Nortel’s painful pension lessons
Posted on October 21, 2015 in Debates, Social Security Policy Context
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TheStar.com – Opinion/Commentary – When telecom giant Nortel collapsed, its 20,000 employees were out of job. Six years later, 10,600 pensioners remain without a secure retirement. Next week a court will decide whether their long battle is over. A group of Canadian pension experts argues it is well past time for them to receive just treatment.
Oct 21 2015. By: Bob Baldwin & four others
The shocking treatment of Nortel employees when the company collapsed in 2009 was a wake-up call for many Canadians concerning the holes in our pension laws.
For several years, Nortel’s 10,600 pensioners faced the prospect of getting nothing for their years of service to the company, as creditors fought over the corporate assets. The fees demanded by the lawyers and accountants during the six years of battle – more than $2 billion – were so excessive that the advisers as a group were publicly slapped by the judges. Simply stated, this prolonged legal battle has become an undue burden on thousands of Canadians’ potential retirement protection.
This spring, a panel of Canadian and American judges made a courageous and ground-breaking decision. They required all creditors to share the remaining assets with the pensioners, an almost unheard-of concession in bankruptcies. Until now many pensioners receive nothing as a result of their employers’ bankruptcy.
The decision stunned creditors and the business community. The Canadian pensioners’ legal team had asked for 59 per cent and got 55 per cent. Getting 55 per cent – just more than half of what the pensioners believe they earned – is a bitter pill to swallow. However, the sad reality is that the settlement of 55 per cent is a lot better than the zero that the bond markets wanted the pensioners to receive. Sadly, it is the best offer they will get.
But even this settlement is not yet finalized, and may once more come under attack. If the greediest of the bondholders decide to appeal again, millions more in legal fees and years of frustration for aging pensioners may lie ahead.
As painful as it may be for Nortel pensioners to see this settlement offer as something to celebrate, most understand that it is far better than it could have been. They also know that even this payment remains at risk until there is a final settlement.
So our appeal is this: Accept the settlement and at the same time join the many voices fighting for pension reform in Canada so these six bitter years of struggle are something no other Canadian employee will be forced to suffer.
After all this time, you cannot afford to let even more money flow into the hands of lawyers and accountants, paid at the expense of your pensions. We should not allow a few recalcitrant creditors to undermine this hard fought settlement.
Nortel pensioners should not put this offer at risk; they should settle. To Canadians and Canadian politicians, we say: join the fight to ensure that no other Canadians are put through the humiliation Nortel employees have endured.
Signed by:
Bob Baldwin, former pension adviser, government of Ontario; former Research Director and Senior Pension Adviser, Canadian Labour Congress.
Tessa Hebb, Director, Carleton University Centre for Community Innovation, international social investment and pension consultant.
Andrew Jackson, Senior Policy Adviser, Broadbent Institute; former Chief Economist, Canadian Labour Congress.
John O’Grady, Principal, Prism Consulting; compensation and pension adviser, former legislative director, Ontario Federation of Labour.
Peter Warrian, Senior Fellow, Munk School, University of Toronto, former chief economist, Province of Ontario.
(All are writing as individuals; titles are for identification purposes only.)
< http://www.thestar.com/opinion/commentary/2015/10/21/nortels-painful-pension-lessons.html >
Tags: economy, pensions, rights, standard of living
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