BELL PENSIONER S GROUP OTTAWA CHAPTER BULLETIN

Transcription

1 Important Notice: see last page regarding PIC election. July 3, 2003 BELL PENSIONER S GROUP OTTAWA CHAPTER BULLETIN Approximately 270 people, our biggest crowd ever, attended the Annual General Meeting of the Bell Pensioners Group (Ottawa Chapter) at the Nepean Sportsplex on May 28,2003. The following outlines the major issues that were discussed: Ottawa Chapter Update Chapter Chair David Barr welcomed all present to a Good News meeting. He introduced Linda Terrill, BPG President, Art Smithard, the Ontario Pensioners PIC Representative, Warren Grant, the Ontario Pensioners Deputy PIC Rep., Guy Thivierge from Quebec Chapter who attended to become familiar with Art Smithard s presentation, and Karen Hickey, BPG Secretary. Linda and Karen are Ottawa Chapter members. After reviewing the Agenda, David noted that David Fair would be taking over as Chair of the Ottawa Chapter at the conclusion of the meeting. The Big Push this year, in Ottawa Chapter, is RECRUITING. With a BPG Fee Holiday in place this year, any and all Bell pensioners can and should sign up for free in BPG in 03. All members are strongly urged to recruit for the Ottawa Chapter. Please provide the name, address, and address if any, of pensioners you recruit to any member of the Ottawa Chapter Executive, for addition to the Chapter membership list. A kiosk outside the meeting room displayed a current Bell World family and friends promotion. We pensioners should all support, use and promote Bell services and products. While our pension fund is currently well funded, the best permanent security of our pensions is the continuing business success of Bell Canada. 1

2 President's Report I am pleased to report that BPG currently has over 6600 members. Thank you for continuing to spread the word. The Board of BPG has been very active since our last report in the fall of a) Bell We continued to meet with Bell to discuss areas of concern among our members. Our relationship with Bell is a positive one and we try to make it solution oriented. We met with them this April and spent most of our time discussing the pension (see the PIC report) and the Call Centre. Bell recognizes that there is a problem handling calls and responding in a reasonable time. New managers have been put in place and a plan has been developed to bring the call centre to a 48-hour response commitment. We have also been pleased with Bell s support of BPG in the In Touch newsletter. This has helped us to spread the word to other pensioners and to grow the membership. At our April meeting with Bell the President of BCE Enterprise Services took the time to come and meet with us which is an indication that Bell and BCE continue to see their retired employees as a valuable asset. b) Dental Plan Most pensioners would like to see Bell improve the dental plan from the 1988 dental schedule to a more current one (note: employees who retired with the flexible benefits are not under the same dental plan). Although BPG raises this issue with Bell on a regular basis Bell is not prepared to increase their expenses on our benefit package. BPG has been pursuing outside insurance companies to find a supplemental plan that would take you from the 1988 schedule to the current dental schedule for reimbursement. We were successful in finding a reliable company that has offered us a supplemental dental plan. This plan must be looked at based on your own personal situation. We recognize it may be too expensive for many but it will be beneficial for others. Please see the dental package enclosed for more details. c) Annual Fee As you know we declared a fee holiday for 2003 in BPG. We are a nonprofit organization and our goal is to keep our bank account below $200K. Our rationale is to avoid moving into a more detailed reporting process with the government while maintaining an account that would allow us to hire lawyers, auditors, etc in the event of an urgent issue. At our April meeting we tried to look at our expenses for a 5-year period to determine what the 2

