MINNEAPOLIS EMPLOYEES RETIREMENT FUND JANUARY 2004 MINNEAPOLIS, MINNESOTA MINNEAPOLIS EMPLOYEE RETIREMENT FUND (612) 335-5950

MINNEAPOLIS EMPLOYEES RETIREMENT FUND JANUARY 2004 MINNEAPOLIS, MINNESOTA MINNEAPOLIS EMPLOYEE RETIREMENT FUND (612) 335-5950 1

RETIREMENT BOARD MEMBERS Agnes M.Gay President Dennis W. Schulstad Vice President Craig P. Cooper Secretary/Treasurer James Lind Brian Lokkesmoe Paul Ostrow Minneapolis City Council Member Heather Johnston Minneapolis City Mayor Rep ADMINISTRATIVE OFFICERS Judith M. Johnson Executive Director/ Chief Investor Officer Cynthia K. Hedum Manager, Accounting Timothy R. Caza Benefits Manager PROFESSIONAL SERVICES Medical Board/Park Nicollet Medical Center Dr. Thomas E. Davis City Physician Milliman USA Actuary Northern Trust Custodian Bank Performance Measurement Ennis & Knupp Investment Donald C. Willeke Willeke & Daniels Legal Council Office State Auditor, Minnesota Auditor 2

TABLE OF CONTENTS Forward from Exec. Director 4 Special Characteristics of MERF 5 Administration of MERF - Board of Directors - Municipal Employees Retirement Association - MERF Staff 6 Contributions to MERF - Rates - Back Charges 7 Disability Benefits - Requirements - Formula - Returning to Work 7 Survivor Benefits - Under 20 Years of Service - Over 20 Years of Service 8 Death Benefits - Cash Settlements 9 Preparing for Retirement - Procedure - Eligibility - Years of Service 9 Retirement Benefits Options - General Information - Single Life Option - Option #1 - Option #2 - Option #3 - Option #4-10 Yr. Certain - Option #4- Death Benefits - Option #4- Other Plans Selected - Two Dollar Bill Option 10 Post Retirement - Payments - Adjustments 13 Transfer to Other Public Employment - Combined Annuities 13 Termination of Public Employment - Refunds - Deferred Annuities 14 Return to Public Employment After Termination - Buy Back Provisions 15 Example of Retirement Under Formula Retirement 16 Work Sheet 17 Option #2, and #3 Tables 18 Option #2, and #3 With Bounce Back Tables 19 Option #4, Table 19 3

FORWARD FROM EXECUTIVE DIRECTOR Dear MERF Members: Since its founding in 1919, the purpose of the Minneapolis Employees Retirement Fund (MERF) has been to provide members with financial security after retirement and survivor and disability protection during employment. Although much has changed in the eighty-five years since MERF s founding, its primary purpose has not changed. Many people are deeply involved in meeting the challenge of providing for the financial security of MERF members. The Retirement Board, in cooperation with the Employees Association, makes efforts to assure the continue independence and financial integrity of MERF. These joint efforts are responsible for many of the improvements, in MERF s structure and benefit package which are reflected in this handbook. The Retirement Board has authorized the publication of this handbook in order to update and inform MERF s members of the retirement, disability and survivor benefits that are available and to update members on recent legislative changes. This edition includes all amendments through the 2003 legislative session. While this handbook is intended to help members understand the law, it should be remembered the final authority is the law itself. If at any time you have questions regarding the Fund or its benefits, feel free to call the MERF office at (612) 335-5950. Judith Johnson Executive Director/Chief Investment Officer 4

SPECIAL CHARACTERISTICS OF MERF MERF is significantly different from most other public and private retirement plans as well as social security. It is important that MERF members understand the structural difference between MERF and other retirement plans in order to avoid confusion or misleading comparisons. Some of most important differences between MERF and other plans are: Contributions MERF members and their public employers share equally in the normal cost of benefits provided by MERF. MERF members currently contribute 9.75% of total salary, which includes.50% for survivor benefits. Beginning in 1983, the full amount of the employee s contribution is not subject to federal or state income tax, but is tax deferred until received as a retirement benefit or refund. Funding MERF, unlike many retirement plans has a specific date by which it must be fully funded. As part of Retirement Board policy, and by state mandate, MERF must be fully funded by the year 2020. For you as a contributing member, this means that you are assured that upon retirement, there will be funds on hand to pay your retirement benefit for as long as you or your designated beneficiary lives. This differs significantly from Social Security and other pay as you go plans where there are no current reserves to pay future retirement obligations. Separate Accounts MERF s structure further assures that there will be adequate funding of all retirement benefits. When a member retires, MERF automatically transfers the full cost of providing the member s lifetime retirement benefit, as determined by the actuary, to a separate retirement account. This account is then professionally invested and annual lifetime benefit increases are granted based on investment performance. Management Unlike other Minnesota Public funds, MERF controls both its active and retired account assets. The Retirement Board s Statement of Investment Policy defines the structure for asset management for the funds. MERF assets are invested by outside professional money managers. MERF s investment performance is monitored and reported by a professional reporting firm and all MERF transactions and accounts are audited annually by the Minnesota State Auditor. Benefits Finally, MERF differs from other funds in that it provides its members with three distinct types of benefits. In addition to providing retirement benefits, which are adjusted annually based on investment earnings, MERF also provides benefits to its actively employed members. In the event of death of an active member, MERF provides benefits to the surviving spouse and children, even if survivors supplement their benefits by working. Should an active member be disabled, MERF benefits can be used to supplement workmen s compensation or other disability benefits. 5

