Corporate Tax

O’Toole guarantees senior residents precedence in retirement and calls on “corporate elites”

Conservative leader Erin O’Toole leaves after his press conference in Ottawa on Aug. 23.

Ryan Remiorz / The Canadian Press

One day after Conservative leader Erin O’Toole attacked private sector unions, Conservative party leader Erin O’Toole pitched in front of Canadian seniors and working-class voters against what the party calls “corporate elites”.

In a statement from its Ottawa virtual broadcasting studio, O’Toole promised to give retirees priority over most other creditors during bankruptcy or restructuring proceedings.

He also said that a Conservative government would change legislation to prevent executives from paying themselves bonuses while running a company through restructuring, unless the retirement plan was fully funded.

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“When I’ve met with Canadian workers and unions across the country, I’ve heard the same thing over and over again: After people have worked hard their entire careers, they should look forward to financial security in retirement,” O ‘Toole said Tuesday.

“Canadian workers who have paid into a retirement plan with every paycheck should be confident that it will be there when they reach retirement age.”

The Tory leader, who on Monday promised union representation on the boards of large companies, said workers would have been forced to cut pensions sharply if their former employer goes bankrupt, with Sears as the most recent example.

The Canadian Labor Congress questioned O’Toole’s promise, citing his track record as cabinet minister under Stephen Harper. The former prime minister cut the corporate tax rate from 22 percent to 15 percent and replaced the lifelong pension for wounded veterans with lump sums that some former soldiers said meant less money, President Bea Bruske said.

“Conservative Erin O’Toole’s rhetoric just doesn’t match his record,” she said in a press release.

“Mr. O’Toole has consistently failed to support retirees – and even passed legislation to make it easier for companies to get rid of retirement obligations.”

O’Toole tabled a private member bill in 2018 designed to give pension administrators more leeway to preserve remaining funds and increase returns for retirees. It also tried to limit payments to executives in the event of bankruptcies, he said.

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“But it would have actually made it possible for the bonuses for executives to increase by a factor of 10 as soon as a company had entered into bankruptcy protection,” said Bruske.

O’Toole’s pension application bears striking resemblances to recent New Democratic bills and builds on his drive for union votes as he seeks support from the party’s traditional turf.

In December, NDP MP Scott Duvall tabled a series of bills aimed at strengthening worker protection, including pensions and bankruptcy benefits.

The draft law, which died on the order paper after the federal election for September 20, would have obliged companies to terminate and severance payments before the secured creditors received their money.

“Erin O’Toole may try to pretend he had the backs of the workers in this election, but he has spent his entire political career throwing them under the bus,” NDP leader Jagmeet Singh said in a statement .

For seniors, the Liberals pledged $ 3 billion over five years in their budget to support long-term care and another $ 90 million over three years to help low-income seniors age at home.

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The New Democrats have proposed universal pharmaceutical supply and a national senior citizen strategy targeting dementia and elder abuse, suspending reclaims on the guaranteed income supplement for low-income seniors who received emergency benefits during the COVID-19 pandemic.

According to Statistics Canada, about 1.3 million of the country’s 13.5 million private sector workers have a defined benefit plan, where employers pay employees a certain amount when they retire – unless bankruptcy sabotages the system.

“This will be the death knell for defined benefit plans,” said Ian Lee, associate professor at Carleton University.

He predicted that moving secured creditors like banks down the ranking below retirees would trigger a rush of conversions to defined contribution plans – where a certain amount is not guaranteed for retirement – or simply an exit from defined benefit plans.

Nonetheless, he noted the apparent interest in retirees faced with bankruptcy scenarios. “Usually they will crouch because there is no more money.”

Lee agreed to Tory pledges to block executive bonuses during restructuring, require companies to report the funded status of their pension plans to employees, and stop forcing underfunded pension plans to convert into annuities.

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This final practice of selling financial assets for an insurance product to reduce risk often occurs in a recession when markets are depressed, including losses, and with less money left for retirees, the Conservatives say.

In 2018, Sears retirees learned they would get 30 percent less than their promised monthly retirement benefits following the retail giant’s bankruptcy, despite millions in executive bonuses.

Nortel retirees in Ontario also saw their pensions cut by about 30 percent more than a decade ago.

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