Pension Pressure Abating

Transcription

1 Pension Pressure Abating This was the message from BCE to the financial and investor communities at its Business Review 2007 conference on December 12, The Chief Financial Officer of BCE, in reviewing the Bell Canada pension plan status during the conference, stated it expects the solvency deficiency to be approximately $100 million as of December 31, By comparison, the company had stated on February 1, 2006 that the solvency deficiency as of the end of 2005 was estimated to be $1 billion. Once the formal actuarial review was completed, the solvency deficiency for the end of 2005 was subsequently revised downwards to $827 million. of the estimated $100 million solvency deficiency as of that date. It is also to be noted that the same presentation on the status of the pension plan indicates that Bell pension and post-employment benefit funding will be reduced from approximately $440 million in 2006 to an estimated $300 million in This reduction is based on new funding rules and improved solvency valuation. According to BCE, this improvement is essentially a result of the better 2006 asset returns ($600 million) and BCE s special funding contribution to the plan ($130 million), as shown on the graph. A new actuarial review will be performed as of December 31, 2006 which will determine the accuracy «Pension Pressure Abating» 1 FINA Reflects BPG s Views 2 New Tax Breaks 3 Did You Know That BPG Writes to Finance Minister 5 Bell Walk For Kids 6 1% Pension Adjustment 7 Gladys Scully 8 Source: BCE BPG Comment The new funding rules mentioned in BCE s presentation pertain to the recently approved temporary funding regulations put in place by the federal government. These regulations provide Bell with a one-time opportunity to take ten years instead of five years to eliminate a solvency deficiency. BPG will be monitoring this possibility very carefully. That said, it is encouraging and comforting to see that the solvency deficiency has been reduced so significantly during

2 In its report to the House of Commons FINA REFLECTS MANY OF BPG S VIEWS On September 5 th, BPG submitted to the House of Commons Standing Committee on Finance (FINA) a brief entitled "Protecting Pensions and the Future of Canada's Economy". On September 21 st, Pam Went, President of BPG, participated in a face to face session with the Committee and reiterated our concerns and our recommendations. On December 7 th, the Committee tabled its report in the House of Commons. The 236 page report, titled Canada: Competing to Win, summarizes the presentations that were made by Canadians during the consultations and presents the Committee s thoughts and recommendations. In the section of the report dealing with Defined Benefit Pension Plans, the Committee raises several of the issues identified in BPG s own brief and presentation: The Committee heard about the importance of protecting defined benefit pension plans, a component of Canada s retirement income system that a number of witnesses and the Governor of the Bank of Canada believe is increasingly vulnerable. Witnesses urged the Committee to recommend that the federal government, in close co-operation with stakeholders, assess the current status and long-term sustainability of defined benefit pension plans. Several suggestions for reducing the risk of solvency deficiencies in defined benefit pension plans were received, including legislating solvency, introducing regulations that require pension plans to establish the minimum and maximum range for the reserve funding for each plan, and changing the Income Tax Act to accommodate the establishment of a reserve fund account and to allow actuaries to establish maximum funding limits for this reserve....the report specifically mentions the suggestion put forward by BPG On the issue of ownership of pension plan surpluses, the report specifically mentions the suggestion put forward by BPG: The Committee learned that uncertainty regarding ownership of pension plan surpluses can be a disincentive to prudent planning by pension plan sponsors. To resolve this issue, the introduction of legislation that clarifies plan sponsors and contributors rights to surpluses was advocated. Bell Pensioners Group Inc. suggested that the concept of pension surplus for ongoing plans be replaced with a reserve fund owned by plan contributors. The Committee was told that key federal legislation including the Canada Business Corporations Act, the Companies Creditors Arrangement Act and the Bankruptcy and Insolvency Act should be modified in order to ensure that retirees pension benefits receive maximum protection if a pension plan sponsor fails financially when the plan is underfunded. BPG is pleased to see that its concerns and recommendations have been acknowledged by the members of the Committee and largely reflected in their report. We look forward to working with Finance Canada, the legislators and other stakeholders in ensuring that the legislative changes that will be proposed fully meet the needs of Canadian pensioners. Did you pay your dues? At the end of January, over 85 % of the membership of BPG s Montreal Chapter have paid their 2007 annual dues. If you haven't paid yet, please send us your payment today. If you have lost or misplaced your renewal notice of contribution, you can use the application form on page 8. Do not forget that your dues are our only source of funding. The BPG has only one objective and it is to represent and protect your interests with Bell and the government. 2

