Dow Jones Newswires reports that under the agreement, the firm will continue to administer the pension plans until September 30. After that date, the plans will be transitioned to a new administrator appointed by the Superintendent of Financial Services.
Nortel will continue to fund the plans consistent with the current service and special payments it has been making during the course of the Companies Creditors Arrangement Act proceedings through March 31, according to the news service. Thereafter, it will make current service payments until September 30.
For the remainder of 2010, Nortel will continue to pay medical and dental benefits to pensioners and survivors and long-term disability beneficiaries in accordance with the current benefit plan terms and conditions. Life insurance benefits will also continue unchanged until December 31, and will continue to be funded consistent with 2009 funding.
In addition, the agreement provides that Nortel will establish a C$4.2 million fund for termination payments of up to C$3,000 per employee, to be made to eligible terminated employees as an advance against their claims under the creditor-protection proceedings.
Nortel estimates that, in total, for the period from filing for creditor protection until the respective end dates, it will pay about C$100 million to the pension plans and towards benefits.
The settlement agreement is subject to court approval.
In the U.S., the pension plan for the bankrupt Nashville-based Nortel Networks was taken over by the Pension Benefit Guaranty Corporation last July (see PBGC Takes Pension for Bankrupt Telecom Company).