President s Message by BPG President Pam Went. Inside this issue:

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1 November 2007 Newsletter President s Message by BPG President Pam Went In her address to the Ontario Chapters this Fall, BPG president Pam Went addressed two key issues about pensions: why the Ontario Pension Review is so important, and BCE ownership change. The majority of Canadian pensions are regulated in Ontario, said Pam. What happens here will be watched very closely by Finance Canada and it is unlikely that the feds will get busy on revamping the Pensions and Benefits Standards Act (PBSA) until the Ontario recommendations are made in mid Pam also explained the role of the BPG Pensions committee with regard to the change of ownership of Bell Canada. The committee is responsible for: communicating our concerns for pension plan security with Bell, the Bell board of directors Special Oversight Committee and the government; monitoring all media and company communication; working with our lawyer to determine our legal rights; responding to the media. Southwestern Ontario Chapter Inside this issue: Bell PIC 2007 Annual Report 2 It Was A Great Day in Fergus! 3 Prescription Supply for Vacation 3 Annual Pension COLA 4 BPG Committee Activities 4 Reviewing Canadian Pensions 5 BPG Submission to Pre-Budget Consultations 5 BPG s New Slogan! 6 BPG s Report to Ontario s Expert Commission on Pensions 6 A Word on Income Splitting 7 Proactive Planning 8 At this point we are waiting for the ownership change event to take place, Pam explained. Once that happens, your pension committee and your board of directors will pursue face to face contact with key personnel. A key strategy has been to establish our credentials with key stakeholders in both government and Bell. In the area of government, we are well regarded by Finance Canada and OSFI who recognize BPG, and specifically Raymond Bertrand and Jim Murray, as subject matter experts on pension reform. Similar recognition is sure to come at the Ontario provincial level in the coming months. Our relations with Bell and BCE continue to be strong, said Pam. The board met with our counterparts just last week and our dialogue continues to be harmonious. I am confident that we will be able to continue this cooperative relationship when the new regime enters the picture. Page 1 of 8

2 Bell Pension Information Committee 2007 Annual Report What a positive difference a year makes! by BPG PIC Rep Jim Murray Last year s PIC report indicated that our pension plan had a solvency deficit of $827 million at the end of But on 26 September, 2007, at the annual PIC meeting, our representatives were advised that the financial position of the pension plan had significantly improved to a solvency surplus of $168 million as of the end of This turnaround is due to a higher return on investments (12.8% in 2006), stabilization of liabilities because market interest rates stopped declining, and an injection by the companies of $184.3 million in special solvency cash payments. The solvency calculation is significant for retirees because it indicates, in theory, how well our pensions are protected had the pension plan been wound-up as of the date of the valuation. The plan actuaries going-concern calculations provide an indication of how well the pension plan is funded on the basis that the participating companies will continue to operate indefinitely. At the end of 2005 there was a going-concern surplus of $5 million. The going-concern surplus grew to $435 million by the end of It is unlikely that the high return on investments achieved in 2006 will be repeated in 2007, due in part to a weaker market caused by the problems associated with high-risk American mortgages*. The employers will take a partial contribution holiday in 2007 but will still contribute an estimated $51 million in cash to the defined benefit arrangement this year and a further $26 million to the defined contribution arrangement. *Our pension plan has a very minimal and insignificant exposure to these mortgages (0.6% of total investments as of August 2007). The plan s actuaries will conduct complete reviews of the plan annually as of the end of 2007 and This is on the assumption that the plan remains fully solvent during this period of time and there are no unforeseen events that would require a more formal review in order to meet regulatory requirements. The next mandatory actuarial study will be required as of the end of **************************************************************************** BPG Membership Fees Are Now Due For 2008 It s that time of year once again! A Notice is included with this Newsletter for those members that have not as yet paid their 2008 Fees. You are asked to forward a cheque in the return envelope provided and please do write your membership number on the memo section of your cheque. We depend on your support to carry on with the important work we are doing and a timely remittance of your payment will help us to continue. **************************************************************************** It Was a Great Day in Fergus! It was a sunny bright Halloween morning when 348 BPG members and guests gathered at the Fergus Legion for a BPG Membership meeting. The event was organized by Don Tosh and a committee of other loyal BPG members. Page 2 of 8

