HomeMy WebLinkAboutGlendale Federal; 1997-11-05;b e
4* * * * * * * * * ** ATTENTION
DEFERRED COMPENSATION MEETING
SCHEDULE C H;4 f& F
THE DEFERRED COMPENSATION MEETING PREVIOUSLY SCHEDULED
FOR wo A','M, ON PARCH 30J' NU, HAS BEEN CHANGED TO
Z:O~ wiD- ON MARCH TOTH IN THE COUNCIL CHAMSERS, PLEASE
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CHA35t YOU CALENDARS 8
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MEMORANDUM
March 25, 1981
TO: ALL INTERESTED PARTIES
FROM: FINANCE DIRECTOR
SUBJECT: DEFERRED COMPENSATION PLANS
Last December the City held a meeting on deferred compensation where representatives of several companies addressed the City with proposals for deferred compensation plans. After that meeting, a discussion was held between the employees in attendance to determine the level of interest in the various plans proposed to the group.
Two plans had some interest and deserved further study; the plans proposed by National Plan Coordinators (NPC) and AETNA Insurance company. These plans appeared to provide the basis for a worthwhile deferred compensation plan for both the employees and the City.
Since this meeting a user satisfaction survey has been taken for both plans Some research has also been done to provide information on fees, administra methods, reporting and rates of return on investment. A summary of this in formation is attached. Information concerning both plans has also been attached for further information.
A meeting is scheduled for Monday, March 30, 1981 from 9:OO AM to 11:30 AM, in the City Council chambers to discuss these deferred compensation plans. I recommend that at this meeting the participants in the present deferred compensation plan select a committee of three to five members to make a for review of these options (or any others that may be of interest) and present final proposal to the City Manager:
All members of the present deferred compensation plan and any interested err should attend this meeting.
If there is consensus on one of the plans before the group at this time, a posal can be made to the manager by the committee and finance director with one to two weeks. If the group desires to review further plans, the commit
and finance director should plan to report back to the group within two wee
If there are any questions prior to this meeting please contact me at 438-5
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DEFERRED COMPENSATION PLAN
NATIONAL PLAN AETNA LIFE INSURANCE
COORDINATORS (NPC) AND ANNUITY COMPANY
INVESTMENT VEHICLES PROPOSED
NPC has indicated that almost AETNA has proposed a defer]
any investment vehicle desired compensation plan based on
by the City can be obtained. A four (4) funding vehicles.
survey of ten (10) cities All directly controlled by
indicates that three (3) AETNA:
vehicles are commonly used:
Common Stock Fund
Fixed Annuity Money Market Fund
Life Insurance & Annuity Bond Fund
Savings and Loan Fixed Investment Fund
These vehicles are selected
through a bid process.
RATE OF RETURN
The rate of return depends AETNA has supplied rates o
upon the investment vehicle return for their four (4)
selected by the City. basic investment vehicles
According to NPC, the highest the past five (5) years.
rate of return received by 1980 rates are below:
their clients is typically
12.1% at this time. Annuities Variable Fund
typically yield somewhat less (Common Stock & Securities
Loan Association’s rates vary Encore Fund
between 8% and 15% depending (Money Market Instruments:
on the size of the deposits. 10.47%
- than this figure. Savings and 25.45%
Income Shares
(Bond & Debt Securities) -
1.97%
General Account
(Real Estate/Long Term
Mortgages) - 8.80%
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FRONT END LOAD (Cost to Invest Funds)
The agencies dealing with NPC The current AETNA plan has
do not usually require front no front end fees. All
end fees, however, several investment options earn
annuity options don't yield interest on the full amount
any return until the second invested for the entire time
or third year of invested.
participation.
ACCOUNT MAINTENANCE FEES
NPC charges a monthly account AETNA charges an annual fee
maintenance fee of $.50 per of $20 assessed to each
participant for account member's account after the
administration. This fee is end of each year of
paid by the various investment participation. If more
companies selected by the than $100,000 is invested i
City. It is not a charge the plan, the charge drops
against the participant or the $15 annually per person.
participant's earnings.
WITHDRAWAL FEES ,
Fees cha--ged upon withdrawal AETNA has a sliding scale c
from the various investment withdrawal charges based
options differ. Typically, upon the participant time 3
annuities will have the plan:
withdrawal penalties ranging Less than 5 yrs. 5%
from substantial interest 5 to 7 yrs 4%
reductions to loss of 7 to 9 yrs. 3%
principal. National 9 or more yrs. 2%
Investors Life reduces based upon the total
interest earnings from the investment amount. If
12.1% normally paid on withdrawals are spread ove
accounts to 3% if withdrawals a 3 year period, no penalt
are made in a lump sum is charged.
settlement. If payments are
taken over a 13-month period,
no reduction of interest
. takes place.
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ADMINSTRATIVE SERVICES
NPC is primarily an accounting AETNA provides bi-weekly
and administration firm. statements on each individi
Reports are provided to the account indicating the amoi
city quarterly and to members of money currently receivec
semi-annually on investment date these monies were appl
activity and interest earned. to the participant's accour Reports are generally received total amount received to d,
by 60 days after the close of and the total value of the
the quarter. participant's accounts. T'
reports are generally rece
10 to 14 days after the NPC will arrange to pay payroll period.
proceeds to members of the
plan upon retirement or
separation for any reason. Annual reports may also be
provided as needed. AETNA
provides all payout servic
for members withdrawing fr
the plan.
MINIMUM PARTICIPATION
The minimum participation for AETNA requires a minimum c
each plan offered under NPC $25 per payroll period to
will vary depending upon the qualify for 'participation
individual company used for in the plan. The $25 may
investment. Typically MPC allocated to one or any
requires at least $10 per combination of the four
payroll period to be deducted Investment options.
to participate in the plan.
USERS SATISFACTION SURVEY
A user- survey was eondueted of A survey of five AETNA
10 users of NPC's adminis- clients provided the foll
tration servicesb The comments:
user's comrcents: 1. Most cities are now o
plan currently offered to 1. Investment Vehicles: city of Carlsbad. (4 opti
. following is a summary of the
National Investor's Life 2. Participation - 20%
Annuity . 30% of eligible employees
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Life Insurance Annuity 3. General comments:
A) . Set-up process relatit Term Life Insurance smooth. Takes about 2 to 3
Annu i t y months from start.
Variable Annuity B) AETNA legal staff verj
Home Savings and Loan
helpful in plan set-up.
C) Generally high particll 2. Participation - from 20% pant satisfaction..
to 35% of eligible employees.