3 right annual fee might be. For the year 2004 and any members joining after October 1, 2003 the annual BPG membership fee will once again be $ d) Legal Cases We currently have 2 issues we are working on where we have hired lawyers to assist us. The first case is dealing with medical costs for pensioners over 65 in the Province of Quebec. In Quebec when you reach 65 you must select either a government medical plan or a private health plan. This is costly for pensioners and our position is that pensioners should be able to use their $50K CME coverage prior to moving to the government plan. We are working with a Quebec City lawyer who is reviewing the Bell documentation and other precedents that may have been set with other companies. A further meeting is scheduled in July with the lawyer and hopefully a follow-up meeting will be held with Bell before the summer is out. This does not impact Ontario pensioners. The second case is regarding pensioners who get divorced and in the court settlement the spouse waives their right to the survivor option. Our position is that the Pension Act allows Bell to put the pensioner back to a level pension. We were successful in 2001 in having Bell do this for a pensioner but when we took a second case forward Bell sought an outside legal opinion. Their opinion claims that regardless of the court settlement the agreement for a survivor option still stays in place. We currently have a Toronto legal firm assessing this issue and expect a legal opinion some time in July. e) Vision At our April Board meeting we spent a lot of time looking at the mandate of BPG and what we felt it should be in the future. We tried to balance the fact that there are lots of issues we could undertake with the fact that we are a volunteer organization and must ensure we do not commit to do more than is feasible. We also recognized that we are not experts in areas of pension or benefits and would seek outside expertise i.e. lawyers, accountants, auditors, etc when we felt it could benefit several BPG members. As a result of our discussion we agreed that our primary focus is to protect pension and benefits through bell and the government. We will also continue to support PIC reps through access to our members and working with them on key pension issues. This support includes training, expense compensation and the hiring of outside expertise as required. As a Board we also commit to be fiscally responsible to our members through audits and reporting to you on how we are spending your membership dollars. We will continue to 3

4 use our chapter meetings to provide not only a social link to other retirees but also an opportunity for education on issues of major interest. f) In Closing It has been a very active year to date and I would like to thank the Board members and the volunteers for each chapter. Since our last newsletter several members have participated on subcommittees tackling pension concerns, meeting with the federal regulator, contacting government representatives on the Must Protect Pension issues and working on the legal cases as well as the daily issues that impact BPG members. It is thanks to your support as members that we are getting the ear of both Bell and government groups. Thank you and please continue to spread the good word. Linda Terrill, President BPG Linda s presentation was well received and prompted a number of questions from the floor: Q1. Could we look at setting up a non-profit charitable organization to which members could contribute to assist fellow members experiencing difficulties? A1. That s an interesting idea. We have not considered this to date, but I will raise this for discussion with the Board. Q2. With respect to the proposed Supplemental Dental Plan, how many of us would need to subscribe to make this viable? A2. It s recognized that this plan will be considered costly by many of our members but only about 10% need to sign up to make it viable. We are hoping that we can get Bell to help promote the plan in In Touch but this is still under discussion. Q3. Are fees for this dental plan tax deductible? A3. Yes. Q4. What s the nature of our interaction with CARP? A4. We re committed to cooperate on issues requiring a coordinated lobbying effort. For example, we ve had some dialogue with CARP regarding bill

5 Q5. Would collecting membership fees in advance for a five-year period ease the Treasurer s administrative task? A5. We haven t thought of this, but my first reaction would be one of concern about exceeding the maximum assets allowed for a non profit organization without becoming subject to much more rigorous financial reporting requirements. Q6. Does Bell provide new pensioners with a BPG membership application package? A6. No, but it s the sort of thing we ve been pushing with Bell. However, it s worth noting, that Bell has been publishing some of our notices in In Touch Q7. Aside from the change to accrual accounting, why don t you ask for membership cheques to be dated January 1? A7. We would be reluctant to do this, since it would make no difference to our accounting but would have a negative impact on our cash flow. Q8. Do you have any information regarding when Bell ExpressVu will become part of our 35% discount package? A8. This topic has been raised on several occasions. At this time, Bell has plans to introduce this to employees by this summer and will then address pensioners later but we have not been given any timetable. The cash option, which is available to pensioners but not current employees, is a complicating factor that needs to be considered in establishing the necessary billing routines. BPG Financial Report Since there was no membership fee for 2003, we did not collect revenue for 2003 in the fall of This enabled us to keep our Corporate assets below $200K, and, hence, avoid the need for much more detailed financial reporting. Corporate assets were about $162,500 and Ottawa Chapter assets were about $11,700 at 31Dec02. 5

