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Montreal Chapter Newsletter

September 2010

PENSION REFORM: THE NEW LAW HAS BEEN ADOPTED

the pension rules can be strengthened. Many of our pro-posals have been adopted by the government in the new Law. Some of these improvements are:

• Contribution holiday for sponsors only if there is a 5% plan surplus

• Potential maximum surplus increased to 25% from 10%

• Enhanced disclosure requirements • Voluntary plan termination by sponsor only if plan

is fully funded (within five years) • Plan valuations and funding resets on an annual ba-

sis • Solvency funding based on 3 years' solvency ratios • Solvency ratios based on market value of assets • Deviations from standard funding rules can be

adopted by sponsor only with agreement from its pensioners

On July 12, 2010 changes to the Pension Benefits Stan-dards Act received Royal Assent. These will require fur-ther revisions to regulations in the future. On June 25, 2010 the Minister of Finance announced that the government has finalized revisions to certain regula-tions relating to federally-regulated private pension plans. These regulations took effect on July 1, 2010 and are essen-tially unchanged from those which BPG commented on in May 2010. They allow Bell Canada to continue to take advantage of previous arrangements whereby it can pay off over 10 years the solvency deficiency which was identified as of the end of 2008. For additional solvency deficiencies that may emerge in the future, the "fresh start" amortization approach introduced with the new Law will apply and Bell will be required to pay off 20% of the remaining solvency deficiency each year. This "fresh start" approach means that, in the future, it could take 15 years or more to completely eliminate a solvency deficiency. While BPG is disappointed with the government's decision to adopt the "fresh start" approach, the new legislation and regulations include a number of significant gains for pen-sioners. Over the last year, BPG has made many represen-tations to the federal government on specific ways in which

Important Reminder 2

Nominations to the BPG Board 3

New Faces for the Montreal Chapter 3

Some Nortel Pensions Cut by a Third 4

Pensioners and Travel Insurance 4

Impact of Divorce on Pension & Benefits 6

IN THIS ISSUE

PENSION INFORMATION COMMITTEE (PIC) REPORT FOR 2009

At the September 13th 2010 PIC meeting, Bell Canada in-formed the PIC members of the following: ⇒ The company submitted its actuarial report as of De-

cember 31st 2009 to the Office of the Superintendent of Financial Institutions (OSFI).

⇒ The pension Plan deficit on a solvency basis went from $1.8 billion in December 2008 to $1.3 billion in

December 2009.

⇒ This improvement is attributable to the $500 million voluntary contribution made by Bell in 2009, as well

as to a rate of return on assets of 15.1 %.

The detailed financial data is shown on the following page:

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1Assumes termination (wind up) of the Plan on the date of the actuarial evaluation. 2Assumes permanency (going concern) of the Plan.

Bell decided to take advantage of the temporary measures authorized in 2009 which allowed the amortization of the deficit over a period of ten years.

Bell’s contribution to the Defined Benefit Plan for the year 2010 will be:

- Cost of current services (DB) $155.3M - Amortization of the solvency deficit $ 80.0M ________ $ 235.3M

The amortization of the deficit is limited to $ 80M follow-ing the 2009 $ 500M voluntary supplementary contribu-tion, of which part was assigned to the amortization of the deficit.

A letter of credit is not required in 2010 to make up the difference between the 10 year temporary amortization pe-riod, and what would be required for a normal 5 year amor-tization period, as a result of the $500M supplementary contribution made in 2009.

As of June 30th 2010, the rate of return on assets was 1.2% and the Company still hopes to reach its 7.25% objective to cover the ($866M) pension plan disbursements.

An actuarial report will be required for the year 2010 to be

submitted to the OSFI around June 2010.

Richard Vanslette, PIC representative, Quebec pensioners

PENSION INFORMATION COMMITTEE (PIC) REPORT FOR 2009 (CONTINUED)

Dec. 2009

Dec. 2008

Solvency Basis1 Assets $ 11.1B $ 9.9B

Liabilities $ 12.4B $ 11.8B

Surplus/Deficit

($ 1.3B) ($1.8B)

Going-concern Basis2

Assets $ 11.1B $ 9.9B

Liabilities $ 11.1B $ 10.9B

Surplus/Deficit

$ 23M ($ 1.0B)

Financial Ratio (Solvency)

89.6% 84.3%

Rate of Return on Assets

15.1% (19.5%)

AN IMPORTANT REMINDER CONCERNING THE PUBLIC PRESCRIPTION DRUG INSURANCE PLAN - ANNUAL PREMIUM

When you reach 65 years of age you are obligated to pay the annual premium to the public prescription drug Plan (with very few rare exceptions). You are automatically registered in the Plan as of age 65, whether or not you buy prescription drugs. The premium is collected yearly by the Quebec Revenue Ministry when you complete your income tax report (annex K). We have received several calls to the effect that pensioners who had reached 65 years of age, and had not completed annex K on their annual income tax report, were forced to reimburse all premiums owed to Revenue Quebec. The annual premium as of July 1st, 2010 varies between 0$ and 600$ (depending on your revenue). The Regie, together with Revenue Quebec, verify regularly to ensure compliance. For information concerning the Public Prescription Drug Insurance Plan: http://www.ramq.gouv.qc.ca/en/citoyens/assurancemedicaments/regimepublic/regimepublic.shtml 514-864-3411 (Montreal), 418-646-4636 (Quebec), 1-800-561-9749 (elsewhere in Quebec).