3. General comments: participants and city.
A) Reporting has been slow
and untimely. Some
improvements lately. Reports
now received within 60 days.
B) Initial start up very
difficult. Many initially
unhappy. Now most plans are
running well.
C) Home Savings doing a very
good job.
D) No investment counseling
provided by NPC.
D) Very good reporting tc
ADVANTAGES
1) Program can be designed 1) Stable organization.
by the City using funding Plan is backed by a large
vehicles desired by city insurance company.
employees.
2) Ability to restructure options.available to each
plan at any time if better employee.
options become available. 3). Ability to move funds 3) NPC provides one-on-one from one investment vehicl
counseling to employees during another without penalty.
initial sign-up.
4) NPC provides adminis- tracking system establishe
tration of benefit and payout
reporting . 5) Provides administratl
of benefit payout, reportl
and plan management.
2) Variety of investment
4) Good reporting and
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6) General user satisfact
appears to be high.
DISADVANTAGES
1) Deferred comp committee 1) Contact with AETNA WOI
must administer plan more be made through local agenl
closely by choosing investment Unless carefully selected, vehicles, monitoring the these agents may lack prop
moving of funds between knowledge of tax shelter options and making changes to investments and necessary
the deferred comp plan. This counseling skills.
will require consulting services or significant time 2) To be a complete plan,
from the committee or city the city should also offer
staff. Savings and Loan option si
the AETNA plan does not in 2) Reporting to participants comparable feature.
and the city appears to be
weak.
3) Limited or total lack of
ability to move funds from
vehicle to vehicle as rates
of return change.
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NPC ACMINISTRATIVZ SYSTEM
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d NPC provides a complete and comprehensive deferred compensation
administrztive system. Yogr organization will not be respon-
sible for, or involved in, any tasks other than being willing
to distribute announcements provided for employees and provid-
ing time and facilities for comnunication of the plan benefits
to the employee and making available a payroll slot for admin-
istrative purposes. NPC does all the rest, and at no cost to
your organizEtion.
If a deferred compensation plan relies on the ir,vest!ri=.at Cc;n--
panies for edainistration of the plan, the result will Sa ad-
rninistratfve chaos, 2nd will have a sigriificant impact 3n t,ne
tasks fcr -.;:?ich we will have responsibility, Even .though osr '' ' organizatlsz has, upon request, utilized other ze:p.inistrat:ve
services (sxch as banks) in the past, we do wish'to eapkasize
that we aye totally capable of' providing the City with a
proven adcinistrative system. If you will. check with the City
of San Jose and the State of Arizonz (both shoxn cn cilr Client
Reference List in the attached exhibits} you wL11 rind that
they are quite satisfied with our capabilities iri the area of
plan adainistraticn. Outline6 helow. is a s:i:::arj- of our
administrz5ive services :
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Re 1) 0 r t I r, ."; :
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Our reForting system is compatible with the City's cti:*--
rent nistl~~cl of accounting and haridli~g di :;burscrric.i?ts. c. J ne
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reports are geared specifically for this typc of progmx
and do not contain unnecessary information generally asso-
ciated with qualified retirement programs. \?e are experi-
enced in administering plans of' 211 types and our system is
flexible enough to adapt to any changes the C-ty may wish
to make. For example, in the area of disSursezent of funds
5. to carriers there are several alternativzs bEyond the
present nethod. The firsb alternative would be to FZ~J
contributions directly tc the funding medi=l, Anothei
option xogld be to have the plar: administrator write chftc'x
on the funds deposited with the custodian b22k rather th?.
send disbursement instructions.
9
- Disburseczzt Reports (monthly)
There gre two disbursement reports made ezc3 n~o?ith, t?r
COY~TS cmtributions by participznts and the o:h$r sumrr,z.r
izes the rrtorithly ?3ayout of benefits:
A. Czzcribution report - This report shs..:s th2 amcu2
deferred by participants to each fun5ir;g ze$i,~ c
givss the totals to each fundifig media.
E. Payout report - A listing of those receiving Senefit
the amount, reason (retirement? disability, e5c. ) , ?
Fc the effective date is given on this report.
10';31s and/or 14-2's are issued, as appropriste.
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E e t, i r e r~ e I: : 3 e g i s t e r f in o 1 I t h 1 y -
This rzport lists, by participant, a cor?ple+,e su:mary
the Sznefits (including disability) being p2'id o:rt.
follcxlng inforrn3tion is Given:
e
1, Personal Data - Social Security number, retirernen
date,’ date and amount of last check,
2, History - Current check . amount, check number
year-to-date total paid, and grand total paid,
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Employer Lnformation Report (monthly)
%I 3 A complete listing, including totals, is given for each par
ticipant of contributions, charges, previous balances, ne
added to funds, adjustment, earnings, benefit payments ar
the balance as of the report date. (The fund Column can t
expanded to- include as nany funding rnedi.a as desired. )
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$ - Participmt Staterngnts (quarterly or annually)
Each participant receives a complete sumrnwy of his accour
status for the period covered. The - informatioil corresponc
with zkz above listed Employer Information Report,
Enrollment Sxamary
For ez:!? enrolirnent period, a report is ma8e showing t1
numtilr of eligible ernployees contacted and the number e’
rolled, It also gives a’ breadown of funding media and. i
vestment option of the new contributions,
Please refer to the following Samples of the above mention
Employer reports. c_- Eniployee -- participant statcinents are -- -_ ind
vidualiy designed for each client of ours.
A d:n5 n i s t rz t i 0:) /Se r v i c e Fee
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The applicable section of our proposed Agrccnient wich t
City would read as follows:
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_. COMPENSATION
= A. Administrator shall receive a sum not to exceed $
per pay 'period per participant from the City f
administrative expenses subject to the paragraph bel(
The actual charge shall be based upon the total numl
of participants contributing or receiving distribut
as of the last day of each pay period, This cha
shall be increased by mgtual consent of the parties
the City offers more than five (5) investm,
options, but in no event shall this charge be less tl
s.25 per investment per pay period for- each particip;
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r
a I N 3 F
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. for those investment cptions in excess of five (5 1.
B, The aforexzntioried charges shall be reduced by :
zdxinistrative subsidies paid by the funding mcd.
A~2xinistrator promises to use its best efforts to :
ctlrpI administrative subsidies from the funding rneciia
C, At the time of the presentstions to eligible enplop
in the course or^ the enrollment process, but Sefc
actual execution of the participation agreements, :
ministrator or- its designee shall explain that; it w:
provide a detailed annual accounting af all admin:
tr-ative subsidies to the ccnmittee, and that said i
comting shall be available for employee inspection.
