Docket #3835 on the Epiq Website contains a copy of Nortel US's latest operations report. According to the report the operating revenue for June 2010 was $12M US. A far cry from the multiple hundreds of millions of dollars per month that was normal in the last years that I worked there.
The total assets of NNI is $1,642M US ,and the total liabilities is $5,923M US.
Within those liabilities there is $5,583M US subject to compromise. These include $206M trade and other accounts payable; $377M intercompany A.P.; $125M restructuring; $3,391M NNI debt guarantee; $183M long term debt; $36M Financial Obligations; $426M pension obligations; $293 post retirement obligations other than pensions; $127m Notes and Interest Intercompany; and $59M other.
As of June 30,2010 NNI has received 7,316 claims asserting approximately $16,369M in outstanding claims. Certain claims may be duplicated in multiple jurisdictions or may be overstated, or may be erroneous. NNI has an ongoing process to investigate filed proof of claims to determine legitimacy.
Divestiture proceeds received by Nortel amounts to $3,083M, of which $2,797 is held in escrow and $214 from the sale of LGN is included in restricted cash reported by NNL. A further $239M is expected to be received from the sale of various assets.
The following is a summary of the various sales:
$1,070M CDMA and LTE
$908M ES and NGS
$616M Optical and Carrier
$214M LGN
$155M CVAS
$88M GSM
$18M Layer 4-7
$10M Packet
$4M other.
Tuesday, August 31, 2010
Monday, August 30, 2010
Canadian Silver Fox Alliance
The Silver Fox Alliance is circulating a petition to the Canadian Government to pass laws protecting pensions in bankruptcy.
Here the press release I received.
Silver Fox Media Release. Aug. 23, 2010
Today, Silver Fox Alliance (SFA), an organization of seniors, pensioners and supporters committed to achieve Canadian justice-in-bankruptcy, launched its' website, Facebook page and on-line petition.
PLEASE GO TO THE PETITION SITE AND SIGN NOW:
www.thepetitionsite.com/2/pass-federal-bill-c-501-third-reading-by-sept-30/
OTHER SITES TO CHECK OUT:
www.silverfoxalliance.com
www.facebook.com/group.php?gid=108180069230266&ref=ts
Dedicated to all Canadian private sector pensioners under threat of employer bankruptcy, the immediate focus is on 20,000 Nortel Pensioners for whom justice will die on September 30. In their crisis they will lose as much as 36% of their pensions, followed by all their health and life insurance by Dec.31.
Please help expand our reach by signing the petition and forwarding it, with the links provided, to your family, friends, neighbours and fellow pensioners.
Here the press release I received.
Silver Fox Media Release. Aug. 23, 2010
Today, Silver Fox Alliance (SFA), an organization of seniors, pensioners and supporters committed to achieve Canadian justice-in-bankruptcy, launched its' website, Facebook page and on-line petition.
PLEASE GO TO THE PETITION SITE AND SIGN NOW:
www.thepetitionsite.com/2/pass-federal-bill-c-501-third-reading-by-sept-30/
OTHER SITES TO CHECK OUT:
www.silverfoxalliance.com
www.facebook.com/group.php?gid=108180069230266&ref=ts
Dedicated to all Canadian private sector pensioners under threat of employer bankruptcy, the immediate focus is on 20,000 Nortel Pensioners for whom justice will die on September 30. In their crisis they will lose as much as 36% of their pensions, followed by all their health and life insurance by Dec.31.
Please help expand our reach by signing the petition and forwarding it, with the links provided, to your family, friends, neighbours and fellow pensioners.
Sunday, August 29, 2010
Canadian Pension Wind up versus FSM
Over the last week there has been a lot of discussion on the Yahoo Nortel Pension group about the pros and cons of winding up the pension, or using a private company (Financial Sponsorship Model) to continue the pension without wind up.
The NRPC has urged retirees to support the Financial Sponsorship Model (FSM) indicating that the payout percentage could be 8%-10% more. As pointed out by a number of people there is increased risk with the FSM versus the wind-up annuity approach.
In the case of the wind up with purchased annuity the payout ratio will be lower( NRPC has indicated around 64% if the pension is indexed), however there is a higher level of security since in Canada purchased annuities are insured against company failure by Assuris up to 85% or their value or $2000 per month which ever is higher.
In the case of the FSM approach the pension fund would not be wound up but would be managed by a private company. This means that the money in the fund would be invested in a variety of vehicles and managed by the operator. There is risk that the economy could once again impact the total value of the fund in the event of a turn down. On the other hand there would not be a cost associated with purchasing annuities, and there is also the possibility of gain in the value of the fund. Because the operator would expect to improve the value of the fund the pension payout would most likely be higher than through the annuity approach.
Unlike the situation of the Nortel guaranteed pension however, the private company managing the fund would not be obligated to make regular payments or top-ups into the fund as was the case when Nortel administered it. This could result in an eventual decline in the fund value if the investment gains do not meet the targets required, and could mean future reductions in pension payouts.
At this point there is no FSM option since the Ontario government has not yet agreed that this alternative is reasonable and legal. The only option on the table is the FSCO wind-up. The NRPC have been working with the Ontario Government to have them enact changes to the law to allow a FSM option.
In the event that Ontario agrees to do that, I think that there needs to be a vote by the retirees and those with deferred pensions in order to determine which choice to make. I don't think it is reasonable for the NRPC to make that decision on their own, since there appear to be a number of people who are uncertain as to the direction being advocated by the NRPC.
Before any option is chosen, there needs to be an information session at which the alternatives are clearly stated, along with the risks and rewards of each option. Independent views of each option should be presented by credible and respected financial analysts, so that the NRPC membership at large can have the data required to make an informed decision and choice.
Following the session, votes should be submitted by all retirees and future pensioners to the NRPC and the result verified by an independent agency to determine the direction forward.
The NRPC has urged retirees to support the Financial Sponsorship Model (FSM) indicating that the payout percentage could be 8%-10% more. As pointed out by a number of people there is increased risk with the FSM versus the wind-up annuity approach.
In the case of the wind up with purchased annuity the payout ratio will be lower( NRPC has indicated around 64% if the pension is indexed), however there is a higher level of security since in Canada purchased annuities are insured against company failure by Assuris up to 85% or their value or $2000 per month which ever is higher.
In the case of the FSM approach the pension fund would not be wound up but would be managed by a private company. This means that the money in the fund would be invested in a variety of vehicles and managed by the operator. There is risk that the economy could once again impact the total value of the fund in the event of a turn down. On the other hand there would not be a cost associated with purchasing annuities, and there is also the possibility of gain in the value of the fund. Because the operator would expect to improve the value of the fund the pension payout would most likely be higher than through the annuity approach.
Unlike the situation of the Nortel guaranteed pension however, the private company managing the fund would not be obligated to make regular payments or top-ups into the fund as was the case when Nortel administered it. This could result in an eventual decline in the fund value if the investment gains do not meet the targets required, and could mean future reductions in pension payouts.
At this point there is no FSM option since the Ontario government has not yet agreed that this alternative is reasonable and legal. The only option on the table is the FSCO wind-up. The NRPC have been working with the Ontario Government to have them enact changes to the law to allow a FSM option.
In the event that Ontario agrees to do that, I think that there needs to be a vote by the retirees and those with deferred pensions in order to determine which choice to make. I don't think it is reasonable for the NRPC to make that decision on their own, since there appear to be a number of people who are uncertain as to the direction being advocated by the NRPC.
Before any option is chosen, there needs to be an information session at which the alternatives are clearly stated, along with the risks and rewards of each option. Independent views of each option should be presented by credible and respected financial analysts, so that the NRPC membership at large can have the data required to make an informed decision and choice.
Following the session, votes should be submitted by all retirees and future pensioners to the NRPC and the result verified by an independent agency to determine the direction forward.
Friday, August 27, 2010
NRPC Newsletter part 4 8-27-2010, Q&A, Upcoming events, and Contact Info.
This is the last of my summaries of the NRPC Newsletter published on Aug 24th.
Questions and Answers
Q1. The PBGF top-up is said to apply to the first $1000 per month of pension earned in Ontario. What does ‘first $1000' mean?
A. The top-up applies only for pension earned in Ontario up to $1000 per month. Someone earning $600 per month will be brought back to $600 per month. Someone earning $2000 per month will see $1000 topped up and the remaining $1000 will not be topped-up.
Q2. When I retired there were many components used to calculate my pension: Basic Pension, Additional Pension etc. Which of these is being topped-up by the province?
A. The top-up is applied to the pension amount received from the pension fund up to $1000. The manner in which it was originally calculated is irrelevant. The only constraint is that the top-up only applies to pension up to $1000 earned in Ontario.
Q3. If the top-up will come from the province does this mean that I will receive two payments every month; one for the top-up and one from the pension plan replacement?
A. It is not expected to result in 2 separate payments. The province will calculate the top-up and the aggregate amount will be transferred to the administrator who will issue a combined payment every month.
Q4. How will I know if I am eligible for the PBGF top-up? Do I need to apply for it?
A. People with service in Ontario will be eligible for a PBGF top-up. This applies for the portion of pension earned in Ontario. There is no need to apply; the top-up will be overseen by an administrator appointed by the province of Ontario based on employment info supplied by Nortel.
Q5. I worked in Ontario but now live out of province. Will I be eligible for the PBGF?
A. The PGBF top-up is not affected by the current location of residence.
Q6. When will the PBGF top-up come into effect?
A. At this time the exact timing of the PBGF top-up is unknown. The province needs to appoint an administrator to oversee the pension plans and administer them per the Pension Benefits Act. Once the administrator is in place, PBGF funds would be transferred to the administrator and applied to pension payouts.
Q7. What % of final claims can we expect and when?
A. Unfortunately, it is too soon to say what the final % payout will be. It will probably only be a faction of the claim so you should not plan on receiving a significant amount. For Ontario residents, it is also important to note that the first portion of payments will be used to repay the PBGF for top-up expenditures. Pensioners will receive claim settlement payments only if claim settlement funds remain after PBGF repayment.
Q8. Is there any hope of recouping Transitional Retirement Allowance (TRA) monies?
A. The TRA that was lost by many Nortel retirees will be part of the Compensation Claims process. As part of the claims process, the affected individuals will receive a percentage of their entitlement on a pro-rata basis at the same percentage as other unsecured creditors
Q9. - Where is my Canadian pension registered, Ontario or Quebec?
A. The Nortel pension plans are registered in Ontario, regardless of the location(s) where you worked in Canada or from which you initiated your pension.
Q10. - Ontario is going to split pension by time worked in Ontario and other locations. Will the Régie des Rentes du Québec (RRQ) do the same calculation?
A. The bureaucrats are still working the details of how the funds will be managed from the pension plans to the RRQ. As soon more information is available the NRPC will communicate the details to all NRPC members.
Webinars and Information Sessions
Webinars:
In addition to providing information through NRPC and KM newsletters and web site updates, NRPC and KM are planning on holding a webinar for the retirees and former employees groups in September. The webinar for retirees, pensioner survivors and terminated employees will be held Sept. 1 at 3:00pm. Questions are welcomed at queries@nortelpensioners.caThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it or at our contact address.
The webinar number for audio only is intended for people without internet access. Please call and register with KM on their hotline at 1.866.777.6344. Details for the online access will be placed on the NRPC website and e-mailed to those with e-mail addresses.
Information Sessions:
Once the court approves the Compensation Claims procedure, the NRPC may also schedule information sessions in various cities in order to provide you with more information about your claims and the related court procedures. Please watch the NRPC web site or KM's web site under "Latest Development" section.
