Monday, November 30, 2009

Ontario liberals vote down the bill to help Nortel Pensioners

November 26, 2009.

McGuinty Liberals dash hopes of Nortel Pensioners

Defeat Private Member's Bill to help protect the value of their pensions

(Queen's Park, Toronto) – The McGuinty Liberals dashed the hopes of Nortel Pensioners by defeating a Private Members Bill which was designed to help protect the value of their share of the Nortel pension plan should the plan be wound up.

Bill 213, the Pension Benefits Amendment Act (Transfers on Wind Up), 2009, introduced by Carleton-Mississippi Mills MPP Norm Sterling, would have allowed,if passed, existing Nortel pensioners or their survivors two options on the wind-up of their pension fund.

At present when a pension plan is wound up, the Financial Services Commission of Ontario (FSCO) is required to purchase a life annuity on behalf of pensioners already receiving pension benefits for the value of the pension. With interest rates low, annuities are providing low benefits. Mr. Sterling's Bill would have allowed pensioners to roll their reduced pension into an annuity or into another prescribed retirement savings arrangement.

Liberal Members who spoke to the Bill objected to it on the basis that it did not address all the problems facing Ontario's current pension system.

"It was important we pass this Bill now because the Nortel Pension Plan may be wound up before the Legislature returns in February," explained Mr. Sterling. "This was not intended to be a comprehensive solution to the need for pension reform but it was an interim measure that could have helped thousands of Nortel Pensioners across Ontario who need help now."

Mr. Sterling told the Legislature that the solution presented in his Bill was not the first choice of Nortel Pensioners, nor was it his first choice. However, FSCO, an arm's length body, makes the decision to wind up a plan when they determine that the company (in this case Nortel) will no longer survive. Since that could conceivably happen in the next few months, Mr. Sterling's Bill at least presented an option which would have helped alleviate some of the pain for Nortel Pensioners.

Ontario's approximately 12,000 Nortel pensioners are taking a double hit. Firstly the value of their pension is reduced to an estimated 69% because the plan was underfunded when Nortel filed for bankruptcy protection. Secondly their only option, a lifetime annuity, is a poor investment at this time.

"I want to thank my colleague, Mr. Sterling for bringing this bill forward," said Frank Klees, MPP for Newmarket-Aurora. "There is a matter of urgency which is why it is before the House now. We've heard honourable members make reference to the fact that pension legislation in this province should be reformed, that we need to approach pensions in a new way. That's all fine and good. But I think we missed the point of this Bill if we wax eloquent about future discussions about reforming pension plans in this province. What we need to do here is deal with a matter that is affecting people who are caught. They're caught in a circumstance beyond their control."

Mr. Sterling concluded his remarks in the Legislature with a plea on behalf of Nortel Pensioners. "Please, please give these people the opportunity to save some of their pension funds should this thing be wound down in the next two to
three months."

Despite his pleas all Liberal Members present in the Legislature voted down his Bill, leaving Nortel Pensioners literally out in the cold this winter.

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