This newsletter is published by the Montreal Chapter of the Bell Pensioners’ Group (BPG). Please send your comments or suggestions to André Bergeron at: andrembergeron@sympatico.ca

www.bellpensionersgroup.ca

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NOMINATIONS TO THE BPG BOARD

NEW FACES FOR THE MONTREAL CHAPTER

Over the past year, many new volunteers have joined the Montreal Chapter’s Board of Directors. Many of these new faces can be seen on the following photo. Manon Denis and Jean-Luc Geha are shown surrounded by Michel Couture, Robert Guay, Yves Sauvé, and Yves Gi-rard.

Here is the complete list of the members of your Chapter’s Board responsible for the management of the Chapter as well as communications and member services. Yvan Dutrisac- President Jean-Luc Geha- 1st Vice-President Yves Girard- 2nd Vice-President Yves Sauvé- Secretary Francine Lussier- Treasurer, Webmaster Manon Denis- Members’ Computerized Records André Bergeron- Communications Louis Lapierre- Communications and BPG Info-Line Huguette Turgeon- BPG Info-Line Gladys Scully- Director of Administration Lise Ouellet- Volunteers and Management Stuart Smith- Support Jim Tjelios- Support REGIONAL REPRESENTATIVES Léo Lapointe- Outaouais and Haute Gatineau Walter Pearce- South Shore Claude Bissonnette- Estrie (Eastern Townships) Michel Couture- Montérégie

The Nominations Committee has been successful in its search to fill both the VP and Secretary positions on the BPG Board. At its September meeting, the Board approved the appointment of Michel Doyon, Lancy Hum and Sue Dawes to the Board of Directors of BPG In addition, the Board appointed Michel Doyon as BPG’s Vice President and Lancy Hum as Secretary. They will join Bob Farmer (President) and Gwen Guillet (Treasurer) as Officers of the Bell Pensioners’ Group.

Below are brief CVs of the new directors:

Michel Doyon – Michel retired from Bell in 2001 as VP – Audits & Sécurity, with over 27 years of service. During his career, he held a variety of management positions in accounting, systems, finance, audits and security at Bell, Télébec Ltée, Bell Canada Management Corporation and BCE Corporate Services. In 2002, he was appointed Gen-eral Auditor at the City of Montréal, for a seven-year term. He retired from the City in 2009. During his carreer, he has served on several committes of the Institute of Internal Auditors, l’Institut des vérificateurs interne de Montréal, l’Ordre des comptables agréés du Québec and the Canadian Institute of Chartered Accountants.

Lancy Hum – Lancy retired in July 2009 after 27 years of service at Bell and Stentor, during which she held manage-ment positions in various areas such as business develop-ment, marketing, program management, communications (employee, customer and company acquisitions), customer service, and strategic planning. She was Director of Plan-ning and Communications for the Small & Medium Busi-ness (SMB) Group at the time of retirement. In the fall of 2009, she joined the Ottawa Chapter of the Bell Pension-ers’ Group as Secretary and has been responsible for the preparation of the newsletters. Sue Dawes - Sue retired from Bell Canada in 2008, with over 29 years of service. During her career at Bell and Stentor, Sue held management positions first as an Analyst in engineering economics and then in increasingly senior roles in finance, service management, marketing, business development and regulatory affairs. During her last ten years with Bell, Sue was Director -Regulatory Affairs, re-sponsible for management of, and preparation of documen-tation for proceedings before the CRTC. Sue has been Chair of the Pension Committee of BPG since April 2010.

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What is travel insurance and why do you need it? Travel insurance is designed to protect you against unforeseen medical emergencies while away from home. It also pro-vides you with assistance services and peace of mind, since a medical emergency outside Canada without travel insurance can cause considerable financial difficulty and emotional stress. Canadians are not always aware of the high costs of medical treatment and hospitalization abroad, especially in the United States. Did you know that provincial government health insurance plans only cover a small percentage of emergency medi-cal costs incurred abroad? Furthermore, many Canadians have little experience with American and other healthcare sys-tems; it can feel overwhelming to need medical care in unfamiliar surroundings. It’s also strongly recommended that travellers have appropriate insurance coverage even for trips within Canada. Besides

No one would want to see their monthly pension chopped by a third but that’s exactly what’s facing some former em-ployees at the bankrupt, scandal-ridden telecom firm Nortel.

The Toronto-based communications company will liquidate its pension accounts at the end of next month and the plan is only about 64% funded.

