NDP to call for bankruptcy pension protection
The NDP said Tuesday it will introduce new legislation to protect employees' pensions when companies go bankrupt in an effort to prevent a situation like that currently facing Nortel retirees.
NDP Leader Jack Layton and pensions critic Wayne Marston said the proposed "Nortel act" would amend the Bankruptcy and Insolvency Act to make workers seeking to claim the unfunded portion of their pensions be considered preferred creditors in bankruptcy proceedings.
The legislation follows October protests outside Queens Park in Toronto and on the steps of Parliament by Nortel retirees urging legislators to ensure current and former employees don't take a back seat to bondholders and other parties when companies undergo financial restructuring.
The move of longtime technology stalwart Nortel into bankruptcy protection in January and the subsequent delays in securing pensions for workers prompted the NDP to call for reform to the bankruptcy act, said Layton.
Many company pension plans are not fully funded, said Marston, and when companies go bankrupt workers often end up down on the list of creditors seeking to claim the remaining portion.
Marston said the legislation will also seek to remove a cap on the pension benefits a person can claim.
Don Sproule, chairman of the national committee for Nortel pension plan members, has said about 17,500 Nortel pensioners have been affected by the bankruptcy.
Pensions about 30 per cent unfunded
Speaking alongside the two NDP MPs, Sproule said Nortel's pension is about 69 per cent funded, leaving 31 per cent up in the air and in the hands of bankruptcy courts.
Layton said the current law "allows workers to be denied the wages they had earned" and called on the Conservative government and opposition parties to support the bill.
Marston said long-term disability benefits will be handled in a separate piece of legislation.
Marston said the proposed legislation would not be retroactive and so might be able to assist Nortel retirees, but Sproule was hopeful the bill could be passed before Nortel moves from protection under the Companies' Creditors Arrangement Act to the bankruptcy act, thus allowing the measures to apply to his workers as well.
In October, the Quebec government vowed to safeguard the pensions of 3,750 Nortel employees in the province. That offer will last to a maximum of five years, and in a statement, national assembly member Francois Ouimet called the measure a "special situation."
In July, the U.S. government took responsibility for pensions covering 23,000 American employees and retirees of Nortel.
At the time, the Pension Benefit Guaranty Corp. estimated the Nortel Networks Retirement Income Plan has assets worth only $716 million US, while its benefit liabilities were much higher, at $1.23 billion US. The agency said it expect to cover the entire $514-million US shortfall for the company's U.S. defined-benefit pension plan.
With files from The Canadian Press