In order to accomplish the payment of compensation, i
to eliminate the .necessity of applying the above-stz'
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fee to the employee-participant (thus creating a mno-
cost" program for the employees), the proposed Agree-
ment would also contain the following:
t BROKER OF RECORD 4 = NPC, or its designees, is hereby appolnted as Bro-
ker of Record for all investment vehicles offered
under the Deferred Compensation Program and is
authorized to receive compensation (i.e., any and
all commissicns, renewals, service fees and con-
cessions) developed as a result of the sales of
these investment vehicles.
COSTS
In the event the Ctty selects investment options
wherein the investment companies do not have srrffi-
cient margins to pay out the administrative fees
outlined in first paragraph under ftCompensationlr
above ($.50 per pay period), then all or some por-
tion of this fee would be paid by the employee-
participant. The amount of $.50 per pay period is,
.however, the maximum cost the employee would be
required .to pay. A check of our ref'erenct?s srill
disclose that NPC has been successful in reducinl
(or totally eliminating) any cost to the ernployec
in our plans.
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$ 31 J 1-
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TAX DEFERRED ANN& AND
INSURANCE MARKETING GORP.
March 23, 1981
Mr. Jim Elliott Finance Director
1200 Elm Avenue
Carlsbad, CA 92008
Dear Nr. Elliott:
Enclosed please r'ind information on National Investors Life
Insurance Company you recently requested in our telephone
conversation. This information shows past rates.fron 1977
thru the current period. Because National Investors uses
a method of "banding" interest rates, all the rates have bee
increased as the current rates move up. This is illustrated
in Table One (1) of the New Money Rate Announcement. Accumu
lations based on the current rate of 12.1% are shown in Tab1
Two (2). I have enclosed a copy of their brand new Deferred
ComFensation Brochure that includes basic information on the
product along with current annuity rates.
I hope this information will be of help to you in making a
decision on the handling of your Deferred Compensation Progr If I can be of any assistance to you in this matter, please
do not hesitate to call.
w
& Research
JMB/dmd
Enc . .*
'444 West Ocean Blvd., Suite 1514 Long Beach, California 90802 (213) 435-76!
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NATIONAL INVESTORS - "NEW MONEY" RATE
The "New Money" rate refers t6 the actual rate of interest that National
Investors will credit to funds deposited under group annuity contracts.
Those funds made available for investment during a given interest period
will continue to earn the same rate of interest in subsequent years as was
initially applied by National Investors during the first period of credited
interest. Thus, periodic increases in the rate of interest paid on "New
h4oney" will, as the name suggests, normally apply to "New Money" only,
that is, money received on or after the date the new interest rate goes
into effect; previous deposits wiIl continue to earn the rates of interest
applicable to
However, as Table I indicates, National Investors has actually increased
interest rates currently paid on deposits received in 1977, 1978 and 1979.
Table I reflects interest rates credited from January 1, 1977 through
December 31, 1980.
New Money" at the time those deposits were received.
Table I
YEAR IN WHICH INTEREST WAS CREDITED
YEAR 111- 411- 1011- 111- 411- 111
1977 1978 1979 1979 1979 1980 1980 - 198
1977 7.50 7.50 7,50 7.75 7.75 8.125 8.125 9.0
111 - 3/31/79 7.75 8.25 8.25 8.375 8.375 9.0
411 - 9130179 8.25 8.25 8.375 8.375 9..0 1011 - 12/31/79 9.00 9.000 9.000 9.2
l/l - 3/31/80 10.300 10.300 10.3
4/1/80 - 12/31/80 11.250 11.2
1/1/81 on 12.1
OF 3/31 9/30 12/31 3/31 12/31 on - - _I - - - - DEPOSIT
1978 7.50 7,50 7.75 7.75 8.125 ' 8.125 9.0
The following Table I1 reflects the accumulation results of interest
rates from Table I above applied to deposits of $100 per month.
Table I1
$100 deposited on the First Day of each month
End of Year Projected
Account Value 1981 - 1980 - 1979 - 1978 .- 1977 -
12-31-77 $1,248.70 $ -0- $I -0- $ -0- -0-
12-31-78 2,591.05 1,248.70 -0- -0 - -0 -
12-31-79 4,045.30 2,598.92 1,253.45 -0- -0-
12-3 1-80 5,649.52 4,085.62 2,630.83 1,270.50 -0-
12-31-81 7,462.87 5,75 8.22 4,172.50 2,688.91 1,277.28
Total Deposits ($6,000.00) ($4,800.00) ($3,60S.O0) ($2,400.00) (1,200 .OO)
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ANNUITIES
An important aspect of the Deferred Compensation Plan, as with any benefit
plan providing post-retirement income, is to guarantee that the participant
will receive an income which he cannot outlive, and on a basis that will
offer a possible measure of protection against future loss of purchasing power due to inflation. A variable annuity has this potential.
Aetna Life -Insurance and Annuity Company's Group contracts are designed for
Deferred Compensation Plans and offer flexibility that can satisfy the
retirement, financial goals of most plan participants.
LIFE INSURANCE
Although existing life insurance coverage may not be transferred to the
Deferred Compensation Program, a participant has the opportunity to
purchase additional life insurance with "before tax" dollars. This
deferred income might be applied to purchase a life insurance policy with guaranteed cash values which could be used at a future date to provide a
lifetime income. The policy would also have a death benefit which could
provide an income for the beneficiary if the participant were to die before retirement.
It is extremely important that you realize that death benefits -received by
the beneficiary. or cash values received by the participant, will be
treated as income and subject to Federal income tax... while life insurance
death benefits bought outside the program are not subject to income taxes.
If lffe insurance 2s purchased under this program, the proceeds my be
spread out over many years which may reduce the income tax in most cases.
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\ EXPERIENCE RATING. CREDITS 0 -
In addition earned investment results on credited interest amounts, experience rating credits may be earned on case generating greater than $50,000 of purchase payinents during the previous 12 month period,
Experience Rating Credits may be earned with 2 methods:
1. 2.
Average premium per plan participant and/or Percent of monies on a per case basis that are invested in Aetna Variable Fund, Inc.
