Bell Pension Group – Ottawa Chapter May 27, 2014 Bell Pension Plan and Post-Retirement Benefits CONFIDENTIAL

Page 2 | | CONFIDENTIAL 2 Pension Plan – Overview of risk control PRB’s – Overview of plan evolution

Page 3 | | CONFIDENTIAL 3  One of the largest and oldest pension plan in Canada, Bell’s plan is significant in relation to its core business and is an important benefit for employees Regulated by federal authorities Defined benefit assets total $13B as of December 31st, 2013 Defined contribution assets total $500M as of Dec 31st, ,000 active employees, 10,000 deferred vested and 33,000 retirees participate in Bell pension plans  As early as 2005 Bell started to seek avenue to stabilize cost and secure pension promise  Although somewhat buffered, the 2008 financial crisis impacted Bell’s solvency ratio significantly  Elements of our pension strategy includes: Better control on company funding and reduction of contribution volatility in a disciplined manner Recognize that circumstances change and economic environment is in constant evolution Look and investigate all the levers available: eg Investment policy Pension has Bell senior management’s attention

Page 4 | | CONFIDENTIAL 4 END POINT: Target Risk Level Plan design changes Bond portfolio changes Bond portfolio changes Funding strategy adjustments De-risking strategy sophistication Look out for innovations Closed DB to new entrants in 2005 Increased bond portfolio duration from 6 to 11 over several years Increased bond allocation: Fixed income changed from 40% of assets in 2008 to 60% of assets in 2013 Before each year end, assess if additional advance contribution is desired ($2.7B made since 2009) Establish guidelines on deficit funding decision process Daily tracking of financial situation Split portfolio by Return Generating (RG) and Low Risk (LR) to better align investment strategy with liability Structure a plan to progressively shift to ultimate asset mix with acceptable risk level (glide path) Keep abreast of emerging initiatives and legislation changes STARTING POINT Bell Initiatives Typical de-risking path Bell is a market leader in pension risk management strategy

Page 5 | | CONFIDENTIAL 5  Indicative of Bell Fund prior to March 2009  Traditional pension fund managers seek returns in each asset category which are higher than the associated benchmark  Traditionally have higher weights in riskier asset categories as these categories have a greater risk premium and added value potential  FRM investment framework is built on the premise risk is taken by deviating from the liability proxy and that the fund return needs to outperform the liability proxy in order to maintain or improve the funded status of the plan  As we proceed with the FRM investment framework, we better align our portfolio with the liabilities Moving to a Financial Risk Management (FRM) investment framework

Page 6 | | CONFIDENTIAL 6  A new investment framework has been implemented to de-risk the pension plan over a period of time in a disciplined and systematic fashion  The framework is built around the solvency deficit/surplus in line with the objective to reduce contribution volatility  Assets are moved from the Return Generating Portfolio to the Low Risk Portfolio as the solvency position improves Moving to a Financial Risk Management investment framework In 2013, more than $1B has been transferred from the Return Generating Portfolio to the Low Risk Portfolio

Page 7 | | CONFIDENTIAL 7 Monitoring ensures the strategy responds to changes in the market and incorporates ongoing pension liability dynamics:  How we monitor? Asset has been split into two segment :Return generating and Low risk Liability has been allocated to each portfolio segment  What is monitored ? Solvency status for each segment Performance of the investment strategy of each segment Investment performance of the low risk against the asset-based liability benchmark  DAILY REPORT: Track the solvency ratio against our glide path  MONTHLY REPORT: Measure asset performance vs. liability performance Allow monitoring of our investment strategy vs. investment benchmark Allow to monitor our FRM strategy against interest rate risk Monitoring to maintain discipline and ensures timely actions

Page 8 | | CONFIDENTIAL Post-retirement benefits Retirement dateLevel of CoverageLimitations Pre July 2000Medical, Vision, Dental - Out-of-country medical - Lifetime maximum of $50k Transition Benefit Basic Group Life 1988 dental fee guide Vision of $75/ 2 years Medical, Vision, Dental - Lifetime maximum of $75k Life insurance of $10,000 Basic Group Life* No out-of-country medical No Transition Benefit Premium to cover dependents Medical - Lifetime maximum of $75k Basic Group Life* Medical ends at age 65 No Dental, Vision No life insurance of $10,000 Premium to cover dependents Coverage fully paid by retirees Basic Group Life* Plan Enhancements - Health card - Online claims reimbursement - Direct payment to Dentist * available to a closed group

Page 9 | | CONFIDENTIAL Conclusion Solid governance, tight risk control, effective administration processes and high quality services are part of Bell’s priorities to ensure pension and benefits promises to employees and retirees are honored. QUESTIONS?