I wrote this back when I was laid off from Nortel, and before settling my pension and severance. This ends up being very prophetic. The Nortel pension did actually collapse, and sooner than I thought. Luckily, I got out of it before that happened.
One of the major interesting issues that I am facing is whether to opt out of Nortel’s pension plan. If I opt out I get a lump sum payment (which will mostly be transferred to a Locked In Retirement Account (LIRA)) . The other option is to leave the money in Nortel’s pension plan. If I leave it I can draw from it at either age 55 (at an actuarially lowered rate) or 65.
As I have said previously I will be opting out. I have very little confidence the money will be available when I get to retirement age. I read in the Globe and Mail the following (by Derek DeCloet):
The bad news is that at the start of this year, Nortel’s plans were already short by $1.2-billion (U.S.). The worse news is that 53 per cent of the assets were in stocks, which have been annihilated. So the pension hole has become a cavern – one that will have to be filled with cash that the distressed company would rather use for other things. Like surviving, for instance.Derek DeCloet Globe and Mail
I am concerned, as I was supposed to receive information within 30 days of my severance about my pension options. I have not received anything in the mail as of yet, and I now wonder what new “wrinkles” may arrive in terms of this money.
My view is that this money is mine, and I have earned it over the 20+ years I worked at Nortel. Given they “capped” this pension as of January 1 2007, leaving my money there makes little or no sense to me. If anyone cares to comment or disagree, please feel free I am open to discussion on this issue.
Hey, like the Steve Miller song says “Take the money and run.” I can see how you’d be nervous about finally getting your pension money. I suppose the pension is underfunded on account of the huge layoffs Nortel seems to keep unleashing, and the number of those people who wisely opt to cash out their pensions.
I was listening to a podcast, and an analyst figured that near term sales for telecom suppliers would be poor, since most telcos are going to want to cut back during the economic slump. Hopefully Nortel survives long enough for the next upturn or at least gets taken over. Hope your cheque (from Nortel) clears soon.