Dipac

Ontario Finance Minister Dwight Duncan has officially rejected a request by affected pensioners to let the private sector take over managing $2.5 billion in pension assets held by the Nortel pension plan.

Retirees had urged the government to let the plan avoid mandatory wind-up and instead allow the pension fund to be transferred to a new investment fund and managed by a financial company. Under wind-up provisions the fund is estimated to have assets equal to about 65 percent of its liabilities, thus plan members stand to lose about one-third of their pension entitlements. The government largely ignored the pensioner's plea that forced conversion into annuities in today's markets denied pensioners any opportunity to have the fund recover any part of the current significant shortfall.

Mr. Duncan also referenced the Pension Benefits Guarantee Fund as the source of relief for those pensioners who face pension reductions to below $1000 per month, The PBGF will augment pension payments received such that pension income is restored to at least the $1000 threshold amount. Individuals whose reduced pension remains above $1000 per month will receive no PBGF benefit. It is noteworthy that this benefit level was highlighted as inadequate for current times, yet this need for improvement is not addressed in the government's most recent announcement regarding pension reform.

A letter from DIPAC to Minister Duncan expressed disappointment with the decision to reject the Nortel appeal and suggests he should reconsider this decision,