In March of this year, Senator Art Eggleton’s Bill S-216, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act in order to protect beneficiaries of long-term disability benefits plans, passed onto second reading and amendment.
In speaking to the senate, the Senator explained the importance of the proposed bill: “[Bill S-216] is about long-term disability, LTD, and that only. Second, the bill is not only about Nortel, although that situation precipitated this bill. It is about employees now and in the future, in similar circumstances with respect to LTD plans.
Senator Eggleton went on to appeal to all “honourable senators, on an all-party basis, to support this piece of legislation.”
The purpose the bill is straightforward. It aims to protect employees on long-term disability. While its focus is narrow, Bill S-216 speaks to larger issues, such as issues of “fairness, justice and respect”. Indeed, the bill aims to correct the situation that leaves the most vulnerable workers exposed to the effects of loss of income and security due to disability. “It reaffirms the simple principle that people who pay their dues and play by the rules have the right to expect that they will receive what has been promised to them” Senator Eggleton said.
The bill represents an importance piece of the pension puzzle, which has been growing in political attention over the past few years, thanks in part to the pressures caused by the recession, bankruptcies of companies such as Nortel, and by the work of organizations such as CARP.
According to senator Eggleton, “at the moment, approximately one million employees in Canada have disability benefits that are self-insured by their employers. That is approximately 40 per cent of long-term disability plans. Approximately 60 per cent of them are actually insured through the normal insurance premium process, but 40 per cent are self-insured. If a company with self-funded, long-term disability benefits goes bankrupt, its employees who depend on these benefits are given the same standing as an unsecured creditor.” Simply, Bill S-216 would provide security to the most vulnerable employees of companies that go bankrupt. The act stipulates the increased priority of those suffering with LTD’s. Or, according to senator Eggleton, the bill would fix the current situation, wherein disability suffers must “get in line behind the secured creditors, behind the bondholders, behind the preferred shareholders, behind the common shareholders, and then, if there is anything left, you might get something.”
Like all bills that are not tabled by a sitting government, this one needs widespread support to move forward and become law. To express your support for Bill S-216, contact the members of the Senate Banking Committee. A list can be found here