Thursday, July 30, 2009

Pay Check Surprise for Nortel Canada Pensioners

After Nortel declared bankruptcy and entered chapter 11 protection in the US, and CCAA in Canada, retirees in the traditional defined pension plan continued to receive their pension checks. In Canada the same applied to retirees who were part of the registered pension plan. At first there was a lot of trepidation as pensioners considered the possible loss of pension, and in fact many who had company paid non-qualified pensions, or retirement allowances were impacted when these payments stopped without any notice.

As time wore on the pension checks kept coming and a false sense of security was built up in the minds of many who were not paying close attention to the situation. For those of us who knew that the trust funds were in a disgraceful state of underfunding, it was only a matter of time before those pensions would be impacted also.

In July the PBGC took action and went to court to take over the Nortel US defined pension plan trust fund. In the UK a similar action occurred with the PPF taking control. In Canada however, there is no equivalent of the PBGC or the PPF. What a shameful reflection on the Canadian government that in spite of taxing people to the hilt and declaring themselves as a socially conscious country, there is no safety net for pensioners if their company declares bankruptcy and folds. To add to that appalling Canadian situation, pension trust funds do not have priority in the courts and are treated as unsecured creditors like everyone else.

In the mean time the company has kept pensioners out of the loop. There has been no explanation or communications from Nortel directly to their retirees until this month when they slipped a notice into everyone’s pension check which says the following.

“Nortel is under court protection from its creditors. Former employees are represented by court-appointed counsel, Koskie Minsky LLP, in respect of claims resulting from Nortel’s insolvency. Your pension plan is underfunded, which may result in claim against Nortel. You may contact KM at NOTEL@KMLAW.CA or 1.866.777.6344. Please visit WWW.NORTELPENSIONERS.CA or WWW.KMLAW.CA “

Note that the spelling mistake is theirs, not mine. Perhaps this is a Freudian slip and a message to us all that shortly there will be No Nortel.

In all the years I spent at Nortel, we took pride in keeping everyone informed. We had town halls, general information sessions, reviews, team meetings, parties, external functions, web sites, notices and all forms of media to make sure that employees, their families, shareholders, customers, suppliers and retirees were aware of what was happening. Those days are long gone, and the current management team has destroyed any vestige of that old Nortel. Shame on them, and shame on Canada for its neglect and disgraceful treatment of pensioners.

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