The Ontario government is coming to the rescue of pensioners of Nortel Networks Corp., one year after the iconic Canadian telecom-equipment maker sought court protection from its creditors.
The government is pledging to inject funding into the province's support net for pensioners of failed companies, guaranteeing that former Nortel employees who worked in Ontario can receive the first $1,000 of their monthly pension payments.
A government source said last night that Finance Minister Dwight Duncan will provide either a grant or a loan to the province's Pension Benefits Guarantee Fund once Nortel emerges from court protection. It is not known at this time how much the guarantee will cost the province.
"The minister is providing reassurance to Nortel workers that the Pension Benefits Guarantee Fund will be in place," the source said.
But opposition members criticized the timing of the announcement, noting that the government is belatedly addressing Nortel's pension woes just as it heads into a by-election March 4 in the riding of Ottawa West-Nepean, a region where many Nortel pensioners reside.
Just last week, Bob Chiarelli, the Liberal candidate in the riding, called on the government to ensure that there is sufficient money in the guarantee fund to top up the Nortel pensions.
Lisa MacLeod, finance critic for the Progressive Conservatives and MPP for the neighbouring riding of Nepean-Carleton, last night accused the government of "playing the worst kind of politics." Premier Dalton McGuinty has been stringing Nortel pensioners along for more than a year, she said.
"I think it's cynical. Nortel pensioners have been begging the government to act."
New Democratic Leader Andrea Horwath echoed those comments.
"The McGuinty Liberals have ignored the plight of Nortel pensioners for months," she said. "The thought of losing a seat has now forced them to listen. Sadly, the only jobs they really care about are their own."
The government source denied that the timing has anything to do with the by-election, which was called after former cabinet minister Jim Watson resigned to run for mayor of Ottawa.
The source noted that the Finance Minister has the power to deal unilaterally with a pension crisis under new rules introduced last year as part of the budget bill. Prior to the rule changes, the Finance Minister needed authorization from the Lieutenant-Governor to make loans to the guarantee fund. Under the new rules, he can make a grant or a loan on his own authority.
This year alone, Mr. Duncan has made loans totalling $130-million to the guarantee fund to rescue pensioners of failed companies, the source said.
Nortel will likely eclipse that amount. The company's pension deficit was estimated to be between $2.5-billion and $2.8-billion when it filed for protection from creditors in January, 2009.