ADMINISTRATION OF THE FUNDS There are three major elements in the administration of MERF; the Retirement Board, the Employees Association, which elects the Retirement Board, and the MERF staff that carries out the policies established by the Retirement Board. Board of Directors The Retirement Board is made up of seven members who represent both employees and employers as follows: - Five employee/retiree representatives elected by members of the Employees Association, at least two of them, effective 1983, must be retired members. Employee members serve three year staggered terms. - Two elected officials serve as Retirement Board members under state law. These members are the Mayor of the City of Minneapolis, or his or her designee and a representative of the Minneapolis City Council. Municipal Employees Retirement Association The Employees Association is established according to Minnesota State Law to represent the interest of all MERF members and has direct responsibility for electing five of the seven members of the Retirement Board. Officers elected by the membership govern the Association, under its own by-laws. The executive, legislative and nominating committees also serve important roles within the Association. All contributing employees and, and as of 1983, all retirees are eligible for full voting membership in the Employees Association. Annual Association dues are $50.00 and are paid through payroll or retirement benefit deductions each year. MERF Staff The Executive Director who is directly responsible to the Retirement Board heads the MERF staff. The Executive manages a staff that administers the Retirement Fund in accordance with Minnesota law. CONTRIBUTIONS TO MERF Rates Employees under state law contribute 9.75% of their earnings to MERF, which includes.50% for survivor benefits. Employee contributions are not subject to federal income tax until they are withdrawn from the fund. Either as retirement benefits or as refunds. If no retirement benefits are earned, all employee contributions are refunded with interest, upon separation from the service. Survivor benefits contributions are not refundable. The employer also makes contributions to the fund as are annually calculated by the State Actuary. 6

Back Charges Back charges are for contributions that the employee would have paid at the regular contribution rate, from the start of service for the employer, plus interest. MERF reviews member accounts periodically and notifies members of back charges owing. This amount may be paid in cash or by payroll deduction. Payments of the back charges are optional. It is important to remember that no service credit can be given for years in which back charges are owed. DISABILITY BENEFITS Disability, whether duty or non-duty, means that an employee is unable to perform the duties of his or her ordinary employment. All applications for disability retirement must be approved by the Medical Board which determines, disability by considering both the employee s physical and mental health. The Medical Board is made up of the Minneapolis City Physician, a physician retained by MERF and the employee s own physician. Requirements. In order to qualify for a disability retirement, the following requirements must be met: 1. The disabled employee must submit an application for disability retirement to the MERF office. This application must be approved by the Medical Board. 2. The employee must be under age 60 and have five years of service if the disability is not employment related. There is no service requirement for duty disability. 3. Under age 60 disabled employees may be required to have an annual medical examination. If the employee is able to return to his or her former employment, the disability retirement will end. Employees are urged to consult with the MERF staff, their department head and supervisor before applying for disability retirement. As there is a three-month waiting period between the retirement date and payment of disability retirement. It is very important that both the employee and supervisor make certain that application is made before vacation and sick leave are exhausted. If the disability retirement allowance is granted and the employee has not been restored to duty after three months, monthly benefits begin and are paid retroactively from the date of retirement. During this waiting period the MERF staff is available to the employee and dependents for advice and counsel. If the employee is unable to travel to the office to make application for disability retirement benefits, a MERF staff member will visit the employee at home or in the hospital. In extreme, cases the employee s department head may make application on be half of the employee. Formula. The formula for determining the benefits paid under a disability retirement is substantially the same as the formula used to determine a regular service retirement benefit (see pages 12 to 13). The only difference in the calculation of a disability 7

