A committee representing 20,000 Nortel retirees is lobbying the Ontario government to save their beleaguered retirement plan from mandatory liquidation by the end of September.
Nortel Networks Corp.’s pension plan members are asking the province to accept a new proposal that allows the private sector to take over the management of the money.
The committee is giving financial companies a chance to review the pension plan’s $2.5 billion in assets, and calling for bids for the project.
There has been significant interest, with 10 companies applying for access to Nortel’s data room, a committee spokesperson said.
Proposals must be submitted to the pensioners’ committee by Sept. 27.
Nortel’s pension, currently on life support, faces government supervision effective Sept. 30, unless the province accepts its new proposal.
But there are some plan members arguing that the plan is too risky and the pension monies should instead be used to buy low-risk annuities.
Any move to transfer the pension money to new management would require government approval because pension plan assets cannot currently be transferred when companies go out of business. Instead, the standard procedure is for the assets to be liquidated, and the money used to purchase annuities.
But annuities are currently providing miserly rates of return in the low-interest-rate environment, which is why the Nortel pension committee opposes liquidation.
Nortel filed for bankruptcy protection in January, 2009, selling off most of its assets in a series of auctions. The company is now completing the final steps of its windup, including that of its pension plan.
