Former Nortel Networks workers who feared they’d lose their company-covered benefits by March 31 will continue to get coverage through the end of the year, in a deal announced on Monday.
Bankrupt Nortel negotiated the $57 million deal with groups representing the ex-employees. The agreement impacts tens of thousands of pensioners, long-term disability recipients and workers who lost their severance pay after Nortel filed for bankruptcy last year.
The contract is good through Sept. 30. After that, the pension plans will be moved to a government administrator. Nortel also will establish a fund, valued at $4.2 million in Canadian dollars, for termination payments. The once-venerated telecom equipment maker will keep paying medical, dental and life insurance benefits.
“We are pleased to have come to a resolution on these important matters,” David Richardson, Nortel chairman, said in a prepared statement. “We understand the need to provide clarity to former employees as well as several months of certainty that will allow beneficiaries to make alternate plans.”
Canada’s federal government still must approve the settlement.
Monday’s news came after months of pensioners’ pleas for their former employer to continue paying them the benefits they’d earned. Earlier in the day, word broke that Ontario’s finance minister will provide either a grant or loan to Ontario’s Pension Benefits Guarantee Fund after Nortel emerges from court protection. No one yet knows how much the grant or loan will cost but estimates peg the amount between $2.5 billion and $2.8 billion.