The currently established scales are as follows:
Average Premium Experience Credit as Per Participant a % of Contract Values
$ 39000 - 4,999 0.10% 0, 15% 0 20%
0 25%
5,OQQ a 7,499
7,500 - 9r999 10,000 and over
. % of Reserves in Experience Credit
as $ of Reserves Aetna Variable Fund
20 - 29 % 0~10% 0,15% . 0*20% ’
30 - 39 x
40 - 49 9’0
50 - 59 % .* 0,304’0
70% or more Om50%
60 - 69 % 0840%
Experience Rating Credits may be earned under one or both scales and will be applied to the contracts in the form of additional account units at thl established llanniversaryT1 date,
Account Maintenance Fee
There ape no c@arges to City of Carlsbad for the Deferred Compensation Pli
all promised material, marketing and enrollment, legal and data processin1 services and plan administration described in this proposal are provided i
no cost to you. In addition our Generation Anniuty Contract is free of a initial or rlfpont-endlf sales charges. Monies invested into the contract i invested at 100# on the dollar.
There is an annual account maintenance fee of‘ $20.00 which is deducted frc the participant account at anniversary date,
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, DEFERRED SALES CHARGES
A deferred sales charge may be assessed to a participant account when mi are withdrawn. The deferred sales charge is only applied to the amount
money withdrawn from the plan and would be determined by the following
Number of f'ull years Charge as a % of
Premium Paid Amounts surrendered
Less than 5 5% 5 or more but less than 7 4% 7 or more but less than 9 3% 9 or more 2%
GENERALTION 80 AIJNIUTY CONTRACT
Aetna offers a unique unbrella concept in that our product protfolio of a wide range of investments needs within one contract. There is no nee
have separate contracts should a participant wish to place money in a f accowlt and an equity or variable account. front-end "loads*' or sales charges, thus allowing each dollar to be inv wholly .
We have fbnds that a participant may select.from in choosing hisher deferred conpensation investment: - Aetna Variable Fund, Inc. -- comon stock and securities - Aetna Encore Fund, Inc. -- money market fund - Aetna Income Shares, Inc. -- a bond fund - General account -- a fixed investment fund
Our product is free of-any
A participant may elect to enter 1 or a11 of these funds, with the flex of changing fbture
Flexibility to account changes in investment mix and in the dollar amou may be made every 90 days (as allowed by the plan document). If a comb
of investment funds is elected by the plan participant, purchase paymen may be allocated to the respect funds in increments of 5%, provided tha allocation to any one fhd is at least $10.00,
Our General Account consists primarily of long term rnortgaes because d
the long term nature of these investments, we are currently precluded f allowing any transfer of PAST monies f'rom the General Account. However
contributions to this fixed account can be.changed and redirected to an the other equity accounts.
Following is a more detailed explanation of our four flmds:
Aetna Variable Fund, Inc. -- (common stock and securities).
and past contributions to another equity account.
.
The 'jrimar
investment objective is long term capital appreciation which it se through investment in common stock and securities and converts int common stock. The f'unds averaged a return of 19.96% for 1979, and
ranked I 2nd to the Lipper analytical survey of investment perfoman for the past 5 year period.
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The investment experience in this fund measured during the last 12 calendar months (9-28-79 to 9-30-80) is 18.06%. Following is a lis
of Aetna Variable Fund investment performance for the past 5 years, The investment perfomgmce for this period averaged over 14%.
Aetna Variable F'und, Inc. 5 Year Investment Historx
I Year % of Increase
1 79 19.96%
0.32% 1978 I977 - 2.61%
I975 29.21%
25e4.Y 5
'To
1976 23 o 78%
Aetna Encore Fmd, Inc. (monq market instr.ments.)
The primary investment objective of the Encore Fund is to seek as 1
a level of current income as can be reasonably achieved consistant with the preservation of capitol, principally through investment ii money market instruments and other debt islsues maturing not more tl 30 months from the date of purchase. The Encore Fund had a yield ( 9.90% through 1979. The yield fz.ona 9-28-79 through 9-30-80 is 10.r .
Aetna Encore Furad, Inc.
I_ 5 Year Investment History - Year $ of Increase.
1978 6.33% 1977 3.71% 1976 5.17% 1975 1.30%
Aetna- Incane Shams, Inc. (bonds and debt secwities) Primary investment objective of Aetnayncorae Shares (AIS) is to se a high level of current income which fs consistent with prudent investment risk through investment in a ~versifed portfolio prim of debt securities. Capital appreciation is a secondary objectivf 'The hypothetical for 1980 as of 9-30-80 is Il,60%. Aetna Income 2
Inc., was not available until 1978. performance .
fCim /0,$1 .F, 1979 9.90%
Following is the available
Aetna Income Shares, Inc.
Year % of Increase
1979
1978
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f ?SO l,s;7 c .72% 1 -36%
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The company makes a daily deduction from the current value of the equity funds which is equivalent to 1.5% on an annual basis. l'he deduction for the annual mortality risk and for the contractual guarantee that the company cannot increase the deductions for sales and administrative expenses is 1.25% on an annual basis. The remaii
ing 0.25% is the investment advisory fee charged to each and.
Note: All investments are net of fees. - -
General Account (Fixed Account) Monies invested in the General Account are invested primarily in real estate and other long term mortgage commitments. currently crediting a 9% protfolio interest rate. We feel that the portfolio method of crediting interst is superior to the "new money' approach as it serves'to eliminate the volitility which may be associated with the new money method. The portfolio approach allow: the crediting of a single interest rate without regard to when contributions were made. of interest is being credited on all moneys invested in this accounl In addition, the portfolio methodTes not discriminate between new
plan participants and existing plan participants (who otherwise wou:
be experiencing a lower interest rate) and does not penalize contra( owners who are forced to stop making contributions to the Deferred
The guaranteed interest rate in the general. account is 4%. 1974, however, we have not paid less than 7.25%, our current intere: rate is 9%. interst rate,
We are
Plan participants know exactly what rate
. Compensation Plan.
Since
Following is a 5 year history of our actual credited
Deferred Rate f Actual Credited Rate Year Effective Annual Rate at Year End -
81 W 9400 8.08% 1979 7 . 88% 1978 7.31% 7 50% 1977 7 . 25% 7.25%
3 976 7.25% '7 * 25% 1975 7.25% 7025%
. ItSW
Cases which generates a premium flow in excess of $750,000 in a 12 month period may qualif'y for a higher rate of interest: Currently I(
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CONTRACT INFORMATION
SECTION VI
SPS 25 1.4
F
. ' GROUP VARIBLE RETIREMENT CONTRACTS
FOR DEFERRED COMPENSATION PLANS
The following are some frequently asked questions and their answers whicl
describe the features of the contract. Kore detailed information may be
found in the enclosed prospectuses and specimen contract.
