1. 1
Targeting a better future :
Target Benefit Plans
Employer’s Experience
Benoit Brière, FSA, FCIA
Director, Pension & Benefits
Resolute Forest Products

2. 2
WHO WE ARE
North American forest products company with a leading
market presence
2012 sales of $4.5 billion
Q1 2013 sales of $1.1 billion
Facilities in the U.S., Canada and Asia
20 wood products facilities
22 pulp and paper mills
Products marketed in close to
90 countries
Paper Retriever® recycling operations
in 19 North American metropolitan
centers
Manager of 4.7 million hectares
(11.5 million acres)* of forestland in
North America, which are 100% third-
party certified to sustainable forest
management standards
565.7 megawatts of installed capacity
7 hydroelectric facilities
8 cogeneration facilities
* Following the implementation of the tenure reform in Quebec on April 1, 2013, the government has taken over full responsibility for forest management.

3. 3
Resolute has a Long History…..
Predecessor Companies in Canada
Abitibi-Consolidated, Abitibi-Price, Avenor, Alliance Forest Products,
CP Forest Products, Bowater, Stone-Consolidated, Donohue, QUNO, Price,
Consolidated Paper, Bathurst Paper, Rainy River, …
Legacy Canadian DB Pension Plans
• Membership: 5,500 actives + 20,500 inactives
• Liabilities of 5.6G$ as of December 31, 2012 (US GAAP)
• Commitment to fully maintain DB pension plans (past service only)
despite significant solvency deficit

4. 4
Partnership with our Unions
• Agreements with Resolute Forest Products and
– Communications, Energy and Paperworkers Union of Canada (CEP)
– Confédération des syndicats nationaux (CSN)
• Two new Target Benefit Plans (TBP)
– Members in Quebec and Ontario
– Registrations have been filed with Régie des rentes du Québec
• Fixed contribution paid in the TBP
– CEP : 18% of salaries
– CSN : 17% of salaries (employees contribution may be reduced by 2%
when the required level of reserve is reached)
• Initial cost of the design must be 15% of salaries (on going basis)
• Difference between contributions and cost is a provision for adverse
deviations

5. 5
Partnership with our Unions
• Joint technical committees have designed the TBP
• If a deficit arise, the target accumulated benefits are cut in order to
restore the financial balance of the TBP
• Resolute will continue to administer the legacy DB plans, including
investment decisions (just like before)
• Rules of governance for the legacy DB plans remain the same
Legislative amendments are necessary to allow for TBP
in Quebec and Ontario

6. 6
Rationale
• Objectives
– For the employees: Maintenance of a « DB » pension plan for current and
new members
– For the employer: Stabilization of its contribution
• New TBP
– Applies to membership from January 1, 2011 of the current and new active
members
– Plan provisions prior to January 1, 2011 are unchanged
• Basic principles of the TBP
– Assets and liabilities are separated and separately managed from legacy
DB plans
– A safety margin is introduced into the plan funding to increase the
likelihood of achieving the plan promise
– With the creation of this safety margin, employees accepted the principle
of a fixed contribution from the employer and a reduction in benefits if
required

7. 7
• Objectives of the design
– Safety margin in the level of contributions will increase in the
future with the younger new hires
• 15%-20% of the cost  up to 40% of the cost within 5 years
– Prudent use of gains/surplus
• CEP: Reserve for post-retirement indexation conditional
benefit
– Eliminate the « retirement cliff » at age 55
• Equity between those who quit before and those who quit after
• Funding more ordely
• TBP will be registered in Quebec
– Ontario members will participate in the Quebec TBP
– Important for the union and the employer that members are
treated on an equal basis
Design of the Target Benefit Plan

8. 8
Design of the Target Benefit Plan
CEP CSN
Benefit
Final earnings with bridge benefit payable
without reduction at age 60
Indexed career earnings (no bridge)
payable without reduction at age 60
Termination and
death benefits
• Lifetime and bridge benefits payable at
age 60
• Same early retirement conditions as for
active members
• Commuted value can be transferred at
the solvency ratio (if <100%) + surplus
transferred (if >110%) and will be a final
settlement
• Lifetime benefit payable at age 60
• Same early retirement conditions as for
active members
• Commuted value can be transferred at
the solvency ratio (if <100%) +
surplus transferred (if >110%) and will
be a final settlement
Minimum benefit
• 100% of employee contributions with
interest
• No 50% rule
• 100% of employee contributions with
interest
• No 50% rule
Option at retirement
• Monthly pension • Monthly pension
• Purchase of the pension if the
reserve is made
Post-retirement indexation
• Conditional on solvency ratio (>110%)
• Calculated as if it is permanent and as if it
is given to active and retired
• Granted only for retireees and for 1 year
only
Not applicable

9. 9
• Reduction of benefits where necessary to ensure the financial
health of the TBP
– Accurately described in the plan text
– Not a decision of trustees
– Balance between active and inactive members
– Reduction enough to make the TBP 100% solvent, on a
projected basis, over a minimum period of 5 years after the
valuation date based on the negotiated contribution
– Benefits must be reinstated when the TBP has a solvency
ratio of 110%
• Communication
– Risks to participants
Design of the Target Benefit Plan

10. 10
• With the rejuvenation of the active members, the current service
cost will decrease in the coming years, increasing the safety
margin included in the total contribution of 18%
Projected Costs – TBP of CEP
Current service cost projections
9%
10%
11%
12%
13%
14%
15%
16%
17%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030 2035 2040
Year
Servicecost
30
35
40
45
50
Averageage
Median cost Average age Source : AON Hewitt
July 2011

11. 11
Solvencyratio projection
50e
25e
75e
80%
100%
120%
140%
160%
180%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030 2035
Year
80%
100%
120%
140%
160%
180%
Source : AON Hewitt
July 2011
Funding ratio projection
50e
25e
75e
100%
120%
140%
160%
180%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030 2035
Year
100%
120%
140%
160%
180%
• Average indexing is 0.9% a year until 2035
Projected Costs – TBP of CEP

12. 12
• Funding
– The employer is not liable for the balance of the cost nor deficits at the
plan wind-up. Financial responsibility is limited to the fixed contribution
– Current solvency rules replace by a « projected adequacy test »
• Reduction in benefits unless the actuary can certify that negotiated
contributions will be sufficient for the TBP to satisfy the « projected
adequacy test » in a short period of time (e.g. 5 to 10 years)
• Design
– Exempt TBP from the 50% rule
– Commuted value transfer at the solvency ratio (if <100%). If the solvency
ratio exceeds 110%, the excess above 110% is also transferred
– The TBP has no further obligations to retirees for whom an annuity is
purchased
Legislative Changes are Quite Simple

13. 13
• Administration and governance
– Joint administration should be required
– Allow the establishment of the TBP for future service without it
resulting in the termination of an existing plan registered in
Quebec if there are no more active members
• Multi-jurisdictions TBP
– Uniformity / harmonisation between provinces is essential
• projected adequacy test
• reduction of benefits / equitable treatment
Legislative Changes are Quite Simple

14. 14
Conclusion
• Target Benefit Plan is a solution to deliver sustainable pensions
• Employers from private sector
– Can no longer bear the risks of traditional DB plans
– Prefer DC plans
• Employees prefer to have a defined pension
• Compromise: Target Benefit Plan
– Employer: Risk similar to a DC plan
– Employees
• Investment and longevity risks are shared
• Better planning for their retirement than in a DC plan