Koskie Minsky Bulletins ( Includes Canada pension fund % updates)

Koskie Minsky has issued two bulletins and has them posted on their website. You can see the details by going to the following web address:

http://www.koskieminsky.com/Case-Central/Overview/Status-Of-Case/?rid=107

The following is my summary of the content of the bulletins which affect Nortel Canada pensioners, disabled employees, and ex-employees.

Pensions.

The latest estimate of the trust fund ratio is 64% on a wind up basis for both the negotiated and managerial defined benefit plans. On a solvency basis the ratio is 76% for the negotiated and 72% for the managerial.

When the Ontario administrator takes over October 1 your pensions will be reduced to one of these funding ratios. For those who worked in Ontario the first $1000 per month (adjusted for service in Ontario) will be protected by the Ontario Pension Benefit Guaranty Fund. The remainder of the monthly pension will be reduced to the funding ratio.

The NRPC and advisers are exploring alternatives to a conventional pension plan wind-up and are seeking support from the government. Depending on the results of these efforts the timing of the wind up could be affected as well as the future administration of the plan.

For those in the Defined Contribution plan you will be able to withdraw your full individual pension in your account and transfer it to a locked in retirement vehicle. You will not suffer any loss but will not have any further pension claim on Nortel.

People with questions regarding defined benefits plans, may contact Mercer at 1-866-667-8358.

People with questions regarding defined contribution plans may contact Sun Life at 1-866-733-8612.

Compensation Claims Procedure.

Koskie Minsky hopes to go before the court in September 2010 to obtain agreement on the claims procedure.

Every one will receive written documentation from K.M. with all details associated with their individual claims including; pension, TRA, excess pension, severance, health, dental, and life insurance.

You will have a chance to review the claims in detail and ensure that all information related to your claims is correct. If not you will have a chance to engage with K.M. to make sure everything is right before proceeding.

You do not have to file your own claim. Koskie Minsky will do that for you.

Once claims have been received, verified, and tallied, and once the total Canadian assets available for distribution are determined there will be a distribution of assets based on the percentage of money available to all unsecured creditors. This probably will not happen until 2011. There may be an interim distribution, but that is unknown at this stage.

Health and Dental Benefits

Nortel will cease to pay these benefits on December 31 2010. You must submit a claim by February 28,2011.

The proposal to create a Replacement Health Plan through future cash recoveries has been dropped. (See the bulletin for details). As a result each individual entitled to health and dental benefits from Nortel will have to file a claim.

Group Life Insurance Coverage

This coverage will cease on December 31,2010. Individuals will have a claim against Nortel for the loss. The claim will be part of the Compensation Claims procedure.

Health and Welfare Trusts Assets.

K.M. and other parties including the monitor are working towards a court approved distribution of the HWT in 2010. K.M. expects the Monitor to make a proposal for the allocation of assets. Individual beneficiaries will have an opportunity to make submission to the court on the proposal.

On December 2009 the assets in the trusty was estimated to be $80 million while liabilities are much higher. The loss of future benefits as a result of this situation will be part of individual claims against Nortel in the Compensation Claims Procedure.

The actuary, working with K.M., put forward before the court in March 2010, that the HWT would only produce a 30% payout based on the liabilities and the estimated assets. K.M. has demanded that each disabled person receive an estimate of the amount they will receive through a distribution of HWT assets under the Monitor’s proposal.

Each disabled person will have the support of an actuary to calculate their individual claims based on the present value of lost future benefits.

The goal is to achieve allocation and distribution of the HWT assets before the end of 2010.

Health and Welfare Fund Distribution Taxes.

K.M has submitted a proposal to the Canadian Revenue Agency to reduce or eliminate taxes on the lump sum payments from the HWT to eligible beneficiaries who are receiving disability benefits, have group life insurance, or come under the survivor income benefit plan. There is no response yet from the CRA.

Court Appointed Representative- disabled personnel.

Susan Kennedy is the court appointed representative for Nortel’s disabled employees, with the exception for CAW-Canada members. K.M. has received requests to add two additional representatives for the disabled employee group. After examination the request has not been granted. (See bulletin for details).

Termination Fund and payments.

Eligible terminated employees are entitled to a lump sum payment up to $3000. K.M. anticipates payments to be made in the fall 2010.

Foreign Service earnings.

The CRA completed their review and concluded that Nortel’s historical practice of including Foreign Service earnings as eligible earnings for the purposes of pension benefits is acceptable.

Employee hardship Process.

The process in Canada has been extended until October 29, 2010. K.M. have requested the possibility of establishing a hardship fund to apply to pensioners and survivors for use after December 2010. There is no news yet on that possibility.

Future updates.

Once the Compensation Claims Process has been approved, KM may schedule information sessions in various cities to provide more information about claims and related court procedures. These events as well as future webcasts will be announced on the K.M. website as well ads the NRPC website.