retirement involves the determination of years service. Under a disability retirement the employee s years of service equal the great of: 1. The number of actual years of service completed plus the number of years the employee would have worked up to age 60, with a combined maximum of 22 years, or 2. The actual number of years of service if greater than 22 years. The disability retirement benefit is by state law subject to an income restriction. If a disabled employee s outside income, from workmen s compensation or other sources, when combined with the disability benefit exceed his or her earnings at the time of disability the disability benefit is reduced to that extent. At age 60 the disability retirement is, automatically converted into a regular service retirement, which continues for life without income restrictions. Returning to Work. Employees qualify for disability retirement only as long as the Medical Board continues to certify the employee as disabled. If the Medical Board certifies that the employee is able to return to work within 5 years of the disability, the employer must reemploy the employee at a salary not less than his or her disability retirement benefit. After five years re-employment is at the option of the employer and after age 60 the employee cannot be re-employed. Disabled employees are not only allowed, but are encouraged to supplement their disability retirement benefits with outside employment. These earnings are, however, subject the income limitation previously outlined. SURVIVOR BENEFITS Under 20 Years of Service. If, after July 1, 1983 a contributing member dies with less than 20 years of service the member s personal contributions will be returned to his or her beneficiary. Survivor benefits are payable as follows: Surviving spouse 30% of member s average salary over last six full months of service preceding death. Each surviving child 10% of the above salary Maximum family benefit - cannot exceed 50% of member s average salary over last t months. Surviving spouse means the unremarried spouse of a deceased member who was not legally separated or divorced at the time of death. The surviving spouse benefit continues for life. Surviving child means a natural or adopted unmarried child who is either under age 18 or under age 22 if a full time student at an accredited school, college or university. Over 20 Years of Service. If a contributing member dies with 20 or more years, his or her beneficiary receives a survivor benefit life income. The lifetime monthly benefit is the actuarial equivalent of what the member would have received if he or she had retired on the date 8

of death. Only the member s spouse, or if none, a dependent child or dependent parent can be designated as a beneficiary of this survivor benefit life income. A child or parent receiving over 50% support from the member is considered dependent. If the member does not designated a survivor benefit beneficiary, a surviving spouse, or if none, a dependent child or parent may, within 60 days of the members death, file an application with MERF to receive a reduced survivor benefit life income. Members are urged to keep their beneficiary designation current, as MERF has no alternative but to follow the members written designation if it conforms with the law. Beneficiary designations are valid until retirement at which time eligibility for survivor benefit ceases. DEATH BENEFITS Cash Settlements. If a contributing member dies with less than 10 years of service and does not have a surviving spouse or child who qualifies for survivor benefits, the member s beneficiary receives a refund of all personal contributions along with a $750.00 death benefit. The beneficiaries of deceased members with over 10 years of service receive a refund of the member s personal contributions, a $1,500.00 death benefit and an Accumulated Employer Benefit as shown below. The Accumulated Employer Benefit may only be paid to qualified beneficiaries, or if no beneficiary is designated, to qualified survivors. For more information on who is qualified to receive Accumulated Employer Benefits contact the MERF office. The following table shows the accumulation of the employer benefit with interest for the number of years indicated: Service Yrs Amount Service Yrs Amount Service Yrs Amount 10 720.37 22 2,054.88 33 3,419.71 11 809.18 23 2,197.07 34 3,556.50 12 901.55 24 2,344.95 35 3,698.76 13 997.61 25 2,498.75 36 3,846.71 14 1,097.51 26 2,598.70 37 4,000.58 15 1,201.42 27 2,702.65 38 4,160.60 16 1,309.47 28 2,819.75 39 4,327.08 17 1,421.85 29 2,923.18 18 1,538.73 30 3,040.11 20 1,660.28 31 3,161.72 21 1,786.70 32 3,288.18 PREPARING FOR RETIREMENT Procedure. Employees considering retirement are urged to contact the MERF office for information and to make application for benefits before ending employment. This is extremely important to ensure that there is no gap between wages and retirement benefits. Retirement benefits commence from the later of either the day following the employees last day of work or the date of application. When you visit the MERF office to make application for retirement, a retirement counselor will assist you in selecting one of several retirement options, which are 9

outlined in the next section of this handbook. The MERF staff will also assist you in estimating what your retirement benefits will be under the retirement formula chosen. A list of retirement options and estimated benefits must, by state law, be sent to the member s spouse before application for retirement can be made. Eligibility. Employees are eligible for service retirement either: 1. With 30 or more years of service at any age; or 2. At age 60 with 1 or more years of service 3. With 20 or more years of service at age 55 under the Two Dollar Bill option, if a MERF member prior to June 28, 1973. Years of Service. An employee s years of service, or service credit, are important for several reasons. Years of service are used in determining eligibility for various disability and survivor benefits as well as eligibility for service retirement. The following guidelines are used in determining years of service eligibility for retirement benefits: 1. Any service in a calendar year will qualify an employee for a 1, 20 or 30 year retirement provision even though the amount of service may not qualify the employee to be credited for that full year of service. Under this provision, an employee under age 60 who has worked for 30 years may technically only have 29 years of creditable service, but nevertheless be eligible to retire. 2. An employee who is short months of service or dollar credit from earlier years of service may apply unused credit earned during a later year in order to restore the earlier year to full credit. No two or more years may be combined under this guideline to restore more than one creditable year of service. 3. Employees may use their final year s salary in calculating their highest 5 of their last 10 years of service. The application of these guidelines will vary with each retirement situation. Select military service may also qualify for creditable years of service. Call the MERF office if you have any questions about your military or service credit status. RETIREMENT BENEFIT OPTIONS General Information. When employees apply for retirement benefits, either under a service retirement or a disability, each employee must choose an option under which his or her retirement benefit will be calculated. Selecting an option is very important and must be done with extreme care, not only because it cannot be changed under any circumstances after the 10

