If you’re working at Hudson’s Bay—or used to—and you’ve been seeing headlines about pension cuts, job losses, and store closures, it’s hard not to brace for the worst. The company’s under creditor protection. Stores are liquidating. Jobs are being slashed. Naturally, the question on everyone’s mind is: What happens to my pension if HBC goes bankrupt?
Here’s the straight answer: If you’re part of the main HBC employee pension plan, your pension is safe.
That’s because the cuts you’re hearing about don’t apply to the vast majority of workers. They only affect a very specific group: former senior executives who were receiving payments from a separate plan—the “Supplementary Executive Retirement Plan” or SERP.
What Hudson’s Bay Pension Cuts Are Happening?
As Hudson’s Bay Co. begins winding down much of its retail operations and restructures under creditor protection, concerns are mounting among employees and retirees regarding the stability of their pension entitlements. While the company has initiated cuts to executive-level retirement benefits, the primary pension plan for the majority of employees remains fully funded and is not affected by the current restructuring process.
The company sent letters last week to people in that executive-level plan saying those payments are stopping. The SERP was never fully funded to begin with, and now that HBC is under creditor protection, it can’t keep pulling from general revenues to cover the gap.
The plan trustee, Royal Trust Corporation of Canada, has been instructed to initiate a wind-up of the SERP and distribute available assets. However, since the SERP was only partially pre-funded, beneficiaries are expected to receive reduced payments.
The SERP had an $84.5 million shortfall as of its last valuation on January 1, 2022, according to court documents filed by the company’s chief financial officer. Ongoing payments under the plan had been made directly from corporate revenues, which have now been suspended due to insolvency proceedings.
The changes apply exclusively to the SERP and do not impact the company’s primary pension plan, which covers more than 20,000 current and former employees, including both defined benefit and defined contribution participants. According to court filings, that plan is in a surplus position and remains fully capable of meeting its obligations.
This is not like the 2017 collapse of Sears Canada, where retirees faced deep pension cuts as a result of an underfunded plan. The Pension Plan is sufficiently funded and is able to satisfy its liabilities.
As of December 31, 2024, the defined benefit component of the plan covered approximately 4,000 individuals, while the defined contribution side included around 17,000 members. Under a defined benefit arrangement, retirees receive a fixed monthly income for life, calculated based on salary and years of service. Defined contribution members receive payouts based on the performance of invested funds.
HBC’s primary pension plan is protected under provincial pension legislation and is managed independently from the company’s operating revenues. This distinction has allowed it to remain insulated from the financial challenges currently facing the business.
HBC continues to solicit bids in an effort to restructure part of its business. While there remains a possibility that some stores could avoid closure if a buyer is found, the company is actively selling off merchandise and preparing for a broader exit from the retail market.
The uncertainty has led many employees to re-evaluate their long-term financial plans, especially those nearing retirement. For members of the defined benefit plan, options such as commuting the value of their pension may be under consideration, though such decisions require careful financial analysis.
Schedule a call to chat with us as soon as possible if you are a worker at HBC on the defined benefit or defined contribution plan.
