The Quebec government is offering to help Nortel Networks Corp. retirees with a proposal to take over management of their pension plan.
Quebec Employment Minister Sam Hamad has pledged to amend provincial regulations to give the pension regulator, the Régie des rentes du Québec, the ability to manage assets for Nortel pension plan members in Quebec if they approve the option, said Alexandre Boucher, a spokesman for Mr. Hamad.
"It's very good news for retirees of Nortel," Mr. Boucher said. He said the province will take on the responsibility because Nortel's almost 6,000 pension plan members in Quebec are facing a shortfall in their pensions and are worried about their futures. At current funding levels, Nortel retirees would receive just 69 per cent of their pensions if their plan were wound up today.
The Nortel plan has about $2.5-billion in assets, and roughly $800-million belongs to the Quebec members.
Ken Lyons, a Quebec representative on the national committee representing Nortel plan members, said he welcomes the news for the Quebec retirees because the province will manage their money for five years, investing the assets to try to recoup the funding shortfall. That means they do not have to cash out and crystallize their pension loss at the current level.
Mr. Lyons said each Nortel retiree has the right to decide whether to opt for the proposal. He said the other alternatives are to have the money invested immediately in an annuity, which he argues offers a "terrible" return at current interest rates, or to invest on their own in a life income fund.
He expects many retirees to opt for provincial management, which guarantees they will receive no less than the 69 per cent pension they are currently eligible to receive, and could earn more in the future.
"Markets are likely to improve, and interest rates may also increase," Mr. Lyons said.
Pension lawyer Michel Benoit in Montreal said the process of transferring the funds to the Quebec regulator is complicated because Nortel's pension plan is registered in Ontario and does not have a separate Quebec division. As a result, pension money for Quebec would have to be separated out and transferred to the province.
The other complication is that Quebec's pension rules require a plan to be terminated under bankruptcy before the province can take over management of the assets. Nortel is operating under court protection through the Companies' Creditors Arrangement Act, but the company is not bankrupt.
This means the province must amend its regulations to also cover companies that are operating under bankruptcy protection.
Don Sproule, chairman of the national committee for Nortel plan members, said the proposal is good for Quebec workers, but does not help members in other provinces.
He said Nortel retirees are planning two demonstrations to try to win more assistance. The first is set for today, and will target the Ontario government at Queen's Park, seeking a promise that the province's Pension Benefits Guarantee Fund will cover the Nortel plan shortfall.
The second protest, Oct. 21 on Parliament Hill, will try to pressure the federal government to give pension plans an elevated status among creditors when companies liquidate.
Janet McFarland