Dipac

Thousands of Nortel pensioners will now be allowed to invest their pensions with private fund managers, after the Ontario Liberal government announced Friday it will reverse an earlier decision forcing them into a safer -- but less profitable -- regime.

"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," Finance Minister Duncan said in a letter addressed to Don Sproule, chair of the Nortel pensioner's association.

Pensioners had complained they faced an immediate 10-per-cent loss if the government-led windup of their $2.5-billion plan went ahead with an annuity purchase as required under current legislation.

They argued those annuities, contracts with financial institutions that provide fixed payments, would put them at a huge disadvantage. Annuity markets are at historic lows and lack the capacity to take on the Nortel fund's massive infusion of capital, they said.

Sproule had reacted to that earlier news by threatening to haunt the Liberals in next year's election. "Quite frankly, the 2011 election begins now," he said in September. "We have 18,000 Nortel pensioners (10,260 based in Ontario) who are going to come forward and not let them forget."

This is good news for Nortel pensioners, and confirms that governments are influenced by organized campaigning. Your 'vote' does have some weight, and your communications with MPs and MPPs does influence the political process. In this case this concession also enjoyed support from the financial institutions who see it as a business opportunity.

Unfortunately comparable good news currently appears unlikely opposite Pension Plan Funds that are the victim of under-funding and become caught up in today's federal Bankruptcy provisions. These provisions provide virtually no shortfall recovery potential and federal MPs seem unconcerned with the fate of Nortel pensioners in this regard.

If you are interested the Ottawa Citizen report may still be available via the following link...

http://www.ottawacitizen.com/life/Nortel+pensioners+right+invest+with+private+fund+managers/3997385/story.html#ixzz18lh8LB7x