Call-outs:
Finally, the NRPC been testing a dial-out service to alert people to major upcoming events and important information. Don't be surprised if you get a phone message from the NRPC.
Upcoming Events
Sept. 1 @ 3:00pm KM Webinar for pensioners and terminated employees
Sept. 13 Ontario Legislature resumes with fall session
Sept 15 @ noon Rally of NRPC and CAW members at Queens Park
Sept. 20 Federal Government resumes fall session
Nov. 2010 (TBC) Industry Committee Hearings on Bill C-501.
TBC Senate Committee on Banking re Bill S-214.
Contacting the NRPC
If you have questions that are not answered either in the NRPC newsletters or on the NRPC web site or if you have suggestions for future topics, please e-mail them to: newsletter.nrpc@gmail.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it
To correspond by mail, write directly to the main NRPC postal address:
NRPC, PO Box 11005, Station H, Ottawa, ON K2H 7T8
Questions and Answers
Q1. The PBGF top-up is said to apply to the first $1000 per month of pension earned in Ontario. What does ‘first $1000' mean?
A. The top-up applies only for pension earned in Ontario up to $1000 per month. Someone earning $600 per month will be brought back to $600 per month. Someone earning $2000 per month will see $1000 topped up and the remaining $1000 will not be topped-up.
Q2. When I retired there were many components used to calculate my pension: Basic Pension, Additional Pension etc. Which of these is being topped-up by the province?
A. The top-up is applied to the pension amount received from the pension fund up to $1000. The manner in which it was originally calculated is irrelevant. The only constraint is that the top-up only applies to pension up to $1000 earned in Ontario.
Q3. If the top-up will come from the province does this mean that I will receive two payments every month; one for the top-up and one from the pension plan replacement?
A. It is not expected to result in 2 separate payments. The province will calculate the top-up and the aggregate amount will be transferred to the administrator who will issue a combined payment every month.
Q4. How will I know if I am eligible for the PBGF top-up? Do I need to apply for it?
A. People with service in Ontario will be eligible for a PBGF top-up. This applies for the portion of pension earned in Ontario. There is no need to apply; the top-up will be overseen by an administrator appointed by the province of Ontario based on employment info supplied by Nortel.
Q5. I worked in Ontario but now live out of province. Will I be eligible for the PBGF?
A. The PGBF top-up is not affected by the current location of residence.
Q6. When will the PBGF top-up come into effect?
A. At this time the exact timing of the PBGF top-up is unknown. The province needs to appoint an administrator to oversee the pension plans and administer them per the Pension Benefits Act. Once the administrator is in place, PBGF funds would be transferred to the administrator and applied to pension payouts.
Q7. What % of final claims can we expect and when?
A. Unfortunately, it is too soon to say what the final % payout will be. It will probably only be a faction of the claim so you should not plan on receiving a significant amount. For Ontario residents, it is also important to note that the first portion of payments will be used to repay the PBGF for top-up expenditures. Pensioners will receive claim settlement payments only if claim settlement funds remain after PBGF repayment.
Q8. Is there any hope of recouping Transitional Retirement Allowance (TRA) monies?
A. The TRA that was lost by many Nortel retirees will be part of the Compensation Claims process. As part of the claims process, the affected individuals will receive a percentage of their entitlement on a pro-rata basis at the same percentage as other unsecured creditors
Q9. - Where is my Canadian pension registered, Ontario or Quebec?
A. The Nortel pension plans are registered in Ontario, regardless of the location(s) where you worked in Canada or from which you initiated your pension.
Q10. - Ontario is going to split pension by time worked in Ontario and other locations. Will the Régie des Rentes du Québec (RRQ) do the same calculation?
A. The bureaucrats are still working the details of how the funds will be managed from the pension plans to the RRQ. As soon more information is available the NRPC will communicate the details to all NRPC members.
Webinars and Information Sessions
Webinars:
In addition to providing information through NRPC and KM newsletters and web site updates, NRPC and KM are planning on holding a webinar for the retirees and former employees groups in September. The webinar for retirees, pensioner survivors and terminated employees will be held Sept. 1 at 3:00pm. Questions are welcomed at queries@nortelpensioners.caThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it or at our contact address.
The webinar number for audio only is intended for people without internet access. Please call and register with KM on their hotline at 1.866.777.6344. Details for the online access will be placed on the NRPC website and e-mailed to those with e-mail addresses.
Information Sessions:
Once the court approves the Compensation Claims procedure, the NRPC may also schedule information sessions in various cities in order to provide you with more information about your claims and the related court procedures. Please watch the NRPC web site or KM's web site under "Latest Development" section.
Call-outs:
Finally, the NRPC been testing a dial-out service to alert people to major upcoming events and important information. Don't be surprised if you get a phone message from the NRPC.
Upcoming Events
Sept. 1 @ 3:00pm KM Webinar for pensioners and terminated employees
Sept. 13 Ontario Legislature resumes with fall session
Sept 15 @ noon Rally of NRPC and CAW members at Queens Park
Sept. 20 Federal Government resumes fall session
Nov. 2010 (TBC) Industry Committee Hearings on Bill C-501.
TBC Senate Committee on Banking re Bill S-214.
Contacting the NRPC
If you have questions that are not answered either in the NRPC newsletters or on the NRPC web site or if you have suggestions for future topics, please e-mail them to: newsletter.nrpc@gmail.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it
To correspond by mail, write directly to the main NRPC postal address:
NRPC, PO Box 11005, Station H, Ottawa, ON K2H 7T8
Thursday, August 26, 2010
NRPC Newsletter part 3 8-26-10 Political and court action
The following is a summary of elements of the NRPC Newsletter dealing with political action underway and recent court activities as reported in Koskie Minsky's web site.
I will post the last summary information from the Newsletter tomorrow with a list of questions and answers as well as future communications.
Quebec Political Action –
The Quebec committee will be targeting influential Quebec MNAs, and MNAs or MPs who have a large number of Nortel pensioners in their riding. They will be asking Nortel Retirees in Quebec to arrange a meeting with their MP or MNA and bring along one of the Quebec Committee volunteers
Federal Election preparedness –
Federal MPs are seeking donations to fund their political campaigns. If you receive a solicitation from a federal party, take the opportunity to find out if your MP supports the cause of Nortel Pensioners; specifically whether he or she supports Bill C-501.
If your MP cannot commit to support you, let them know that you will urge your friends, neighbours, and family not to send one penny to their campaign unless they change their position vis-à-vis Nortel Pensioners. You can remind Conservative MPs that in the Throne Speech they made a commitment to "protect the pensions of workers whose employer declares bankruptcy".
Political Thrusts - Bill C-501
Further to the "You Can Run but You Can't Hide" ad that was placed in the Ottawa Citizen in June, the NRPC has initiated an extensive media ad campaign across the country targeting vulnerable Conservative MPs who voted against Bill C-501. Several Conservative MPs have already contacted the NRPC to discuss the reasons why they voted against the Bill and others who indicated why they weren't in the House to vote for it. This is being followed-up with letters and calls to the MPs by the Letter Warrior team and other NRPC members. As well, many members are attending local MP constituent meetings and the summer BBQ circuit to discuss the situation first-hand with their MPs.
Although Bill C-501 does not yet include retroactivity and still asks for secured status rather than preferred status, we need to keep up the pressure on all MPs to ensure that they are aware that this bill is our last chance for change. MP John Rafferty has recently extended the offer of consultation to all parties to make the necessary changes to the Bill as it currently stands to ensure passage at third reading.
Keep pressing your MP to do something for former Nortel employees and retirees. Use your voice to let them know that you have a choice with your vote if they do not support us in our time of need.
News from the Courts (from files of Koskie Minsky)
Extension of Stay of Proceedings and Employee Hardship Process
On July 16, 2010, the Court granted an extension of Nortel's stay of proceedings until October 29, 2010. The Court also granted an extension of the Employee Hardship Process until October 29, 2010. Our lawyers have also inquired about the possibility of establishing a hardship fund that would apply to pensioners and their survivors who experience severe financial hardship after benefits are eliminated on December 31, 2010. This request is subject to Court approval. We will notify you of all developments with this matter.
NRPC and KM approaches to the Canada Revenue Agency
Health and Welfare Trust (HWT) and Canada Revenue Agency (CRA) Advance Ruling Submissions - Tax counsel for all Nortel employee groups have prepared written submissions to the CRA requesting an advance ruling on the taxability of funds to be distributed from the HWT. The specific possible future lump sum distributions, if court approved, would be for lump sum payments in connection with termination of rights under the long-term disability plan; the pensioner group life insurance plan; and the survivor income benefit plan or survivor transition benefit plan.
Timing of a ruling in uncertain, however, we will advise members as soon as we know. Please note that this ruling is only applicable to the HWT lump sum distributions and not for any future distributions from the Nortel estate. We will pursue a tax ruling on the asset distributions once this one has been obtained for the HWT.
Foreign-Service Earnings -
The CRA recently completed its review of Nortel's practice of including foreign-service earnings for pension purposes and will continue to permit the calculation of pensions in accordance with this practice. For those members who have experienced delays and/or reduced pensions, these issues have now been resolved. It may take up to the end of September for Mercer to complete the recalculations and to implement the appropriate payments.
I will post the last summary information from the Newsletter tomorrow with a list of questions and answers as well as future communications.
Quebec Political Action –
The Quebec committee will be targeting influential Quebec MNAs, and MNAs or MPs who have a large number of Nortel pensioners in their riding. They will be asking Nortel Retirees in Quebec to arrange a meeting with their MP or MNA and bring along one of the Quebec Committee volunteers
Federal Election preparedness –
Federal MPs are seeking donations to fund their political campaigns. If you receive a solicitation from a federal party, take the opportunity to find out if your MP supports the cause of Nortel Pensioners; specifically whether he or she supports Bill C-501.
If your MP cannot commit to support you, let them know that you will urge your friends, neighbours, and family not to send one penny to their campaign unless they change their position vis-à-vis Nortel Pensioners. You can remind Conservative MPs that in the Throne Speech they made a commitment to "protect the pensions of workers whose employer declares bankruptcy".
Political Thrusts - Bill C-501
Further to the "You Can Run but You Can't Hide" ad that was placed in the Ottawa Citizen in June, the NRPC has initiated an extensive media ad campaign across the country targeting vulnerable Conservative MPs who voted against Bill C-501. Several Conservative MPs have already contacted the NRPC to discuss the reasons why they voted against the Bill and others who indicated why they weren't in the House to vote for it. This is being followed-up with letters and calls to the MPs by the Letter Warrior team and other NRPC members. As well, many members are attending local MP constituent meetings and the summer BBQ circuit to discuss the situation first-hand with their MPs.
Although Bill C-501 does not yet include retroactivity and still asks for secured status rather than preferred status, we need to keep up the pressure on all MPs to ensure that they are aware that this bill is our last chance for change. MP John Rafferty has recently extended the offer of consultation to all parties to make the necessary changes to the Bill as it currently stands to ensure passage at third reading.
Keep pressing your MP to do something for former Nortel employees and retirees. Use your voice to let them know that you have a choice with your vote if they do not support us in our time of need.
News from the Courts (from files of Koskie Minsky)
Extension of Stay of Proceedings and Employee Hardship Process
On July 16, 2010, the Court granted an extension of Nortel's stay of proceedings until October 29, 2010. The Court also granted an extension of the Employee Hardship Process until October 29, 2010. Our lawyers have also inquired about the possibility of establishing a hardship fund that would apply to pensioners and their survivors who experience severe financial hardship after benefits are eliminated on December 31, 2010. This request is subject to Court approval. We will notify you of all developments with this matter.