3 New Tax Breaks for Eligible Pensioners and Seniors Two years ago, BPG joined the ranks of the Common Front for Pension Splitting, a coalition made up of 23 associations from across Canada representing 2.6 million members. The coalition, which has had been actively advocating on behalf of its members to allow retirees the option of splitting pensions, recently received a positive response. On October , Canada s Finance Minister Jim Flaherty proposed, as part of its Tax Fairness Plan, two significant tax breaks for eligible pensioners and seniors. 1) An increase in the Age Credit to $5,066 ret roactive to January 1, 2006 would raise the maximum federal tax relief available under the credit to almost $800 per individual. However, the maximum amount is available only to those seniors with net incomes of less than $30,270 and the credit is fully phased out when net income reaches $64,043. 2) Pension Income Splitting, starting in the 2007 tax year, would allow couples with eligible pension income to reduce their combined federal taxes by transferring income to the lower-earning spouse. An individual with eligible pension income would be allowed to transfer up to one-half of this income to a spouse or eligible commonlaw partner. a) Eligible Income: Income in the form of a pension from a registered pension plan (such as the Bell Canada pension plan) regardless of the recipient s age. Income from a registered retirement savings plan (RRSP); a registered retirement income fund (RIFF); a LIF (locked-in RRIF); or a deferred profit sharing plan (DPSP) annuity, if the recipient if 65 years of age or older. b) Ineligible Income includes: Old age security (OAS); Guaranteed Income Supplement (GIS); Canada/ Quebec Pension Plan; RRSP annuities, RRIFs, and DPSP annuities if recipient is under age 65; RRSP withdrawals; and income from retirement compensation arrangements (RCAs). NOTE: existing rules permit Canada/Quebec Pension Plan (CPP/QPP) pensioners to share up to 50% of their CPP/QPP benefits for tax return purposes. In December 2006 the Quebec Finance Minister announced that the province would adopt similar tax provisions for pension income splitting to be effective with the 2007 tax year. How will pension income splitting work? Both the individual receiving the eligible pension income and his or her spouse or common-law partner must agree to the allocation in their tax returns for the year in question. The pension income splitting allocation will be available for the 2007 and subsequent tax years and must be made one year at a time. How much pension income can an individual split? An individual in receipt of eligible pension income will be permitted to allocate up to one-half of this pension income to their spouse or common-law partner. For further information and to access the Finance Canada Senior s Tax Saving Calculator, go to: 3

4 DID YOU KNOW THAT HOW TO INFORM BELL OF THE DEATH OF A PENSIONER OR A SPOUSE The loss of a loved one is a difficult moment. This is why it is important to know in advance what is expected of you. Here is important information on what you must do in the event of the death of a Bell pensioner, or of a spouse. The pensioner or a member of the family should call the Benefits Administrator at , to advise of the death of the pensioner or of the spouse. When the call is made, the following information must be provided: DEATH OF A PENSIONER DEATH OF A SPOUSE - Pensioner's name - Pensioner's name - Pensioner's employee number - Pensioner's employee number - Pensioner's date of birth - Pensioner's date of birth - Pensioner's social insurance number - Spouse's name - Surviving spouse's social insurance number - Spouse's date of birth - Cause of death - Spouse's cause of death - Date of death - Spouse's date of death - Address to which the deceased's information - Pensioner's address to which the package should be sent (spouse, executor, etc.) deceased's information package should be sent, or a third party's address Following this, you will receive an information package giving you precise instructions and the necessary forms in order to receive either a life insurance payment, transition benefit or survivor pension, etc., if applicable. THE TRANSITION BENEFIT - WHAT IS IT? WHO CAN RECEIVE IT? This is a death benefit payable upon your death. The beneficiary for the Transition Benefit is automatically your spouse, with priority given to your common-law spouse/same sex partner. If you don t have a spouse the benefit is paid to your dependent children. Other financially dependent individuals could be eligible under certain circumstances. Otherwise, no benefit is paid. Please note that the transition benefit is not payable to beneficiaries of pensioners who retired as of July The first 10,000$ is tax free, but anything over this amount is taxable in the hands of the beneficiary if applicable. Refer to your latest Benefits at Retirement Statement for the amount your beneficiary is entitled to receive in your particular case. For further information call the Bell Benefits Administrator at