effective date of retirement, but also because the option chosen will have a significant effect on the retired employee and his or her beneficiary throughout retirement. In addition to the age and health of the employee and the beneficiary, the retiring employee should take into consideration their anticipated living standard, savings, insurance and investments or other sources of income. Many of the retirement options available are variations of the single life formula. By calculating your retirement benefits under the single life formula, using the examples and option tables at the back of this handbook, the retiring employee can predict the approximate retirement benefit which he or she will be receiving. Take a few moments to work through the calculation of your retirement benefit under the single life option; it will give you insight into how the various options were developed and give you perspective as to how they compare. If you have any questions or are having difficulty calculating your retirement benefit, feel free to call or visit the MERF office. Bear in mind that both your calculations and those of the MERF staff are subject to the computations of the actuary. With this information in mind, the retiring employee may choose from the following options. Single Life Option. This option pays the retired employee the largest monthly retirement benefit, but at the time of death all payments stop and nothing is paid to family or heirs. Employees who have no beneficiaries usually select this option. Option No. 1. This option pays the retired employee a relatively low monthly benefit, but when the employee dies the remaining value of the employee s pension benefit is paid to his or her beneficiary in a lump sum payment. This option is rarely used except in the case of terminal illness. Option No. 4-10 Year Certain should also be considered under these circumstances as it pays benefits to beneficiaries in monthly installments. Option No. 2 Joint Survivor Annuity. This option pays the employee a reduced monthly retirement benefit for life. When the employee dies the same monthly benefit is paid to his or her beneficiary for life. The beneficiary under this option must be designated upon retirement and cannot be changed. Option No. 3 Joint Survivor Annuity. This option is similar to Option 2 except that the monthly benefit paid to the designated beneficiary is reduced by one half. For example, if a retired employee under Option No. 3 were receiving a monthly retirement benefit of $3,000 for life, after the employee s death, the beneficiary would receive a monthly benefit of $1,500 for life. 11

Monthly retirement benefits under this option are less than under the Single Life Option but greater than Option 2. Employees who need larger monthly benefits but still want to provide for a beneficiary often use this option. Option 2 or 3 Joint Survivor Annuity With a Bounce Back Provision. If you elect the option 2 or 3 joint survivor, you may choose a bounce back option. This option would further reduce your monthly benefit, but if your joint annuitant should die before you, your monthly annuity would increase or bounce back to what the amount would have been had you chosen a single life annuity at retirement rather than a joint and survivor annuity. Option No. 4 10 Year Certain. The 10 Year Certain pays the employee a monthly retirement benefit for life. If the employee dies within the first 10 years of retirement, the same monthly benefit is paid to the beneficiary (ies) for the balance of the 10-year period. Under this option the beneficiary may be changed at any time. In considering this option, employees are cautioned that surviving beneficiaries receive monthly benefits only during the ten-year period. Option No. 4 Death Benefit. Under this Option the employee is selecting a single life option less the amount of premium each month required to pay for a death benefit. The table shows examples of the cost per month of the first $500 and each additional $100 of coverage: Age 54 55 56 57 58 59 1 st $500 $1.02 $1.08 $1.14 $1.21 $1.28 $1.35 Each Additional $100 $0.20 $0.22 $0.23 $0.24 $0.26 $0.27 Age 60 61 62 63 64 65 1 st $500 $1.43 $1.52 $1.61 $1.70 $1.81 $1.92 Each Additional $100 $0.29 $0.30 $0.32 $0.34 $0.36 $0.38 The death benefit selected under this Option cannot be less than $500 or more than one half the value of the employee s total retirement benefit. Death benefits under this option are paid in a lump sum. Option No. 4 Other Plan Selected. Subject to the approval of the Retirement Board, any other plan you may have in mind can be worked out provided it is of equal actuarial value to the Single Life Option. Two Dollar Bill Option. The Two Dollar Bill Option is only open to employees who were members of MERF prior to June 28, 1973. This plan is rarely used. If you have questions, about this option, please contact the MERF office and the staff will be happy to answer any questions you may have. 12