6 Corporate expenses were about $107,000. The four largest expenses were Travel, Chapter Meeting Expenses, Postal and Printing & Office Supplies. Ottawa Chapter expenses were about $13,500, with 75% of that due to Chapter Meeting Expenses and Transfers to Corporate. The membership fee for 2004 will be $20.00 and we will begin accepting payment this fall. Confirmation of 2003 BPG Board of Directors Five members of the Board have agreed to serve for another term thus ensuring the continuity that is so important to the continued success of our organization. The following are our Returning Directors: Linda Terrill - President Doug Frame - Treasurer David Barr - Director at Large Carol Reid - Director at Large Russ Donaldson - Toronto Chap Chair We would like to take the opportunity to thank those who are leaving the Board, particularly our Past President, Don Beauchamp. They are a credit to our organization and we wish them well. John Elliot, while resigning from the Board, will continue to serve on the Pension Subcommittee. The Resigning Directors are: Don Beauchamp Florence Curry John Elliot Guy Thivierge We would like to welcome five new directors to the Board, as well as Karen Hickey who has volunteered to handle secretarial duties. You will note that the Ottawa Chapter is well represented as old and new members of the BPG Board of Directors. The New Board Members are: Bob Bentham - London Chap Chair Daniel Gilbert - Mtl Chap Chair David Fair - Ottawa Chap Chair Martial McGraw - Que Chap Chair Art Smithard - Director at Large Karen Hickey Secretary (ex officio) The Nominating Committee proposed the above slate of officers and, since no other nominations were received, the Board was elected by acclamation. However, as a show of support, the Ottawa Chapter members in attendance 6

7 unanimously approved a motion to support the nominating committee s recommendations and also to thank the new Board for their commitment to our organization. Pension Seminar The PIC Pensioner Reps. in conjunction with the BPG executive decided that as pension fund information had become a hot button item in the press, the BPG spring meetings would feature an in depth review of our pension fund. Accordingly, a Pension Seminar was developed and presented at all five BPG meetings London, Ottawa, Toronto, Quebec City and Montreal. The first part of the seminar explained the environment in which our Pension Plan operates. 1. Defined Contribution Plans-Bell has introduced a defined contribution plan as part of the Pay Equity Settlement, and the unions have indicated an interest by some of their members in having a defined contribution pension plan. In a defined contribution plan both the members and the employee contribute a defined portion of salary into a pension fund. There is no guarantee as to how much the pension will be. If the fund is successful the pension could be very good. However, if the fund is not too successful the pension could be considerably less than expected. The employee bears all the risk! 2. Our pension plan is a Defined Benefit Plan. The pension is defined based on the number of years of service and the average salary for a stated period of time. The pension amount is guaranteed by the company, and is not dependent of the status of the pension fund. The pension must be paid even if the pension fund is in a deficit position. The company is required to make pension fund contributions out of earnings. The company bears all the risk! 3. Pension Funds-control billions of dollars, and are vital sources of investment funds for the Canadian economy. In view of their economic importance, both to the country and to the pensioners there is a wide variety of opinion as to how pension funds should be managed, and many legal issues such as who owns a pension surplus. Company management plays a vital role as they make all of the basic operating decisions, and set the specific rules for the fund. There are many professional groups involved such as Actuaries, 7

8 Lawyers, Accountants and Investment managers. Government is involved both in establishing pension fund legislation, the laws that a pension fund must follow, and as a regulator of pension fund performance and management. Private pension funds such as Ontario Teachers are starting to make their presence felt in terms of setting financial reporting standards that will benefit investors. 4. Pension Legislation-is established by the government and sets out the basic rules that all pension funds must follow. The objective of the legislation is to ensure that all pension funds are reasonably well managed, and that pension plan members receive the pension promised. It should be clearly understood that the government does not guarantee pension funds, as it does bank deposits up to $60,000. Provincial Legislation covers all pension funds if the company operates in one province. Federal Legislation covers all pension funds if the company operates in more than one province. Legislation, either provincial or federal does not cover every possible situation. If disputes arise, they must be taken to court. Ontario has introduced a Pension Ombudsman to make it easier for pensioners to obtain a resolution to any problems they may encounter. We would like to see a Federal Pension Ombudsman established. 5. Regulatory Oversight is provided by the Office of the Superintendent of Financial Institutions (OSFI), which is also responsible for the oversight of banks, trust, and insurance companies. The OSFI reviews financial and actuarial data submitted by the company. Financial data must be submitted annually, and actuarial data at least every three years. The extent and scope of the OSFI review is governed by both legislation and budget constraints. Government Auditors visit pension plans that are in difficulty; however, there are only approximately 20 auditors and over 400 plans experiencing difficulty. If a pension fund moves from fully funded to deficit there is a five-year period established to bring the fund back into line. If a fund is declared insolvent a 15-year correction period is established. The basic objective is to balance the needs of the pension fund with the earnings ability of the firm. 6. Pension Fund Financial Disclosure-is an increasingly controversial subject and has been featured in the business press during the past few months as more firms have announced that their pension funds are experiencing difficulty. Legislation defines how information must be submitted to the OSFI. However, the Canadian Instituted of 8