NRPC and KM approaches to the Canada Revenue Agency
Health and Welfare Trust (HWT) and Canada Revenue Agency (CRA) Advance Ruling Submissions - Tax counsel for all Nortel employee groups have prepared written submissions to the CRA requesting an advance ruling on the taxability of funds to be distributed from the HWT. The specific possible future lump sum distributions, if court approved, would be for lump sum payments in connection with termination of rights under the long-term disability plan; the pensioner group life insurance plan; and the survivor income benefit plan or survivor transition benefit plan.
Timing of a ruling in uncertain, however, we will advise members as soon as we know. Please note that this ruling is only applicable to the HWT lump sum distributions and not for any future distributions from the Nortel estate. We will pursue a tax ruling on the asset distributions once this one has been obtained for the HWT.
Foreign-Service Earnings -
The CRA recently completed its review of Nortel's practice of including foreign-service earnings for pension purposes and will continue to permit the calculation of pensions in accordance with this practice. For those members who have experienced delays and/or reduced pensions, these issues have now been resolved. It may take up to the end of September for Mercer to complete the recalculations and to implement the appropriate payments.
Wednesday, August 25, 2010
NRPC Canadian Newsletter 8-24-10 Part 2 Claims Process and HWT benefits
Some more information summarized from the recent NRPC newsletter. I will post another summary tomorrow on the political content of the newsletter.
The Claims Process: Part 1: (All claims except registered pension)
The claims process for former Nortel Canadian employees that includes claims such as: Health Benefits, Life Insurance, TRA/RAP, SERP, Severance, Survivor Income Benefit, etc. will be discussed in a webinar to be held on Wed. Sept. 1st @ 3:00 pm. Check the NRPC and Koskie Minsky web pages for details. The claims are to be tabled in court in the fall timeframe.
In the next few weeks you will receive information from Koskie Minsky about your claim. Please note that you will get an opportunity to comment on the major inputs for your claim; age, spouse, dependents, etc. but will not be privy to the detailed actuarial calculations that determine the benefit.
The Claims Process: Part 2: (Registered pension claims)
The claims process for the registered pension plans is spearheaded by FSCO and will happen under the guidance of the Ontario Superintendent of Pensions. Nortel has issued a placeholder claim for the pension shortfalls.
Recent Health and Welfare Trust (HWT) Developments
A motion regarding the distribution from Nortel's Health and Welfare Trust ("HWT") is scheduled for the end of September. Materials will be filed in Court by the end of August.
Because there is uncertainty in the wording of trust documents relating to Nortel's HWT, separate legal counsels will represent the pensioner and former employee group, and the disabled group.
Mr. William Pepall of Lerners LLP will represent the pensioner and former employee group on the HWT distribution.
The disabled employee group has retained independent counsel, Sack Goldblatt Mitchell LLP, to advise and represent them on the HWT distribution.
KM will not represent any parties for the allocation and distribution of the HWT assets, however they will continue to represent the pensioners and former employees with respect to all other matters pertaining to Nortel's CCAA proceedings until any further Order of the Court.
Health Coverage Replacement
The option to use future health claims to offset the start-up of a group health insurance plan was found to be too complex to implement and is now off the table.
The current approach is to establish a replacement health plan through insurance providers. The goal is to ensure no lapse in coverage when the current plan ends at the end of this year. A key aspect is the ability to convert to the new plan without the need for medical assessment. Because the new plan will not be employer-sponsored, premiums will be charged to obtain coverage, however it's too early to estimate the individual costs.
The current health care plan terminates as of Dec. 31, 2010. Health expenses up to that date will be processed by Sun Life only until Feb. 28, 2011. Make sure you file on time.
Life Insurance Update
Life insurance coverage will cease on Dec. 31, 2010. The possibility of rolling over current coverage to a new plan without medical assessment but with you paying the premiums is being investigated. The NRPC expects to have more news in the September newsletter.
The Claims Process: Part 1: (All claims except registered pension)
The claims process for former Nortel Canadian employees that includes claims such as: Health Benefits, Life Insurance, TRA/RAP, SERP, Severance, Survivor Income Benefit, etc. will be discussed in a webinar to be held on Wed. Sept. 1st @ 3:00 pm. Check the NRPC and Koskie Minsky web pages for details. The claims are to be tabled in court in the fall timeframe.
In the next few weeks you will receive information from Koskie Minsky about your claim. Please note that you will get an opportunity to comment on the major inputs for your claim; age, spouse, dependents, etc. but will not be privy to the detailed actuarial calculations that determine the benefit.
The Claims Process: Part 2: (Registered pension claims)
The claims process for the registered pension plans is spearheaded by FSCO and will happen under the guidance of the Ontario Superintendent of Pensions. Nortel has issued a placeholder claim for the pension shortfalls.
Recent Health and Welfare Trust (HWT) Developments
A motion regarding the distribution from Nortel's Health and Welfare Trust ("HWT") is scheduled for the end of September. Materials will be filed in Court by the end of August.
Because there is uncertainty in the wording of trust documents relating to Nortel's HWT, separate legal counsels will represent the pensioner and former employee group, and the disabled group.
Mr. William Pepall of Lerners LLP will represent the pensioner and former employee group on the HWT distribution.
The disabled employee group has retained independent counsel, Sack Goldblatt Mitchell LLP, to advise and represent them on the HWT distribution.
KM will not represent any parties for the allocation and distribution of the HWT assets, however they will continue to represent the pensioners and former employees with respect to all other matters pertaining to Nortel's CCAA proceedings until any further Order of the Court.
Health Coverage Replacement
The option to use future health claims to offset the start-up of a group health insurance plan was found to be too complex to implement and is now off the table.
The current approach is to establish a replacement health plan through insurance providers. The goal is to ensure no lapse in coverage when the current plan ends at the end of this year. A key aspect is the ability to convert to the new plan without the need for medical assessment. Because the new plan will not be employer-sponsored, premiums will be charged to obtain coverage, however it's too early to estimate the individual costs.
The current health care plan terminates as of Dec. 31, 2010. Health expenses up to that date will be processed by Sun Life only until Feb. 28, 2011. Make sure you file on time.
Life Insurance Update
Life insurance coverage will cease on Dec. 31, 2010. The possibility of rolling over current coverage to a new plan without medical assessment but with you paying the premiums is being investigated. The NRPC expects to have more news in the September newsletter.
Tuesday, August 24, 2010
NRPC Newsletter 8-24-2010 (1)
The NRPC has issued a newsletter on August 24th 2010 which may be read on their website. I have provided a summary of the points on the pension trust fund and the wind-up and will provide a summary tomorrow on other entries in the Newsletter:
Pension Plan Trust Fund
Nortel's June 2010 estimate is that the company's two defined benefit pension plans (managerial and negotiated) are funded to 64% if they were to be wound up today and indexing is included. This is down from 69% as last publicly reported in May 2009. The decrease is not due to the quality of the actual investments but mainly to changes in key assumptions on future market returns, the purchase of annuities and future inflation rates. When the wind-up occurs, the actual ratio used may be different. Without indexing, the non-negotiated solvency ratio is 72%, the negotiated is 74%.
Ontario Government Update:
The Ontario Government bureaucracy has been extremely reluctant to engage the NRPC in dialogue on the orphanage plan (now called the Financial Sponsorship Model).
Conventional Pension Wind-Up
FSCO is charged with carrying out the Wind-up process. Due to the complexity and size of the Nortel wind-up FSCO still cannot tell us exactly what we can expect under conventional wind-up (CWU).
Our current pension plan is indexed for Cost of living increases. The aspect of indexation is complicated and when an administrator is appointed in September, indexation provisions might be maintained or it might not.
The following scenarios are attempts to clarify the impact of the reduced ratio and indexing.
Ontario pensions (non-negotiated): Scenario (a) -Not IndexedFirst $1000 - 72% of pension plus a PBGF top-up of 28% = $1000 - not indexed in future years
Portion above $1000 - 72% of pension - no longer indexed in future years
Ontario Pensions (non-negotiated): Scenario(b)- IndexedFirst $1000 - 72% of pension plus a PBGF top-up of 28% = $1000 - not indexed in future years
Portion above $1000 - 64% of pension - indexed in future years in line with provisions of our pension plans.
These examples from the NRPC are only to give you an indication of orders of magnitude. As mentioned above, it is not clear how CWU will be implemented.
For pensions outside Ontario:
Under wind-up regulations funds could be transferred to each province for administration of pensions in that province. The transfer of pension funds to other provinces is also unclear at this time.
Service earned outside of Ontario is not eligible for the top-up provided for service earned in Ontario. At this time, indications are that funds from the pension plans would be transferred to each province, at the solvency ratio currently estimated to be 72%,for administration according to their rules.
Currently the NRPC has no information about how the pensions for people living outside the country will be handled.
Financial Sponsorship Model
There are many variables leading to a very complex set of possibilities. That is why the NRPC has been pursuing the concept of FSM. Under FSM a large financial institution would take over management of the pension fund. Under FSM, the large costs to purchase annuities would be avoided. It is anticipated that payouts larger than CWU by 8-10% or more are likely.
However, the Ministry of Finance (MoF) has been reluctant to support FSM. We need them to pay attention to FSM and to modify the regulations accordingly. Without a change to provincial regulations, FSM cannot be implemented in Ontario.
To make this change we need to intensify pressure on the Ontario government, and the MoF in particular. A rally at Queen's Park on September 15 is organized for that purpose
All Canadian Nortel retirees and their families should support FSM and lobby their MPS to make it happen.
Petition to the Ontario Legislature re Don't Wind up the Plan
The NRPC has initiated a petition which is:
- Available online on the NRPC website.
- To be printed and signed by as many individuals as possible.
- Not to be changed in any manner.
- Not to have any comments on it or the sheet will have to be discarded.
Some key points to remember:
- Petitioners must be residents of the Province of Ontario.
- It is acceptable for petitioners to be under the age of majority.
- A petition must contain original signatures only, written directly on the face of the petition.
Please return completed signed page(s) to the NRPC no later than Sept. 5, 2010 at:
NRPC - Petitions, PO Box 21, Dorchester, ON, N0L 1G0
Queens Park Rally
To reinforce the request to not wind up our pension plans, The NRPC is organizing a rally with the support of the CAW at Queen's Park on Wednesday, Sept. 15, 2010 at noon. If you are within travelling distance of Queens Park, please attend and bring your friends. We need a strong show of support. More information will be on the NRPC web site as the agenda, speakers and logistics are finalized.
Pension Plan Trust Fund
Nortel's June 2010 estimate is that the company's two defined benefit pension plans (managerial and negotiated) are funded to 64% if they were to be wound up today and indexing is included. This is down from 69% as last publicly reported in May 2009. The decrease is not due to the quality of the actual investments but mainly to changes in key assumptions on future market returns, the purchase of annuities and future inflation rates. When the wind-up occurs, the actual ratio used may be different. Without indexing, the non-negotiated solvency ratio is 72%, the negotiated is 74%.
Ontario Government Update:
The Ontario Government bureaucracy has been extremely reluctant to engage the NRPC in dialogue on the orphanage plan (now called the Financial Sponsorship Model).
Conventional Pension Wind-Up
FSCO is charged with carrying out the Wind-up process. Due to the complexity and size of the Nortel wind-up FSCO still cannot tell us exactly what we can expect under conventional wind-up (CWU).
Our current pension plan is indexed for Cost of living increases. The aspect of indexation is complicated and when an administrator is appointed in September, indexation provisions might be maintained or it might not.
The following scenarios are attempts to clarify the impact of the reduced ratio and indexing.
