Mr. Don Sproule
National Chair: NRPC
Nortel Retirees and former employees Protection Canada
Dear Mr. Sproule:
I am writing regarding the government’s ongoing discussions with the Nortel Retirees and former employees Protection Canada (NRPC) on options for Nortel pensioners. As part of the government’s commitment to a second review of the NRPC proposal, I understand that further detailed discussions have taken place between the NRPC and officials from the Ministry of Finance and the Financial Services Commission of Ontario. As I emphasized in my last letter to you, the government appreciates the many opportunities we have had to meet to discuss this challenging issue.
I appreciate the strong advocacy you have shown on behalf of the pensioners and the advice you have provided regarding their interests and concerns. The government’s central priority is security of benefits for Nortel pensioners. However, in discussions regarding the NRPC’s proposed Financial Sponsorship Model, you have made strong arguments for allowing greater pensioner choice.
The government intends to move forward with a solution that will respect pensioner choice while safeguarding benefit security. We will be introducing legislative amendments that, if passed, would give Nortel pensioners the choice to opt out of the current process and transfer their pension commuted values to a life income fund account. To further protect Nortel pensioners, adequate disclosure would be required to enable pensioners to make informed decisions.
The ability to opt out of the current wind up approach would allow pensioners who have a greater risk tolerance to elect to pursue investment strategies that may ultimately lead to higher benefits. But it would also ensure that no pensioners have their benefits put at increased risk without making a clear choice, since the default option for pensioners would remain the purchase of annuities as prescribed by the Pension Benefits Act. This approach is consistent with what is currently available to plan members who are not yet in receipt of a pension.
I note that Quebec has recently made this option available to Nortel pensioners in its jurisdiction. However, unlike Quebec, Ontario pensioners will have their commuted value entitlements “topped up” by the Pension Benefits Guarantee Fund (PBGF). Last spring, the government provided a $500 million grant to the PBGF, the majority of which is expected to be used to fully cover claims from the Nortel plans. For many in Ontario, the PBGF would significantly enhance their pension benefits.
Ministry officials have reviewed the proposals you have received to date for a Financial Sponsorship Model. We believe that this clarification of the government’s intention will allow the NRPC to move forward and seek binding proposals.
Once again, I would like to thank the NRPC for its leadership on this challenging issue. I would also like to acknowledge the work of the Rights for Nortel Disabled Employees group in advocating for the interests of disabled plan members. Finally, I wish to thank my colleague MPPs for their work on behalf of Nortel pensioners. Many members of the government caucus, including Bob Chiarelli, Yasir Naqvi, and Charles Sousa, have been deeply engaged on this file. I would also like to acknowledge MPP Norm Sterling, whose Private Member’s Bill was a helpful contribution to this debate.