Sears Pension Issues shows A Need For Diversification

Sears Canada pensioners are still fighting for a payout, and some are shocked to see what they're receiving from their pension due to the company's insolvency process.

Sue Earl, a 38-year Sears Canada employee recently found out she would only get 81 per cent of the value of her pension, with the other 19 per cent "up in the air," and also had her severance payments cancelled. She assumed that her defined-benefit pension was going to be paid out to her regardless of the state and health of the company, which was a risk she took.

Experts have said that depending too much on the defined-pension plan is a risk, and that the employer-sponsored pension plans become risky when the employer isn't healthy enough to fund them. However, James McCreath, associate portfolio manager with BMO Nesbitt Burns (Calgary) says they are also a good thing because it forced people to save.