Ontario pensions (non-negotiated): Scenario (a) -Not IndexedFirst $1000 - 72% of pension plus a PBGF top-up of 28% = $1000 - not indexed in future years
Portion above $1000 - 72% of pension - no longer indexed in future years
Ontario Pensions (non-negotiated): Scenario(b)- IndexedFirst $1000 - 72% of pension plus a PBGF top-up of 28% = $1000 - not indexed in future years
Portion above $1000 - 64% of pension - indexed in future years in line with provisions of our pension plans.
These examples from the NRPC are only to give you an indication of orders of magnitude. As mentioned above, it is not clear how CWU will be implemented.
For pensions outside Ontario:
Under wind-up regulations funds could be transferred to each province for administration of pensions in that province. The transfer of pension funds to other provinces is also unclear at this time.
Service earned outside of Ontario is not eligible for the top-up provided for service earned in Ontario. At this time, indications are that funds from the pension plans would be transferred to each province, at the solvency ratio currently estimated to be 72%,for administration according to their rules.
Currently the NRPC has no information about how the pensions for people living outside the country will be handled.
Financial Sponsorship Model
There are many variables leading to a very complex set of possibilities. That is why the NRPC has been pursuing the concept of FSM. Under FSM a large financial institution would take over management of the pension fund. Under FSM, the large costs to purchase annuities would be avoided. It is anticipated that payouts larger than CWU by 8-10% or more are likely.
However, the Ministry of Finance (MoF) has been reluctant to support FSM. We need them to pay attention to FSM and to modify the regulations accordingly. Without a change to provincial regulations, FSM cannot be implemented in Ontario.
To make this change we need to intensify pressure on the Ontario government, and the MoF in particular. A rally at Queen's Park on September 15 is organized for that purpose
All Canadian Nortel retirees and their families should support FSM and lobby their MPS to make it happen.
Petition to the Ontario Legislature re Don't Wind up the Plan
The NRPC has initiated a petition which is:
- Available online on the NRPC website.
- To be printed and signed by as many individuals as possible.
- Not to be changed in any manner.
- Not to have any comments on it or the sheet will have to be discarded.
Some key points to remember:
- Petitioners must be residents of the Province of Ontario.
- It is acceptable for petitioners to be under the age of majority.
- A petition must contain original signatures only, written directly on the face of the petition.
Please return completed signed page(s) to the NRPC no later than Sept. 5, 2010 at:
NRPC - Petitions, PO Box 21, Dorchester, ON, N0L 1G0
Queens Park Rally
To reinforce the request to not wind up our pension plans, The NRPC is organizing a rally with the support of the CAW at Queen's Park on Wednesday, Sept. 15, 2010 at noon. If you are within travelling distance of Queens Park, please attend and bring your friends. We need a strong show of support. More information will be on the NRPC web site as the agenda, speakers and logistics are finalized.
Canadian public reaction
The NRPC site reported on a rally in Nova Scotia where former employees had a chance to show their displeasure towards PM Harper and his inaction and apathy towards Nortel retirees. The rally was reported on CBC and following that a piece was written for the CBC web site.
The comments on the piece show the total ignorance of some of the Canadian public about the plight of Nortel retirees and also what they are trying to do to obtain priority on the Nortel Canadian estate. There seems to be resentment and anger towards Nortel by some Canadians due to the impact on their investments and that has flowed over into unjustified anger towards the retirees.
If we are to change the law in Canada to give retirees the proper rights in bankruptcy then we will have to do more to gain public opinion. There are many people who sympathize with us but they seem to be in the silent majority. There needs to be more information and discussion in the media to sway opinion in our favour and make Haper and his cronies listen to reason.
The NRPC posting is as follows:
Former Employees Rally in NS with Harper
See the article at CBC: http://www.cbc.ca/canada/nova-scotia/story/2010/08/19/ns-nortel-pension-protest-harper.html#socialcomments
Note that many of the comments after the article show that many of the responders really do not understand the issues - almost as if they were purposely spreading mis-information.
Also a video clip at 1 minute 48 seconds into this: http://www.cbc.ca/video/#/News/Local_News/NS/ID=1569531400
Last Updated ( Friday, 20 August 2010 )
The comments on the piece show the total ignorance of some of the Canadian public about the plight of Nortel retirees and also what they are trying to do to obtain priority on the Nortel Canadian estate. There seems to be resentment and anger towards Nortel by some Canadians due to the impact on their investments and that has flowed over into unjustified anger towards the retirees.
If we are to change the law in Canada to give retirees the proper rights in bankruptcy then we will have to do more to gain public opinion. There are many people who sympathize with us but they seem to be in the silent majority. There needs to be more information and discussion in the media to sway opinion in our favour and make Haper and his cronies listen to reason.
The NRPC posting is as follows:
Former Employees Rally in NS with Harper
See the article at CBC: http://www.cbc.ca/canada/nova-scotia/story/2010/08/19/ns-nortel-pension-protest-harper.html#socialcomments
Note that many of the comments after the article show that many of the responders really do not understand the issues - almost as if they were purposely spreading mis-information.
Also a video clip at 1 minute 48 seconds into this: http://www.cbc.ca/video/#/News/Local_News/NS/ID=1569531400
Last Updated ( Friday, 20 August 2010 )
Saturday, August 21, 2010
Canadian Pensioners Rally at Queen's Park on Sept 15
The following announcement was posted on the NRPC web Site today.
On Sept. 30, 2010, the Nortel Defined Benefit Pension Plans will become orphans. The Financial Services Commission of Ontario (FSCO) will then take over as required by current law.
Unless the Ontario government takes prompt action, Nortel's pensioners will then lose 36% of their pensions and possibly even more. A major part of their loss occurs because, under current regulations, FSCO will simply wind-up the pension funds by converting them to annuities. This forever locks-in the existing pension deficit and it adds major penalties, because the cost of annuities is presently at the worst they have even been in 25 years with no relief in sight. It is the worst possible outcome for Nortel's pensioners, who will also be hit with the loss of their health and life insurance benefits.
Nortel Retirees and Former Employees Protection Canada (NRPC) is demanding that the Ontario government change its regulations and stop these automatic wind-ups. The added benefit of having members of the CFP organization supporting regulation changes is putting even more pressure on the Gov’t to bring changes. After all, It’s our money and it’s our pension. It’s should also be our call.
Instead of locking-in the losses and buying expensive annuities, the plans should be professionally invested for the benefit of the pensioners rather than the insurance companies. Alternatives should be available, to allow for the continuation of a much higher monthly pension and give the funds a chance to recover in value as the economy improves. It will provide more money for pensioners, save unnecessary disbursements from the PBGF (Ontario’s “Pension Benefit Guarantee Fund”) and also save costs to the Ontario taxpayer by keeping pensioners out of the social security system. In 2008, the government's own study of pensions recommended a similar approach but no action has yet been taken.
The money left in an "Orphan" Pension Funds is the property of the pensioners. It does not belong to the government of Ontario (FSCO). Pensioners must be allowed to decide how their money is managed!
Queens Park Rally:
Date: - September 15, 2010
Time: - Noon - for one hour
Message: - "It’s our money – It’s our pension – It’s our call”
Other groups participating: CAW, Teamster, CFP and its affiliates and CEP.
Dual MCs:
NRPC: Mike Campbell,
CAW: Bob Nickerson.
Speakers:
NRPC Nat’l President, Don Sproule
CAW Nat’l President, Ken Lewenza
CFP VP ON affairs: Jack Walsh
Genmo Pres. Brian Rutherford
Petition: - see separate article regarding the Petition
Buses planned for: - Kingston/Belleville, London, Brampton, Hamilton/St Catharines, Ottawa
On Sept. 30, 2010, the Nortel Defined Benefit Pension Plans will become orphans. The Financial Services Commission of Ontario (FSCO) will then take over as required by current law.
Unless the Ontario government takes prompt action, Nortel's pensioners will then lose 36% of their pensions and possibly even more. A major part of their loss occurs because, under current regulations, FSCO will simply wind-up the pension funds by converting them to annuities. This forever locks-in the existing pension deficit and it adds major penalties, because the cost of annuities is presently at the worst they have even been in 25 years with no relief in sight. It is the worst possible outcome for Nortel's pensioners, who will also be hit with the loss of their health and life insurance benefits.
Nortel Retirees and Former Employees Protection Canada (NRPC) is demanding that the Ontario government change its regulations and stop these automatic wind-ups. The added benefit of having members of the CFP organization supporting regulation changes is putting even more pressure on the Gov’t to bring changes. After all, It’s our money and it’s our pension. It’s should also be our call.
Instead of locking-in the losses and buying expensive annuities, the plans should be professionally invested for the benefit of the pensioners rather than the insurance companies. Alternatives should be available, to allow for the continuation of a much higher monthly pension and give the funds a chance to recover in value as the economy improves. It will provide more money for pensioners, save unnecessary disbursements from the PBGF (Ontario’s “Pension Benefit Guarantee Fund”) and also save costs to the Ontario taxpayer by keeping pensioners out of the social security system. In 2008, the government's own study of pensions recommended a similar approach but no action has yet been taken.
The money left in an "Orphan" Pension Funds is the property of the pensioners. It does not belong to the government of Ontario (FSCO). Pensioners must be allowed to decide how their money is managed!
Queens Park Rally:
Date: - September 15, 2010
Time: - Noon - for one hour
Message: - "It’s our money – It’s our pension – It’s our call”
Other groups participating: CAW, Teamster, CFP and its affiliates and CEP.
Dual MCs:
NRPC: Mike Campbell,
CAW: Bob Nickerson.
Speakers:
NRPC Nat’l President, Don Sproule
CAW Nat’l President, Ken Lewenza
CFP VP ON affairs: Jack Walsh
Genmo Pres. Brian Rutherford
Petition: - see separate article regarding the Petition
Buses planned for: - Kingston/Belleville, London, Brampton, Hamilton/St Catharines, Ottawa
Friday, August 20, 2010
FSCO Canadian Pension Policies
The following address will take you to the FSCO Financial Services Commission of Ontario web site and specifically to their pension policies. The policies are PDF documents that can be downloaded for review. The First policy W100-102 deals with the wind up process as applied by FSCO for Canadian Defined Benefit and Contribution pensions. It include a variety of situations including bankruptcy and underfunded trust funds.
This may give a better understanding of what happens in wind up of the Nortel Canadian pension. There are still unanswered questions for our specific situation which may only be clarified as we go through the process.
There is a French section within the FSCO site which should parallel these English documents and may be easier to understand for French speaking retirees.
http://www.fsco.gov.on.ca/english/pensions/policies/active/#windup
This may give a better understanding of what happens in wind up of the Nortel Canadian pension. There are still unanswered questions for our specific situation which may only be clarified as we go through the process.
There is a French section within the FSCO site which should parallel these English documents and may be easier to understand for French speaking retirees.
http://www.fsco.gov.on.ca/english/pensions/policies/active/#windup
Thursday, August 19, 2010
(1) Koskie Minsky bulletin and seminar. (2) US VEBA
(1) Koskie Minsky have released another bulletin on their website on August 18th 2010 relating to the new representation for disabled former Nortel employees. You can check it on their site shown in the links in the right hand column.
Koskie Minsky also announced in this bulletin that there will be another webinar on September 1st 2010 from 3:00PM to 5:00PM. Details will follow on their website and the NRPC website when they have been finalized.
(2) The minutes of the US court session held on the 18th indicated that the discussion on the proposed Voluntary Employee Benefits Association, proposed by the NUSRPC would be posponed until the end of September. There has been no further action by Nortel regarding the termination of health benefits, since they withdrew their motion.