1. WHAT ARE IXE NINWUM LIMITATIONS ON THE WER OF PARTICIPANTS
REQUIRED OR ON THE PURCHASE PAYMEN~W L-
.. I - There is no minimum number of participants required. Purchase
payments on behalf of a participant must be at least $50 per mor
($600 annually), and not less than $25 per payment.
ARE TH5B ANY CHARGES DEDUCTED FROM PURCHASE PAYMENTS FOR SALES
AND/OR ADMINISTRATIVE EXPENSES?
2.
There are no
purchase paydnts.
for further inPomation.
ales and/or administrative charges assessed qains
Please refer to the response to question 12
3. IS THERE A HAISUTENANCE CHARGE ASSESSED AGAINST THE INDIVIDUAL . ACCOUNTS? \ I
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A $20 maintenance charge is deducted from each participant's
account at each individual account anniversab. 1.
4. IS THERE AN INCREASE PROVISION?
An unlimited increase provision is included in accordance with ti
Revenue AcLof 1978.
participants may not defer more than $7,500 or 33 1/3% of
includible compensation.
According eo the Revenue Act of 1978,
5. MAY CONTRIBUTIONS BE INCREASED OR DECEASED VTHOL7T CHANGING
CONTRACTUAL GUARANTEES?
1 \
Yes, contributions my be increased or decreased without changing
the contractual guarantees providing it is in accordance with the
Plan.
-
-- YEAR (Effective Annual Rate) AT YEAR-END
1979 7.88% 8.00%
1978 7.31% 7.50%
1977 7.25% 7.25%
1976 7.25% , -. 7.25%
1975 7.25% 7.25%
10. HOW OFTEN IS INTEREST CREDITED?
Interest is credited daily to all account values.
11. WHAT METHOD OF CREDITING INTEREST IS USED?
\?e use the portfolio method of crediting interest. This approach
allows the crediting of one interest rate without regard to when
the contributions were made and smooths out the highs and lows by
taking an average of the varying rates of return received by the
Company.
We feel that the portfolio method is best suited to our contract
owners because it is less volatile than the new money method of
crediting interest and does not penalize contract owners who are
forced to cease making contributions or discriminate between old
and new contract owners. In addition, you always know the rate of
interest being credited to all contributions.
e e
12. ARE THERE ANY WITHDRAWAL OR DEFERRED SALES CHARGES ASSESSED
AGAINST THE INDIVIDUAL, ACCOUNT OR THE MASTER CONTRACT?
f A deferred sales charge is assessed againas all withdrawals f'rom any participant's account except upon death or election of a settlement option. The charges are as follows:
Premium Paid qf Amounts Surrendered
Number of Full Years Charge as a Percent
Less than 5 5% 4% 3% 9 or more 2%
5 or more but less than 7 7 or more but less than 9
13. ARE THE DEFERRED SALES CHARGES GUARANTEED? OF TIME AND UNDER WHAT CIRCIXSTANCES?
Yes, charges applicable at the time of a participant's entry into the Plan will. continue to be applicable to all hture Purchase Payments on behalf of that participant.
WHAT ARE THE A"LTITY PAYOUT OPTIONS THAT ARE AVAILABLE?
By giving written notice to the Company at least 30 days prior to
the commencement of annuity payments, the Contract owner may elect any of the following on behalf of a disabled, retired or terminated participant or beneficiary:
Interest Income - This option is available only to the-beneficizry
and only on a fixed dollar basis for settleaent of the proceeds payable on the death of a participant before annuity payments commence. Company's current rate of these deposits.
Payment of a Specified Dollar Amount - Equal payments of a designated dollar amount until the value of the individual account is exhausted.
Payments for a Specified Period - This option is available and made for the number ofFars selsdd, whkh may be from three to thirty
years b
Life Annuity. 0.f LAfe Annuity with 60, 120, 180, or 240 Montl-Q Payment Certain - An annuity payable during the lifetime of the annuitant with the provision that if the annuitant should die, payments will be made to the beneficiary for the remainder of that period designated.
IF SO, FOR WHAT PERIOD
44.
The value of the Contract is left on deposit with the
Joint and Last Survivor Life Annui2 - An annuity payable monthly during the joint lifetime of the annuitant and a designated second
period.
L GINNY BUBNA BUSINESS DEVELOPMENT OFFICER
November 9, 1979
Mr. Jim Elliott
Finance Manager
City of Carlsbad
City Hall
Carlsbad, California 92008
Dear Mr. Elliott:
Enclosed is Fixed/Rate Fixed/Term Certificate of
Deposit showing City of Carlsbad as account
holder for Employees Deferred Compensation Plan
in the amount of $1,896.92.
Also enclosed is a fully executed copy of the
Deferred Compensation Investment Agreement
between the City and Glendale Federal.
It has been a pleasure to be of service to
you and the City of Carlsbad. If you have any
questions regarding any facet of the plan or we
can give additional presentations please feel
free to call any of us on our toll-free number,
1-800-232-2336.
Thank you again for your time and consideration.
Sincerely,
/ LL -
Business Development Officer
/gb Encs.
GLENDALE FEDERAL SAVINGS AND LOAN ASSOCIATION 201 WEST LEXINGTON DRIVE GLENDALE CALIFORNIA 91209 * (213) 956-4744
w -e
CITY OF CARLSBAD
DEFERRED COMPENSATION INVESTMENT AGREEMENT
GLENDALE FEDERAL SAVINGS & LOAN ASSOCIATION
(800) 232- 2336
w -w
DEFERRED COMPENSATION INVESTMENT AGREEMENT
(employ City of Carlsbad
has established the city of Carlsbad Deferred Compensation Plan
("Plan"), a copy of which is attached hereto as Exhibit "A" and
designated the City Manager Of the city Of Carlsbad
("Administrator") to administer the Plan and this Agreement on
half of the Employer.
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Glendale Federal Savings and Loan Association ("Glendale
Federal") is a Federal Savings and Loan Association, a corporat
duly organized and existing under the laws of the United States
is authorized by California law for the investment by local pub
agencies of deferred compensation funds.
The Agreement sets forth the manner by which Plan funds w.
invested with Glendale Federal, and Glendale Federal in accordai
with the applicable Laws and Regulations, will accept such fund'
investment and will account for such funds on a regular basis.
1. Glendale Federal agrees to accept for investment the
sent to Glendale Federal in accordance with the Plan, and to es
lish and maintain savings accounts in accordance with the instri
of the Administrator and the provisions of this Agreement. All
earnings on such accounts will be credited to such accounts in i
ance with prevailing practice at Glendale Federal, unless othert
instructed by the Administrator.