POST RETIREMENT Payments. Checks for retirement benefits are mailed from the MERF office on the last business day of each month. Benefit checks are mailed to the member s home address on file at the MERF office. Benefit payments may also be sent electronically to member s bank for deposit into only one account. These payments are posted at the bank on the first business day of the month. If the first falls on a Saturday, the funds will be available on Monday. If the first falls on a holiday, the funds will be available the next normal business day. Members are urged to make sure that MERF is notified of any change of address, or change in banking information. Deliveries by the United States Postal Service are occasionally delayed, particularly outside the Minneapolis/St. Paul metropolitan area. If you experience delivery problems, please contact your local post office. If delivery problems persist, please call the MERF office. If, for any reason, a member cannot receive or endorse his or her benefit check, special arrangements can be made to have the check held in the MERF office for later payment, or deposited into a bank, by calling the MERF office. In some cases the member will be furnished with a Power of Attorney form, valid only for the MERF pension checks, in other cases it may be more appropriate for a guardian or trustee to be appointed to endorse the check. The family or legal representatives of the member are urged to contact MERF quickly, if these conditions arise. Adjustments. All of the assets attributable to retired members of MERF are placed in a separate account that is professionally invested under the supervision of the Retirement Board. Each January members receive an annual increase equal to the CPI for the previous year up to a maximum of 3.5%. In addition, if investments earn a return when averaged over 5 years that exceed both the assumed rate of return of 5% plus the CPI adjustment, an additional permanent increase is awarded. TRANSFER OF OTHER PUBLIC EMPLOYMENT Employees who transfer to other public employment not covered by MERF have the following options: 1. Remain a member of MERF if the employee meets very specific requirements; or 2. Join the Retirement Fund which serves the new employer and receive a refund of accumulated contributions, with interest; or 3. Leave accumulated contributions on deposit with MERF by applying for a deferred annuity, which may be converted into a combined annuity as described below. 13

Employees transferring to another public employer are encouraged to call MERF for more information on which options are available. Combined Annuities. A monthly retirement benefit is available to employees who have under 1 year of service in MERF, but only when these years of service are combined with service in other public funds total 3 or more years of service. Service in any of the following funds may be combined. 1. State Employee Retirement Program (MSRS) 2. Correctional Employees Retirement Program 3. Unclassified Employees Retirement Plan 4. Highway Patrolmen s Retirement Plan 5. Legislators Retirement Plan 6. Elective State Officers Retirement Plan 7. Public Employees Retirement Association (PERA) 8. Public Employees Police and Fire Fund 9. Teachers Retirement Fund (TRA) 10. Minneapolis Teachers Retirement Fund Association (MTRA) 11. St Paul Teachers Retirement Fund Association 12. Duluth Teachers Retirement Fund Association A monthly retirement benefit is also available to employees who have less than 1 year of combined allowable services in any of the Funds listed below, provided the employee works until age 65. 1. Minneapolis Employees Retirement Fund (MERF) 2. State Employees Retirement Fund (MSRS) 3. Correctional Employees Retirement Program 4. Highway Patrolmen s Retirement Fund 5. Public Employees Retirement Fund 6. Public Employees Police and Fire Fund 7. Teachers Retirement Fund MERF members who have allowable service in any of the Funds listed above are urged to call the MERF office and confirm that this information is part of the employee s retirement file. TERMINATION OF PUBLIC EMPLOYMENT Refunds. Employees leaving public service any time before retirement may receive a refund of all personal contributions, with interest, except for the.50% survivor benefit contribution, which is the equivalent of a non-refundable term insurance premium. Employees who leave public service after age 60 may not withdraw personal contributions unless they have worked under 1 year and do not qualify for monthly retirement benefits. 14

Deferred Annuities. Members who leave public service with 1 or more years of service may apply for deferred annuity and collect their retirement benefits when they reach age 60. The following guidelines are important for the employee to remember when considering a deferred annuity: 1. Application for deferred annuity must be made within 30 days of leaving public service. 2. Any time before becoming eligible to receive a monthly retirement benefit, employees may choose to withdraw their personal contributions with interest. 3. If an employee dies while on deferred annuity, his or her beneficiary will receive a refund of all personal contributions with interest, and the Accumulated Employer Benefit if the employee had over 10 years of service. 4. Upon reaching eligible retirement age employees must apply for service retirement with MERF and choose the retirement option under which to calculate their monthly retirement benefit. No retirement benefits can be paid until this application is filed. RETURN TO PUBLIC EMPLOYMENT AFTER TERMINATION Buy Back Provisions. Upon returning to public employment, a former MERF member who received a refund upon leaving public service may buy back the years of service accumulated under MERF by repaying the full amount of the refund, with interest. This provision may be important to returning public employees for purposes of claiming a combined annuity on the basis of pooled years of services. (See pages 14 to 15) 15