The Ontario government stepped in this year to guarantee the first $1,000 of monthly payouts for each of the 11,000 employees who worked in that province. About 12,000 oth-ers in Alberta, Quebec and Nova Scotia are out in the cold and could find themselves facing poverty, says former Nortel employee Ken Lyons.

“There are people who will have to go on social assis-tance,” said Lyons, Quebec representative of the Nortel Retirees’ and Former Employees’ Protection Committee.

“It’s devastating. We’re losing all of our benefits including complementary medical insurance, dental and life insur-ance. The only solution for us is to put money aside in place of insurance."

The problem for Nortel pensioners has to do with the size of Canada’s annuity market. It’s too small to provide a healthy return on a one-time dump of Nortel’s pension ac-counts. The market can only absorb $500 million a year.

“Nortel’s two retirement funds are much larger than that,” said Lyons. “Putting (the funds) on the market would cause pressure and that would be even worse.”

SOME NORTEL PENSIONS CUT BY A THIRD, EMPLOYEES SAY

Nortel was once the darling of Canada’s telecom industry but it began to shed jobs and assets in 2001 after the tech-nology bubble burst. Then, in April 2004, the company fired CEO Frank Dunn and two other executives in an ac-counting scandal that wiped out tens of billions of dollars of market value.

In 2008, Dunn and two other former executives were charged with fraud. RCMP allege criminal activity in the Nortel executive suite between 2002 and mid-2003, when Dunn, chief financial officer Douglas Beatty and former corporate controller Michael Gollogly allegedly fraudu-lently misstated financial results.

It later emerged that Nortel executives received $45 million in bonuses while the company scrapped severance pay and scaled back pensions.

Quebec has said it was ready to offer partial pension guar-antees for Nortel workers in the province. The province would take over the pensions of 3,000 current and former workers for a period of five years and guarantee that pen-sions would not fall below the 64% level while putting the fund on the market in an attempt to increase its value.

Nortel’s pension fund deficit was estimated to be between $2.5 billion and $2.8 billion when the company filed for bankruptcy protection in January 2009.

Source: Money – August 24, 2010

WHY PENSIONERS SHOULD HAVE EMERGENCY MEDICAL TRAVEL INSURANCE

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the fact that provincial plans only cover a limited percentage of out-of-province costs for most medical expenses, there are some things, such as ambulance charges or prescription drugs, that aren’t covered at all.

Healthy individuals shouldn’t dismiss purchasing travel insurance either: it’s designed to cover you for all manner of unex-pected emergencies. Even a minor illness or injury can have serious financial consequences if you’re away from home.

Not all travel insurance is created alike… There are many different types of travel insurance today. The biggest mistake many people make is to buy travel insurance based on price alone without considering other factors such as benefit limits or pre-existing conditions. Insurance compa-nies are accessible by phone and online, and consumers can take advantage of this to do a little research and find the best plan for their travel needs.

Consider the following when shopping for travel insurance: ⇒ Do you need emergency medical coverage only?

⇒ Should you purchase trip cancellation and baggage insurance as well? Look for an all-inclusive plan to cover all your needs.

⇒ Do you have coverage through a credit card or other program? If so, read the fine print – it may only offer lim-ited days of coverage or not as many benefits as you need.

⇒ Who will assist you in an emergency? Will you be able to reach a live representative no matter where you’re travelling or what time of the day or night it is?

⇒ Will you be able to get a referral to a medical provider, reach a doctor directly or arrange a house call if you need to?

⇒ Be sure you read and understand your insurance coverage – ask as many questions as you need to feel comfort-able with your purchase.

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MARRIAGE RUPTURE/END OF THE MARITAL RELATIONSHIP AFTER LEAVING ON PENSION EFFECT ON PENSION, HEALTH CARE AND LIFE INSURANCE

Effect on Pension In your annual Benefits at Retirement report, issued by The Bell Enterprises Group (BCE) at the beginning of each year, for those who have a right to the lifetime level pension with a 60% survivor pension guarantee to the spouse it is stated as fol-lows: “The form of pension payment chosen upon retirement is irrevocable, meaning that the form cannot be modified once pen-

sion payments have started. However, since January 1, 2004 upon a judgment or separation agreement during retirement

and your former spouse waiving his/her entitlement to a survivor pension, all future payments are reinstated (increased) to

the pension amount as if the 60% survivor pension option had been waived at retirement.”

If your ex-spouse waives his/her right to a survivor pension and if payments are re-established to the pension amount as if there had been renunciation of the spousal survival pension at the time the pension was taken, the change then becomes irrevocable. It is not possible to designate a new spouse as beneficiary to the ex-employees spousal survivor pension. Health Care As far as health care benefits are concerned the ex-spouse is not entitled to these benefits anymore and a new spouse can be eligible if appropriate. Life Insurance As far as life insurance is concerned, if the spouse is identified as irrevocable beneficiary, he/she remains so, unless it is renounced. Contact the Benefits Administrator (1 888 400-0661) for any further discussion pertaining to your personal situation.