Friday, December 17, 2010

FSM for Canadian pensions a real possibility?

The following story was posted in the Ottawa Citizen today. I couldn't see any report of it on the NRPC site. If this is true it looks like the FSM may become a reality for Nortel's pension fund which means that the standard wind up using annuities will not be followed.

I'm not sure what the next moves will be. Morneau Sobeco and the FSCO will surely be involved as well as the Regie de Quebec since this approach may prove bettet than what is offered by law 129.

It will take some time to sort it out.

Ontario gives Nortel pensioners more control over their pensions
By Lee Greenberg, Ottawa December 17, 2010 7:35 PM TORONTO -

Roughly 18,000 Nortel pensioners will now be allowed to invest their pensions with private fund managers, after the Ontario government announced Friday that it will reverse an earlier decision forcing them into a safer - but less profitable - regime.

In a letter Friday afternoon, Finance Minister Dwight Duncan told leaders of the pensioners' group they "have made strong arguments for allowing greater pension choice."

Duncan said the Liberal government will table legislation allowing that choice while "safeguarding benefit security."

"The ability to opt out of the current wind-up approach would allow pensioners who have a greater risk tolerance to elect to pursue investment strategies that may ultimately lead to higher benefits," Duncan wrote in the letter to Don Sproule, national chair of the Nortel Retirees and Former Employees Protection Canada (NRPC). "But it would also ensure that no pensioners have their benefits put at increased risk without making a clear choice."

Pensioners complained they faced an immediate 10-per-cent loss if the government-led wind-up of their $2.5-billion plan went ahead as planned.

© Copyright (c) The Ottawa Citizen

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