In the week since my previous post on Sears Canada, more news has come to light. While the majority shareholders in the company mull over their options, word has surfaced that the company’s pension fund may become a victim of the court-ordered restructuring.
The company announced that retirement benefits have been suspended for their employees. In addition to the loss of finances, the discontinuation of regular pension fund payout levels would likely also mean the termination of retiree health and life insurance benefits. With the pension plan currently underfunded, there is a very real chance this could occur. And you thought the loss of 59 locations, many jobs, and no termination packages was as bad as this could get?
There is something particularly despicable about robbing people of their pension benefits. The lure of a pension and financial freedom in your golden years causes many people to stay with a firm longer (sometimes much longer) than they would otherwise. That sort of employee loyalty is gained under false pretenses when you fail to protect their pensions in times of company financial strife. Sears’ problems are not the fault of their employees, but of systematic mismanagement in the C-suite. Will those men and women suffer in the same way? Probably not.
The law does not help the retirees’ case. They are considered to be the equivalent of unsecured creditors and that means their claims rank after those of banks and other secured creditors. Likely that means while they will get something, it will fall far short of the benefits they expected to receive until the end of their lives.
Such news is especially unfortunate for people this age because many are no longer in sufficient health to get a new job. This can lead to depression and anxiety woes, on top of the money concerns involved.