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 â€“ 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.