Morneau Sobeco response to some questions.

Late last year I wrote to Morneau Sobeco for some clarification on a few items regarding the wind up of the Nortel Canada pension plan.

The following information was provided to me by one of their representatives working on the Nortel plan.

1) The reductions in pensions will occur as soon as we have determined the appropriate funded level of the plan. You will receive notification in writing before this reduction takes place. We will not wait until the wind up report is approved. Reducing pensions early in the wind up process does help minimize the impact of any overpayment to pensioners at the end of wind up process.

2) Claims have already been made against the estate of Nortel. This occurred prior to Morneau Sobeco's appointment and we continue to be involved in the negotiations. Any settlement would be included in the assets used to determine the wind up funded ratio and ultimately affect the final payments. The timing of the settlement will determine if it can be included in the wind up payments or be dealt with after the wind up payments have been completed.

3) Indexing is not considered in the calculations for the PBGF coverage. Normally Indexing ends immediately when an Ontario plan winds up and annuities are purchased without indexing in respect of members in receipt of a monthly pension. However, Nortel is very different from most pension plans and no decisions have been made yet regarding what options members will receive after the wind up report has been approved.

If you would like any further information, you could contact Morneau Sobeco at (877)392-2074.