A plan to make major changes to employee pension plans has attracted a class action lawsuit against Nortel Networks. Employees see their future pension benefits evaporate as Nortel initiates a series of cost-cutting measures that include layoffs.
More than 40 Nortel employees are supporting the class action. Nortel has changed the pension plan from a defined-benefits plan to a defined-contribution plan as of Jan-01-08, effectively shifting the future inflation from the company to the employee.
Health care benefits have also been eliminated from future retirees. The class action has been initiated to help employees with at least 20 years of service who were not protected in the transition.