Koskie Minsky also announced in this bulletin that there will be another webinar on September 1st 2010 from 3:00PM to 5:00PM. Details will follow on their website and the NRPC website when they have been finalized.
(2) The minutes of the US court session held on the 18th indicated that the discussion on the proposed Voluntary Employee Benefits Association, proposed by the NUSRPC would be posponed until the end of September. There has been no further action by Nortel regarding the termination of health benefits, since they withdrew their motion.
Tuesday, August 17, 2010
Nortel Canada Disabled Employees Legal Representation
The following bulleting was published on the Koskie Minsky site August 17 2010
NORTEL DISABLED EMPLOYEE NEWS BULLETIN
THIS NEWS UPDATE IS PREPARED BY KOSKIE MINSKY LLP (KM) IN THEIR CAPACITY AS REPRESENTATIVE COUNSEL ON BEHALF OF SUSAN KENNEDY
August 17, 2010
Recent Developments Pertaining to the HWT
In our last bulletin, we advised you that because there is uncertainty in the wording of trust documents relating to Nortel's Health and Welfare Trust ("HWT"), each of the two groups represented by Koskie Minsky have sought independent legal advice with respect to the allocation of the HWT assets. Susan Kennedy has retained Peter Engelmann and Fiona Campbell of Sack Goldblatt Mitchell LLP ("SGM") to advise the CNELTD Steering Committee. Mr. Engelmann and Ms. Campbell are experienced in the areas of human rights and pension law, and are based in Ottawa, where the majority of the disabled employee constituency resides. The pensioner and former employee group have retained their own independent counsel, Lerners LLP, to advise and represent them on the HWT distribution. Koskie Minsky will not represent any parties for the allocation and distribution of the HWT in order to eliminate the possibility of a conflict with the pensioner group.
A motion relating to the distribution from the HWT is scheduled for the end of September which will include consideration of a proposal by the Monitor. Materials will be filed in Court by the end of August. SGM will advise Susan Kennedy and the Steering Committee on the proposal and will participate in a webinar that will be held in early September to discuss the motion. You will be advised of the webinar date once it has been finalized. Please continue to check your email inbox for updates. Prior to the webinar, you may submit questions to the Steering Committee. The questions will be prioritized and will be addressed as appropriate by SGM during the webinar. Notice of any Court proceedings as well as any related motion material relating to the HWT assets will be posted to the Monitor’s website in due course.
An allegation of conflict of interest was recently raised in motion materials served by Rochon Genova LLP, however, KM has already taken steps to address any possibility of a conflict of interest between the pensioner and disabled groups. Rochon Genova seeks to replace KM and the disabled employees' current advisors, and to obtain an order that the legal, actuarial and financial fees incurred by Rochon Genova be paid by Nortel. They seek to appoint Arlene Borenstein (Plante) as the court appointed representative. Susan Kennedy and the Legal Steering Committee do not believe that any replacement is necessary or advisable, and will resist any attempt to displace your existing representatives. The Steering Committee does not want to expose the group to any unnecessary delays in the allocation of the HWT assets, as their priority continues to be to ensure that the disabled employees receive a distribution from the HWT prior to December 31, 2010. The Steering Committee is also concerned about the costs of engaging in unnecessary litigation about the HWT because they would be paid from the corpus of the HWT. If you share these views, please let Ms. Kennedy and her Steering Committee know.
Although KM will not represent you for the purpose of the allocation and distribution of the HWT assets, they will continue to represent you and the other disabled employees with respect to all other matters pertaining to Nortel's CCAA proceedings until any further Order of the Court.
NORTEL DISABLED EMPLOYEE NEWS BULLETIN
THIS NEWS UPDATE IS PREPARED BY KOSKIE MINSKY LLP (KM) IN THEIR CAPACITY AS REPRESENTATIVE COUNSEL ON BEHALF OF SUSAN KENNEDY
August 17, 2010
Recent Developments Pertaining to the HWT
In our last bulletin, we advised you that because there is uncertainty in the wording of trust documents relating to Nortel's Health and Welfare Trust ("HWT"), each of the two groups represented by Koskie Minsky have sought independent legal advice with respect to the allocation of the HWT assets. Susan Kennedy has retained Peter Engelmann and Fiona Campbell of Sack Goldblatt Mitchell LLP ("SGM") to advise the CNELTD Steering Committee. Mr. Engelmann and Ms. Campbell are experienced in the areas of human rights and pension law, and are based in Ottawa, where the majority of the disabled employee constituency resides. The pensioner and former employee group have retained their own independent counsel, Lerners LLP, to advise and represent them on the HWT distribution. Koskie Minsky will not represent any parties for the allocation and distribution of the HWT in order to eliminate the possibility of a conflict with the pensioner group.
A motion relating to the distribution from the HWT is scheduled for the end of September which will include consideration of a proposal by the Monitor. Materials will be filed in Court by the end of August. SGM will advise Susan Kennedy and the Steering Committee on the proposal and will participate in a webinar that will be held in early September to discuss the motion. You will be advised of the webinar date once it has been finalized. Please continue to check your email inbox for updates. Prior to the webinar, you may submit questions to the Steering Committee. The questions will be prioritized and will be addressed as appropriate by SGM during the webinar. Notice of any Court proceedings as well as any related motion material relating to the HWT assets will be posted to the Monitor’s website in due course.
An allegation of conflict of interest was recently raised in motion materials served by Rochon Genova LLP, however, KM has already taken steps to address any possibility of a conflict of interest between the pensioner and disabled groups. Rochon Genova seeks to replace KM and the disabled employees' current advisors, and to obtain an order that the legal, actuarial and financial fees incurred by Rochon Genova be paid by Nortel. They seek to appoint Arlene Borenstein (Plante) as the court appointed representative. Susan Kennedy and the Legal Steering Committee do not believe that any replacement is necessary or advisable, and will resist any attempt to displace your existing representatives. The Steering Committee does not want to expose the group to any unnecessary delays in the allocation of the HWT assets, as their priority continues to be to ensure that the disabled employees receive a distribution from the HWT prior to December 31, 2010. The Steering Committee is also concerned about the costs of engaging in unnecessary litigation about the HWT because they would be paid from the corpus of the HWT. If you share these views, please let Ms. Kennedy and her Steering Committee know.
Although KM will not represent you for the purpose of the allocation and distribution of the HWT assets, they will continue to represent you and the other disabled employees with respect to all other matters pertaining to Nortel's CCAA proceedings until any further Order of the Court.
Resolutions for Protection of Pensions and Long Term Disability Benefits in the Workplace
Forwarded to me by Diane Urquhart
United Senior Citizens of Ontario Annual Convention
Resolutions for Protection of Pensions and Long Term Disability Benefits in the Workplace
Passed by Majority Vote on August 16, 2010
1. Canadian court precedents say that when pensioners lose their income due to pension plan deficits at the time of corporation bankruptcies, their loss is treated the same as unsecured creditor claims. This means pensioners are not being protected by Canada's bankruptcy laws and that large and powerful bond owners are benefiting from pensioners losing their income.
Therefore, be it resolved that the Federal bankruptcy laws be amended to place pension plan deficits at preferred status above unsecured creditor claims when corporations are liquidated or restructured.
2. More than 1 million Canadian are exposed to unsafe long term disability benefits provided by employers who are not buying insurance policies to back these benefits. When employers go bankrupt, they are cutting the income and medical benefits of the disabled. The disabled are being pushed into poverty without a basic quality of life. The disabled are forced to rely on the taxpayer funded Guaranteed Income Supplement in their senior years, even though the employers had enough money in their bankruptcy estates to pay for the long term disability benefits.
Therefore, be it resolved that the Federal bankruptcy laws be amended to put self-insured long term disability benefit claims at super-priority above all creditors when corporations are liquidated or restructured.
The United Senior Citizens of Ontario Inc. (U.S.C.O.) represents 300,000 seniors and over 1,000 seniors clubs throughout the province.
http://www.uscont.ca/
These resolutions will now be forwarded and voted upon at the National Pensioners and Senior Citizens Federation Annual Convention
October 20th to the 23rd, 2010 at the Travelodge Ottawa Hotel & Conference Centre in Ottawa, Ontario
The National Pensioners and Senior Citizens Federation (N.P.S.C.F.) is a democratic, non-partisan, non-sectarian, and non-racial organization, formed in 1945. We are comprised of 450 seniors' chapters and clubs across Canada, who have a collective membership of 1,000,000 Canadian seniors.
http://www.npscf.org/
United Senior Citizens of Ontario Annual Convention
Resolutions for Protection of Pensions and Long Term Disability Benefits in the Workplace
Passed by Majority Vote on August 16, 2010
1. Canadian court precedents say that when pensioners lose their income due to pension plan deficits at the time of corporation bankruptcies, their loss is treated the same as unsecured creditor claims. This means pensioners are not being protected by Canada's bankruptcy laws and that large and powerful bond owners are benefiting from pensioners losing their income.
Therefore, be it resolved that the Federal bankruptcy laws be amended to place pension plan deficits at preferred status above unsecured creditor claims when corporations are liquidated or restructured.
2. More than 1 million Canadian are exposed to unsafe long term disability benefits provided by employers who are not buying insurance policies to back these benefits. When employers go bankrupt, they are cutting the income and medical benefits of the disabled. The disabled are being pushed into poverty without a basic quality of life. The disabled are forced to rely on the taxpayer funded Guaranteed Income Supplement in their senior years, even though the employers had enough money in their bankruptcy estates to pay for the long term disability benefits.
Therefore, be it resolved that the Federal bankruptcy laws be amended to put self-insured long term disability benefit claims at super-priority above all creditors when corporations are liquidated or restructured.
The United Senior Citizens of Ontario Inc. (U.S.C.O.) represents 300,000 seniors and over 1,000 seniors clubs throughout the province.
http://www.uscont.ca/
These resolutions will now be forwarded and voted upon at the National Pensioners and Senior Citizens Federation Annual Convention
October 20th to the 23rd, 2010 at the Travelodge Ottawa Hotel & Conference Centre in Ottawa, Ontario
The National Pensioners and Senior Citizens Federation (N.P.S.C.F.) is a democratic, non-partisan, non-sectarian, and non-racial organization, formed in 1945. We are comprised of 450 seniors' chapters and clubs across Canada, who have a collective membership of 1,000,000 Canadian seniors.
http://www.npscf.org/
Monday, August 16, 2010
Canadian Pension Fund Ratio Calculations
The recent Bulletin (August 6, 2010), provides estimates for both negotiated and non negotiated Defined Benefit pension plans to have a wind up ratio of approximately 64%(including indexing). Estimates on a solvency basis, stated that the Negotiated Plan is estimated to be funded at 76% while the Managerial Plan is estimated to be funded at 72%"
A retiree wrote to Kosie Monsky asking for clarification of the calculation methods and this is the response he received:
“The numbers are estimates, based on a monthly funded status prepared by Nortel's actuaries as at June 30, 2010, and are subject to many variables and fluctuate with interest rates and market conditions.
Solvency ratios use assumptions consistent with the plan being terminated, and are based on current financial market conditions. While in regular actuarial reports the solvency ratio often coincides with the wind up ratio, when a pension plan is actually wound up, the wind up and solvency ratios are often different amounts. The wind up ratio is subject to the reality of paying the lump sums on the annuity contracts as well as the costs of the wind up, which is a reason why the wind up ratio is lower than the solvency ratio.
