Nortel retirees welcome Ontario pension rescue
By Claire Sibonney
TORONTO (Reuters) - Ontario pensioners of Nortel Networks Corp said on Monday they can rest easier after the provincial government pledged to provide funds that will help top up their modest payouts from the failed telecoms equipment giant.
Ontario Finance Minister Dwight Duncan said in a television interview on Sunday that the province will put extra cash into Ontario's Pension Benefits Guarantee Fund (PBGF), an insurance net for pensioners of failed companies.
A group representing Canadian retirees of Nortel, which filed for bankruptcy protection in January 2009, said this would ensure Ontario pensioners receive the first C$1,000 ($990) due to them each month.
"What this announcement means is that for people with small pensions like pensions of C$12,000 a year, and they had service in Ontario, it means they can sleep at night," Don Sproule, national chair of Nortel Retirees and Former Employees Protection Canada, told Reuters.
In a statement on Monday, Nortel also said it entered into a settlement agreement with former employees under which it will administer two pension plans until September 30, at which point the plans will be transferred to a new administrator.
Earlier, Duncan told reporters in Ottawa that the province will spend about C$200 million in providing help to pensioners, but the full cost won't be known until Nortel's bankruptcy proceedings and the sale of its assets are wound up later this year, according to newspaper reports.
A spokesperson for Ontario's finance minister could not immediately be reached for comment.
Nortel's pension deficit was estimated to be between $2.5 billion and $2.8 billion when it filed for bankruptcy protection. Continued...