FSM management

In my opinion, if the option to create and apply an FSM for the Nortel Canada pension fund becomes a reality, there need to be some up-front rules and decisions made and ratified by the pensioner and future pensioner population.

The following options should be made available to each pensioner depending on their place of residency and eligibility.

1. Option to use the standard annuity Ontario process.
2. Option to use the Quebec proposal.
3. Option to join the FSM approach.

The NRPC must be completely separate from the administration of the FSM, and the choice of FSM manager should be ratified by a proper vote of those selecting that option. Once a decision is made, the contact with pensioners and future pensioners who select the FSM option regarding their personal situation should be directly from the FSM manager.

Prior to choosing an FSM:

-The pensioner and future pensioner population should be made aware of the element of risk involved with the FSM, and provided clear examples of what to expect in terms of the options they are eligible for.

-It should be made clear if it is to be an either/or decision between choosing the FSM option or choosing an annuity. If it is not possible to convert to an annuity at a later date that must be declared up front. If it is possible to convert at a later date, the mechanism for calculating residual commuted value should be also made clear.

Investment goals should be set for the FSM to ensure the survival of the fund to meet it's actuarially determined obligations and performance against those goals measured routinely.

The FSM performance should be monitored by the NRPC or another body and reported on monthly to all participants. Audits should also be carried out by third parties and reported on annually.

I'm sure there are lots more that needs to be worked out, however I want to emphasize the importance of transparency in this decision and the absolute need to involve all possible pension members to ensure that there are no major legal and financial problems following a decision. We don't want to reduce the pension trust fund any further with unnecessary actions, or poor investment policy.