A class action lawsuit has been filed against the Nortel Networks Corp. over major changes to employee pension plans. Nelligan O’Brien Payne is seeking class-action certification for employees who saw their future pension benefits plunge in a series of cost-cutting actions, including layoffs, announced two years ago. Veteran Ottawa employee serves as the lead plaintiff in the class action lawsuit.
Nortel spokeswoman Karen Monaghan said “changes to the pension program were designed to bring the company in line with many other comparable companies, while ensuring we still offer a competitive pension plan and overall benefits program”.
It can be recalled that Nortel announced plans in June 2006 to convert the pension plan from a defined-benefits plan to a defined-contribution plan, effective Jan. 1 of this year. It shifted the risk of future inflation from the company to the employee. It is similar to registered retirement savings plans, with the company matching some employee contributions. Nortel also eliminated future retirement health-care benefits for employees younger than 50 and with less than five years of service, effective July 2006.
Many older, long-service Nortel employees were protected from the change under a complex formula. But many middle-aged workers were not. Chief executive officer Mike Zafirovski agreed to cut his future pension benefits by 29 per cent as part of the switch. He will still qualify for a $355,000 pension at age 60 if he sticks with Nortel for five years.
Employees were eligible to remain in the more generous defined-benefit plan if they were at least 55 years old and their age and years of service totalled at least 70; at least 60 regardless of service; or had 30 years of service regardless of age.
Source: canada.com
Filed under Class Action, General Law | Tags: Class Action Lawsuit, Employee Pension Plan, Nortel Networks Corp., plaintiff, retirement health-care benefits | Comment Below
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