February 8th 2010: The Nortel Retirees and former employees of Protection Canada (NRPC) and their court-appointed representatives have negotiated a $57-million dollar deal that will extend benefits for Nortel pensioners. The deal will extend medical, dental and life insurance benefits through 2010 and also pay out up to $3000 severance packages. In return, the former Nortel employees have agreed not to sue executives and directors over management of pension and health benefit funds except where there has been fraud.
The NRPC hopes that this extension of benefits will give them until the end of the year to lobby politicians to amend the Bankruptcy and Insolvency Act, and to give pensioners higher priority among Nortel creditors. To read the NRPCs press release announcing the deal, click here.
Unfortunately, not everyone is happy with the deal. Some former employees on Long-Term Disability (LTD) feel that the deal might greatly reduce their benefits. This interpretation is contested by Sue Kennedy, the official representative for LDT employees. Ms. Kennedy told the Ottawa Citizen that naysayers have not read all the terms and that the agreement will buy time and extend the LTD benefits to December 31st, not March 31st as originally planned. To read this article, click here
Ontario Finance Minister Dwight Duncan also recently announced that the province will make a loan to the Pension Benefits Guarantee Fund so that there are sufficient funds to make up the Nortel pension shortfall. Since the Fund guarantees up to $1000/month and since the Nortel Pension Fund is approximately 69% funded. this will mean that a pensioner who was meant to receive $1000/month but would now receive $700/month will be topped up by $300, thanks to the Ontario Pension Benefits Guarantee Fund. This move is expected to cost the province between $100-200 million dollars.
In the meantime the NRPC will continue lobbying the Federal Government to amend the Bankruptcy and Insolvency Act. CARP supports this amendment: pensions are critical to retirement security, and represent a promise made in exchange for the employees willingness to accept deferred income. Pensioners shouldnt be the last in line to collect their due!