MONTREAL – Former Nortel employees will likely hear that cuts to their pensions will never be fully restored – despite an expected payment into the fund from the sale of the bankrupt company’s technology assets – when they get an update from their pension administrator this Friday.
Cuts to the underfunded pension will take place in late August and it’s “unrealistic” to expect they will be reversed, Anne Clark-Stewart of the Nortel Retirees and Former Employees Protection Canada said Tuesday from Ottawa.
The cuts are interim until Nortel’s global creditors, including about 11,600 Canadian pensioners, have been paid. Some of the creditors are asking for billions, said Clark-Stewart, and the process of paying them will likely be a lengthy one.
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“There’s not enough money to go around,” she said of Nortel’s asset sales, estimating the company’s Canadian pension is underfunded by about $1.5 billion.
Nortel has made $7.2 billion from the sale of its assets, including the recent sale of more than 6,000 patents, some of them on technology for advanced wireless networks for mobile phones. Clark-Stewart also estimated that Nortel has about $1 billion in cash.
The average annual pension for a unionized Nortel employee is $12,800 and for managerial and non-unionized employees it’s $22,500, Clark-Stewart said. The average age of the roughly 11,600 Canadian pensioners is 74.
In Ontario, unionized members will get 75 per cent of their non-indexed pensions and non-managerial staff will get 70 per cent. Outside Ontario, union members will get 59 per cent of their indexed pensions and non-union pensioners will get 57 per cent, she said.
Stewart-Clark said retirees had been receiving full pension benefits since last Oct. 1 when the windup of the underfunded plan began and the overpayments since then are going to be clawed back.
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