Pensions: What you need to know
Source: Infometrica, University of Toronto professor Keith Ambachtsheer
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An interactive explainer breaking down the different kinds of pension plans and the payouts depending on income and age of retirement
Use our glossary to find explanations of key terms related to retirement and pensions
Video: Meet a victim of Canada's pension crisis
Laid off from his factory job of 40 years, he's living on a pension that's underfunded by 10 per cent
Full story: Bankrupt companies, pension promises destroyed
By Greg Keenan
Keith Carruthers never saw it coming.
More than a decade after he retired from Indalex Ltd., the aluminum processing company was granted protection from its creditors. Within weeks of the filing this past April, a substantial portion of his retirement income evaporated - along with the retirement incomes of several other senior executives.
"It was kind of like a lightning bolt," says Mr. Carruthers, who retired at age 56 after 13 years as president of Indalex. "All of us are going to lose half to two-thirds of our pension. All of us are long-term employees who worked for the company for many, many years. That just leaves a real sour taste in your mouth."
They are among the hidden victims of the Great Recession. In the year-long economic slump that is the most severe Canada has experienced since the early 1990s, 357,000 people have lost their jobs - in every sector of the economy, and at every level of the work force.
But the meltdown has also had a devastating impact on a group that does not show up in the monthly unemployment statistics: the retired. Already hobbled by an aging work force and companies' gradual move away from guarantees for retired workers, Canada's pension system has been pushed to the breaking point by the downturn. Now, millions of blue-collared workers, salaried employees and professionals - both the retired and those still working - are facing starkly scaled-down retirement dreams.
If there is a sector of the economy that shows the pension crisis at its worst, it is manufacturing. Once well over 20 per cent of Canada's GDP, it has shrunk relentlessly - and so has its capacity to pay for the pension promises made in brighter days.
Within the factory sector, the unravelling of Canada's pension system has become such a massive and broad-based problem that it is has reached the people at the very top of the corporate hierarchy: executives like Mr. Carruthers.
Many company pension plans have been left badly underfunded by market volatility and more pressing demands on their cash resources, leaving retirees with smaller plans. But the most dramatic impact on employees and pensioners has been at failed companies where pensions have evaporated in bankruptcy proceedings.
Bankruptcies, liquidations and filings for protection under the Companies' Creditors Arrangement Act (CCAA) have surged, including such legendary Canadian titans as AbitibiBowater Inc. and Nortel Networks Corp., to name just two. And if manufacturing companies such as Indalex have been among the hardest-hit, they may also be the least likely to recover. "As soon as [a] company goes into CCAA, it's basically like they just won the lottery and they can do whatever they want," says Mr. Carruthers, who lives in London, Ont. "I lose the lottery."