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2. Glendale Federal shall establish, from time to time,
accounts at a branch or branches of Glendale Federal upon instri
of the Administrator for investment of Plan funds sent to it on
of the Employer. The accoumts will be titled: City of Carlsbi
Deferred Compensation
The Administrator shall have the sole custody of all pass1
or other indices of ownership of said accounts and no,investmeni
withdrawal of funds shall be made in such accounts except in acc
ance with the instructions of the Administrator and pursuant to
Agreement.
3. On either a bi-weekly, semi-monthly, or monthly basi:
shall be forwarded to Glendale Federal to be invested pursuant 1
AgreeTent for Participants in the Plan, together with a list inc
to which Employer accounts these deductions should be credited.
upon receipt of said funds, Glendale Federal shall make the appr
credits to the applicable accounts. The legal and beneficial ob
of all such funds shall at all times be vested in the Employer.
4. The Employer shall have the same rights and obligatic
connection with any of such invested funds as any other investor
having the same type of savings accounts with Glendale Federal,
contained herein shall be construed as requiring any Plan funds
invested with Glendale Federal or to remain invested for any spc
period of time except as may be required by applicable Law or RE
or the terms of the applicable savings account Agreement,.includ
but not limited to the penalty required by Federal Regulation Up01
withdrawal from an account prior to maturity.
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The parties intend that the funds shall be depositec
(or 31) day certificates of deposit as currently permitted by E
regulation, which shall mature on the 28thday of each month
shall automatically be renewed until the same day of the next s
month. Additions to or distributions from said account shall 1
on the monthly maturity date upon instruction of the Administrz
5. The initial interest rate to be paid by Glendale Fec
this account is 8% compounded daily - paid quarterly, howevei
understood such rate is subject to change from time to time as
by Federal Law or Regulation or by action of the Board of Direc
Glendale Federal. Funds received between maturity dates shall
posited in an interest bearing passbook account and shall auto1
be added to the 30 (or 31) day certificate account on the montl
maturity date. Glendale Federal shall notify the Administrato:
of the rate which will be paid during the next ensuing calenda:
d
6. On a calendar quarterly basis, Glendale Federal wil
pare a statement of activity in duplicate for each Participant
deferral and earnings amount. Such statements will recap all (
on the accounts during the period. Statements will be sent to
attention of the Administrator.
i
7. Glendale Federal shall, from time to time, disburse
from the applicable account or accounts as instructed by the A
istrator in accordance with this Agreement.
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8. The services to be made available by Glendale Federal
this Agreement will be performed by Glendale Federal without an)
to the Administrator, the Employer, or the Participants under tl
9. This Agreement may be terminated at any time by eitht
hereto ’upon six (6) months’ advance notice in writing to the oi
party .
d
10. All notices given pursuant to this Agreement sEall bc
writing and may be sent by regular or certified mail, postage p:
addressed as follows: Employer: City Manager, -_I_- City Of Carlsba
1200 Elm Avenue
Carlsbad, California 92008
Administrator: City Manager, City oflaLIsbad, 1700 Flm Avenue
Carlsbad. CA 97008
Glendale Federal Savings and Loan Association, Business Develop
Division, 401 North Brand Boulevard, Glendale, California 91209
11. Glendale Federal shall be entitled to rely on the wr
instruction of the Administrator designated by the Employer and
not be required to act upon any oral instructions.
12.
both parties.
This Agreement may be modified by a writing executed
13. This Agreement shall be interpreted at all times by
laws of the State of California.
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Administrator : Employer :
City Manager of the City of - Carlsbad
1200 Elm Avenue, Carlsbad, CA 92008 1200 Elm Avenue, Carlsbi
City of Carlsbad
-
BY y&&&nJ BY &&LA2 --fc
Mayor
City Clerk
r (Interim){) L
BY &lfA. %
GLENDALE FEDERAL SAVINGS LOAN ASSOCIATION
Title: Vice President
Market ng Division
BY ~ZL- /
Title: Vide President
Branch Marketing
-
oyer's Attorney
Dated: ?/[l- i 37 15
At: - ,;,+&, ,&y 4
CALI1
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c'
CITY OF CARLSBAD
DEFERRED COMPENSATION PLAN
PARTICIPATION AGREEMENT
THIS AGREEMENT, made by and between the City of Carlsbad,
hereinafter referred to as "City" and
hereinafter referred to as "Employee."
WHEREAS, the City has established the "City of Carlsbad
Deferred Compensation Plan," hereinafter referred to as "Plan"
for the benefit of its employees; and
WHEREAS, the Plan provides that any Employee, subject to
the limitations established in the Plan of the City, may elect
to join and become a Participant in the Plan upon executing an(
filing with the City a Participation Agreement, and
WHEREAS, the Employee desires to join and become a Partic
pant in the Plan, NOW, THEREFORE, the City and the Employee ag
as follows:
1. City has provided the Employee with a current
copy of the Plan.
Employee hereby elects to become a Participant in
the Plan and to defer payments pursuant to the Plan as follows:
a. Amount of Compensation per Payroll Period $
(not less than $260 per year).
The maximum amount deferred annually may not exceed the lesser of $7,500 or 25% of gross Compensation.
Employee agrees that his rights to the Deferred Compc
sation shall be governed by all terms and conditions the Plan.
The Employee designates his investment objective to '
Savings Accounts and Certificates of Deposit. City
may recognize this objective but is not required to
so.
2.
See Plan for further description.
3.
4.
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i
Under Section 7 of the Plan, the Employee elects the following distribution of benefits:
At Ret,irement
(1) (-1 Lump Sun
(2) (-1 - Installments payable over years (not to ex(
-
10 years) (z) Monthly (z) Quarterly (-) Annually
Expectancy . (Number of years determined by Standard American
mortality tables) (z) Monthly (-1 Quarterly (-1 Annually
-
(31 (-1 Installments payable for years of Life -
- -
(4) (-1 Postpone distribution election to age 55. -
At Other Termination (except total disability)
(1) (:I Lump sum
(2) (-1 Installments payable monthly over years -
(not to exceed 10 years
(3) Q-) Postpone distribution election to age 55. _.
At Death to Beneficiary
(1) (-1 Lunp sum
(2) (-1 Installments payable over years
-
-
(not to exceed 10 years) (zl Monthly (-1 Quarterly (z) Annually -
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I, I
The Employee designates the following persons as his benefici, to receive, in the event of his death, any benefits to which 1 entitled under the Plan:
Name of Beneficiary Address of Beneficia:
a.
b.
C.
d.