EXAMPLE OF RETIREMENT UNDER THE FOMULA PLAN. Member retires at age 60 with 28 years of service. Choose best 5 years earnings of the last 10 years: 1. 40,000 2. 42,000 3. 44,000 4. 46,000 5. 48,000 220,000 Total high 5 earnings. Consult chart below to obtain percentage for years of service; in this example, 28 years of service. X.65 Multiply earnings by % listed after 28 years. 143,000 60 Divide this amount by 60 to arrive at monthly allowance for Single Life Option $2,383.33 143,000 60 = 2,383.33 Percentage Charge for Years of Service Years % Years % Years % 10 20.0 21 47.5 32 75.0 11 22.5 22 50.0 33 77.5 12 25.0 23 52.5 34 80.0 13 27.5 24 55.0 35 82.5 14 30.0 25 57.5 36 85.0 15 32.5 26 60.0 37 87.5 16 35.0 27 62.5 38 90.0 17 37.5 28 65.0 39 92.5 18 40.0 29 67.5 40 95.0 19 42.5 30 70.0 41 97.5 20 45.0 31 72.5 42 100.0 Using the example above, the employee s monthly retirement benefit under Option No. 2 may be determined by consulting the chart on page 18. Using the example of age 60-year-old member whose beneficiary is 2 years younger, the corresponding reading on the Option No. 2 chart is 84.2%. This means the employee under this option would receive 84.2% of a Single Life Option benefit or $2,006.77 per month. If the employee dies before his or her beneficiary, the beneficiary would continue to receive a monthly retirement of $2,006.77 for life. Under Option No. 3 the 91.4% corresponds to the age of the employee and beneficiary (see chart on page 18). If the employee chose Option No. 3, he or she would receive a monthly retirement benefit of $2,178.37 for life. If the employee died, his or beneficiary would receive one-half that amount, or a monthly retirement benefit of $1,089.18 for life. 16

WORK SHEET Your Age Number of years older-younger than beneficiary Years of Service Choose best 5 years earnings out of the last 10 years: 1. 2. 3. 4. 5. $ Total high 5 earnings. X Multiply earnings by % listed after 28 years. Divide this amount by 60 to arrive at monthly allowance 60_ for Single Life Option $ 60 = Consult Charts on pages 18, 19 to determine % by which to multiply monthly Single Life Option to arrive at allowances for Option No. 2 and 3 and page 19 for Option 4 10 Year Certain. 17

OPTION NO 2 100% Joint Survivor Percent of Single Life Option Years Difference in Ages Annuitant Older Annuitant Younger Annuitant Age 1 2 3 4 5 6 7 8 Same Age 1 2 3 4 50 89.6% 89.2% 88.7% 88.3% 87.9% 87.4% 87.0% 86.6% 90.1% 90.9% 91.6% 92.3% 92.9% 51 89.2 88.8 88.3 87.8 87.4 86.9 86.5 86.0 89.7 90.5 91.3 92.0 92.7 52 89.8 88.3 87.8 87.3 86.9 86.4 85.9 85.4 89.3 90.1 90.9 91.7 92.4 53 88.4 87.9 87.3 86.8 86.3 85.8 85.3 84.8 88.9 89.8 90.6 91.4 92.1 54 87.9 87.4 86.8 86.3 85.8 85.3 84.7 84.2 88.4 89.4 