Pension Information Committee Report October 2017
Pension Information Committee (PIC) • The PIC was created in 1988 to promote better communications with Plan members. Functions include: • Helping to build and distribute the PIC report • Attending an annual meeting to review various issues related to the Plan • Communicating with members • The PIC’s mandate, as defined by the Pension Benefits Standards Act of 1985, also includes reviewing, for information purposes, the financial, actuarial, and administrative aspects of the Plan. • PIC members for 2017: Oct 2017 Pension Information Committee Report
Evolution of the Membership* ACTIVE MEMBERS • 10,887 active members (employees) accruing Defined Benefit (DB) service • Down 1,761 yr/yr • Average age is 50.7 yrs • The Defined Contribution plan, introduced in 2005, now covers almost 65% of active members. RETIREES & SURVIVORS • 35,045 retiree and survivor members. • 32,041 retirees • 3,004 survivors • Up 991 from last year Oct 2017 Pension Information Committee Report * As of December 31, 2016
Age Distribution of Retirees/Survivors • As of December 31, 2016, the average age was 70.7 years for retirees and 77.5 years for survivors and beneficiaries. Oct 2017 Pension Information Committee Report
Disbursements $947 million of 1000 disbursements paid 900 out in 2016 800 • pension benefits of $784 million 700 • lump-sum 600 DB - Monthly Pensions payments of 784 764 500 $126 millions* • allowable DB - LumpSum* 400 expenses of $37 300 million** DC - LumpSum* The average 200 53 pension payout is 52 100 73 47 approx. $1,900 per Expense** 42 37 0 month 2015 2016 * Includes DB benefits paid upon death, termination of employment, divorce or separation, and DC lump-sum withdrawals ** Includes fees for investment management, trustees, auditing, and longevity swap management Oct 2017 Pension Information Committee Report
Cost-of-Living Adjustments The Plan partially compensates for cost-of-living increases. The formula takes into account the retiree’s age and the increase in the Consumer Price Index (CPI) over 12-months running from Nov 1 st to Oct 31st of the next year Under 65 - CPI (rounded to nearest whole number), up to a maximum of 2% • • Age 65 + - The greater of: • 100% of CPI (rounded to nearest whole number), up to a maximum of 2%; or • 60% of the increase in the CPI), up to a maximum of 4% Over the 12-month period ending Oct 2016, the CPI increased by 1.49%. Therefore, the 2017 adjustment applicable to all Bell retirees was 1%. Oct 2017 Pension Information Committee Report
Actuarial Valuations of the Plan Solvency Valuation* Considers obligations of a pension Dec 31, Dec 31, 2016 2015 ($ millions) plan, assuming it is terminated as of the date of the valuation and Market Value of Assets** 15,500 15,212 based on current economic and Solvency Liability 16,192 16,210 demographic parameters. Solvency Shortfall (692) (998) ($692M) Deficit; Ratio of 95.7% at 95.7% 93.8% Dec 31 st , 2016 Going Concern Valuation* Dec 31, Dec 31, 2016 2015 ($ millions) Considers obligations of the plan Actuarial Value of Assets 15,345 14,769 assuming that it will continue to operate indefinitely. Actuarial Liability 14,541 13,791 $804M Surplus; Ratio of 106% Going Concern Surplus 804 978 at Dec 31 st , 2016 106% 107% * Includes $348 of Unused Advanced Contributions Oct 2017 ** Includes plan windup costs of $16 million Pension Information Committee Report
Historical Valuation Results Solvency Tests whether the plan has sufficient assets to pay all benefits that have been earned by members to that date Going-Concern The purpose of a going-concern valuation is to recommend the orderly funding of a plan to accumulate assets to provide for the plan’s benefits in advance of their actual payment Oct 2017 Pension Information Committee Report
Funding the Pension • Last year Bell contributed $487 million to the DB Plan which included $348 million of Advanced Pension Contributions relating to the solvency deficit • As of December 31, 2016 the estimated minimum funding for the DB Plan for 2017 is $313 million • Note that Bell has this $348 million of Unused Advanced Contributions (referred to above) to satisfy the Solvency Deficit Amortization requirement portion of this funding which is $197 million Oct 2017 Pension Information Committee Report
Recent Plan Performance BIMCOR Oct 2017 Pension Information Committee Report
Plan Asset Allocation Strategy • Bell has gradually reduced the equity weight in the BCE Master Trust Fund in favour of fixed income securities. Asset allocation for the BCE Master Trust Fund is currently 70% fixed income and 30% equities • Assets are also invested to match the characteristics of liabilities in terms of interest-rate sensitivity and timing of when funds are required Oct 2017 Pension Information Committee Report
Retirees Audit Audit Year 2016 2017 Population ~ 10,000 ~ 8,000 Temporary suspended 224 … pension (from November) Outstanding cases 63 … As of 2017/09/27 2017 audit of 8,000 retirees ü 3 mailings done in April (initial), in June (reminder) and in August (final) ü 89% completed ü 5.5% not correctly completed Ø Forms received with missing information ü 5.5% not received (including 1.1% returned mail) Ø Possibility of temporary suspension of payments starting in November The electronic audit form process temporarily suspended due to fears of hacking • Will be re-introduced shortly The audit process helps protect our pension funds from fraud Oct 2017 Pension Information Committee Report
Final Remarks • Bell continues to be a solid sponsor of our DB Pension Plans • The financial health of the plans have improved significantly in recent years • The Bell Plan Solvency Ratio is now over 95% • The 2017 Pension Information Committee Report provides detailed pension fund status as of December 31, 2016. It will be available on both the InTouch and Benefits Websites in November and will be mailed to pensioners, if requested. Oct 2017 Pension Information Committee Report
Questions Oct 2017 Pension Information Committee Report
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