U.S. government to cover Nortel pensions of 23,000 Americans
A U.S. federal agency has taken responsibility for pensions covering 23,000 American employees and retirees of Nortel Networks, which is operating under court protection from its creditors.
The Pension Benefit Guaranty Corp. estimates the Nortel Networks Retirement Income Plan has assets worth only $716 million US, while its benefit liabilities are much higher at $1.23 billion US.
The agency says it expect to cover the entire $514-million US shortfall for the company's U.S. defined-benefit pension plan.
Nortel issued a statement saying the U.S. agency won't be taking on the company's defined-contribution pension funds or its unregistered pension plans for its American workers.
The company's statement didn't mention its employees and retirees in other countries, but Canada doesn't have an equivalent to the Pension Benefit Guaranty Corp., which currently ensures basic pension benefits for 44 million Americans.