If more than one person is named as Beneficiary, any payments which they may be entitled shall be paid as follows (choose or
(1 1 Wholly to the person designated as the first Benefic above, provided (she) - (he) survives me, and if (sh
does not survive me, in equal shares to the remainin
Beneficiaries who survive me.
(E 1 In equal shares, to such of the designated Beneficia
as shall then be living.
I hereby reserve the right to change or revoke this Beneficiar designation without notice to any Beneficiary.
Dated: I 19
CITY OF CAaLSBAD
EMPLOYER
BY
Its City Manager
EMPLOYEE
I hereby agree to the designation of Beneficiary as shown abovl
(Spouse to sign only if not named above as sole first beneficit
SPOUSE OF EMPLOYEE
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RESOLUTION NO. _^_- 5948
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, DEFERRED COMPENSATION PLAN ANI) AUTHORIZING
THE EXECUTION OF AGREEMENTS RELATED TO SAID
PLAN BY THE MANAGER OF THE CITY OF CARLSBAD.
CALIFORWIA ADOPTIPSG AN EHPLOYEE'S
BE IT RESOLVED by the City Council of the City of Carls!
as follows:
WHEREAS, the City of Carlsbad has in its employ employe
are and will be rendering valuable services to the City; and
WHEREAS, said employees may desire to defer income unti
In retirement for the purpose of deferring Federal and State
Taxes on said income; and
WBEREAS, the City Council of the City of Carbsbad has c
sidered the establishment of a Deferred Compensation Plan fo
said employees and believes that the adoption of said Plan w
enhance the efficiency and morale of the employees and will
in the best interests of the City; and
WHEREAS, it is intended that said Plan shall be in accc
with Federal and State law and regulations; and
WHEREAS, the City Council finds that it h70uld be for tl-
benefit and in the best interests of the City to approve the
proposed Deferred Compensation Plan this day submitted to tlr
Council.
NOW, THEREFORE, BE IT RESOLVED by the City Council of t
City of Carlsbad, California that the City Council establis1
Deferred Compensation Plan for said employees of the City ar
said Deferred Compensation Plan this day submitted to the C:
Council, which is attached hereto as Exhibit "All be, and the
is hereby approved and adopted, to be effective this date ai
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remain in effect until terminated by further resolut.ion of tk
City Council.
BE IT FURTHER RESOLVED THAT City Manager of the City of
bad is hereby appointed to administer the Plan on behalf of t
City and is authorized. to execute Participation Agreements WI
eligible officers, officials and employees, and all other Doc
and Agreements necessary to Implement and administer the Plai
PASSED, APPROVED AND ADOPTED at a regular meeting of tht
Council on the 2nd day of October , 1979 by the fc
vote, to wit:
AYES : Councilmen Packard, Anear, Lewis and
NOES : None
ABSENT:
Councilwoman Casler
Counc i 1 man S ko t n i c k i fi"%4/& &d&
RONALD C. PACKARD, Mayo
ATTEST :
Exhibit A
Resolution 0 @
CITY OF CARLSBAD
DEFERRED COMPENSATION PLAN
SECTION 1.
NAME: The name of this Plan j.s the City of Carlsbad Deferred Compen
Plan (hereinafter referred to as the "Plan") a
SECTION 2.
PURPOSE: -- of Carlsbad to defer portions of their compensation and to provide
retirement, disability and death benefits,
SECTION 3.
The purpose of this Plan is to enable Employees of the Cit
DEFINITIONS: For the purpose of this Plan, certain words or phrases
used herein will have the following meanings.
3.1 "Employer" means the City of Carlsbad.
3.2 "Employee" means any officer or employee of the City of Carlsbad e
"Participant" means any eligible Employee who elects,
pursuant to the Plan, to defer a portion of his/lzer
compensation, and who fulfills the requirements for
participation in the Plan.
3.4 . "Participation Agreement'' shall mean the written agreeme by which an Employee elects to become a Participant unde
3.3
the Plan. ..
3.5 "Beneficiary" may be any person, trust, corporation or firm, or the estate of the Participant, or any combinati
of the foregoing designated by a Participant to receive benefits under the Plan. Designation shall be by writte instrument executed by the Participant unless otherwise
provided. Beneficiary may be singular or plural, prima1
or contingent.
3.6 "Administrator" means the Employer and/or other parties
appointed by the Employer to administer the Plan,
"Compensation" means the total of all amounts which woul
be paid by the Employer to or for the benefit of an Emp.'
(if he were not a participant in the Plan) for actual
services for the period that he is a Participant.
"Payroll Period" means the work period €or which a pay
"Includible Compensation" means compensation for servi-cc
3.7
3.8 'check is issued.
3.9
0 0
performed for Employer which is currently includible in gro:
income, but less any amounts deferred pursuant to a plan
described in IRC Section 457 (including but not limited to
this Plan) or IRC Section 403(b).
3. 10 "Retirement" means retirement from service with the Employe
which becomes effective on the first day of the calendar mo
after Participant meets the age and service requirements fo
retirement (including "early" or "late" retirement) specif i
in the applicable retirement policies of the Employer,
SECTION 4. PARTICIPATION IN THE PLAN
4.1 Any Employee designated by the Employer to be eligible may
elect to become a Participant in the Plan by executing and
filing a Participation Agreement with the Administrator, ?
election to Participate in the Plan shall become effective with respect to Compensation earned by the Participant duri
the pay period next following the date of the Participant's
election. Such election shall continue thereafter in full
force and effect unless revoked by the Participant.
Each Participation Agreement shali.specify the dollar amoui
which is to be deferred pursuant to the Plan and to be wit]
out of the Compensation otherwise payable to the Pa-rticipai
for each payroll period. The amount deferred each year mar not exceed the lesser of $7,500 or 25% of Participant F q
gross Compensation. Such deferred amounts shall be
reasonable equal installments totaling not less than ten dollars ($10.00) per payroll period.
4,2
4,3 Notwithstanding the provisions of 4.2 herein, during any o all of the last 3 tax years ending before a Participant's normal retirement age the maximum amount deferred annually
shall be the lesser of $15,000 or the sum of the maximum
amount which can be deferred pursuant to paragraph 4-2 plu
the difference between the amount which could have been deferred in prior years and the amount actually deferred F suant to the Plan.
A Participant may revoke his election to participate in tl-
Plan, and thereby terminate further deferral of his Comper sation, by executing and filing with the Administrator a
notice of revocation at least fourteen(3-4) days prior to ti.
effective date of revocation. A former Participant may nc
rejoin the Plan during the calendar month in which revocal
occurred; however, he may elect to become a Participant fc
subsequent calendar months after a lapse of not less than
three (3) months. No amounts shall be payable to an Emph upon revocation of his participation in the Plan unless otherwise provided for in Section 7.
