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Nortel’s Pension Woes
By Mark Evans | November 2, 2008
The Globe & Mail’s Derek DeCloet has an interesting story looking at the growing pension deficits facing a growing number of companies, including Nortel.
DeCloet reports that one of the problems facing Canadian companies is there’s no incentive to over-fund pension funds to protect themselves from market volatility. According to the Income Tax Act, once you reach a 10% surplus, you can’t make any more contributions. This apparently encourages Canadian companies to carry deficits rather than surpluses.
In any event, Nortel’s pension fund (which had $1.2-billion deficit going into 2008) is getting hammered because 53% of its assets were in stock. Mind you, many companies were probably sitting in the exact same boat.
Technorati Tags: Nortel
Topics: Financials |










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