Government must protect Canadian Nortel assets from U.S. seizure

OTTAWA – Canadian Nortel employees awaiting their pensions could be left high and dry as U.S. officials move to seize Nortel funds to pay for pension shortfalls in the United States, say New Democrat Pensions Critic Wayne Marston and Ottawa-Centre MP Paul Dewar.

“The government must take immediate action to secure Canadian Nortel assets and protect Canadian pensioners before the pension funds are seized by the U.S.,” says Dewar. “They must stand up for Canadians and ensure that if pension assets are held in Canada, then they stay in Canada,” he added.

The US Pension Benefit Guaranty Corporation recently seized the pension fund for Nortel’s American employees, and has announced that it will guarantee pensions for as much as $54,000 (US) per pensioner annually.

“If Canada had a federal version of the U.S. Pension Benefit Guaranty Corporation, Nortel pensioners, and for that matter, all Canadian pensioners would be protected as well,” said Marston. “The New Democrats’ recent Opposition Day Motion, which passed unanimously in the House, calls for the creation of a national pension insurance program that would have protected these workers, yet this government refuses to take action and protect Canadian employees.”

Nortel’s Canadian pension fund is underfunded by US$1 billion. According to Independent Analyst Diane Urquhart, total available cash in the Canadian Nortel estate is just $127 million, and will likely be reduced to zero by November of this year. Canada is the only country where the company’s cash balances are declining, with increases occurring in the U.S. and Europe since January 14, 2009. Canada now needs to seize a high percentage of Nortel's cash proceeds from the fire sale of its businesses in order to protect its 17,500 Canadian pensioners from a serious cut in their monthly income.