What do they do after that?

Nortel pensioners will soon find poverty their daily grind. Photograph by: Pat McGrath, The Ottawa Citizen

Nortel’s ex-employees living on disability benefit got a short reprieve yesterday. The on-again-off-again deal to preserve their benefits despite the bankruptcy is back on again.

Nortel disability pensioners will be living at 64% of the poverty line in 2011. The Canadian safety net for those living with disabilities is not adequate.

The court order striking the original deal was apparently all over one little clause that said the $57 million agreement to extend benefits could over-ride changes in the Bankruptcy and Insolvency Act.

The deal was originally opposed by Nortel employees with long term disabilities. They still face the reality of joining the majority of Canada’s disabled. They will be poor.

Why the judge couldn’t make the amendment for the sake of equity is anyone’s guess. Nortel made the change and the deal has been accepted.

The maximum annual benefit under the CP Disability is $13,512. The average CP disability benefit paid during 2010 will be $9.708. The LICO or Low Income Cut Off (Statistics Canada)for a single person in Canada was $20,778 in 2005.

Formerly those employees living on disability would have been receiving approximately 60% of their regular earnings on disability. Most companies insure their employees with long-term-disability insurance. Some, like Nortel, self-fund which saves the company money but puts the employees at risk. Canadian insurance companies are a much safer bet than industrial businesses.

The Conservative government has promised disability pension reform but no action has been taken. “Finance Minister Jim Flaherty wants to hear Canadians’ views on whether the country’s retirement income system needs to be improved, and, if so, how that should be done. Flaherty announced plans Wednesday for a series of public town hall meetings, round tables and online consultations over the next five weeks.” CBC

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With stories from CBC and the Globe and Mail