Potential US settlement for Nortel Health Benefits

A number of my colleagues and I have just received a large package of documents from Epiq on a settlement proposal, regarding health and other benefits, between the Retiree Committee and Nortel US. I think all US retirees will receive it. It looks like it is still preliminary but on schedule for court approval in March. The agreement is for Nortel to pay close to $67M to an LLC that the retiree committee will establish, and then the money will be used either by a Voluntary Employee Benefits Association, VEBA, to provide partially subsidized health insurance, or it will be placed into individual Health Reimbursement Accounts, HRAs, to be used to offset medical costs. The two options will be voted on by all claimants before the decision is made. The individual claims for everyone will be sent out and will spell out the present value claim for health insurance, long term care, and life insurance based on actuarial data and each individuals service and age etc. It will then show the portion of the $67M that each individual is entitled to. There was no mention of percentages since everyone's claim is different. They did say that no insurance company was willing to provide long term care or life insurance so the value of those claims will be added to the health claim for health insurance either through the VEBA or HRAs. If the VEBA is voted in then everyone will have to use it or forfeit any claim. If the VEBA vote fails, then the claims will be placed into HRAs. The current benefit program will end May 31st no matter what is voted on. The document also indicated that the Committee of Retired Employees has a web site: http://www.kccllc.net/nortelretiree

Canadian OAS

As a Canadian living for many years in the USA I had not considered applying for a Canadian Old Age Security pension, thinking that the claw back clause would probably eliminate most of it. I also wondered if it would have an impact on my US Social Security. However when I called Service Canada last year they urged me to apply and said that I would receive the benefits I was entitled to without clawback or impact on Social Security. I did apply and it took about a year to finalize but I am happy to say that I am now receiving $245 per month that I wasnt before. Also, since it is a government pension which I didn't specifically contribute to, it is paid out of general taxes, it is not considered in terms of the USA Windfall Provision on Social Security. Much of this is because of the treaty between Canada and the USA on pensions. To be eligible for OAS one has to have resided in Canada and paid taxes for 10 years after the 18th birthday. If you live outside Canada you need to have 20 years to receive the pension. Since there is a treaty with the USA, Canada takes into account the time residing in the USA as well. For example I lived in Canada for nearly 19 years and then 27 years in the USA, so I was eligible to receive the OAS. To calculate it they take the ratio of the number of years you resided in Canada to 40 years, which is the maximum number, and multiply it times a dollar amount. In my case that worked out to $245 per month. Then they calculate any back payments to your 65th birthday and send you the money. It's worth looking into and applying for. Tom

Impact of WEP on Spousal benefits

Recently my wife applied for social security benefits. She applied under the provision that provides benefits to a spouse based on their partner's work experience. This is certainly a useful source of income and one that every married couple should take advantage of. I am not sure if it apples to common law partners but is worth checking. There are a few things that everyone should know. The spousal benefit is based on the workers full retirement age PIA (primary insurance amount). Some of the Social Security agents are not familiar with that and may try to argue that the spouse's benefits are based on the worker benefits which may have already been reduced if the worker has retired early. That is not the law. The law is clear that the spouse is entitled to half of the workers PIA amount if the pension is taken at the spouse's full retirement age. The spouse may also apply early from 62 years of age or later, but, in that situation,the spousal benefit is then reduced by the defined Social Security percentages based on the age the spouse is when she or he applies. A second impact is the Windfall Elimination Provision. If a worker has a second source of pension income from a government entity that did not contribute to Social Security then the worker's social security benefit is reduced up to a maximum amount. Check the social security website http://www.socialsecurity.gov/retire2/wep-chart.htm to find the impact based on your age. This situation applies for example if you are receiving a Canadian pension such as CPP as well as Social Security. However it does not apply to Canadian OAS since this old age pension falls into another category altogether. The US Social Security people are fully aware of Canadian CPP and QPP and will deduct overpayments from your social security pension if you do not make them aware of your other pension. I know it doesn't sound fair but that is the way the law works, and S.S. will find out eventually if you don't let them know and then you will owe a large amount back to them. The WEP also affects Spousal benefits from Social Security. When a worker has both pensions the worker's PIA is reduced by the Windfall Elimination Provision and that then has a direct effect on the spouse's pension. I dont understand the logic of that part of the WEP law if the spouse does not obtain extra income from the worker's other source of pension. It appears to be a double whammy to me and I plan to write to my congressman regarding this inequity. In the mean time the law applies and so I am posting this informaton so that others may know what to xpect if they encounter this situation.