The notion that employee pensions should be managed independently of corporations originates from a fundamental need to protect workers’ financial futures. This separation is not merely a technicality—it is a safeguard against the potential misuse of pension funds by corporate leadership, especially in times of financial distress. Independent management ensures that pensions are shielded from corporate volatility, providing employees with a sense of stability and security that is often absent when companies control these vital funds.

Corporate history offers sobering lessons about the dangers of letting pensions remain under internal oversight. Nortel Networks, once a telecommunications giant in Canada, serves as a cautionary tale. In 2009, the company declared bankruptcy, leaving thousands of employees with drastically reduced retirement benefits. Nortel’s failure lay in its inability to separate pension funds from corporate finances. When the company collapsed, so did its workers’ financial safety net, illustrating how mismanagement can devastate lives.

Sears Canada provides another stark example of corporate negligence. As the company spiraled into financial ruin, it diverted money earmarked for employee pensions to pay bonuses to executives. By the time Sears liquidated in 2017, many of its workers were left with a fraction of their expected retirement savings. The betrayal of trust was profound, revealing how conflicts of interest and short-term corporate priorities can destroy decades of employee contributions.

Perhaps the most infamous case of pension mismanagement is the collapse of Enron. The energy company’s fraudulent practices led to one of the largest corporate scandals in history. Employees, encouraged to invest their retirement savings heavily in Enron stock, lost everything when the company’s value plummeted to zero in 2001. The devastation was not just financial; it shattered lives, proving how dangerous it can be for pensions to remain under corporate influence, especially when tied to a company’s performance.

In contrast, some systems demonstrate the benefits of independent pension management. The Ontario Teachers’ Pension Plan (OTPP) in Canada stands as a model of success. Completely independent of any single employer, the OTPP operates as a dedicated entity focused solely on securing the financial futures of its members. By keeping pension funds separate from corporate finances, the OTPP ensures that its members’ retirement savings remain insulated from the financial challenges of any individual employer.

Similarly, the California Public Employees’ Retirement System (CalPERS) highlights the advantages of independent oversight. As the largest public pension fund in the United States, CalPERS serves millions of employees by ensuring their pensions are managed with transparency and accountability. Free from the influence of any specific employer, CalPERS protects its members from the risks associated with corporate insolvencies or governance failures.

These examples reveal why policymakers must act to reform pension systems worldwide. Legislation mandating the independent management of pension funds is a necessary first step. By requiring third-party fiduciaries to oversee these funds, governments can protect workers from corporate mismanagement and ensure impartial oversight. At the same time, mechanisms like the U.S. Pension Benefit Guaranty Corporation (PBGC) must be strengthened and expanded globally to insure pension funds against insolvency.

Ethical corporate governance must also be a priority. Boards and executives should be explicitly barred from using pension funds to address short-term financial challenges or boost shareholder profits. Employees deserve to know that their retirement savings will be safeguarded, no matter the economic circumstances.

The stories of Nortel, Sears, and Enron serve as stark reminders of the consequences of inaction. Conversely, models like OTPP and CalPERS offer a glimpse of what is possible when pension funds are managed independently, transparently, and ethically. By learning from both failure and success, policymakers and corporate leaders can build a pension system that prioritizes employees over profit—a system that delivers on its promise of a secure retirement for all.