As Sears Canada filed for protection from creditors and wound its way through bankruptcy proceedings, disturbing details regarding the state of the company’s pension fund began to emerge.

The short story is this: In 2005 Sears came under the control of Goldman Sachs alum Edward Lampert and his New York hedge fund, ESL Investments.

ESL and Lampert gutted the company, doling out huge dividends to shareholders and bonuses to executives. They invested next to nothing in the company, liquidating as much as they could for profit.

As its owners bled Sears for profit, the company’s pension plan went unfunded. By the summer of 2017, when Sears filed for protection from creditors, the pension fund was running a deficit of $267 million.

Sears’ owners and executives had spent the last decade getting rich, paying themselves $1.5 billion. But 18,000 of its workers, who had been promised benefits and a pension in their retirement, now found that promise broken.

Many of them, some well into their 70s, have found themselves re-entering the workforce to cover living expenses. This, we should be clear, was not their fault. They planned for their retirement responsibly. Their pension and benefits were deferred earnings, no different than a daily wage aside from the fact that they were to be paid in retirement. But the retirement they had earned was sacrificed to line the pockets of shareholders, and it was done quietly so nobody would sound the alarm.

What should frighten all of us is the fact that Sears is not an aberration. If you have a pension with a private Canadian corporation, the odds are good that your benefits and payments are at risk.

A study by the Canadian Centre for Policy Alternatives released earlier this year showed that of the 39 largest Canadian corporations with defined-benefit pension plans, 30 were underfunded. 11 were less than 80% funded, including those of Bombardier, Rogers, and Magna International.

There are two consequences of corporations’ failure to fulfill their obligation to workers.

First, retirees are put in a precarious position. Should their past employer meet the same fate as Sears, they are likely to lose their benefits and face pension cuts. In many cases, this forces retirees back into the workforce. The damage this inflicts on peoples lives and health is difficult to quantify.

Second, in some jurisdictions, the public pays to compensate those who lose their retirement earnings. For example, Sears pensioners in Ontario are eligible for relief of up to $1,000 /month. While it is good that this safety net exists, it should not be necessary — the public should not be expected to pick up the tab for corporate malfeasance. This amounts to a subsidy of corporate profits.

Most galling of all is the reality that most of these corporations can afford to fully fund their pension plans. They choose not to in order to pad their profits, which are then distributed to the owners of the corporation in the form of dividends.

In the case of Sears, had just 17% of what was paid out to owners been allocated to the pension plan, it would have been funded and pensioners would have been protected.

But corporations and their owners seek profits without limit and regard for who is harmed by their behaviour. This is the logic of 21st century vulture capitalism: find sick companies, pick the bones clean, leave nothing for anyone else. If 18,000 retirees can no longer pay their bills as a consequence, well — that’s someone else’s problem.

In the face of this psychopathy, government has a clear duty to step in and protect the public. Forcing companies to fully fund their pensions before issuing profits to owners would be a good step. Limiting executive pay and bonuses at corporations with underfunded pensions would be another.

Corporations and their rich owners may not give a damn about Sears pensioners, or anyone other than themselves for that matter. But governments cannot — must not — abdicate their duty to defend the public interest.