Canadians likely won't benefit from some of the proposed federal changes to pension plan rules until a decade from now, says the head of a group representing Nortel retirees.

"There's nothing in it for people with pension plans currently in crisis," said Don Sproule on Wednesday in response to the changes announced by Finance Minister Jim Flaherty a day earlier. "The real benefit to Canadian pension plans is probably 10 years away, [during the] next economic downturn, and it's doing absolutely nothing for our situation."

Under the new rules, companies can make surplus pension contributions of up to 25 per cent instead of 10 per cent, and that will affect both federally regulated pension plans and provincially regulated plans like Nortel's.

"That encourages corporations to save for a rainy day," Sproule said.

However, Sproule thinks companies are unlikely to take advantage of the new rules until the economy improves. After that, he predicts it will take a few years before enough of a surplus has accumulated to protect benefits during the next downturn.

In the meantime, he said, most pension plans now are about 30 per cent underfunded.

"It's not just Nortel."

Nortel retirees have been lobbying governments since Nortel filed for bankruptcy protection in January and began selling off its units one by one.

They worry they will lose a large chunk of their pensions once Nortel finally ceases operations, leaving them officially in the queue of the company's unsecured creditors. That means they would have to jostle with other creditors for a share of whatever is left.

The previous, lower cap on surplus pension contributions were intended to protect tax revenue, as pension plan contributions are tax-exempt.

"Certainly part of the reason we're where we are today is Nortel was prevented … in the good times from topping up the pension plan," Sproule said. "Whether they would have done it is another question."

Sproule maintains what is needed to help Nortel retirees and former employees on long-term disability is a change to federal bankruptcy laws, so pensioners are higher up on the priority list of creditors.

Flaherty proposed two other changes to rules for federally regulated pension plans Tuesday. They would:

• Ban employer contribution holidays unless the pension plan has a five per cent cushion between its assets and liabilities.
• Required fully funding pension benefits when a plan is terminated. Currently, employers must fund only 80 per cent of benefits.