WASHINGTON - A U.S. federal agency has taken responsibility for pensions covering 23,000 American employees and retirees of Nortel Networks, a Canadian company operating under court protection from its creditors.
The Pension Benefit Guaranty Corp. estimates the Nortel Networks Retirement Income Plan has assets worth only US$716 million, while its benefit liabilities are much higher at US$1.23 billion.
The agency says it expects to cover the entire US$514-million shortfall for the company's U.S. defined-benefit pension plan.
Nortel issued a statement saying the U.S. agency won't be taking on the company's defined-contribution pension funds or its unregistered pension plans for its American workers.
The company's statement didn't mention its employees and retirees in other countries but Canada doesn't have an equivalent to the Pension Benefit Guaranty Corp., which currently ensures basic pension benefits for 44 million Americans.