9 Chartered Accountants (CICA) determines how pension fund financial information should be reported to shareholders. The rules are different, and produce different numbers. Canada and the US have similar financial reporting rules, but the UK has recently introduced new more stringent rules for financial reporting, which has disclosed a number of problems with some major UK pension funds. The International Accounting Standards Board has announced that it will introduce new rules in 2004, and we intend to monitor how the CICA adopts these rules for use in Canada. The stated objective of the International Standard is to segregate Pension fund reporting from company operations. The second part of the seminar examined how our pension fund is performing during this difficult time in the investment market. It should be noted that the BCE quarterly financial report stated that the Company Pension Plans were moving into a deficit position, and that the Company would have to resume pension plan contributions this year. In order to understand how the Pension Fund moved from a surplus to a deficit, a financial analysis model was developed. The model was developed from information contained in the financial statements for the BCE Master Trust Fund, and the Bell Canada Pension fund and parallels the performance of the BCE Master Trust 7. BCE Master Trust Fund-was established to optimize the investment process for all of the BCE Pension Funds. The BCE Master Trust Fund enables better utilization of investment professionals, better control, and economy of operation. Our pension fund, the Bell Canada Pension Fund, is the oldest and largest in the group, and accounts for approximately 90% of the BCE total. 8. Lower Interest Rates-have had a negative impact on pension fund performance. Government Bonds that were paying 12% 20 years ago are now being redeemed, and replaced by bonds paying 4 or 5%. This not only reduces pension fund earnings; it causes a shift to more investment grade commercial bonds. Commercial bonds yield a higher return on investment, but they also increase the investment risk level. 9. Stock Market Turbulence-is in large part a result of many companies posting lower earnings in recent years. This has caused some companies to reduce their dividend payments, and in some instances to suspend dividends entirely, which greatly reduces pension 9

10 fund income. As a result there has been a steady decline in equity value during the past three years. Declining market values create an unrealized capital loss in the pension fund. Therefore, even though the pension fund holds the same investment, it isn t worth as much as it was the year before. 10. Earnings Shortfall-caused by lower interest rates, and lower dividend income has to be made up by selling pension fund assets in order to meet the operating expenses of the fund, primarily paying our pensions. 11. Actuarial Studies-are conducted each year by the Company. Simply stated, the actuarial study estimates future pension fund payments, to cover the commitments to current pensioners, employees and their survivor option beneficiaries. Lower interest rates and declining equity income have to be taken into account in these studies, and coupled with the trend to early retirement packages have increased the total Pension Fund liability. 12. Our Pension Fund s move from Surplus to Deficit-is the result of: Lower Income from Bond and Equity investments. Sale of fund assets to cover current operating costs. Unrealized capital losses caused by declining market values. Increased Pension Fund liability recognized in current Actuarial Studies. Clearly our Pension Fund has encountered some rough water, but the important thing to understand is that the system is working the way it was designed to work. The fund surplus, which was created during good investment times, has absorbed much of the economic shock. Most importantly the Company has indicated that it recognizes the situation, and is prepared to resume pension fund contributions. Our expectation is that a Company plan will be developed and submitted to the OSFI, and that a combination of Company pension fund contributions and improving financial markets will produce a return to fully funded status. Art Smithard PIC Pensioner Representative During the course of his very informative presentation, Art answered a number of questions from the floor: Q1. Why are some unions motivated to move to a Defined Contribution Pension Plan? 10

