How Your Benefits Are Calculated

Your retirement benefit is based on your credited benefit service, your compensation and your covered compensation. These terms have specific meaning when calculating benefits under the Plan.

Generally, your "Credited Benefit Service" is the total time you are an eligible employee, beginning with your date of hire and ending with your final termination date, and accounting for any breaks in service.

Your compensation—which, for purposes of the Retirement Plan is referred to as your "Final Average Monthly Compensation" or "FAMC" —is the average of your base salary (plus overtime and annual bonuses) for the five consecutive years during the most recent 10-year period during which you earned the highest average monthly compensation as an eligible employee. By law, the Plan may only recognize compensation up to an annual limit. This limit, which is adjusted periodically for cost-of-living increases, is currently (as of January 1, 2009) $245,000.

Lastly, your "Covered Compensation" is the average monthly Social Security taxable wage base in effect for each calendar year for the 35 years ending with the year you reach Social Security age. These averages are determined by law for each age group (and are available by contacting your local Human Resources representative or online via the Social Security Administration's Website at www.ssa.gov).

Using The Benefit Formula

To use the benefit formula, you'll need all three of the above figures—Credited Benefit Service, FAMC and Covered Compensation. The benefit formula is comprised of up to three steps.

Step 1

• 1.45% of FAMC, up to Covered Compensation, plus

• 1.85% of FAMC over Covered Compensation, times

• Years of Credited Benefit Service up to 25 years.

Step 2 If you have more than 25 years of Credited Benefit Service, add to Step 1...

• 0.725% of FAMC, up to Covered Compensation, plus

• 0.925% of FAMC over Covered Compensation, times

• Years of Credited Benefit Service between 25 and 50 years.

Step 3 If you have more than 50 years of Credited Benefit Service, add to the total from Step 2...

• 0.725% of FAMC, times

• Years of Credited Benefit Service over 50 years.

You can use the worksheet to estimate your own benefit. Your local Human Resources representative can provide you with the "Covered Compensation" amount you should use when making this calculation.

Calculating Early Retirement Benefits

If you retire early, your benefit will be based on your earnings and Credited Benefit Service, up to your early retirement date using the formula outlined previously. However, the benefit will be reduced if you begin receiving payments early, since you'll receive payments over a longer period of time. The table below outlines the benefit reduction factors.