Catalyst Pension Problems shows Need for Wider Reform

The Green Party of Canada is in full support of the Catalyst pensioners and is urging government action, both to help these workers and prevent future problems.

“We have seen these problems come up before, most famously with Nortel and now with Catalyst. Workers pay into a benefit plan for years and then are faced with a loss of income when companies go bankrupt. The government needs to put in place protections for workers’ pensions,” said May.

Catalyst Paper of British Columbia, with mills in Crofton, Port Alberni and Powell River, is now up for sale through a court-approved process after a vote to restructure the company failed. Pensioners may lose $115 million, but as they are considered unsecured creditors, were not able to participate in the restructuring vote. The company entered creditor protection last January. Now that a sale will proceed, the pension fund liability could result in a cut of 35% to individuals’ pensions.

Various private members’ bills have been introduced which would have improved this situation, but unfortunately none of them passed. NDP MP John Rafferty’s Bill C-501 would have placed both pensions and terminations/severance packages on the same tier as secured creditors when a company goes bankrupt, but the pension provisions were stripped out in committee and it was eventually dropped. A Senate bill to improve the priority of former employees for claims on the assets of bankrupt companies over other liabilities, spurred by the Nortel debacle, was not passed.

Greens are hopeful that NDP Wayne Marston’s Private Member’s Bill C-331, which would place pensions on the same tier as secured creditors, among other things, will pass to prevent similar problems in future.

“Time and time again, we are seeing a failure of government to make necessary pension reforms. It is an urgent issue that pensions that were not protected in the private sector be protected as secured creditors in bankruptcy, such that the workers would not be wiped out when a company falters. This is a continual problem in our economy,” said May.


Media Contact:
Debra Eindiguer