'It's going to be hard': Sears pension payments cut by 30% this week

Many Sears Canada retirees found it hard to take this week when they got their first reduced pension payment chopped by 30 per cent.

Theyhad been bracing for a 20 per cent cutbutlearned inJune it would shrinkby a further 10 percentage points.

"It's terrible," said Ron Husk of Mount Pearl, N.L., who worked for Sears for 35 years. On Wednesday, his monthly pension payoutdropped by almost $450.

"I stayed awake at night thinking about it and I don't know what to do," said the 72-year-old former appliance salesman.

When Sears shut its doors in January, it left behind an underfunded pension plan that serves about 18,000 retirees. They will be going to court to fight for more money, butfor now theymust contend with a significant decrease intheir monthly cheque.

The pension fund is actually short about $260 million, which works out to a 20 per cent deficit. But due to a delay in reducing pensioners' payments by 20 per cent,they now face a 30 per centcut for the next 20 months.

"People had their minds wrapped around the 20 per cent, now it's more than that," said Ken Eady, vice-president of the Sears Canada Retiree Group (SCRG), a volunteer organization representing retirees.

"It's another loss for Sears pensioners."

Attilio MalatestaofCalgary worked for Sears for 44 years. He sayshis pension was cut by $800 a month starting this week.

"It's going to be hard," he said.

Malatesta isevenconsidering returning to work in sales to make up for the lost income something he's not looking forward to.

"Who the hell's going to hire a 73-year-old guy?" he said. "I can only stay on my feet for so many hours. I have arthritis."

Husk is already working, as a greeter at Home Depot. He took the job last year in anticipation of a reduced pension.

"I'd rather stay home," he said. "Anybody at 72 prefers not to work."

'You do what you can'

Their prospects could change somewhat, depending on what happens in court.

In the fall, lawyers for the retireeswill argue in Ontario Superior Court that they should move to the front of the line, ahead of other creditors still waiting to be paid the debt Sears owes them.

"This is not the same type of debt as merchandise or landlords," SCRG'sKen Eadysaid of Sears's underfunded pension plan. "The company's obligation was to have it fully funded, and they failed."

According to court documents, retirees are asking for nearly $730 million. Most of the money would go to top up the pension fund ($260 million) and provide health benefits ($421 million). Retirees lost their benefits three months afterSears filed for bankruptcy protection in June 2017.

But even if they were to move to the front of the line, the pensioners would likely only see a small portion of their claim.According to the court-appointed monitor for Sears'sinsolvency proceedings, the defunct retailer has about $135million left in its coffers and faces more than 2,000 claims for its cash, totalling at least$36 billion.

Eady hopes retirees can lay claim to that $135million, which he says would still be a drop in the bucket compared to what they're actually owed.

"You do what you can," he said. "It certainly doesn't rectify the injustice of us being shorted on our pension and benefits."

What about the government?

Some retirees believethefederal government should stepin to help.

"I don't know what you have to do to get the government to listen," said GailMcClellandofCalgary, who worked for Sears for 33 years. "There has to be something done to protect pensioners."

Advocates have called for federal legislation that would provide safeguards forworkers when corporations collapse and can't pay out pensions.

Sears retirees in Ontario are already faring better because of a provincial law that guarantees the first $1,500 of monthly pensions for retirees in defined benefit plans.

"Why should they be covered and we're not?" Malatesta said. "We're in Canada. We work for the same company."

InNovember, NDP MP Scott Duvall introduced a private member'sbill that would givepensioners top priority when companies go under and the leftover money isdoled out to creditors.

However, private member's bills rarely become law.

Meanwhile, the federal government plans to hold consultations on the matter.Its goal is "to find a balanced approach to the important issue of Canadians' retirement security," Derek Mellon, spokesperson forInnovation, Science and Economic Development Canada, said in an email.

But that's little comfortfor pensioners like Malatesta, who are waiting to hear what more if anything they'll get back from Sears, whilegrapplingwith a different kind of retirement than they had planned.

"You give your life to a company and then in the end you get shafted."