Bell Pensioners' GroupSpring 2014

President's Report

Presented by Dan Mc Donald

Agenda

Bell Valuation report Overarching Goal Target Benefit plan BPG Areas of Investigation BPG Board of Directors

227 May 2014 2

Solvency: 16% Deficit

$ Million Year-End2012

Year-End2011

Year-End 2010

Year-End2009

Market Value of Assets(Net of Wind-Up Expenses)

13,341.9 12,322.8 11,679.7 10,283.2

Liability, assuming Plan is wound up

15,874.6 15,457.4 13,197.8 12,357.0

Surplus/(Shortfall) (2,532.7) (3,134.6) (1,518.1) (2,073.8)

Solvency Ratio 84.0% 79.7% 88.5% 83.2%

Bell’s latest update on the Solvency as of May 2014 is 91%327 May 2014 3

Overarching Goal: Improve security of existing DB pensions

Understand risks to pension security Business and Pension environment Legal counsel, actuarial consultation, discussions with

Bell Understand working of government

Political and bureaucracy: the key players and their motivations

Government Relations consultation Be seen as well-informed, professional player on DB policy Garner support for pension rules that would reduce risk

Politicians; political staff; government Bureaucrats

427 May 2014 4

Overarching Goal: Improve security of existing DB pensions

Leverage opportunities, proactively and reactively, to advocate for DB pensioners …some examples… BPG directly, or as part of Canadian Federation of

Pensioners Ontario: recommendations for legislative reform Quebec: critique of harmful proposals from D’Amours New Brunswick: reinforce with Finance the need to honour

promises made Federal: preparing brief on reform of insolvency legislation

(BIA/CCAA) Federal: preparing a response to the Target

Benefit Plan Consultation paper

527 May 2014 5

Pension Innovation for Canadians:The Target Benefit Plan

Consultation Paper

Definition of 'Target-Benefit Plan' **

A benefit plan that is similar to a defined benefit plan since contributions are based on projected retirement benefits. However, unlike a defined benefit plan, the benefits provided to participants at retirement are based on the performance of the investments, and are therefore not guaranteed.

** The Investopedia.com definition

627 May 2014 6

Pension Innovation for Canadians:The Target Benefit Plan

Consultation Paper The government’s consultation paper presents proposals

to incorporate Target Benefit Plans (TBPs) into pension legislation

The government is seeking views on the approach and elements of a federal TBP framework that includes the conversion of existing Defined Benefit (DB) and Defined Contribution (DC) pension plans to TBPs

We have a number of serious concerns about the proposal and the very negative impact it could have on DB plan members and will be actively involved in the consultation process. This will include submitting our comments on the proposal by the June 23 deadline

27 May 2014 7

Pension Innovation for Canadians:The Target Benefit Plan

Consultation Paper

Observations

For a company that does not already have a pension plan for its employees, this is an approach that might give that company an incentive to offer one

But for companies that offer DB pension plans, there are compelling incentives to replace existing plans with target plans because they shift risks away from plan sponsors and place them squarely on the shoulders of pensioners

The government plan would require consent from plan members for such a transfer but the means of obtaining consent and the manner of approval are not defined. This could pose a big problem

Though it’s likely that Bell – like other DB plan sponsors - would support the target plan concept, we cannot know whether this is something that Bell might consider either now or in the future

827 May 2014 8

Pension Innovation for Canadians:The Target Benefit Plan

Consultation Paper Risks

The relaxed funding rules the government is proposing for TBPs would mean higher funding shortfalls – in the order of 20-30% - and more of them. Reduced funding obligations mean targets are unlikely to be reached if a plan is terminated

The average Bell DB pension is $22,000. In a windup situation under a hypothetical TBP, Bell pensioners could see their pensions drop considerably because the real windup deficit would not be adequately funded

Even in a non-windup situation, should Bell’s DB plan be changed to a target benefit plan, your pension income could fluctuate year-to-year depending on the financial performance of the pension fund and employees’ willingness to make plan contributions

927 May 2014 9

Pension Innovation for Canadians:The Target Benefit Plan

Consultation Paper

Bottom Line

This proposal is a major attack on DB pension plans and should be considered a serious threat

BPG considers this proposal a top priority and the Pension Committee and Government Relations Committee are working on this important project

In our response to the consultation paper, BPG will urge the government to exclude the conversion of DB plans to TB plans from the proposal and to put in place a consent process that would give each retiree the option to retain his/her current DB pension plan

A copy of our response will be posted on our website

1027 May 2014 10

Pension Innovation for Canadians:The Target Benefit Plan

Consultation Paper

Bottom Line

We need your support

It’s important that you keep yourselves informed on Target Benefit Plans

When ever possible, it’s important that you inform other pensioners, members or non members, about Target Benefit Plans and the threat to our pensions

1127 May 2014 11

BPG Areas of Investigation Restructuring

Indexation

COLA versus indexation

Pension vs Annuities

Valuation Methods Investment Strategies Financial Health of Bell Bankruptcy

1227 May 2014 12

BPG Board Changes

DeparturesFrank Bible Chapter Chair Southwestern OntarioBob Bartlett PC Chair & Nomination CommitteeRon Hunt Director at Large

ArrivalsBill Hollet Vice-PresidentYvan Dutrisac Director at Large & Benefit PrimeDon Graham Chapter Chair Southwestern OntarioMarg Eades Director PensionPatte Seaton Board Secretary

BPG Board

Dan Mc Donald (President) Bill Hollett (Vice-President) Penny Gilray (Treasurer) Patte Seaton (Secretary) Roberte Cadieux Bob Farmer Yvan Dutrisac Marg Eades Jean-Luc Geha Michel Doyon Louise Touchette Sue Dawes

Chapter Chairs Marlyn

Easterbrook(Ottawa) Titus Ramkhalawansingh

(Toronto) Don Graham (SW

Ontario) Robert Guay (Montreal) Jean Lamer (Quebec City) Norm Kelly (Télébec)

1427 May 2014 14

Q & A