Nortel Pensioners

Saving money for one’s golden years, when working is no longer possible or desirable, is a goal rightfully pursued by many Canadians. One does not expect to be working their entire lives just to survive. Nobody wishes to become an imposed burden on their family or friends during their later years. Yet, a flawed system seems to point at this possibility. An eight hour work day, with one or two hours commuting time, and the recommended eight hours of sleep, plus an hour to cook and eat, leaves only five hours of downtime during a work week (excluding weekends). Continuing such a pattern until death does not reflect an ideal image for a first world country. Those preparing for the rewards of retirement, set aside funds in the hopes of realizing this dream but recent events have forced the reality of such hopes into question.

Many expect this will be accomplished through the use of pension plans in addition to the usual government savings programs, which are described to be insufficient independently, when calculating the cost of retirement. In principle, pension plans are a great way of insuring a comfortable future, however, when a plan is self insured by the company offering the plan, the invested funds are protected primarily by a promise rather than any guarantee of receiving the expected funds should the company go bankrupt. The recent discussions on Oct 26, 2009, available on CPAC, regarding National Pensions and Retirement Income Security, demonstrated the difficult situation many Nortel employees are finding themselves in where large portions of their investments were lost. The fact of the matter is that during bankruptcy, the banks receive preferred creditor status over employees contributing portions of their salaries and years of service to a company.

Michael Boychuk, President & CEO of Bimcor Inc., says that these plans were not guarantees and were simply promises based on the strength of the company offering them. He explained that “the best security and best promise we can give to pensioners is by maintaining the viability of the corporations and making them financially sound.” In the matter of the priority of pensions in the event of bankruptcy Boychuk explained that there was no clear reason why pensioners should be favored over the banks. John McCallum, Liberal MP Markham-Unionville (Ont.) was applauded when he countered by explaining that pensioners deserve preferred status over banks because “the need of the pensioner is a lot greater than the need of the banks.” Diane Urquhart, an Independent Financial Analyst, complimented McCallum’s line of thought by showing that most industrialized countries around the world have preferred status for pensioners and/or public pension insurance, but for some reason Canada has neither. Joel Harden, Pension Policy Expert for Canadian Labor Congress used the German pension system as an example of a successful and well funded system which was the result of implementing the necessary firewalls to protect pensioner interests. He also mentioned that the Nortel situation is not unique, and that the Forestry and Manufacturing industries were greatly impacted as well.

Judy Sgro, Liberal MP, York West (ON) and Michael Ignatieff, the Liberal Party Leader, clearly outlined the need to quickly repair the pension system. It was described as “a crisis situation demanding immediate action” which could have far greater costs and implications if the situation continues as is. Suggestions such as strengthening CPP and modifying the existing Bankruptcy and Insolvency Act were offered but only time will show what policy is adopted and what necessary steps are taken to insure the secure and dignified retirement of our valued elders.

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Tags: michael ignatieff, nortel, pension plan, retirement

This entry was posted on Thursday, November 5th, 2009 at 1:37 pm and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.