Recently I spoke in the House of Commons on the important issue of employee protection when their employee faces bankruptcy.
This is an important issue that has unfortunately crossed my desk on more than one occasion.
The Government of Canada understands the challenges faced by workers whose employers go bankrupt, such as the possible reduction or loss of benefits, such as long-term disability. That is why our government has put in place a series of measures to help deal with the challenges that these beneficiaries face.
In fact, this issue was identified in the 2010 Speech from the Throne. We made a commitment to Canadians that we would look at how we could better protect workers when an employer faces these kinds of difficult circumstances, and we are delivering on that promise.
We recognize that when an employer goes bankrupt, employees are often left in a difficult situation regarding wages. Through no fault of their own they can suddenly find themselves struggling to make ends meet. That is bad for workers and their families and it is bad for our economy.
In response, our government has established the wage-earner protection program, or WEPP. This provides timely compensation to employees who are owed money when their employers go bankrupt. As a result of this important program, eligible workers who lose their jobs and are owed money because their employer has gone bankrupt or has become subject to receivership are now compensated for unpaid wages and vacation pay. They are also eligible for more recent severance and termination pay up to a maximum of approximately $3,400.
The WEPP was expanded in 2009, and as a result, it has meant improved financial support to Canadian workers during the economic downturn. It has meant that more Canadians were able to qualify for WEPP financial support and secure higher average monetary claims. Since January 2009, over 30,000 WEPP claimants have received almost $67 million in payments.
In December 2010, a number of regulatory amendments were proposed for the pension benefits standards regulation. The proposed amendments are designed to make federally regulated private pension plans less sensitive to financial market volatility while protecting plan members and retirees. It calls for four key measures.
- First, it would permit plan sponsors to secure properly structured letters of credit in lieu of making solvency payments to the pension fund to a limit of 15% of the plan assets.
- Second, it would require plan sponsors to fully fund pension benefits on plan termination.
- Third, it would render void any amendments to a pension plan that would reduce the solvency ratio of the pension plan if the plan's solvency ratio is below 0.85 or the amendment causes the solvency ratio to fall below 0.85.
- Fourth, it would introduce a distressed pension plan workout scheme.
These changes are part of the Government of Canada's overall commitment to further strengthen the retirement income system for our citizens. This is the kind of action that Canadians have been asking for and that we have been delivering.
As always I welcome your ideas and suggestions. Please contact me anytime at 905-953-9515 or by email at Brown.L@parl.gc.ca.
