Pension Information Committee Report October 2016

Pension Information Committee (PIC) The PIC was created in 1988 to promote better communication with Plan members. The PIC achieves its tasks through efforts, such as: Providing input on the PIC report Holding a yearly meeting to review various issues related to the Plan Communicating with members The PIC’s mandate, as defined by the Pension Benefits Standards Act, 1985, also includes reviewing, for information purposes, the financial, actuarial, and administrative aspects of the Plan. PIC members for 2016:

Evolution of the Membership As of December 31, 2015, there were 34,054 retiree and survivor members. The DC arrangement was introduced on January 1, 2005 and has since grown to cover 61% of active members (i.e., employees).

Age Distribution of Retirees/Survivors As of December 31, 2015, the average age was 70.6 years for retirees and 77.1 years for survivors and beneficiaries.

Disbursements $905 million of disbursements paid out of the Plan in 2015, including monthly pension benefits of $764 million, lump-sum payments of $99 millions* and allowable expenses of $42 million**. * 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

Funding the Pension In 2015, Bell Canada and the other participating companies contributed a total of $462.8 millions to pension funding $385.8 million to the DB arrangement ($132.0 million of normal cost, $35.2 million of deficit funding and $218.6 million of advance pension contribution) $77.7 million to the DC arrangement. As December 31, 2015 the estimated minimum funding for 2016 is $439 millions As of December 31, 2015, Bell has $219 million of unused advanced contributions that are available to be used to satisfy the deficit amortization requirements of $220 million

Actuarial Valuations of the Plan Two Actuarial Valuations Solvency Liabilities Considers obligations of a pension plan, assuming that it is terminated as of the date of the actuarial valuation and based on current economic and demographic parameters. Deficit of ($997.9M) (Ratio of 93.8%; 3 year average ratio of 93.2%) Going-Concern Considers obligations of the plan assuming that it will continue to operate indefinitely. Surplus of $977.6M (ratio of 107.1%)

Historical Valuation Results Solvency Tests whether the plan has sufficient assets to pay all benefits that have been earned by members to that date. 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.

Plan Asset Allocation Strategy Strategy is to manage the Master Trust Fund with a conservative asset mix with a view to minimizing funding volatility 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 invested to match characteristics of liabilities in terms of interest-rate sensitivity

Recent Plan Performance BIMCOR

The audit process helps protect our pension funds from fraud Retirees Audit 2016 audit of 10,000 retirees 3 mailings done in April (initial letter), in June (reminder) and in August (final reminder) 94% completed 3.5% not correctly completed Forms received with missing information (retiree signature, witness section, etc...) 2.5% not received Researching for those with invalid addresses Possibility of temporary suspension of payments starting in November An electronic audit form has been introduced in order to ease the process Available on the Bell In Touch site More than 3,100 pensioners used it Audit Year 2015 2016 Population ~ 10,000 Temporary suspended pension (from November) 246 … Outstanding cases 34 As of 2016/09/29 The audit process helps protect our pension funds from fraud

The PIC Report The 2016 Pension Information Committee Report provides the pension fund status as of December 31, 2015. It will be available on both the InTouch and Benefits Websites by early of November and will be mailed, if requested.

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