Days after a patent sale generated $4.5 billion (U.S.) for creditors of insolvent Nortel Networks, its retirees are facing a huge cut in pension income, along with a clawback of benefits paid out over the past 10 months.
“This is hitting our family very hard,” said Jayne Price, whose 89-year-old father, John Price, supervised a staff of 300 Nortel engineers in Quebec until he retired in 1980.
John Price and the other 12,000 or so Nortel pensioners in Canada began receiving individual letters Wednesday from pension administrator Morneau Shepell announcing “interim” cutbacks in benefits starting with the Aug. 25 pension cheques.
Ontario estimates an average Nortel non-union employee who worked in this province faces an 18 per cent reduction in benefits. Workers who spent their careers outside of the province, and were entitled to indexed pensions, will see average cuts of 31 per cent for non-union staff and 25 per cent for unionized employees.
The cuts are deemed interim because benefits will be recalculated higher to reflect Nortel’s liquidation sale that yielded total proceeds of more than $7.6 billion, far greater than the company had forecast.