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We assumed the following trend rates in health- care costs: 

• a 4.5% annual rate of increase in the cost per person of covered health-care benefits for 2004 and the fore- seeable future 

• a 10.5% annual rate of increase in the cost of medica- tion for 2004 with a gradual decline to 4.5% over six years. 

Assumed trend rates in health-care costs have a significant effect on the amounts reported for the health-care plans. The table below, for example, shows the effect of a 1% change in the assumed trend rates in health-care costs. 

<img src='content_image/103737.jpg'>

## Pension Plan Assets 

The investment strategy for the major benefit plans is to maintain a diversified portfolio of assets, invested in a prudent manner to maintain the security of funds while maximizing returns within our guidelines. 

The expected rate of return assumption is based on our target asset allocation policy and the expected future rates of return on these assets. 

The table below shows the allocation of our pension plan assets at December 31, 2004 and 2003, target allocation for 2004 and the expected long-term rate of return by asset class. 

<img src='content_image/103738.jpg'>

Equity securities included approximately $95 million of BCE Inc. common shares or 0.7% of total plan assets at December 31, 2004, and approximately $111 mil- lion of BCE Inc. common shares or 0.9% of total plan assets at December 31, 2003. 

Debt securities included approximately $8 million of BCE Inc. and affiliates’ debentures or 0.1% of total plan assets at December 31, 2004, and $108 million or 0.9% of total plan assets at December 31, 2003. 

## Projected Cash Flows 

We are responsible for adequately funding our DB pension plans. We make contributions to them based on various actuarial cost methods that are permitted by pension regulatory bodies. Contributions reflect actuarial assumptions about future investment returns, salary projections and future service benefits. 

We contribute to the DC pension plans as employees provide service. 

The table below shows the amounts we contributed to the DB and DC pension plans and the payments made to beneficiaries under other employee benefit plans. 

<img src='content_image/103734.jpg'>

