When I worked at Nortel during their healthy years, I was pretty happy with the benefits package offered. It was very comforting to know that if you were sick you could go to the doctor and take a few days off to recover without losing income. Even if you became seriously ill and needed a lot of time to recover there was a long term disability benefit which provided income.
During my career at Nortel I heard of a number of people who fell ill or were injured so badly that they couldn’t return to work, but at least they were covered by the long term disability benefit and could survive without falling into poverty.
When Nortel declared chapter 11 and entered bankruptcy protection I was more concerned with continued pension payments and the loss of other pension or severance related income. However, at the recent webinar held by the Canadian NRPC group and hosted by Diane A. Urquhart, Independent Financial Analyst, Mississauga, Ontario, I was astounded to find out that the long term disability payments are in jeopardy. You can watch the video of this webinar at http://ismymoneysafe.org/video/FixBIANow.wmv.
The disability payments made by Nortel had been funnelled through Sunlife Insurance Company. However it was not an insurance policy. Nortel had self funded the plan and were simply using Sunlife as their agent for disability payments. Disabled former employees face income losses of up to 90%. It is shocking that Nortel self-funded its long term disability benefits rather than through an insurance company.
At this point the payments are being made since Nortel is still operating. If it sells off all its assets and liquidates, the trust fund is woefully underfunded and will not support continued payments. It was estimated by the Canadian NRPC that there is only enough money to fund about 10% of the promised payments. This is disgraceful! People on disability have no opportunity to go back to work and recoup their losses. Those receiving LTD will become unsecured creditors with no priority.
It would seem reasonable that a case could be made that the directors are liable for misrepresentation on the security of the long term disability income, and that they failed to ensure there were no omissions or misrepresentations in Nortel's and its Administrative Services Organization Sunlife's long term disability plan literature.
A group representing ex-Nortel employees on Long Term Disability exists in Canada. Sue Kennedy a representative of that group spoke at the Webinar on July 8th and may be contacted at kennedy.robinson@rogers.com.
Tuesday, July 14, 2009
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I agree, very disgraceful. Good post, Dad.
ReplyDeleteDisgraceful doesn't even cover this abandonment of long term disability employees.
ReplyDeleteIt is a problem with the set up of the LTD plan, and also the health benenefits, and now I hear the "life insurance" as well. These are in ASO-styled plans which are NOT INSURED !! and often underfunded. All these were placed into one "TRUST" payed into by general revenue!! All will evaporate soon. And the Canadian government has no plans to help us or the pensioners with reduced payments. I hear the U.S. LTDers have no help either, but at least they have pension protection. We're lobbying, but it looks bad.
Our government has avoided these issues for the last 30 years, and they have to step up now, or make room for a government who will finally remedy these holes in legislation and regulation. I guess they don't care since their pension plans are fully indexed and funded, as are their other benefits. They'd better give us our tax money back for the last 35 years if they don't want to fix the problems they have helped cause. It's shameful. - Spouse of a Canadian Nortel
LTDer. Thank you for your insightful story.
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ReplyDeleteI have got some important information for it. And the information discussed in the post is very important for us. You have included a lot of information about Long Term Disability Insurance Ontario. It varies in the kind of benefits included as per the age group and number of people covered in the plan.
ReplyDelete