I speak to you today to present a working Canadian's perspective on the retirement income security of Canadians. My name is Paul Hanrieder, and I was a longstanding employee at Nortel who was severed with no severance in 2009.
Retirement planning is something that is part of every facet of every decision you make during your working career. Retirement saving is a balancing act many of us have been successful at, but potholes, loopholes, and other obstacles that are far beyond our control are making working Canadians' heads spin. These obstacles are caused by outdated legislation and a shift in balance between the interests of ordinary Canadians and business investment interests. Archaic government legislation is being used by business interests to shift the balance away from working Canadians to secure profits for junk bond holders. It is important to ensure a strong economy, to ensure jobs for workers, but if the Canadian workforce is destroyed and their retirement is left in ruin, we face a much larger problem.
I inject that those influences have been permitted for so long without correction that we are in a crisis. Sophisticated investors and business interests have been able to engineer a business environment that permits unloading of debts, objectifying of workers, and rampant ethical breaches, all in the pursuit of profits.
I worked for Nortel Networks as an engineering manager, and at that time knew very little about the issues I am talking about today. I accepted a layoff for downsizing with the assurance of a legislated severance. These funds would help me transition to another job and allow me not to become a burden to the taxpayers' purse. In January 2009 Nortel declared bankruptcy protection, allowing the company to forfeit any severance owed, and my foundation for transition was destroyed. At this point, the severed employee has no income and no recourse other than to immediately find employment, file for EI, and offset financial deltas from personal savings or by liquidating retirement investments. Years of retirement planning are thrown out the window. It's survival mode. A pay cheque and funds to transition you to a new job vaporize.
The average Canadian has approximately two weeks of savings. Once those savings are depleted, money is pulled from retirement savings to avoid financial distress. These moneys used from retirement savings could take several years to replenish at best. This is unrecoverable for most.
Federal CCAA or bankruptcy filing immediately allows a company to stay all pending obligations for employee-related claims and they become unsecured creditor claims. Having been through the bankruptcy process now with Nortel, I am disgusted at the whole process. The bankruptcy process, by design, is a long and drawn-out process to allow a company to restructure in the implied hope for recovery, wearing down creditors to accept less of a claim. In the case of Nortel, the executives lined their pockets with $470 million in so-called “retention bonuses”, while to pay severance would only have cost about $165 million. We have the most to lose and the least to gain of any other creditor class. Employee-related claims should have preferred status in bankruptcy. No other group has such claims without recourse for recovery.
The legal representation process is debilitating. There are three distinct groups that exist in the Nortel employee situation: the severed, the long-term disabled, and the pensioned. Three groups with vastly different issues, each distinct with their own concerns that were shoehorned together to have one legal counsel to represent all parties.
Things get worse. Nortel got to approve the law firm that would represent employee-related claims. How would that be fair? The unelected steering committee was asked to sign blanket non-disclosure agreements on details of their work in our interest by our legal counsel. How can our committee represent us if they can't even talk to us about what they're discussing? Legal counsel still has not identified a date to close employee-related claims. An unsecured creditor committee has been created with no employee representation even at the table--one of the largest unsecured creditor groups.
In my opinion, an artificial deadline was recently invented by Nortel where all payments to pension, health trusts, and benefit plans were to stop by the end of March. This created a distinct fear and uncertainty within the select few representing us, which forced retired and some disabled people to accept a settlement agreement that gave up substantial potential gains by the employee group. It honestly felt like a gun was held to our heads and we were forced to choose between two equally bad options. In the end, the agreement forced us, without a vote or even a poll of agreement from the so-called “steering committee”, to give up all rights against Nortel and the potential future BIA changes we have been working to get with the government.
We are outraged, and feel that we have been sold down the river for issues that are of no concern to the severed. Nortel has saved approximately $1.2 billion--an outrageous dollar amount--by successfully playing this gambit. Who's protecting the hard-working Canadian during this process?
The severed are disillusioned and poorer than ever, and have nowhere to turn. Our very legal system that supposedly has checks and balances built in to ensure that this cannot happen has been used to permit this to occur.
Yes, we can find yet another lawyer to represent us, but without a lottery win, this is extremely unlikely, as the Nortel legal bill is already over $290 million and growing. Why did they not just pay the obligation rather than paying it to lawyers to fight us? Something is really wrong here.
You may ask how this applies to retirement. Many say, “You have half your working life ahead of you, you can recover.” I strongly object to this logic. This is an emotional and financial upheaval that many will never recover from, with wide-reaching effects. The loss of these earned benefits means that we cannot retrain. We have no money to be able to wait for the right job. We end up taking anything we can find.
Our ability to re-plot our course has been damaged forever. Many of us hang our heads in humiliation and disgust that this has been allowed to happen. We, however, have no financial means to fight this. Some, like me, will speak out in the hope that someone will hear and will eliminate this injustice, but most will plod on in search of a foothold to attempt to recover.
These are but a few of the many items that still exist in the minefield we have uncovered. In the interest of time, I'll provide some of those additional issues in an addendum to this presentation text. If anyone would like to discuss them, please feel free to contact me. They're on the following pages.
We need your help to make retroactive amendments to key legislation in Canada now to ensure priority of the interests of ordinary working Canadians who have no other means to legally protect their own interests. This is a situation that cannot be resolved without government involvement. That is why I've come here to speak to you today. Without these changes, how can any Canadian worker sleep at night? This could happen to them tomorrow.
I would like to thank you all for your time and attention in listening to my concerns today, and I welcome any questions you may have going forward.
Thank you.