Canadian Webinar Sept 1 2010 Summary Part 5

Part 5 of the summary of the webinar held by Koskie Minsky / NRPC on Sept 1st 2010.

(8) Questions and Answers

There were a few Questions and answers provided on the webinar held Sept 1st. I am only listing the ones that I think added some extra information that people would be interested in.

Q. Pension reduction timing.
A. Things may go on unchanged for several months after Sept 30 2010. The reduction will be later at the same time as the PBGF is applied.

Q. Ontario top up and Quebec law1.
A. The key is the province in which service occurs. Service in Ontario will mean eligibility for the PBGF top up prorated specifically for the service in Ontario. Only those who retired from Quebec (about 25%) will be eligible for Law 1.

Q. Purchase of annuities.
A. The administrator will look to purchase group annuity contracts. It will be huge. At close to $2.5B. The timeline is very difficult to predict due to the size and complexity.

Q. Funded status.
A. The number given 64% is an estimate only. The real number will be determined for the final wind-up.

Q. Annuity market and FSM.
A. The Ontario market is not very competitive. The rates probably won’t be competitive since we are at a 20 year low in rates. The estimate of 64% assumed competitive rates so that number could be lower.

Q. Distribution of claims.
A. Some pressure to have an interim distribution in 2011. This will be discussed further in the next NRPC newsletter which will be published on the NRPC web site- maybe October.

Q. Pension Claim.
A. Whatever is recovered as a part of the claim process for pensions will be put back into the pension plan. People in Ontario may have to pay back the amount topped up by Ontario PBGF, from any claim payment into the pension fund. People outside Ontario may not have to pay that back. Not sure.

Q Record review.
A. The analysis of employee records is well underway but not yet in the control of the wind-up administrator. Each person will receive a statement and have a chance to correct it.

Q. Do annuities run out of money?
A. Obligations of the insurance company should continue for life. Federal government has back up insurance.

Q. PBGF Calculation.
A. the administrator will be responsible for determining eligibility and amount.

Q. Commuted pension.
A. Cannot cash out commuted pension if you are already receiving a pension, except for people in Quebec under law 1. have an option to do that.

Q. Cost of PBGF top up.
A. the federal government has set aside $500M to help make sure the fund is covered.

Q Fund assets and allocations.
A. The Monitor is keeping NRPC informed of discussions on the assets and their investment allocations.

Q. Severance $3000.
A. Have to meet certain eligibility requirements. See Webinar slides.

Q. Transfer pension to another company.
A. Only in Quebec under law 1.

Q. Health plan
A. If one is set up separate from Nortel it will be possible to buy into it. No details yet.

Q. Transfer pension into RRSP or RRIF.
A. No if already retired.

Q. Retiree Survivor pension.
A. Will continue at the ratio after wind up at the new level. (64% or less of what was being received.)

Q. PBGF $1000
A. Service in Ontario any time during your career counts.

Q. Court injunction on wind up.
A. The court does not regulate pension benefits etc. The only way to make a change is through the legislature.

Q. Value of Intellectual property and $1.4B tax credits.
A. I.P. portfolio value is not yet known. The tax credits are part of the I.P. realization process and could enhance the value.

Q. Who will inform retirees about wind up?
A. The administrator will communicate to retirees.

Q. When can we expect Nortel to announce restructuring plan.
A. Nortel is on a path to liquidation.

Q. What happens to the difference between 86% commuted value and total value?
A. The 14% is a claim.