5 BPG WRITES TO FINANCE MINISTER FLAHERTY On December 15 th, as part of the Advantage Canada Consultation, the Bell Pensioners Group sent a letter to the Finance Minister, the Honourable Jim Flaherty, to provide him with its views on Canada s pension system. The purpose of this consultation, whose theme is Building a Strong Economy for Canada, is to obtain the opinion of Canadians on the key issues at stake for the country and on the direction the federal government should take on the economic front. BPG agrees that our country can and should assume a leadership role in the fast-changing global economy. A key strategy towards achieving this goal will be to leverage the power of a strong Canadian defined benefit pension system. Specifically BPG urges the government to implement recommendation 14 presented by the Standing Committee on Finance in its report recently submitted to the House of Commons: The federal government, in consultation with the provincial/territorial governments and relevant stakeholders, undertake a comprehensive review of the Canadian retirement income system with a view to determining the adequacy of the system in meeting the retirement income needs of seniors. The review should be completed no later than 31 August 2007 and any legislative/regulatory amendments needed as a consequence of the review should be enacted no later than 31 December The Bell Pensioners Group also supports the call to action put forward in December by the Governor of the Bank of Canada, Mr. David Dodge, to establish appropriate incentives for sponsors of defined benefit pension plans: There is a crucial need for a framework that provides the appropriate incentives for employers to establish and maintain pension plans, so that the vast pools of capital in these plans can make their maximum contribution to the efficiency of the Canadian economy It is important to get these incentives right, so that DB (defined benefit) pension plans, which have a long-term investment perspective, can continue to grow. However, BPG believes that companies that have sufficient reserves of free cash flow should NOT be allowed to avail themselves of the temporary pension plan funding regulations that eases the requirement to fully fund pension plans by extending the 5 year amortization period to 10 years. On the other hand, BPG is fully in favour of immediately addressing the issue of pension surplus ownership. In conclusion, BPG s letter offers the opportunity of a meeting to discuss our views on policies that could ensure the continued strong contribution of private pension plans towards meeting the government s objective of a strong economy, while at the same time providing sustainable financial support to retirees. BELL PREFERRED HOTEL RATES/CORPORATE CAR RENTAL RATES BPG members will now find on our web site the list of preferred hotels as posted on Bell Canada's intranet site. Based on the information provided by Bell, most Canadian hotels do extend the Bell rates to employees and retirees for personal use. Reduced rates on cars and trucks with Bell s primary supplier, Budget Rent a Car of Canada, are also posted on our site at: To note in your datebook ANNUAL GENERAL MEETING Please note that the Annual General Meeting of BPG s Montreal Chapter will be held Wednesday, June 6 th, The meeting agenda will be published in our next newsletter. 5

6 !! " #$%& ' ( ) &! " * ) +,! "! "#$--. /$0, 1 & & 2 3. % 4 $- --- ' ),! " 8 9 ", 3 :, 3, & DID YOU KNOW THAT PROVINCIAL TAXES AND THE PRESCRIPTION DRUG INSURANCE PLAN AT 65+ Most pensioners 65 years old and over must contribute to the Quebec Prescription Drug Insurance RAMQ plan when they prepare their Quebec tax return for the 2006 taxation year. The amount to be paid is based on your income and is calculated by completing annex K of your Quebec income tax return. Remember that the Bell medical insurance plan administered through Manulife is a SUPPLEMENTAL PLAN for pensioners 65+., and most must pay the annual RAMQ premium. Pensioneers 65+ who belong to a private drug insurance plan, (usually through their spouse s company plan or other) are not required to make this payment, but must cancel their public RAMQ Plan registration by contacting the Regie. Consult the Regie for further details at (514) for Montreal, and from elsewhere in Quebec toll free at or visit their web site at We recommend that you obtain the prescription drug insurance booklet issued by the Régie for your reference. 6