11 A1. There is no easy answer to this question and it will depend on individual circumstances. For example, many young employees today do not expect to remain with the same employer for long periods of time. The stock market bubble of recent years may also have prompted individuals to think that they would be better off in the long run with a Defined Contribution Plan. Likewise, the decision for a corporation to offer a Defined Contribution Plan will not necessarily lead to lower costs since the corporation, in most instances, would also be expected to provide annual contributions. Q2. Many companies are changing to Defined Contribution Plans by slowly introducing new employees only. Is there another approach that would include existing employees? A2. What you have described is the most common approach. Changing existing plans for current employees would require consultation and approval of current employees and pensioners. There is legislation covering this and would involve a significant legal and administrative effort. Q3. As in other fields of financial management, would companies not like to diversify and offer Defined Contribution as well as Defined Benefit pension plans? A3. I doubt it. It probably would not change the risk but it would have a significant effect on cash flow. Q4. Are regulatory bodies such as OSFI prepared to listen to BPG or do they prefer to deal with umbrella organizations such as CARP? A4. Yes, we ve received a good hearing. We re also making the point that, even though our pension plan is federally regulated, we have a legitimate voice in dealing with provincial authorities since provincial legislation often has a subsequent influence on federal legislation. Q5. During our working days, Bell always advised us that our pension alone would not be adequate; any comment? A5. Yes, I recall getting similar advice and, to this end, Bell facilitated and to some extent supplemented additional personal savings through payroll deductions for RRSP, Employees Stock Savings Plan, and Canada Savings Bonds. 11

12 Q6. Are there any guaranties with respect to our pension being safeguarded against catastrophic failures? A6. Your question implies some form of insurance; this does not exist. Protection comes through corporate due diligence and the regulatory framework. Q7. Is the Bell Pension Fund protected against Bell s creditors? A7. Yes, but if the fund became in serious deficit and the company was facing bankruptcy then the Pension Fund would find itself fighting for Bell s remaining assets in competition with other creditors. Q8. Does the Cost of Living portion of our pension have the same protection as our basic pension? A8. I don t know the answer to your question. We ll have to look into that, but since the COLA is part of the plan and paid out of the Fund, it is most likely treated as the rest of the pension. Q9. The Air Canada Pension Plan is not adequately funded; any comment? A9. Since Air Canada is in bankruptcy procedures, there isn t much the regulator can do to force Air Canada to contribute. Q10. When would Bell s company contribution to the pension plan kick in? A10. If the pension plan were in deficit by next year, Bell would set up a payment scheme in consultation with OSFI. Closing Remarks President Linda Terrill made a brief presentation to John Elliot to thank him for serving on the Board. She also presented David Barr with a plaque in recognition of his service on the Board and as Chair of the Ottawa Chapter. David Barr, who will continue as a Board Member at Large, thanked the Ottawa membership for their support over the past several years and welcomed incoming Ottawa Chapter Chair and new Board Member, David Fair. We all wish the new David well as he assumes his new responsibilities. 12

13 Election of Pensioners PIC representative Art Smithard s term as the pensioners representative from Ontario on the Pension Information Committee (PIC) is coming to an end and a new representative will soon need to be elected to replace him. As in the past, BPG would like to support the election of a PIC representative who, like Art, has the competence to support the objectives of our organization while representing the needs of all Bell Canada pensioners on this committee. The June issue of In Touch requests nominations to be submitted by July 18. The BPG Board and Chapter Executives will nominate Jim Murray as the candidate who we would ask you to endorse. The actual election will take place August 4 29 and we ask you to support him with your vote. Some background information on Jim s career with Bell follows: Name: James C. Murray Address: 31 Rowallan Drive, Toronto, ON, M1E 2Y5 Employee No.: A Province of Residence: Ontario James C. Murray Biography: Jim retired from Bell Canada in 1997 after a 27+ year career spanning a broad spectrum of accounting and finance management line and staff positions. Part of his career involved becoming knowledgeable on all aspects of the Pension (payroll) and the related operations of the then corporate Benefits Group. In addition to working directly for Bell, he also had assignments as a management consultant for BCI International in the Caribbean. He was actively involved in the start-up and ongoing accounting, finance and administrative operations for Bell Sygma, including the establishment of subsidiaries in the UK, USA and Singapore along with related regulatory obligations in Thailand, Malaysia, Australia and Hong Kong. Subsequent to his career with Bell, he spent several years in the UK as a senior management consultant and then as the Director of Finance and Administration for the UK and Europe holding company subsidiary of a BCE company. Jim holds a diploma in Business Administration (Financial Management major) from Ryerson University. DP