Updated: Tue Nov. 03 2009 1:21:30 PM

The Canadian Press

OTTAWA — The federal NDP is proposing legislation to protect pensions by giving them priority status when companies close.

Leader Jack Layton says the bill would close loopholes in the Bankruptcy and Insolvency Act, ensuring that failed companies make good on their underfunded pension liabilities.

He says it's only fair that employees who put years of hard work into a company would expect their pensions are protected.

He pointed to the case of former telecom giant Nortel as an example of a company that files for bankruptcy and uses "money owed to workers" to pay off creditors.

Nearly 17,500 Nortel workers are at risk of losing their pensions.

More than 5,700 Canadian companies filed for bankruptcy in the year ending Aug. 31.

The proposed measures were tabled today as a private member's bill by New Democrat MP Wayne Marston.

They come on top of an NDP-sponsored retirement-security plan that calls for increases to the Guaranteed Income Supplement and the Canada and Quebec pension plans.

The party is also advocating a national pension insurance program.