The Nortel pension plan offers a specific benefit known as indexing, which means that the pension amounts are adjusted to provide for inflation-related increases. The Plans are either related to the Consumer Price Index or are adjusted based on a fixed percentage. However, the solvency ratios of 76% and 72% do not include indexing. This is another reason why the wind up ratio is lower than the solvency ratio.”
Another retiree wrote that he thought the wind up ratio calculation procedure may be more complex than that. In order to place the pension claim against Nortel in CCAA proceedings some estimates will have to be made, perhaps before the plan is fully wound up.
Nortel's actuaries will table an 'estimated' windup ratio. Koskie Minsky's actuarial consultants will table one as well on behalf of the NRPC/pensioners. However the operative windup ratio will be determined (later) by the insurance company which ultimately (will or would like to be) providing the annuity, if the NRPC are not successful in getting the Ontario government to allow a private company to continue to run the pension fund without annuitizing it.
So, since the claim submission to the court will be done before the annuity quotes are received (and certainly before they are finalized), how will the likely insurance company view be reflected in the claims and what steps are planned to insure that the expected (10-20%) insurance company hit is properly reflected in the claim.
So the operative insurance company quote and/or delivered pension may be 10-20% lower than a Nortel or other actuarial estimate which means that the real pension pay out ratio could drop by a further 6 to 12 percentage point or between 52% and 58% funded ratio.
Hence it would be wise to assume for budgeting reasons that the cut to our pension could be anywhere from 40% -50%.
A retiree wrote to Kosie Monsky asking for clarification of the calculation methods and this is the response he received:
“The numbers are estimates, based on a monthly funded status prepared by Nortel's actuaries as at June 30, 2010, and are subject to many variables and fluctuate with interest rates and market conditions.
Solvency ratios use assumptions consistent with the plan being terminated, and are based on current financial market conditions. While in regular actuarial reports the solvency ratio often coincides with the wind up ratio, when a pension plan is actually wound up, the wind up and solvency ratios are often different amounts. The wind up ratio is subject to the reality of paying the lump sums on the annuity contracts as well as the costs of the wind up, which is a reason why the wind up ratio is lower than the solvency ratio.
The Nortel pension plan offers a specific benefit known as indexing, which means that the pension amounts are adjusted to provide for inflation-related increases. The Plans are either related to the Consumer Price Index or are adjusted based on a fixed percentage. However, the solvency ratios of 76% and 72% do not include indexing. This is another reason why the wind up ratio is lower than the solvency ratio.”
Another retiree wrote that he thought the wind up ratio calculation procedure may be more complex than that. In order to place the pension claim against Nortel in CCAA proceedings some estimates will have to be made, perhaps before the plan is fully wound up.
Nortel's actuaries will table an 'estimated' windup ratio. Koskie Minsky's actuarial consultants will table one as well on behalf of the NRPC/pensioners. However the operative windup ratio will be determined (later) by the insurance company which ultimately (will or would like to be) providing the annuity, if the NRPC are not successful in getting the Ontario government to allow a private company to continue to run the pension fund without annuitizing it.
So, since the claim submission to the court will be done before the annuity quotes are received (and certainly before they are finalized), how will the likely insurance company view be reflected in the claims and what steps are planned to insure that the expected (10-20%) insurance company hit is properly reflected in the claim.
So the operative insurance company quote and/or delivered pension may be 10-20% lower than a Nortel or other actuarial estimate which means that the real pension pay out ratio could drop by a further 6 to 12 percentage point or between 52% and 58% funded ratio.
Hence it would be wise to assume for budgeting reasons that the cut to our pension could be anywhere from 40% -50%.
Saturday, August 14, 2010
Flextronics and Airvana drop out of US Creditors Committee
The following docket was published on the Epiq website yesterday.
Flextronics and Airvana are no longer members of the unsecured creditors committee for the Nortel Bankruptcy case.
UNITED STATES DEPARTMENT OF JUSTICE OFFICE OF THE UNITED STATES TRUSTEE DISTRICT OF DELAWARE
IN THE MATTER OF: : Chapter 11 :
Nortel Networks, Inc., et al. : Case No. 09-10138 (KG) :
: *THIRD AMENDED NOTICE OF APPOINTMENT OF
Debtors. : COMMITTEE OF UNSECURED ---------------------------------- : CREDITORS
Pursuant to Section 1102(a)(1) of the Bankruptcy the Committee of Unsecured Creditors in connection with the above captioned case:
1. The Bank of New York Mellon, Attn: Martin Feig, V.P., 101 Barcley Street- 8 West, New York, NY 10286, Phone: 212-815-5383, Fax: 732-667-4756
2. Pension Benefit Guaranty Corporation, Attn: Jennifer Messina, 1200 K Street, N.W., Washington, DC 20005, Phone: 202-326-4000 ex 3209, Fax: 202-842-2643
3. Law Debenture Trust Company of New York, Attn: Robert L. Bice, II, 400 Madison Ave., 4th Floor, New York, NY 10017, Phone: 212-750-6474
DATED: August 12, 2010
Code, I hereby appoint the following persons to
ROBERTA A. DEANGELIS United States Trustee, Region 3
/s/ Kevin P. Callahan for WILLIAM K. HARRINGTON ASSISTANT UNITED STATES TRUSTEE
Attorney assigned to this Case: T. Patrick Tinker, Esquire, Phone: (302) 573-6491, Fax: (302) 573-6497 Debtors’ Counsel: Derek C. Abbott, Esquire, Phone: (302) 658-9200, Fax: (302) 658-3989
* Arivana, Inc. resigned from the committee by letter dated December 8, 2009.
* Flextronics Corporation resigned from the committee by letter dated August 2, 2010.
Flextronics and Airvana are no longer members of the unsecured creditors committee for the Nortel Bankruptcy case.
UNITED STATES DEPARTMENT OF JUSTICE OFFICE OF THE UNITED STATES TRUSTEE DISTRICT OF DELAWARE
IN THE MATTER OF: : Chapter 11 :
Nortel Networks, Inc., et al. : Case No. 09-10138 (KG) :
: *THIRD AMENDED NOTICE OF APPOINTMENT OF
Debtors. : COMMITTEE OF UNSECURED ---------------------------------- : CREDITORS
Pursuant to Section 1102(a)(1) of the Bankruptcy the Committee of Unsecured Creditors in connection with the above captioned case:
1. The Bank of New York Mellon, Attn: Martin Feig, V.P., 101 Barcley Street- 8 West, New York, NY 10286, Phone: 212-815-5383, Fax: 732-667-4756
2. Pension Benefit Guaranty Corporation, Attn: Jennifer Messina, 1200 K Street, N.W., Washington, DC 20005, Phone: 202-326-4000 ex 3209, Fax: 202-842-2643
3. Law Debenture Trust Company of New York, Attn: Robert L. Bice, II, 400 Madison Ave., 4th Floor, New York, NY 10017, Phone: 212-750-6474
DATED: August 12, 2010
Code, I hereby appoint the following persons to
ROBERTA A. DEANGELIS United States Trustee, Region 3
/s/ Kevin P. Callahan for WILLIAM K. HARRINGTON ASSISTANT UNITED STATES TRUSTEE
Attorney assigned to this Case: T. Patrick Tinker, Esquire, Phone: (302) 573-6491, Fax: (302) 573-6497 Debtors’ Counsel: Derek C. Abbott, Esquire, Phone: (302) 658-9200, Fax: (302) 658-3989
* Arivana, Inc. resigned from the committee by letter dated December 8, 2009.
* Flextronics Corporation resigned from the committee by letter dated August 2, 2010.
Thursday, August 12, 2010
US Senate committee on aging
I have added a link in the right hand column to the US Senate Comittee on Aging that may provide some useful information and guidance. You can check the details of the committee by clicking on the link which will take you to the following site:
http://aging.senate.gov/issues/index.cfm
http://aging.senate.gov/issues/index.cfm
Wednesday, August 11, 2010
Nortel Patent contracts and ownership.
Docket # 3774 on the Epiq web site contains a letter entered into court records in Canada and the USA by a Nortel inventor who was awarded 80 patents and, in the normal process as a Nortel employee, signed them over to Nortel for "valuable consideration".
The writer disputes that Nortel lived up to it's agreement with him in providing the compensation, insurance, and pension elements of the "valuable consideration" as part of his patent assignment contract with Nortel. The writer is disputing Nortel's claim to ownership of the patents as a result, and questions the ability of Nortel to offer these patents for sale to potential buyers.
All the patents in Nortel's portfolio were invented by Nortel employees. Most of these inventors are no longer working for Nortel, and it is highly likely that many of them have been negatively impacted by the Bankruptcy filing.
Those people who were awarded patents whilst working for Nortel, should check the docket to understand the writer's claims. It may have some validity, and individual inventors may have claims on the patents they obtained whilst working for Nortel.
I am no expert in this, and do not have any Nortel patents. However for those of you who do have Nortel patents, it may be worth checking this out to see if there is a valid dispute.
The writer disputes that Nortel lived up to it's agreement with him in providing the compensation, insurance, and pension elements of the "valuable consideration" as part of his patent assignment contract with Nortel. The writer is disputing Nortel's claim to ownership of the patents as a result, and questions the ability of Nortel to offer these patents for sale to potential buyers.
All the patents in Nortel's portfolio were invented by Nortel employees. Most of these inventors are no longer working for Nortel, and it is highly likely that many of them have been negatively impacted by the Bankruptcy filing.
Those people who were awarded patents whilst working for Nortel, should check the docket to understand the writer's claims. It may have some validity, and individual inventors may have claims on the patents they obtained whilst working for Nortel.
I am no expert in this, and do not have any Nortel patents. However for those of you who do have Nortel patents, it may be worth checking this out to see if there is a valid dispute.
Tuesday, August 10, 2010
NRPC Petition on Canadian Pension Management
The NRPC has placed an announcement on their website in the members section for residents of Ontario to support the move to change the pension wind up procedure that would limit the future growth of our pension trust fund and lock us into annuities which are at their worst pricing and interest rates in 25 years.
It's in the interest of all Ontarians to sign the petition. Please circulate the information on this petition freely amongst your friends and family and acquaintances.
You can see the actual petition at the NRPC web site in the members section/latest site updates:
see right hand column for link to the NRPC site.
Petition for Ontario Residents
Monday, 09 August 2010
About this petition:
SAVE OUR PENSIONS!
On September 30, 2010, the Financial Services Commission of Ontario (FSCO) will take over Nortel's Defined Benefit Pension Plans. Unless the Ontario government takes prompt action, Nortel's pensioners will then lose 36% of their pensions and possibly even more. A major part of their loss occurs because, under current regulations FSCO will simply wind-up the pension funds by converting them to annuities. This forever locks-in the existing pension deficit and it adds major penalties, because the price of annuities is at a 25 year high with no relief in sight.
It is the worst possible outcome for Nortel's pensioners, who are also being hit with the loss of their health and life insurance benefits.
Nortel Retirees and Former Employees Protection Canada (NRPC ) is demanding that the Ontario government change its regulations and stop the wind-up. Instead of locking-in the losses and buying expensive annuities, the plans should be professionally invested for the benefit of the pensioners. This will allow for the continuation of a much higher monthly pension and give the funds a chance to recover in value as the economy improves. It will provide more money for pensioners and save costs to the Ontario taxpayer by keeping pensioners out of the social security system. In 2008, the government's own study of pensions recommended a similar approach but no action has yet been taken.
The money left in Nortel's Pension Funds is the property of the pensioners. It does not belong to the government of Ontario. Pensioners must be allowed to decide how their money is managed!
NORTEL PENSIONERS ARE CALLING ON ONTARIANS TO SUPPORT THIS PETITION
IT'S OUR PENSION - IT'S OUR MONEY - IT'S OUR CALL REMEMBER - YOU COULD BE NEXT!