90.3 91.1 91.8 55 87.4 86.9 86.3 85.8 85.2 84.7 84.1 83.6 88.0 89.0 89.9 90.7 91.5 56 87.0 86.4 85.8 85.2 84.6 84.0 83.5 82.9 87.5 88.6 89.5 90.4 91.2 89.7 86.5 85.8 85.2 84.6 84.0 83.4 82.8 82.2 87.1 88.1 89.1 90.0 90.9 89.3 85.9 85.3 84.7 84.0 83.4 82.8 82.1 81.5 86.6 87.7 88.7 89.7 90.5 88.9 85.4 84.8 84.1 83.4 82.8 82.1 81.4 80.8 86.1 87.2 88.3 89.3 90.2 88.5 84.9 84.2 83.5 82.8 82.1 81.4 80.7 80.1 85.6 86.8 87.9 88.9 89.8 88.1 84.3 83.6 82.9 82.2 81.4 80.7 80.0 79.3 85.1 86.3 87.4 88.5 89.5 87.7 83.8 83.0 82.3 81.5 80.8 80.0 79.3 78.5 84.6 85.8 87.0 88.1 89.1 87.2 83.2 82.5 81.7 80.9 80.1 79.3 78.5 77.8 84.0 85.3 86.5 87.7 88.7 86.8 82.7 81.9 81.0 80.2 79.4 78.6 77.8 77.0 83.5 84.8 86.1 87.2 88.3 86.4 82.1 81.3 80.4 79.6 78.7 77.9 77.0 76.2 83.0 84.3 85.6 86.8 87.9 85.9 81.6 80.7 79.8 78.9 78.0 77.2 76.3 75.4 82.5 83.8 85.1 86.4 87.5 85.5 81.0 80.1 79.2 78.3 77.4 76.5 75.6 74.7 81.9 83.3 84.7 85.9 87.1 85.0 80.5 79.6 78.6 77.7 76.7 75.8 74.8 73.9 81.4 82.8 84.2 85.5 86.7 84.6 80.0 79.0 78.0 77.0 76.1 75.1 74.1 73.2 80.9 82.4 83.7 85.0 86.3 70 79.5 78.5 77.5 76.4 75.4 74.4 73.4 72.4 80.5 81.9 83.3 84.6 85.9 OPTION NO 3 50% Joint Survivor Percent of Single Life Option Years Difference in Ages Annuitant Older Annuitant Younger Annuitant Age 1 2 3 4 5 6 7 8 Same Age 1 2 3 4 50 94.5% 94.3% 94.0% 93.8% 93.5% 93.3% 93.0% 92.8% 94.8% 95.2% 95.6% 96.0% 96.3% 51 94.3 94.0 93.8 93.5 93.2 93.0 92.7 92.5 94.5 95.0 95.4 95.8 96.2 52 94.0 93.8 93.5 93.2 92.9 92.7 92.4 92.1 94.3 94.8 95.2 95.6 96.0 53 93.8 93.5 93.2 92.9 92.6 92.4 92.1 91.8 94.1 94.6 95.1 95.5 95.9 54 93.5 93.2 92.9 92.6 92.3 92.0 91.7 91.4 93.8 94.4 94.9 95.3 95.7 55 93.3 93.0 92.6 92.3 92.0 91.7 91.4 91.0 93.6 94.1 94.7 95.1 95.5 56 93.0 92.7 92.3 92.0 91.6 91.3 91.0 90.6 93.3 93.9 94.4 94.9 95.4 57 92.7 92.4 92.0 91.6 91.3 90.9 90.6 90.2 93.1 93.7 94.2 94.7 95.2 58 92.4 92.1 91.7 91.3 90.9 90.5 90.2 89.8 92.8 93.4 94.0 94.5 95.0 59 92.1 91.7 91.3 90.9 90.5 90.1 89.8 89.4 92.5 93.2 93.8 94.3 94.8 60 91.8 91.4 91.0 90.6 90.2 89.7 89.3 88.9 92.2 92.9 93.5 94.1 94.6 61 91.5 91.1 90.6 90.2 89.7 89.3 88.9 88.4 91.9 92.6 93.3 93.9 94.4 62 91.2 90.7 90.3 89.8 89.3 88.9 88.4 88.0 91.6 92.3 93.0 93.6 94.2 63 90.8 90.4 89.9 89.4 88.9 88.4 88.0 87.5 91.3 92.1 92.8 93.4 94.0 64 90.5 90.0 89.5 89.0 88.5 88.0 87.5 87.0 91.0 91.8 92.5 93.2 93.8 65 90.2 89.7 89.1 88.6 88.1 87.5 87.0 86.5 90.7 91.5 92.2 92.9 93.5 66 89.8 89.3 88.8 88.2 87.6 87.1 86.5 86.0 90.4 91.2 91.9 92.7 93.3 67 89.5 88.9 88.4 87.8 87.2 86.6 86.1 85.5 90.1 90.9 91.7 92.4 93.1 68 89.2 88.6 88.0 87.4 86.8 86.2 85.6 85.0 89.8 90.6 91.4 92.1 92.8 69 88.9 88.3 87.6 87.0 86.4 85.8 85.1 84.5 89.5 90.3 91.1 91.9 92.6 70 88.5 87.9 87.3 86.6 86.0 85.3 84.7 84.0 89.2 90.0 90.9 91.6 92.4 18

