Will the proceeds resulting from the Nokia Siemens offer be used to fund our pension shortfall?
The funds from the sales of all Nortel’s businesses will be put in to a "lock-box" and the judges of Canada, US and UK will then decide how to divide the assets between the creditors of each jurisdiction. In Canada, pensioners and employees owed termination payments become unsecured creditors, just like the bond holders and trade creditors. There is currently no priority given to former employees over any other unsecured creditors, despite the fact that the latter groups are sophisticated business people who made risk-based business decisions whereas the former employees simply thought they had guaranteed pensions and benefits in return for their years of service.
Nothing is certain, but a likely scenario is that all creditors will get cents on the dollar once the company is wound up. That means our pension fund, as one creditor, will get a cents on the dollar top up, and former employees with other claims, such as health & life benefits, excess pensions, TRAs and termination benefits will receive the same percentage.
If that happens, our pensions will fall, possibly by a third or more, and any health and life benefits will cease. However, we are told there will not be an interruption in payments.
But we are fighting to try and change this scenario. There are three possible areas which might help us receive a more favourable treatment:
- 1)Our lawyers, Koskie Minsky, will appeal to the judge to give a more favourable treatment to such a vulnerable group.
- 2)We are pressing our Federal MPs to change the CCAA and BIA laws, giving pensions and other employee benefits a higher priority in bankruptcy. These Federal laws currently override Provincial legislation which general tries to protect former employees.
- 3)We are asking our Ontario MPPs for three things:
- a)To ask Ontario to avoid winding up the pension fund, and to continue paying pensions, maybe at a reduced level. The value in this strategy is that it gives time for the pension fund to recover as the stock market improves, and for better annuity rates as interest rates improve. This strategy is also the recommendation of the body representing Canadian Actuaries.
- b)To ensure Ontario makes good the shortfall in the Pension Benefit Guarantee Fund (PBGF) and meet its commitments to pensioners who worked in Ontario. If they do this, you will be guaranteed the first $1000/month and then receive x% of the rest of your pension (where x is the wind-up value).
- c)To ask Ontario to increase the PBGF’s monthly guarantee limit, which was set at $1000/month in the 1980s, and lags far behind similar protections in the USA and United Kingdom.
Of the above, 1, 2 and 3a help all former employees. But 3b and 3c only help current and future pensioners who worked for Nortel in Ontario.
All former employees can help by pressing their MPs and MPPs to help pensioners and other former employees. So please ask all of your friends to let their politicians know that they support pension reform in general and doing the right thing for former Nortel employees specifically.
What is the most effective way to protect our interests as Nortel pensioners?
Join the NRPC and spread the word to as many former Nortel employees as possible. This will promote a unified voice.
How do we reach out to all members of the Pension Plan?
Privacy laws prevent general disclosure but the Court has granted the NRPC legal representation and, with that, Nortel is to provide us with a complete list of former Nortel employees. In the interim, everyone should spread the word to all former Nortel employee contacts.
Should we lobby the Financial Services Commission (FSCO)?
No. FSCO is a regulatory body with no political authority.
Should we lobby the Government?
NRPC has established a Political Action Committee to help regional and local groups achieve a focused lobby strategy to key provincial and federal government people. Please refer to the Political Action page on this site for further information on what meetings have already occurred and plans for future meetings. In June, NRPC representatives addressed a meeting of the Finance committee on Parliament Hill in Ottawa to make our issues known.