3 Don started working on the event during the summer and his intention was to do his part in helping us to increase BPG membership in the Southwestern Ontario Chapter Area. We are very pleased to report that so far we welcomed approximately 50 new BPG members as a result of the Fergus event. This brings our Southwestern Ontario Chapter total membership to 1132! The Legion ladies provided a delicious lunch and it was a great day for reminiscing and catching up with friends and former co-workers. BPG Vice President Raymond Bertrand was on hand to discuss Pension issues and shared information on BPG initiatives relating to Pension Reform. BPG has become a respected advocate in this area. Jim Murray, BPG PIC Rep and another popular speaker at BPG events was also on hand. Jim shared information on the situation of our pension plan and conducted a very informative question and answer session. Many of the questions involved pensioners concerns regarding the impact of the expected sale of BCE on their shares. BPG SWO Area Reps Sharron Brennan (Stratford-Perth) & Gord Johnson (Brant-Simcoe) handle the registration desk at the Fergus meeting. **************************************************************************** Supply of Prescription Medications for Vacation If you are going on vacation and need an extra supply of prescription medications, read this article before you go to the Pharmacy. The Bell Canada drug plan has a number of system edits in place. The refill too soon feature is one such edit. Supply for less than 100 days Supply for 100 days or more Existing Prescription 2/3rds used or more Less than 2/3rds used New Prescription Existing OR New Prescription No additional approval is required. You may obtain your vacation supply directly from the pharmacy using your pay-direct card. You must call Manulife Financial Group Benefits Customer Service Centre first. Please allow one week for your supply of medications to be processed and approved. Upon receipt of approval from Manulife, you will have a 30-day window during which your pharmacist will be able to process your vacation supply. No additional approval is required. Your may obtain your vacation supply directly from the pharmacy using your pay-direct card. You must always call the Manulife Call Centre in advance. Please allow one week for your request for advance supply to be processed and approved. You then have a 30-day window period to purchase the prescription. For any questions regarding the process for obtaining a vacation supply of your prescription medications please contact: Manulife Financial Group Benefits Customer Service Centre Bell Canada Retirees: Retirees of all other Companies: If you live in Québec : If you live outside Québec: Page 3 of 8

4 Protection of Our Annual Pension Cost ost-of-living Adjustment The annual cost-of-living adjustment (COLA) is an integral part of the Bell pension plan and therefore is as secure going forward as is your basic pension. The Plan provides for pension indexing each January 1 to partially compensate for cost-of-living increases. (Direct quote from the 2007 PIC report) When you receive your copy of the 2007 PIC report, you will find a full page dedicated to COLA, including additional information on the methodology used by Bell versus the one used by CPP/QPP for COLA calculations. A ten year chart comparing the CPI increase with the annual pension plan COLA is also included. **************************************************************************** Activities & Mandates of BPG s Committees & Teams Governance nearing completion of governance manual, which details all BPG critical processes Nominations responsible to ensure good succession plans for all board positions, including the chapter chairs. This ensures smooth transitions when board vacancies, planned or unplanned occur. currently almost all back-ups are in place. also responsible for administering the BPG election process. Since members approved a slate of directors for a two-year term last year, there should be no need for a 2008 election. Communications keep members informed, e.g., about activity related to the change of ownership of Bell Canada recently completed two critical administrative activities: created the virtual Governance Manual, an on-line, protected, repository for the work of the Governance committee; and developed a new BPG slogan Membership critical element of the BPG organization, working on increasing our membership to over the 10k mark. Benefits currently recruiting committee members, who will have two tasks: to monitor for changes to post-retirement benefits; and assist the Pensions committee for post retirement benefits issues. Pensions 2 areas of focus: pursuing pension reform & protecting our bell pensions and post-retirement benefits. ongoing pension reform activities: - maintain active relations with the key stakeholders in the federal government (Finance Canada, Office of the Superintendent of Financial Institutions) - respond to requests for submissions to pertinent government consultations - represent pensioners in government and other forums Page 4 of 8

