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Now that Nortel has started the Canadian claims process, do I need to make an application?

The September claims deadline only applies to bondholders and trade creditors.  A separate process is being developed to handle former employees, current employees and directors and no date for these claimants has yet been set.  

Currently, the Monitor and our advisors are discussing a simpler process for former employees which will be used to calculate individual claims, based on Nortel's records for each claimant.  Once the model has been developed and data provided by Nortel, KM will then prepare individual claims based on entitlements.  The individual claim will be forwarded to each former employee to ensure the Nortel data is correct.

Further details can be found on the Koskie Minsky site at:


If the pension plan is wound up and converted in to annuities, will there be any interruption, a period when no money paid out?  

If the plan is wound up, for example at 69%, the Plan Administrator would have the right to drop the rate of pension payouts and pensions could be reduced to an appropriate level to avoid depleting the pension fund.  This could occur when the plan is put in the hands of an administrator, while annuities are arranged.  It is unlikely that pensioners will cease to receive their pension payments altogether for a period of time.

Will my pension payments continue during the CCAA process?
Nortel has indicated that for now, pension payments from the registered pension plan are being paid out at their full value. We are not certain whether this will continue in the long-term. Excess Plan payments, SERP payments and TRA payments, however, are not being paid.

If I am not yet retired, will my pension rights continue?
A request to transfer the commuted value of your pension from the Pension Plan may be put on hold, or if allowed, will be reduced until the value of the fund is known. You cannot be stopped from taking your pension depending on age and years of service as per the Pension Plan.

Is it possible to agree to a reduced pension if that option is proposed?
No. Pension law does not permit a reduction of earned benefits. If Nortel declares bankruptcy and the underfunded plan is wound-up, all retirees (and all other Plan members) would see a reduction in their pensions.

If Nortel is sold to another company, does the purchaser have a responsibility towards pensioners?
A successor entity would have no legal obligation to pensioners unless it agrees to accept Plan liabilities. The Employment Standards Act or a Collective Agreement may provide rights to employees and pensioners, or the government may insist on some protections. We are not certain whether such obligations will be honoured.

Is the Pension Plan underfunded? What if the market recovers?
Yes, the Pension Plan is underfunded but we are not sure to what extent. For the time being, your pension payments will continue as usual. If Nortel becomes bankrupt and the plan is wound-up, the plan deficiency will become important. In the event of a wind-up, annuities would be purchased for pensioners based on the level of funding available. The wind-up will take time and it is unlikely that a wind-up date would be selected right at a market bottom. However the purchase of such annuities could potentially lock in a loss as a result of low market valuations, but having an annuity will prevent your money from exposure to future market fluctuations.

How do we get updates on the funding status of our Pension Plan?
You can obtain this information through the Court system and through the Financial Services Commission of Ontario (FSCO).

If the underfunding is a result of lower stock values, is Nortel responsible for this deficiency?
The law requires the employer to backstop defined benefit pensions. Nortel has an obligation to see that the funds in the Pension Plan cover the disbursements owed to retirees. Unfortunately, it is incapable of making these payments in the long term. For now, it is making required pension plan contributions.

If the pension plan is wound-up and I am offered a commuted value for my pension, will I receive 100% of its value?
No. If Nortel declares bankruptcy and the Pension Plan is wound up in a deficit, you will receive a commuted value reduced by the same percentage as other pensions.

What happens to a deferred pension if the Pension Plan is wound up?
You will receive a pension from the purchased annuities. The pension amount will be reduced by the same percentage as those of all other pensioners.

Who is responsible for the Pension Fund?
Nortel administers the fund and makes decisions regarding investment policy. Investment decisions are usually delegated to a committee of the Board, often with outside advisors. Mercer is the actuary for Nortel's Pension Fund and Northern Trust the custodian of the assets. If the Plan is wound up, FSCO will appoint a wind-up administrator.

The actuary is appointed by Nortel. Is this legitimate?
Yes, this function is carefully monitored

Nortel accounting is done in US dollars. Will the Pension fund suffer if the exchange rates fluctuate?
No. Pensions are paid in Canadian funds and the value of the Pension Fund is determined on an ongoing basis. (Non-Canadian investments held by the Pension Fund are of course subject to exchange rate fluctuations. We do not know what portion of the pension these types of investments represent.)

When does the Ontario Pension Benefits Guarantee Fund (PBGF) come into play?
The PBGF only comes into play if the Pension Plan is wound up.

Does the Ontario Pension Benefits Guarantee Fund cover all Nortel employees?
No. The PBGF covers only those individuals who worked in Ontario, during the period they worked in Ontario.

Is there a pension benefits guarantee fund in any of the other provinces?
No. Ontario currently is the only province with a guarantee fund.

Can the pension plan be wound-up even if Nortel successfully re-organizes and emerges from CCAA protection?
Yes, that is possible. Also, for employees in the Defined Contribution plan (not this plan), it is possible that the DC plan might be transferred to the Ontario government to manage..

In bankruptcy, is wind-up certain?
Yes, and it can take several years.

If the pension is to be wound-up can we wait until market forces improve our pension assets, and will our situation improve?
Perhaps. It would take time for the pension to be wound-up and the pension administrator
would gauge when to wind-up the plan so a future market recovery could help us.

Could the pensioners take over our pension plan and manage it?

Can pension funds be used to pay out severance for recently terminated employees?
No. The funds used to make pension payments to registered Pension Plan members are held in a trust fund. These funds cannot be used to pay out severance claims in Nortel's CCAA proceedings.