PENSION AND BENEFITS

a) The Company maintains seven defined benefit pension plans in Canada. All plans except for one provide benefits on an average earnings basis. The other plan provides benefits on a flat rate per years of pensionable service basis. The Company also maintains executive plans, post-retirement benefit plans and defined contribution plans in Canada and 401(k) defined contribution plans in the United States. On January 1, 2013, the Company initiated a new defined contribution plan for most of its Canadian salaried employees.

This plan replaced an existing defined contribution plan and the Company's group RRSP.

In addition, under three labour contracts, the Company participates in multi-employer pension plans established for the benefit of certain employees covered by collective bargaining contracts in both Canada and U.S. One of the multi-employer plans is a defined benefit plan; however, this is accounted for as a defined contribution plan as the Company has insufficient information to apply defined benefit plan accounting.

The defined benefit pension plans are administered by the Master Trust, which is legally separate from the Company and is monitored by a pension committee. The pension committee is responsible for policy setting.

The pension plans expose the Company to actuarial risk, currency risk, interest rate risk and market risk.

Six of the Company's defined benefit pension plans had a valuation date of January 1, 2013, and one plan had a valuation date of January 1, 2011.

The components of the Company's pension and benefit expense recorded in net earnings included the following:

Defined contribution plans 6.4 1.5

Pension and benefit expense $ 12.2 $ 6.1

The components of the Company's pension and benefit changes recorded in other comprehensive income included the following:

2013 2012

(millions) (restated)

Remeasurements on the net defined benefit liability

Actuarial gains due to actuarial experience $ 2.7 $ 0.5 Actuarial gains (losses) due to financial assumption changes 13.1 (9.2) Actuarial (losses) due to demographic assumption changes (4.7) - Return on plan assets greater than the discount rate 4.4 1.5 Remeasurments effects recognized in other comprehensive income $ 15.5 $ (7.2) Cumulative actuarial losses relating to pensions and benefits Balance of actuarial losses at January 1 $ (24.7) $ (17.5) Net actuarial gains (losses) recognized in the year 15.5 (7.2) Balance of actuarial losses at December 31 $ (9.2) $ (24.7)

There were no adjustments related to asset ceiling limits in other comprehensive income for the years ended December 31, 2013 and 2012.

The actuarial determinations were based on the following assumptions:

2013 2012

Assumed discount rate - year end 4.75% 4.00%

Rate of increase in future compensation 3.50% 3.75%

Rate of increase in future government benefits 3.25% 3.25%

The discount rate is based on a review of current market interest rates of AA corporate bond yields with a similar duration as the expected future cash outflows for the pension payments. A 0.25% increase or decrease in the discount rate would decrease or increase the defined benefit obligation by approximately $4.0 million as of December 31, 2013 (2012: $4.6 million).

The health care cost trend rates used were 5% for dental and 7.5% graded out for medical, which is reduced 0.5% per year until 5% and 5% thereafter. A 1% change in trend rates would not result in a significant increase or decrease in either the present value of the defined benefit obligation or the net periodic cost.

The sensitivity analysis presented above may not be representative of the actual change in defined benefits obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore; in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected benefit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the statements of financial position.

The mortality assumptions used to assess the defined benefit obligation are based on 85% of UP1994 Generational Table with generational improvements using scale AA.

Informal practices that give rise to constructive obligations are included in the measurement of the defined benefit obligation.

b) The following information pertains to the Company's defined benefit pension and other benefit plans, excluding those which are in the process of being wound up.

Pension Plans Other Benefit Plans

2013 2012 2013 2012

(millions) (restated)

Reconciliation of present value of the

defined benefit obligation

Balance, beginning of the year $ 119.3 $ 112.6 $ 5.2 $ 5.6

Current service costs 3.6 3.1 - -

Participant contributions 0.2 0.2 - -

Interest cost 4.6 4.9 0.2 0.2

Benefits paid (5.8) (10.4) (0.2) (0.2)

Plan amendments 0.2 (0.2) - -

Actuarial (gains) losses (10.6) 9.1 (0.5) (0.4)

Balance, end of the year $ 111.5 $ 119.3 $ 4.7 $ 5.2

Pension Plans Other Benefit Plans

2013 2012 2013 2012

(millions) (restated)

Reconciliation of present value of the plan assets

Balance, beginning of the year $ 85.8 $ 84.7 $ - $ -

Interest income 3.4 3.8 - -

Employer contributions 5.4 6.2 0.2 0.2

Employee contributions 0.2 0.2 - -

Benefits paid (5.8) (10.4) (0.2) (0.2)

Plan administration costs (0.3) (0.2) - -

Return on plan assets greater than discount rate 4.4 1.5 - -

Balance, end of the year $ 93.1 $ 85.8 $ - $ - Defined benefit obligation, net $ 18.4 $ 33.5 $ 4.7 $ 5.2

The fair value of the defined benefit pension plan assets at the end of the reporting period for each category, are as follows:

(millions) 2013 2012

Cash and cash equivalents $ 5.0 $ 16.5

Equity investments categorized by industry type

Energy 10.2 7.4

Materials 7.0 8.0

Industrial products 6.2 3.1

Consumer services 7.2 4.1

Consumer products 4.3 2.2

Health care 1.7 -

Financial services 18.0 11.3

Technology 2.5 1.7

Communication services 2.0 1.8

Utilities 0.5 0.5

59.6 40.1

Fixed income investments categorized by type of issuer

Government guaranteed 11.8 15.4

Provincials 5.8 11.2

Corporate 10.9 2.6

28.5 29.2

$ 93.1 $ 85.8

As at December 31, 2013, five of the seven defined benefit pension plans in the above table had unfunded obligations. As at December 31, 2012, all of the defined benefit pension plans had unfunded obligations. The following table provides the defined benefit obligation for plans with surplus, partially funded plans and unfunded plans.

Pension Plans Other Benefit Plans

(millions) 2013 2012 2013 2012

Defined benefit obligation

Plans with surplus $ (0.2) $ - $ - $ -

Partially funded plans 18.6 33.5 - -

Unfunded plans - - 4.7 5.2

Defined benefit obligation $ 18.4 $ 33.5 $ 4.7 $ 5.2

c) As at December 31, 2013 approximately 68% (2012: 52%) of the fair value of all pension plan assets were invested in equities, 25% (2012: 30%) in fixed income securities, and 7% (2012: 18%) in cash and cash equivalents. The plan assets are not invested in derivatives or real estate assets. Management endeavours to have an asset mix of approximately 55% in equities, 40% in fixed income securities and 5% in cash and cash equivalents. The investment policy allows up to 30% in cash and cash equivalents.

d) The weighted average duration of defined benefit obligations are 14.5 years for defined benefit pension plans, 10.2 years for executive pension arrangements and 8.5 years for other post retirement benefit plans. The Company expects to make contributions of $8.4 million to its defined benefit pension plans and

$0.4 million to its post retirement benefits medical plans in the next financial year.