OPTION NO 2 100% Joint Survivor Percent of Single Life Option With Bounce Back Provision Years Difference in Ages Annuitant Older Annuitant Younger Annuitant Age 1 2 3 4 5 6 7 8 Same Age 1 2 3 4 50 88.6% 88.2% 87.8% 87.4% 87.0% 86.7% 86.3% 85.9% 89.0% 89.8% 90.6% 91.3% 92.0% 51 88.1 87.7 87.3 86.9 86.5 86.1 85.7 85.3 88.5 89.4 90.2 91.0 91.7 52 87.6 87.1 86.7 86.3 85.9 85.5 85.0 84.6 88.0 88.9 89.8 90.6 91.3 53 87.1 86.6 86.2 85.7 85.3 84.8 84.4 84.0 87.5 88.4 89.3 90.2 90.9 54 86.5 86.0 85.6 85.1 84.6 84.2 83.7 83.3 87.0 87.9 88.9 89.7 90.5 55 85.9 85.4 84.9 84.5 84.0 83.5 83.0 82.6 86.4 87.4 88.4 89.3 90.1 56 85.3 84.8 84.3 83.8 83.3 82.8 82.3 81.8 85.8 86.9 87.9 88.8 89.7 57 84.6 84.1 83.6 83.1 82.6 82.0 81.5 81.0 85.2 86.3 87.3 88.3 89.2 58 84.0 83.4 82.9 82.4 81.8 81.3 80.8 80.2 84.5 85.7 86.8 87.8 88.8 59 83.3 82.7 82.2 81.6 81.1 80.5 80.0 79.4 83.9 85.1 86.2 87.3 88.3 60 82.6 82.0 81.4 80.8 80.3 79.7 79.1 78.6 83.2 84.4 85.6 86.7 87.7 61 81.9 81.3 80.7 80.1 79.5 78.9 78.3 77.7 82.5 83.7 85.0 86.1 87.2 62 81.1 80.5 79.9 79.3 78.6 78.0 77.4 76.8 81.7 83.1 84.3 85.5 86.6 63 80.4 79.7 79.1 78.4 77.8 77.2 76.5 75.9 81.0 82.4 83.7 84.9 86.1 64 79.6 78.9 78.3 77.6 76.9 76.3 75.6 75.0 80.2 81.6 83.0 84.2 85.4 65 78.8 78.1 77.4 76.7 76.1 75.4 74.7 74.0 79.5 80.9 82.3 83.6 84.8 66 78.0 77.3 76.6 75.9 75.2 74.5 73.9 73.1 78.7 80.2 81.6 82.9 84.2 67 77.2 76.5 75.8 75.0 74.3 73.6 72.8 72.2 77.9 79.4 80.8 82.2 83.5 68 76.4 75.7 74.9 74.2 73.5 72.7 72.0 71.2 77.2 78.7 80.1 81.5 82.9 69 75.7 74.9 74.1 73.4 72.6 71.8 71.1 70.3 76.4 77.9 79.4 80.8 82.2 70 74.9 74.1 73.3 72.5 71.7 71.0 70.2 69.4 75.7 77.2 78.7 80.1 81.5 OPTION NO 3 50% Joint Survivor Percent of Single Life Option With Bounce Back Provision Years Difference in Ages Annuitant Older Annuitant Younger Annuitant Age 1 2 3 4 5 6 7 8 Same Age 1 2 3 4 50 94.0% 93.7% 93.5% 93.3% 93.1% 92.8% 92.6% 92.4% 94.2% 94.6% 95.1% 95.5% 95.8% 51 93.7 93.5 93.2 93.0 92.7 92.5 92.3 92.0 93.9 94.4 94.8 95.3 95.7 52 93.4 93.1 92.9 92.7 92.4 92.2 91.9 91.7 93.6 94.1 94.6 95.1 95.5 53 93.1 92.8 92.6 92.3 92.1 91.8 91.5 91.3 93.3 93.9 94.4 94.8 95.3 54 92.8 92.5 92.2 92.0 91.7 91.4 91.1 90.9 93.0 93.6 94.1 94.6 95.0 55 92.4 92.1 91.9 91.6 91.3 91.0 90.7 90.4 92.7 93.3 93.8 94.3 94.8 56 92.1 91.8 91.5 91.2 90.9 90.6 90.3 90.0 92.3 93.0 93.5 94.1 94.6 57 91.7 91.4 91.1 90.8 90.4 90.1 89.8 89.5 92.0 92.6 93.2 93.8 94.3 58 91.3 91.0 90.7 90.3 90.0 89.7 89.4 89.0 91.6 92.3 92.9 93.5 94.0 59 90.9 90.6 90.2 89.9 89.5 89.2 88.9 88.5 91.2 91.9 92.6. 93.2 93.8 60 90.5 90.1 89.8 89.4 89.1 88.7 88.3 88.0 90.8 91.5 92.2 92.9 93.5 61 90.0 89.7 89.3 88.9 88.6 88.2 87.8 87.4 90.4 91.2 91.9 92.5 93.2 62 89.6 89.2 88.8 88.4 88.0 87.6 87.3 86.9 90.0 90.7 91.5 92.2 92.8 63 89.1 88.7 88.3 87.9 87.5 87.1 86.7 86.3 89.5 90.3 91.1 91.8 92.5 64 88.6 88.2 87.8 87.4 87.0 86.5 86.1 85.7 89.0 89.9 90.7 91.4 92.2 65 88.1 87.7 87.3 86.8 86.4 86.0 85.5 85.1 88.6 89.4 90.3 91.1 91.8 66 87.6 87.2 86.8 86.3 85.8 85.4 84.9 84.5 88.1 89.0 89.8 90.7 91.4 67 87.1 86.7 86.2 85.7 85.3 84.8 84.3 83.8 87.6 88.5 89.4 90.2 91.0 68 86.6 86.2 85.7 85.2 84.7 84.2 83.7 83.2 87.1 88.1 89.0 89.8 90.6 69 86.1 85.6 85.1 84.6 84.1 83.6 83.1 82.6 86.6 87.6 88.5 89.4 90.2 70 85.6 85.1 84.6 84.1 83.5 83.0 82.5 81.9 86.2 87.1 88.1 88.9 89.8 OPTION No. 4 10 YEAR CERTAIN PERCENT OF SINGLE LIFE OPTION Annuitant Age Percent of Single Life Annuitant Age Percent of Single Life Annuitant Age Percent of Single Life 46 99.41% 53 98.76% 60 97.06% 47 99.35 54 98.61 61 96.66 48 99.28 55 98.43 62 96.20 49 99.20 56 98.23 63 95.70 50 99.11 57 97.99 64 95.13 51 99.01 58 97.72 65 94.50 52 98.90 59 97.41 19

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