Bell Canada is taking steps to improve the funded status of its DB plan by making a $750-million payment into it.
The payment will be funded from cash on hand at the end of 2012, the company says. The company expects to realize $200 million in tax savings in 2013 from the pension pre-payment.
“Accelerating the funding of Bell’s future pension obligation is an efficient use of our cash given the backdrop of a persistently low interest rate environment,” said Siim Vanaselja, CFO at BCE and Bell Canada.
“With this contribution, which preserves the pension plan’s funded status at a high level, we expect Bell’s normal pension funding and cash income taxes for 2013 to be maintained at a similar level to 2012. This action both de-risks the pension plan and improves Bell’s longer term financial flexibility to enhance returns to our shareholders through reduced future pension funding requirements and expense.”