Ontario government to top up Nortel pensions, government source

Staff ~ The Truro Daily News
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TORONTO - A move by the Ontario government to pay into Nortel's underfunded pension plan just days after calling a byelection in the Ottawa riding where many of those seniors live is a "callous" and cynical attempt to buy votes for the Liberal candidate, the Opposition charged Sunday.
It's a move that may help some pensioners but doesn't address many problems and proposals suggested by former workers, who have been lobbying the government for months amid fears of losing their income.
"The only new thing, the only new piece of information here is that there's a byelection on and it's where a lot of those Nortel workers live," said NDP Leader Andrea Horwath.
The move, which comes on the heels of last week's $15 million funding announcement for a downtown Toronto hospital in the riding of Toronto Centre on the eve of a byelection, is simply "cynical," she added.
It also follows a call by Bob Chiarelli, the Liberal candidate in Ottawa West-Nepean, who on Friday urged the government to ensure there are sufficient funds in the Pension Benefits Guarantee Fund to provide a pension top-up to Nortel pensioners.
It looks like the only things the Liberals can do to force the premier to do the right thing for their constituents is to resign and force a byelection," Horwath said.
Progressive Conservative Lisa MacLeod said it was disheartening to see the government put people's lives on hold to win a byelection.
"It's so cynical that Bob Chiarelli and Dalton McGuinty would make Nortel pensioners wait for almost a year and on the eve of a byelection try to buy votes on the backs of seniors," she said.
"They could have done something six months ago. It's callous."
Government sources said there was no actual announcement planned, but that finance minister Dwight Duncan had simply indicated that the government would ensure money was available for the Pension Benefits Guarantee Fund if Nortel emerged from bankruptcy protection and filed for benefits under the plan.
After presentations by pensioners to a finance committee, Duncan wanted to provide some reassurance for retirees, the source added.
The fund provides Ontario's pensioners with up to $1,000 a month in the event a pension plan fails to provide its full benefit, or any at all. It is funded by corporate contributions, and the government has no legal obligation to top it up.
In the past, the provincial government has found ways to support the fund when it has been insufficient to meet demand, including when farm-equipment maker Massey Ferguson and Algoma Steel filed for bankruptcy during previous recessions. But as it currently sits at about $100 million, the plan is dramatically underfunded.
Don Sproule, president of The Nortel Retirees and Former Employees Protection Canada organization , said he hasn't received any details about the government's plans, but said payouts that result from a windup of the pension plan would really only benefit those pensioners earning $12,000 a year.
Nortel's pension plan is about 30 per cent underfunded, and the guarantee fund doesn't contain enough money to cover the shortfall. If the guarantee fund kicks in, workers would get up to $1,000 a month.
That means anyone earning over $12,000 would only get 70 per cent of their pension.
Many pensions are closer to $22,000 a year, so those would see a big drop in their monthly income.
The fund also only applies to retirees who worked in Ontario - and would do nothing for Nortel workers from Montreal, Calgary of Halifax.
The group had proposed what it considered a win-win" plan that would have increased the payout to pensioners while decreasing the payments required by the government - which doesn't appear to be what Duncan is proposing, Sproule said.
It has also urged the province to increase the monthly top up to $2,500 - a proposal that was endorsed by a pension report commissioned by the government.
"Nortel, it's a slow motion train-wreck," Sproule said.
"We know at some point Nortel will stop looking after our pension plan."
Nortel, a telecom equipment vendor that was Canada's most valuable company during the high-tech boom early in the decade, filed for bankruptcy protection in January after mounting losses and the prospects of continued red ink.
It has since been selling off its global operations piece by piece, and there are now nearly 17,500 Nortel workers at risk of losing their pensions.

Organizations: Nortel, Pension Benefits Guarantee Fund, Toronto hospital Toronto Centre Algoma Steel The Nortel Retirees Former Employees Protection Canada organization

Geographic location: Ontario, TORONTO, Ottawa Montreal Calgary Canada

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