Instructions for completing this petition:
Petitioners must be residents of the Province of Ontario since the petition is targeted at the Government of Ontario; it is acceptable for petitioners to be under the age of majority.
A petition must contain original signatures only, written directly on the face of the petition.
Each person petitioning the Legislative Assembly must print his or her name and address and sign his
or her name under the text of the petition.
Complete and sign the petition ensuring all the required information is given and accurate.
Please encourage family, friends and other Ontarians to sign the petition and support pensioners in
having a say in what happens to with what is rightfully theirs - the pension they earned
Do not hesitate to make and complete multiple copies of the petition page. The more people that sign
the better our chances of achieving a just result.
Please do not put any marks, other than the information requested, on the petition
Please return completed signed page(s) to the NRPC no later than September 5, 2010 at:
NRPC
PO Box 21,
Dorchester,
ON N0L 1G0
Click FSM petition V3.21 for the petition itself.
Last Updated ( Monday, 09 August 2010 )
It's in the interest of all Ontarians to sign the petition. Please circulate the information on this petition freely amongst your friends and family and acquaintances.
You can see the actual petition at the NRPC web site in the members section/latest site updates:
see right hand column for link to the NRPC site.
Petition for Ontario Residents
Monday, 09 August 2010
About this petition:
SAVE OUR PENSIONS!
On September 30, 2010, the Financial Services Commission of Ontario (FSCO) will take over Nortel's Defined Benefit Pension Plans. Unless the Ontario government takes prompt action, Nortel's pensioners will then lose 36% of their pensions and possibly even more. A major part of their loss occurs because, under current regulations FSCO will simply wind-up the pension funds by converting them to annuities. This forever locks-in the existing pension deficit and it adds major penalties, because the price of annuities is at a 25 year high with no relief in sight.
It is the worst possible outcome for Nortel's pensioners, who are also being hit with the loss of their health and life insurance benefits.
Nortel Retirees and Former Employees Protection Canada (NRPC ) is demanding that the Ontario government change its regulations and stop the wind-up. Instead of locking-in the losses and buying expensive annuities, the plans should be professionally invested for the benefit of the pensioners. This will allow for the continuation of a much higher monthly pension and give the funds a chance to recover in value as the economy improves. It will provide more money for pensioners and save costs to the Ontario taxpayer by keeping pensioners out of the social security system. In 2008, the government's own study of pensions recommended a similar approach but no action has yet been taken.
The money left in Nortel's Pension Funds is the property of the pensioners. It does not belong to the government of Ontario. Pensioners must be allowed to decide how their money is managed!
NORTEL PENSIONERS ARE CALLING ON ONTARIANS TO SUPPORT THIS PETITION
IT'S OUR PENSION - IT'S OUR MONEY - IT'S OUR CALL REMEMBER - YOU COULD BE NEXT!
Instructions for completing this petition:
Petitioners must be residents of the Province of Ontario since the petition is targeted at the Government of Ontario; it is acceptable for petitioners to be under the age of majority.
A petition must contain original signatures only, written directly on the face of the petition.
Each person petitioning the Legislative Assembly must print his or her name and address and sign his
or her name under the text of the petition.
Complete and sign the petition ensuring all the required information is given and accurate.
Please encourage family, friends and other Ontarians to sign the petition and support pensioners in
having a say in what happens to with what is rightfully theirs - the pension they earned
Do not hesitate to make and complete multiple copies of the petition page. The more people that sign
the better our chances of achieving a just result.
Please do not put any marks, other than the information requested, on the petition
Please return completed signed page(s) to the NRPC no later than September 5, 2010 at:
NRPC
PO Box 21,
Dorchester,
ON N0L 1G0
Click FSM petition V3.21 for the petition itself.
Last Updated ( Monday, 09 August 2010 )
Monday, August 9, 2010
US Magistrate rules in favor of Nortel in suit brought by UK Pension Regulators
As published in Total Telecom Review.
http://www.totaltele.com/view.aspx?ID=457749
US magistrate shields Nortel from UK pension regulators
By Peg Brickley, Dow Jones Daily Bankruptcy Review
Monday 09 August 2010
Authorities fear Canadian vendor could leave $3.4 billion shortfall.
A U.S. federal magistrate has shielded Nortel Networks Corp. from action by U.K. pension regulators who fear the troubled company will walk away from obligations to 40,000 retirees, leaving a $3.4 billion funding shortfall.
Recommendations issued Thursday by U.S. Magistrate Judge Mary Pat Thynge relieve the company of worry that the U.K.'s Pension Regulator will intrude as Nortel negotiates a bankruptcy exit plan, at least until a federal district judge reviews and acts on Thynge's recommendations.
She left in place a February ruling that protects Nortel from having to answer to U.K. pension authorities. The Canadian telecommunications equipment maker filed a Chapter 11 plan in July, but isn't expected to say until September how it will split up the billions it raised while in bankruptcy. Thynge dismissed arguments that the "moral hazard" interests of U.K. pension regulations exempt them from the automatic stay that blocks legal action against companies operating under Chapter 11 protection. Lawyers for the British regulators said they are enforcing laws meant to deter irresponsible corporate behavior.
She upheld a ruling from Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, Del. In February, he barred continued action in Britain, where regulators were pondering whether to order Nortel to say how it planned to deal with its financial obligations under pension plans linked to its U.K. operations. Such orders are issued when U.K. regulators determine a plan is in jeopardy of being left short of funding to cover pension payments but an entity related to the employer responsible for the plan might be in a position to help out.
In this case, U.K. regulators are trying to tap Nortel's Canadian and U.S. operations, which had amassed more than $5 billion in cash as of the end of May, according to court documents and Securities and Exchange Commission filings.
Nortel sold many of its businesses after seeking court protection from creditors. The company still hasn't said whether it will sell or reorganize around its portfolio of patents, which is worth about $1 billion, according to some estimates.
Issuance of a financial support directive would allow the U.K. pension regulator to get in line for a share of the cash that will be distributed under the company's plan. Nortel jettisoned its U.S. pension obligations last year, leaving it up to the U.S. Pension Benefit Guaranty Corp. to take over the payments.
http://www.totaltele.com/view.aspx?ID=457749
US magistrate shields Nortel from UK pension regulators
By Peg Brickley, Dow Jones Daily Bankruptcy Review
Monday 09 August 2010
Authorities fear Canadian vendor could leave $3.4 billion shortfall.
A U.S. federal magistrate has shielded Nortel Networks Corp. from action by U.K. pension regulators who fear the troubled company will walk away from obligations to 40,000 retirees, leaving a $3.4 billion funding shortfall.
Recommendations issued Thursday by U.S. Magistrate Judge Mary Pat Thynge relieve the company of worry that the U.K.'s Pension Regulator will intrude as Nortel negotiates a bankruptcy exit plan, at least until a federal district judge reviews and acts on Thynge's recommendations.
She left in place a February ruling that protects Nortel from having to answer to U.K. pension authorities. The Canadian telecommunications equipment maker filed a Chapter 11 plan in July, but isn't expected to say until September how it will split up the billions it raised while in bankruptcy. Thynge dismissed arguments that the "moral hazard" interests of U.K. pension regulations exempt them from the automatic stay that blocks legal action against companies operating under Chapter 11 protection. Lawyers for the British regulators said they are enforcing laws meant to deter irresponsible corporate behavior.
She upheld a ruling from Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, Del. In February, he barred continued action in Britain, where regulators were pondering whether to order Nortel to say how it planned to deal with its financial obligations under pension plans linked to its U.K. operations. Such orders are issued when U.K. regulators determine a plan is in jeopardy of being left short of funding to cover pension payments but an entity related to the employer responsible for the plan might be in a position to help out.
In this case, U.K. regulators are trying to tap Nortel's Canadian and U.S. operations, which had amassed more than $5 billion in cash as of the end of May, according to court documents and Securities and Exchange Commission filings.
Nortel sold many of its businesses after seeking court protection from creditors. The company still hasn't said whether it will sell or reorganize around its portfolio of patents, which is worth about $1 billion, according to some estimates.
Issuance of a financial support directive would allow the U.K. pension regulator to get in line for a share of the cash that will be distributed under the company's plan. Nortel jettisoned its U.S. pension obligations last year, leaving it up to the U.S. Pension Benefit Guaranty Corp. to take over the payments.
Saturday, August 7, 2010
Updated bulletins on Koskie Minasky Canada site
Koskie Minsky, the Canadian court recognized law firm for the NRPC, has updated the bulletins they published earlier on July 29, and placed them on their server yesterday Aug 6th at:
http://www.koskieminsky.com/Case-Central/Overview/Status-Of-Case/?rid=107
I have looked through the updated bulletins and don't see any major changes, but you should read through paying attention to the areas that affect you in case there are any impacts.
http://www.koskieminsky.com/Case-Central/Overview/Status-Of-Case/?rid=107
I have looked through the updated bulletins and don't see any major changes, but you should read through paying attention to the areas that affect you in case there are any impacts.
Friday, August 6, 2010
Ontario pension protection calculation and general wind up process.
Ontario Protected pension.
In a previous post I mentioned that the calculation of Ontario protected pension was based on service in Ontario as a percentage of total service. There was a lingering question as to whether that means total service world wide or total service Canada.
I spoke to a representative from FSCO today. He was very helpful and explained the way they determine the pension. They don't try to calculate a percentage.
They take the final average earnings as used by Nortel in your pension calculation, and use the Nortel pension factors times the number of years of service in Ontario.
That way they don't have to determine service in all the other Provinces.
But the end result is basically equivalent to a percentage of service in Canada that is used.
This a a little bit of good news
General Wind Up Process.
I took the opportunity to ask the FSCO representative if I need to do anything to make sure that my pension is properly handled when Nortel ceases administering it September 30th 2010.
He was extremely helpful and explained a lot of the wind up process used in previous bankruptcies to me. This is a summary of my discussion with him.
On October 1st there will be another court session. At that session it will be determined if Nortel will have another stay or if it is going into full liquidation.
In either case the pension payment will continue as it is today for some time until all the necessary documents have been reviewed and verified by the trustees and by any administrator.
If Nortel is granted a further stay the pension will continue to be paid without reduction until the full pension wind up process is completed.
When the decision is made in the court that Nortel is being liquidated, the superintendent of Pensions in Ontario will appoint an experienced administrator to handle the pension wind up.
(I have to add at this point that if the NRPC is successful in negotiating some other form of pension administration this process may not apply and will probably be more beneficial for us.)
When an Ontario administrator is appointed there will be a period of time in which a full review of all the books and documents related to the pension will be examined carefully and verified. This process will be long and complicated since there are thousands of retirees being paid pensions, and thousands more who are eligible to apply for pensions some time in the future.
During this part of the process the retirees and future retirees will be contacted and asked to verify their records to ensure accuracy. It's important that everyone get prepared for that, and gather all your documents related to your Nortel pension so that you can provide evidence to support your service etc.
Once all the reviews have been completed and verified, the administrator
will be able to determine a true trust fund ratio that will be applied to all pensions. The administrators always err on the side of caution to ensure that they do not overstate that ratio. They do this to prevent the possibility of having to claw back any payments from retirees in the event that they discover the real ratio is less than they estimated.
This process will take quite a long time. It could be anywhere from 3 months to 9 months or maybe more if there are lots of discrepancies in the records and unforeseen issues.
Once all the due diligence has been performed and the administrator is satisfied that they truly know the ratio they will inform the retirees of the result and will give notice as to when the reduction will take place. This notice will most likely be a month or more in advance of the actual reduction.
