Pension Information Committee Report October 2017 Pension - - PowerPoint PPT Presentation

Pension Information Committee Report

October 2017

Oct 2017 Pension Information Committee Report

• 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:

Pension Information Committee (PIC)

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

* As of December 31, 2016

Oct 2017 Pension Information Committee Report

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 disbursements paid

• ut in 2016
• pension benefits
• f $784 million
• lump-sum

payments of $126 millions*

• allowable

expenses of $37 million** The average pension payout is

• approx. $1,900 per

month

* 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

764 784

52 53

47 73 42 37

100 200 300 400 500 600 700 800 900 1000 2015 2016

DB - Monthly Pensions

DB - LumpSum* DC - LumpSum* Expense**

Oct 2017 Pension Information Committee Report

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 1st 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%.

Cost-of-Living Adjustments

Oct 2017 Pension Information Committee Report

Actuarial Valuations of the Plan

Considers obligations of a pension plan, assuming it is terminated as

• f the date of the valuation and

based on current economic and demographic parameters. ($692M) Deficit; Ratio of 95.7% at Dec 31st, 2016

($ millions)

Dec 31, 2016 Dec 31, 2015 Market Value of Assets**

15,500 15,212

Solvency Liability

16,192 16,210

Solvency Shortfall

(692) (998) 95.7% 93.8%

Solvency Valuation*

($ millions)

Dec 31, 2016 Dec 31, 2015

Actuarial Value of Assets

15,345 14,769

Actuarial Liability

14,541 13,791

Going Concern Surplus

804 978 106% 107%

Considers obligations of the plan assuming that it will continue to

• perate indefinitely.

$804M Surplus; Ratio of 106% at Dec 31st, 2016

Going Concern Valuation*

* Includes $348 of Unused Advanced Contributions ** Includes plan windup costs of $16 million

Oct 2017 Pension Information Committee Report

Historical Valuation Results

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

Solvency

Tests whether the plan has sufficient assets to pay all benefits that have been earned by members to that date

Oct 2017 Pension Information Committee Report

• 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

• f this funding which is $197 million

Funding the Pension

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

• f when funds are

required

Oct 2017 Pension Information Committee Report

Retirees Audit

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

Audit Year 2016 2017

Population ~ 10,000 ~ 8,000 Temporary suspended pension

(from November)

224 … Outstanding cases 63 …

As of 2017/09/27

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