5 Two National Organizations Reviewing Canadian Pension Issues The C.D. Howe Institute ( has announced the formation of an advisory panel to address key challenges facing Canadian pension plans. The panel will advise on a three-year pensions program at the Institute and is co-chaired by Claude Lamoureux, President and CEO, Ontario Teachers Pension Plan, and Nick LePan, former Superintendent of OSFI. BPG has been advised that the Federal government provided some of the funding for program start-up which is just getting underway. BPG will be submitting a briefing to the Institute as part of our policy to advocate on pension plan issues. The Canadian Institute of Actuaries (CIA) ( released a brief paper, Prescription for Canada s Ailing Pension System, in June of this year. Core recommendations include the call for better pension plan funding and are similar in many ways with BPG proposals made to Finance Canada, OFSI and the Ontario Expert Commission on Pensions. The BPG pension committee actively monitors the activities of these two organizations, as well as those of other key pension plan stakeholder organizations. ***************************************************************************************** BPG submits Pre re-budget Brief to House of Commons On August 13, BPG submitted a pre-budget brief to the House of Commons Standing Committee on Finance. The brief outlines BPG s continuing support for specific measures to provide retirees more financial independence and a better quality of life, and the need for an in depth review of Canada s tax system. It also highlights the group s support of two key recommendations: Eliminate the income tax claw-back measures specific to Old Age Security. Allow the full deduction of medical expenses, not covered by government or private insurance. The recommendations recognize that Canadians can reasonably be expected to live 20 to 30 years after leaving the workforce, and that their ability to earn additional income after retiring is limited by opportunity, health, and tax disincentives. Also, at a time in their lives when medical expenses are likely to be the highest, their ability to pay for them is most constrained. The brief also outlines the difficulties many pensioners face in making ends meet, while coping with ever-increasing federal, provincial and municipal taxes. It recommends that the Committee specifically address: the tax burden the protection of Defined Benefit Pension Plans the solvency of pension plans at all times the impact and effectiveness of the current Canadian retirement income system BPG has also offered to appear in front of the Committee again this year to explain its recommendations in more detail. The full text of the BPG Brief is available at Page 5 of 8

6 But what does BPG do? Our new slogan will answer that question before it s even asked! Starting this month, we ve added a slogan or tag line to our BPG logo, to help identify what our group is all about. Together, Protecting Our Pensions and Benefits was approved at the October BPG Board of Directors meeting. The phrase will appear with the BPG logo on stationery, newsletters, our website and eventually our membership cards. Coming up with an effective slogan began with asking board members & others to submit suggestions to the Communications Committee. From those suggestions, the Committee worked with Carol Ann Cole, Membership Chair, to develop a number of proposals and test them with a sample of existing and potential members. The final choice combined the most popular elements: Together signifies co-operation and strength in numbers Protecting actively safeguarding our interests Pensions and Benefits the two main areas of BPG focus The slogan will be very helpful in recruiting new members, said Carol Ann, because it explains right up front the benefits of joining BPG. ************************************************************************************* BPG submits report to Ontario Expert Commission on Pensions BPG has submitted a report to the Ontario Expert Commission on Pensions, which is reviewing the province s pension legislation for the first time in 20 years. The Commission was created in November 2006 with a mandate from the Finance Minister of Ontario. It has requested written submissions, is holding public hearings this fall and has commissioned 17 research projects. Findings and recommendations are expected by June Ontario regulates the largest number of defined benefit pension plans in Canada and the recommendations of the Commission will undoubtedly be carefully considered by all the other provincial jurisdictions and by Finance Canada. BPG will actively participate in the Commission s proceedings in two ways: 1) BPG has submitted a formal written brief, which will eventually be published by the Commission on its public website ( Our brief is a summary of pensioner issues, proposals and implementation considerations issued in 2005 through 2007 to Finance Canada and OSFI (the regulator of federally registered pension plans) in writing and through face-toface meetings. Many areas of both the federal and Ontario pension acts and regulations are in need of significant updating in order to provide pensioners with: better security for their pensions through improved pension plan funding requirements; and more timely and more complete information on the financial and actuarial status of their pension plan. 2) BPG was invited in December 2005 to a meeting with other pensioner groups to discuss how we might jointly advocate for changes in legislation to improve the security of our pensions. A new association named the Canadian Federation of Pensioners(CFP) was the result. Along with BPG, the other groups currently involved include the retirees organizations for DuPont/Invista, Stelco (salaried), Slater Steel, Air Canada, the Bank of Canada and IATA. Page 6 of 8

