Digital Editor for Full Comment.
For those who mark such things, Sunday was the last in which any Sears Canada store would ply its wares. As a Heartless Millennial, I admit no sentimentality about this passing. I have no memory of flipping through its catalog for Christmas presents — although I suppose I must have — and the iconic department store made no attempt to appeal to me, or to anyone like me, until my Amazon and pop-up-shop habits were immovably established.
Instead, I find my sympathies reserved for the likes of Ron Husk, recently profiled by CBC in Newfoundland and Labrador.
The 72-year-old retiree is now pulling shifts at Home Depot after working for 35 years selling appliances for Sears. Thanks to the nature of bankruptcy, his defined benefit pension is likely to be cut by as much as 20 per cent — although the lawyers and actuaries are still working out the details.
While Sears’ shareholders pocketed payouts of $3.5 billion, the chain’s pension plans remained underfunded to the tune of $270 million. While its executives enjoyed dividends, they also accepted multi-million dollar retention bonuses in the company’s closing months.
Maybe those incentives weren’t quite high enough. In the end, they didn’t seem to do much good. Regardless, none of them now need worry about how to make ends meet.
It’s Husk, and more than 16,000 retirees like him, who is left to fill in the gap because he relied on a corporate defined benefit pension.
His life insurance, health and dental benefits are gone, too. Cancelled in September, according to the CBC.
“That leaves me in a spot where, well, I’m going to need more money to make ends meet,” he said.
“At 72 years old, you don’t expect these things to happen.”
This might be an odd lament for a millennial like me, who would never deign to hope to see the sweet side of a defined benefit pension. It might be a good thing to grow up in such times; I’ll never live to be deluded by concepts like job security or loyalty. It’s not a bad thing to expect the worst, to think transactionally, to learn to manage one’s own RRSP account, or to look out for oneself first.
No corporation will ever disappoint me.
However, if fair-minded businesses wish to reduce the cries of more onerous regulation, stories like Husk’s don’t play well. Every senior pensioner who must trek back to Home Depot in his twilight years is going to raise questions about whether or not treating pensioners as secondary to other kinds of creditors in cases of bankruptcy is a fair ordering of priorities.
It’s not hard to imagine a world in which executive retention bonuses and dividend payouts are made contingent on fully funding pension plans, for example. If corporate boards are not willing to hold their executives to account, they should not be surprised to find a government eager to do so.
Ontario has attempted to ameliorate the plight of bankrupt pension plans by creating the Pension Benefits Guarantee Fund, which guarantees the first $1,000 of pension income lost in such a case; that figure has been set to rise to $1,500. (Sears employees in other provinces are out of luck.)
The PBGF strikes me as well-intentioned, but still fundamentally problematic. It’s using taxpayer funds to secure individual benefits at the expense of a province that is already deeply indebted.
Further, it gives us yet another example of privatizing profits and socializing loses; of placing those who were least responsible for Sears’ decline — the likes of a go-getting appliance salesman like Ron Husk — on the hook for his bosses’ failures.
In the end, that could be what defines Sears’ legacy, far more so than mouldering catalogs and storied corporate histories.
44 Comments