So this is a bit clearer for me now. If this is the process used, it means we will probably continue to be paid the same amount for longer than we anticipated.
I don't know what the impact will be if the NRPC are able to obtain a change in the regulations and have some other administration process applied, so use the information I have provided here with caution.
I hope the NRPC provides an update on what to expect before September so that we know where we stand. I know they indicated that there will be some webinars in the near future after the NRPC General Meeting so keep checking for that information on the NRPC site, (see link in Right Hand Column), and I will post it here when I find out about it.
In a previous post I mentioned that the calculation of Ontario protected pension was based on service in Ontario as a percentage of total service. There was a lingering question as to whether that means total service world wide or total service Canada.
I spoke to a representative from FSCO today. He was very helpful and explained the way they determine the pension. They don't try to calculate a percentage.
They take the final average earnings as used by Nortel in your pension calculation, and use the Nortel pension factors times the number of years of service in Ontario.
That way they don't have to determine service in all the other Provinces.
But the end result is basically equivalent to a percentage of service in Canada that is used.
This a a little bit of good news
General Wind Up Process.
I took the opportunity to ask the FSCO representative if I need to do anything to make sure that my pension is properly handled when Nortel ceases administering it September 30th 2010.
He was extremely helpful and explained a lot of the wind up process used in previous bankruptcies to me. This is a summary of my discussion with him.
On October 1st there will be another court session. At that session it will be determined if Nortel will have another stay or if it is going into full liquidation.
In either case the pension payment will continue as it is today for some time until all the necessary documents have been reviewed and verified by the trustees and by any administrator.
If Nortel is granted a further stay the pension will continue to be paid without reduction until the full pension wind up process is completed.
When the decision is made in the court that Nortel is being liquidated, the superintendent of Pensions in Ontario will appoint an experienced administrator to handle the pension wind up.
(I have to add at this point that if the NRPC is successful in negotiating some other form of pension administration this process may not apply and will probably be more beneficial for us.)
When an Ontario administrator is appointed there will be a period of time in which a full review of all the books and documents related to the pension will be examined carefully and verified. This process will be long and complicated since there are thousands of retirees being paid pensions, and thousands more who are eligible to apply for pensions some time in the future.
During this part of the process the retirees and future retirees will be contacted and asked to verify their records to ensure accuracy. It's important that everyone get prepared for that, and gather all your documents related to your Nortel pension so that you can provide evidence to support your service etc.
Once all the reviews have been completed and verified, the administrator
will be able to determine a true trust fund ratio that will be applied to all pensions. The administrators always err on the side of caution to ensure that they do not overstate that ratio. They do this to prevent the possibility of having to claw back any payments from retirees in the event that they discover the real ratio is less than they estimated.
This process will take quite a long time. It could be anywhere from 3 months to 9 months or maybe more if there are lots of discrepancies in the records and unforeseen issues.
Once all the due diligence has been performed and the administrator is satisfied that they truly know the ratio they will inform the retirees of the result and will give notice as to when the reduction will take place. This notice will most likely be a month or more in advance of the actual reduction.
So this is a bit clearer for me now. If this is the process used, it means we will probably continue to be paid the same amount for longer than we anticipated.
I don't know what the impact will be if the NRPC are able to obtain a change in the regulations and have some other administration process applied, so use the information I have provided here with caution.
I hope the NRPC provides an update on what to expect before September so that we know where we stand. I know they indicated that there will be some webinars in the near future after the NRPC General Meeting so keep checking for that information on the NRPC site, (see link in Right Hand Column), and I will post it here when I find out about it.
Thursday, August 5, 2010
Canadian Pension Protection (Ontario) on first $1000 per month
The Province of Ontario Canada has protection on the first $1000 of pension that is impacted by bankruptcy. The protection is provided through the Financial Services Commission of Ontario (FSCO)from the Pension Benefits Guarantee Fund (PBGF). To be eligible for the pension protection, you have to have worked in Ontario at some time in your career. The pension protection applies regardless of where you reside now.
The amount is determined based on the time you spent in Ontario as a percentage of your total service used to determine the pension. At this point it is not clear if the total service is only computed based on service in Canada used to calculate the pension, or if it includes foreign service as well.
This protection can help increase the pension received after September and the approach will provide all Nortel Canadian retirees with Ontario service a bit more in their monthly income than just relying on the remainder of the trust fund.
I have written to the FSCO requesting clarification of this point. I tried calling them at their number 416-250-7250 (1-800-668-0128 in Canada only) but was put on hold for over half an hour (long distance). I hope they call or write back to me. It would be nice to know what impacts all these things have on us.
It feels like we are being kept in the dark, not on purpose perhaps, but waiting until October to find out just doesn't cut it with me. I want to know up front, and I am sure most everyone else does as well. After all it's our money in the pension trust fund, and why we weren't kept better informed about it is suspicious and a mystery to me.
It's a shame that there isn't a Canadian Federal protection program of the sort in Ontario to help retirees who worked solely in other Provinces. I just don't understand the Canadian Government's reluctance and indifference.
Also the $1000 limit in the Ontario fund seems low in today's terms. That number hasn't changed for many years. But it's certainly better than zero.
The amount is determined based on the time you spent in Ontario as a percentage of your total service used to determine the pension. At this point it is not clear if the total service is only computed based on service in Canada used to calculate the pension, or if it includes foreign service as well.
This protection can help increase the pension received after September and the approach will provide all Nortel Canadian retirees with Ontario service a bit more in their monthly income than just relying on the remainder of the trust fund.
I have written to the FSCO requesting clarification of this point. I tried calling them at their number 416-250-7250 (1-800-668-0128 in Canada only) but was put on hold for over half an hour (long distance). I hope they call or write back to me. It would be nice to know what impacts all these things have on us.
It feels like we are being kept in the dark, not on purpose perhaps, but waiting until October to find out just doesn't cut it with me. I want to know up front, and I am sure most everyone else does as well. After all it's our money in the pension trust fund, and why we weren't kept better informed about it is suspicious and a mystery to me.
It's a shame that there isn't a Canadian Federal protection program of the sort in Ontario to help retirees who worked solely in other Provinces. I just don't understand the Canadian Government's reluctance and indifference.
Also the $1000 limit in the Ontario fund seems low in today's terms. That number hasn't changed for many years. But it's certainly better than zero.
Wednesday, August 4, 2010
NRPC General meeting Aug 24th
The following reminder was sent out by the NRPC. If you haven't already sent in your proxy vote, there is still time to do so.
The NRPC Annual General Meeting (AGM) will be held in Ottawa, on Tuesday, August 24, 2010. Attendance at and voting at the AGM is restricted to members of the NRPC who registered and paid their one-time $20 membership joining fee as of June 10, 2010. We continue to encourage former Nortel employees to register and become Members after that date but 10th June is the cut off date for the AGM. Each Member in good standing as of July 10th has been sent by mail a standard AGM notice including proxy voting forms to participate in voting.
Please note: we are advised that some members have been phoning our auditors with questions using their phone number shown in the auditor's report contained in the AGM mailing. Please do not call Nephin & Winters. Their only connection with the NRPC is to serve as an independent auditor of our annual financial report. They are unable to answer any questions regarding the AGM or the NRPC or your personal issues related to the Nortel insolvency.
Also note that the proxy form erroneously states that the AGM meeting is on Thursday, 24 August. It is actually Tuesday, 24 August.
The NRPC Annual General Meeting (AGM) will be held in Ottawa, on Tuesday, August 24, 2010. Attendance at and voting at the AGM is restricted to members of the NRPC who registered and paid their one-time $20 membership joining fee as of June 10, 2010. We continue to encourage former Nortel employees to register and become Members after that date but 10th June is the cut off date for the AGM. Each Member in good standing as of July 10th has been sent by mail a standard AGM notice including proxy voting forms to participate in voting.
Please note: we are advised that some members have been phoning our auditors with questions using their phone number shown in the auditor's report contained in the AGM mailing. Please do not call Nephin & Winters. Their only connection with the NRPC is to serve as an independent auditor of our annual financial report. They are unable to answer any questions regarding the AGM or the NRPC or your personal issues related to the Nortel insolvency.
Also note that the proxy form erroneously states that the AGM meeting is on Thursday, 24 August. It is actually Tuesday, 24 August.
Tuesday, August 3, 2010
Two more months of Nortel administered Canadian Pension
We are now in the Dog Days of Summer and that means that time is running down on the agreement made earlier this year between the NRPC and Nortel on the Canadian pension.
As of midnight Sept 30th 2010, Nortel ceases administering the pension and hands it over to an Ontario government appointed administrator. At least that's the normal situation in CCAA pension situations.
The NRPC however has indicated that they are working with the Ontario government to find an alternative that may mean a continuance of the pension trust fund administered by some other party. If that happens it should be better for us, but it doesn't mean that there won't be reductions in our pensions. I'm afraid we are going to have to live with a big reduction no matter what happens, so plan for it and get prepared.
It seems a bit unreal at this point. We have been receiving our defined benefit Canadian pensions since Nortel filed for bankruptcy protection, so that may have lulled some of us into a false sense of security. There may still be people out there who aren't even aware of this situation and are going to have a big shock come October. Let's hope everyone is aware of the problem.
I can't say I am fully prepared. How can we really be prepared when we don't know the full impact this will have on our income? There will be cut backs on many things, and the life we have been leading will have to change, but no doubt we will survive and find ways to cope.
In the meantime we can look forward to 2 more months of receiving a full pension paycheck. Something we thought would last forever.
But we are also losing something else; the feeling for Nortel that we shared when it was strong and vibrant. I know we were all very proud of Nortel, and felt that we were part of something that was better, and was in a way like a second family. Unfortunately we found out the hard way what big companies are really like.
It's sad that we have had this forced on us; something that we didn't cause , but which swept us up in its cruel embrace.
If one good thing came out of this it was a reconnection with some of our old colleagues and friends with whom we had lost contact, as we all retired and drifted apart. Maybe we will be able to keep some of those contacts as we move through this phase and settle into our new lives post-Nortel.
As of midnight Sept 30th 2010, Nortel ceases administering the pension and hands it over to an Ontario government appointed administrator. At least that's the normal situation in CCAA pension situations.
The NRPC however has indicated that they are working with the Ontario government to find an alternative that may mean a continuance of the pension trust fund administered by some other party. If that happens it should be better for us, but it doesn't mean that there won't be reductions in our pensions. I'm afraid we are going to have to live with a big reduction no matter what happens, so plan for it and get prepared.
It seems a bit unreal at this point. We have been receiving our defined benefit Canadian pensions since Nortel filed for bankruptcy protection, so that may have lulled some of us into a false sense of security. There may still be people out there who aren't even aware of this situation and are going to have a big shock come October. Let's hope everyone is aware of the problem.
I can't say I am fully prepared. How can we really be prepared when we don't know the full impact this will have on our income? There will be cut backs on many things, and the life we have been leading will have to change, but no doubt we will survive and find ways to cope.
In the meantime we can look forward to 2 more months of receiving a full pension paycheck. Something we thought would last forever.
But we are also losing something else; the feeling for Nortel that we shared when it was strong and vibrant. I know we were all very proud of Nortel, and felt that we were part of something that was better, and was in a way like a second family. Unfortunately we found out the hard way what big companies are really like.
It's sad that we have had this forced on us; something that we didn't cause , but which swept us up in its cruel embrace.
If one good thing came out of this it was a reconnection with some of our old colleagues and friends with whom we had lost contact, as we all retired and drifted apart. Maybe we will be able to keep some of those contacts as we move through this phase and settle into our new lives post-Nortel.
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