7 In January 2007, the CFP formed a work committee chaired by a BPG representative to monitor and respond to the activities of the Commission. A 23-page detailed document on pension issues and proposals was submitted to the Commission this past September and will be posted on the Commission s website. In addition, the CFP is scheduled to appear before the Commission at its public hearings. The CFP submission and the presentation material incorporate the key issues and proposals identified to Finance Canada and OSFI by BPG starting back in September ***************************************************************************************** Income Splitting Begins in 2007 Tax Year Beginning with 2007 income tax returns, Canadian residents will generally be able to allocate up to one-half of their income that qualifies for the existing pension income tax credit to their resident spouse (or common-law partner) for income tax purposes. The amount allocated is deducted in determining the net income of the person who actually received the pension income, and it is included in computing the net income of the spouse or common-law partner. Pension splitting affects the calculation of income and tax payable for both persons, so they must both agree to the allocation in their tax returns for the year in question. Eligible pension income is generally the total of the following amounts received by the pensioner in the year (these amounts also qualify for the pension income amount): the taxable part of annuity payments from a superannuation or pension fund or plan; and if received as a result of the death of a spouse or common-law partner, or if the pensioner is age 65 or older at the end of the year: annuity and registered retirement income fund (including life income fund) payments; and Registered Retirement Savings Plan annuity payments. Note: Old Age Security and Canada or Quebec Pension Plan payments do not qualify. A pensioner and his or her spouse who elect to split eligible pension income have to make a joint election in the prescribed form with their income tax returns for the year on or before their filing due date (generally April 30 of the year following the tax year, or June 15th, if self-employed). The new Form T1032, Joint Election to Split Pension Income, can be downloaded now from the CRA web site. The 2007 income tax return will include a new line for the pensioner to deduct the amount of pension allocated to the spouse or common-law partner. A new line will also be added for the spouse to report the allocated pension income. You may find further information by visiting the Federal Government Web site at: pension-e.html It is always a good idea to consult with a tax accountant as well. ***************************************************************************************** Changes Planned for In Touch/En Contact Bell has announced that the paper version of In Touch will be cutting back on content. The electronic version however, will not be impacted. The reduction is partially motivated by cost cutting efforts at Bell. A survey of retirees was conducted regarding In Touch/En Contact and it was learned that retirees prefer not to read about local events and trips in the publication. The company is looking for ways to encourage retirees to visit the In Touch/En Contact web site more frequently and one way to encourage this is by putting exclusive content on the web site. Members can also access the In Touch web site via the BPG web site just by clicking on In Touch Newsletters Page 7 of 8

8 BCE Buyout - Pensioners Urged to Consider Proactive Planning BPG Vice Chair Frank Bible reports that Bell pensioners experienced a very informative presentation by Paul Boulter Vice President TD Waterhouse at a luncheon recently in Owen Sound. Mr Boulter made it very clear that, like everyone else in his position, he doesn t have all of the answers but certainly provided food for thought. Here are a few points we felt were worth sharing with you... As you know, if you own BCE common shares, your shares may be purchased by a consortium led by the Ontario Teachers Pension Plan Board for $42.75 each. The deal is set to close in early The buyout of your shares will potentially trigger a capital gain (or loss). Fifty percent of your net capital gains (total capital gains less total capital losses realized in a year) are taxable as income. To get an idea of how much of a capital gain (or loss) you may realize, you need to know the average cost of your BCE shares. The cost of your shares can be affected by stock splits and other events such as the spin-off of Nortel shares in 2000 and the creation of Bell Aliant Regional Communications Income Fund in Your tax advisor may be able to assist you with determining your cost or you can visit which is the BCE web-site, follow the link Information for Investers, and then to the link ACB Estimator or Adjusted Cost Base Estimator and you will be taken through the calculation process. If you are in a significant gain position, the additional increase in taxable income arising from the buyout may not only mean more taxes payable, but may also mean paying tax at a higher tax rate if the additional income puts you into a higher marginal tax bracket. The higher income may also affect Old Age Security payments, GST credits and other income tested benefits. The deal is not set to close until the first quarter of 2008 and there is an opportunity to engage in some planning to minimize your taxes. For example, you can : 1. Decrease your income next year by reducing the amount you receive from your non-registered and registered investments; 2. Sell investments with unrealized losses next year and use the losses to offset any gains from the BCE buyout; 3. Sell some BCE shares this year to spread the tax liability over two years; or 4. Donate your BCE shares to your favourite registered charity. Your capital gains tax will be reduced to zero and you will receive a charitable tax receipt for the market value of the BCE shares that you donate. The bottom line, Folks and this is very important - see a financial consultant and the sooner the better. Don t wait because you may have to do something before year-end. end. Be sure to visit MAY 7th, 2008! Save the date! Learn what is happening in BPG plus up to the minute news on items of interest to all of our members across both provinces. We want to extend our most sincere thanks to Dave Grieve, the volunteer webmaster for the Toronto Chapter website for adopting the Southwestern Ontario Chapter and taking care of our website as well. Dave worked diligently this past year changing all of the links on the BPG website to reflect our new Chapter name. Thanks so much Dave for making us look so attractive in cyberspace! BPG Southwestern Ontario Chapter Annual General Meeting...look for details on our website & in our next newsletter. Page 8 of 8