COVID-19 and our pensions
In recent weeks, we have been inundated with news about COVID-19 and the impacts it (together with an oil price war) is having on financial markets around the world. You may also have seen media reports about the effects that falling markets and lower interest rates have on pension plans.
Should BPG members be worried about their Bell pensions under these circumstances? The answer is no – fortunately, that is one less thing we need to worry about during these unsettling times! Here’s why:
First, the recent economic turmoil has no impact on your monthly pension. The amount is defined and is unaffected by changes in financial markets. As well, from a COVID-19 perspective, Bell has assured us that it has a robust business continuity plan in place to ensure that pensioner payments will continue to be made as usual.
Secondly, at the end of 2019, most of Bell’s pension plans were fully or close to fully funded on a solvency basis. Investments in the pension funds are well diversified, have sufficient liquidity, and are less risky than those in many other pension plans. So the funds were in a strong position going in to face the current financial challenges.
In recent years, Bell has taken measures to “de-risk” the pension funds. In other words, Bell has taken a number of steps to enable the funds to better weather financial downturns. We have not seen updated numbers from Bell that reflect the recent market changes. However, based on our ongoing discussions with the Company, we anticipate that the pension funds’ losses will be smaller than the equity market losses, thanks to these de-risking measures. As usual, any shortfall in plan funding will be assumed by Bell Canada.
The bottom line … one of the benefits of a Defined Benefit Pension Plan is that the plan sponsor (in our case, Bell) bears the risks associated with market volatility. With a strong plan sponsor like Bell, we can rest assured that our pensions can be counted on, regardless of wild swings in the market, like those we have been witnessing recently.