7 1% Pension Adjustment CONSUMER PRICE INDEX INCREASED BY 0.93% The Cost of Living Adjustment (COLA) on our pension is based on the increase in the Consumer Price Index (CPI) over a 12 month period ending on October 31 of each year. "decrease in fossil fuels prices, which mitigated the 12-month increase in the October All-items CPI. In October 2006, consumers paid 14.3% less for gasoline than they did in October 2005." According to Statistics Canada, the All-items Consumer Price Index (CPI) rose 0.93% between October 2005 and October 2006 for Canada as a whole. Bell Canada used this percentage, rounded up to 1%, to raise our pensions at the beginning of Many people were under the impression that the inflation rate was higher in In fact, during the first 10 months of the period (From November 2005 to August 2006), the CPI rose by more than 2% but it dropped substantially in September and October According to Statistics Canada, the drop to 0.93% in October came as a result of a BPG S VISION We should also keep in mind that the CPI used by Bell to calculate the Cost of Living Adjustment is based on Canada-wide data. In Ontario and Québec, where most of our members reside, the CPI increase from October 2005 to October 2006 was lower than for the country as a whole and was estimated by Statistics Canada to be at 0.6%. A table providing a comparison between the CPI increases and the Cost of Living Adjustments applied on Bell pensions over the last ten years can be found on page 25 of the 2006 Pension Information Committee (PIC) report. As a result of a series of meetings held in 2005 and 2006 by the Board of Directors, BPG recently issued a revised version of its «Vision». The following is taken from this document: The Board of the Bell Pensioners Group will focus on the following priorities: 1. Recommend that the Pensions and Benefits Standards Act mandate annual solvency valuation requirements for federally regulated pension plans. 2. Recommend that key legislation (such as the Business Corporations Act, CCAA and the Bankruptcy and Insolvency Act) be changed to recognize pensioners as key stakeholders, to ensure that retirees pension benefits receive the highest possible protection should a pension plan fail. 3. Support the introduction of a viable way for pension plan sponsors to permanently avoid plan deficit situations. The latest version of BPG Vision document is available on our web site at: Some of your colleagues are still not BPG members? Don t hesitate to talk to them about our group. To recruit new members, use the membership application form on the back of this page. As BPG members, you remain our best recruiters! 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 7

8 Gladys Scully reorients her career within BPG Last December 31, Gladys Scully, Treasurer of the Montréal Chapter for the last 9 years, handed over her responsibilities to Denis Labrecque. Throughout those years, she ensured the good management of our members'dues and worked closely with the last four Chapter's Presidents: Jean-Marc Hébert, Daniel Gilbert, Raymond Bertrand and Yvan Dutrisac. In addition to her task as Treasurer, she was also actively involved in recruiting activities and in coordinating our Annual General Assembly. Her colleagues consider her as the group's memory. Gladys took her leave from Bell in 1990, after a career that lasted 32 years. It started in Saint-Jérome in what was then called Traffic and then, from there to the Business Office. Her next postings were in the Business Office in Montreal and, later, in the Communications Seminar. Thereafter, she became a communications advisor in the Computer Communications Group and finally exhibitions manager. In her own words, she considers herself privileged to have had such a diversified career. Fortunately, even though Gladys changes hat, she will not leave the Chapter's Board as she will be looking after the administrative affairs of the Group, such as the revision of the articles and the printing of our quarterly newsletter. I wish to become a member of the Bell Pensioners'Group (BPG) Inc and I enclose my cheque for $20. Please make the cheque payable to: Bell Pensioners Group. The annual fee covers the period from January 1 to December 31 and will be applied to (Please print) Family and Given Names: Address: City or Town: Province : Postal Code: Telephone : Date of Retirement (Month and Year) : Language Preference: F A I would like to receive my newsletters by : mail I retired from Bell Canada : Bell Mobility : Expertech : Connexim : Bell Internet Management Services (BIMS) : Other (specify): Signature : Please mail this form along with your cheque to: Date(Year/Month/Day): BPG, 20 chemin Dufresne, Austin, QC, J0B 1B0 8