Thursday, September 30, 2010

Last day Nortel administers Canadian Pension

Today is the last day Nortel administers our Canadian Pension. As of midnight tonight Nortel ceases to administer the pension and washes its hands of retirees and future retirees.

The US retirees have already been transferred over to the federal pension insurance corporation, (the PBGC), and many Nortel US retirees have continued to receive their pensions without major interruption. Some US pensioners have seen a reduction due to the PBGC rules and some have suffered quite huge reductions due to the pension contracts they held with Nortel that were terminated when Nortel filed chapter 11 in January 2009. But in general Nortel retirees in the US are very happy that they had the PBGC to pick up when Nortel failed to deliver

Many US retirees also lost their non-qualified pension benefits and now sit waiting for their claims to be considered by the courts, a process that might take years and might only yield cents on the dollars owed to them.

In the UK most retirees were covered by the PFF, another National Insurance plan that provided some security to pensioners as they faced the bankruptcy of their former employer.

In Canada however, there is no national Canadian pension insurance scheme. Pensioners are left to fend for themselves.

Only in the Province of Ontario is there any form of protection, and that only works up to a maximum of $1000 per month. A total that is far below what many people will need to live dignified reasonable lives after retirement.

Tomorrow an appointed administration company, Morneau Sobeco, will take over administering the pension. For now the pension payments will probably continue as is for a while, (2 -3 months maybe). During that time M.S. will examine the assets and liabilities of the pension trust fund and determine the funded ratio. At that point pensions will be reduced. Currently the estimate, provided by Mercer on behalf of Nortel, is a reduction between 28% and 36% depending on the decision on whether to continue indexing or not.

Following that stage, if there is no change in the Federal and Provincial regulations, the pensions considered Ontario pensions will be converted to annuities for each individual. That conversion may result in further reduction and once in place will be locked in for the life of the pensioner and any survivors who are owed a pension.

The annuity rates are currently at an all time low, so the prognosis is grim.

In at least one other province, Quebec, action has been taken to offer alternatives to this dismal plan. As of yet Ontario has not yielded and continues to drive Nortel pensioners towards this future that offers little return for the years of devotion to their jobs at Nortel and basically guarantees that there will be massive reductions to the pensions they were promised.

Canada contrasts dismally to the US, the UK,and many other countries, in terms of pension protection, yet for some reason the Federal and Provincial governments and the general public at large have ignored this issue and turned their backs on seniors facing this big problem. Shame on them all.

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