A Participant may change the amount of Compensation to be
deferred in subsequent pay periods by executing and filin notice wikh the Administrator at least 14 days prior to t
4.4
4.5
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DEFERRED COI;'IPEI?SATa PLAN e
beginning of such pay period, provided however, that such
change may be made not more than fourtimes in a calendar yee
4.6 A Participant may designate in writing a Beneficiary to rete
any benefits which may be payable under the Plan upon the death of such Participant. Designation of Beneficiary may 1
changed by notice in approved form executed and filed with - Administrator,
SECTION 5, DEFERRAL OF COMPENSATION
5.1 During the period of participation, the Employer shall not j the Participant his full compensation, but shall defer paymc
of such part of his Compensation as the Participant has
specified in his Participation Agreement. The Employer sha
establish in its records an Individual Deferred Compensatio
Account ("IDC Account") for each Participant, and a summary of such IDC Accounts, to be identified as a General Deferre
Compensation Account ("GDC Account" } , to provide a convenie
method of measuring its obligations to each and all Partiei
under the Plan.
5.2 Neither the existence of the Plan nor the IDC Accounts shal
be deemed to create a trust, and the Employer shall at all
times be the legal and beneficial owner of all assets of SE
IDC Accounts. ,
5.3 Neither the existence of the Plan or the IDC Accounts shall
entitle any Participant, a beneficiary of any Participant,
or a creditor of any Participant to a claim or lien agains-i the assets of the IDC Accounts. The Participant and his
beneficiary shall have only the right to receive benefits
pursuant to the Plan.
SECTION 6. ADMINISTRATION OF THE PLAN
6.1 The Plan shall be administered by the Administrator under
..
direction of the Employer. Acting for and in behalf of th
Employer, the Administrator may transmit amounts in the ID1
Accounts to such investment plans as hereafter may be appr
by the Employer, In regard to such investments, written
agreements between employer and the institutions accepti
funds for investment shall contain at least the following provisions:
G.l(a) Any investment of amounts in the IDC Accounts, including earnings on such amounts, shall be made
according to written instructions of the Administr
The Employer shall be the legal and beneficial ow1
of all amounts invested (as between Employer and
Participant), The Employer shall hold all certif:
policies and other documents evidencing ownership
the amounts invested, and shall maintain recordsp
6.l(b)
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0 DEFERRED COL'L 'FPENSAI'(I)" PILAR'
including records of the IDC Account of each
Participant and the GDC Account.
Ei.l(c) NO less frequmtly than quarterly, the Employer sha
be furnished with written reports showing the fair
market value and/or the current balance of the amou
invested (inclu-ding interest and dividends accrued.,
if any), and amounts shown in such reports shall be
reflected in each ParticipantDs IDC Account by the
Employer e
6.l(d) No less frequently than quarterly, each Participant
shall be furnished with a statement showing transac
earnings and the current balance of the amounts inv from his IDC Account.
6.l(e) The Employer shall have the sole right to vote any shares of stock or proxies which it may acquire or
be entitled to by investment of IDC Account funds.
The Administrator shall record promptly and accurately all
transactions pertaining to Participants' Deferred Cornpensat in their IDC Accounts., and Participant shall be entitled tc
know the balance in his IDC Account at least quarterly.
6 12
6.3 The Employer shall have the sole authority to enforce the P
and shall be responsible for its operation in accordance wi
its terms. *
6-4 The Employer shall determine all questions arising out of t
administration, interpretation and application of the Plan,
All determinations shall be conclusive and binding.
6.5 Prior to the time specified in the Plan for payment to Part
pant each Participant shaLl elect the time, manner and (if applicable) the amount of benefits to be paid to him, or ir:
the event of his death to his Beneficiary, under the Plan.
no election is made, payment may be made as a lump sum
distribution,
6.6 In the event that the Employer should purchase an annuity a
a means of investment and distribution of funds in a Partic
pant's IDC Account, the Employer shall be both the owner ar
the named Beneficiary of such annuity contract.
6.7 If the Plan provides for more than one type of investment
objective, a Participant may request a change in preference
of investment (as provided in Section 4.4)- Such request
may be made only with respect to compensation not yet earn€
and deferred. The Employer mayI but is not required to, hc
such request. The minimum investment in each type of inves
shall be ten dollars($lO.OO)per Payroll Period. Nothing
contained in this Plan shall be construed as requiring the
Employer to invest deferred amounts or as limiting the Empl
discretion with respect to making investments.
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DEFERRED COMPENSATION PLAN
SECTION 7. BENEFITS
The Employer shall pay to the Participant, or to his Beneficiary if
applicable, the amount in such Participant's IDC Account as of the
month-end following the Participant's termination, retirement, total
disability or death. Distribution of Benefits under the Plan will
be made, or if in installments shall commence, not later than sixty
(60) days after notice to the Administrator of the occurrence of the events or birthday described in Section 7 unless otherwise specifica
provided in the Participation Agreement. All distributions shall be
subject to any State or Federal taxes required to be withheld, Paym shall be made in accordance with the election made in the Participat
Agreement, except in the event of Hardship described in Section 7.4.
. Installment distributions shall be approximately equal installments which shall be intended to exhaust the balance due Participant or
Beneficiary at the expiration of the term over which they will be - made. Such installment amounts may be adjusted from time to time tc
take into consideration gains or losses, if any, from funds invested
Notwithstanding the foregoing if any method' elected by the Participl
shall result in installment payments of less than $50, the Employer
shall make payments on an annual basis aggregating installments othc
wise due; or if the balance due Participant or Beneficiary is less -i
$1,000, Employer shall discharge its obligation by a lump SUM paynei
7.1 RETIREMENT: Upon retirement, the full benefits credited
to the Participant's IDC AccountCI plus or minus investmen-
gains or lossesr but less any Federal or State taxes
requ-ired to be withheld, shall be distributed to a Parti-
cipant in any one or more of the following ways, as pre-
elected at time of enrollment:
7,l(a) In a lump sum.
7.l(b) In monthly, quarterlyl or annual payments for a designed period of not less than one year and
not more than the remaining years of the Parti- cipant's life expectancy, determined by the Administrator in accordance with standard rflortali
tables recognized for that purpose.
7.l(c) In payments, under 7.l(a) or 7.l(b) above, postpc
by pre-election at time of enrollment until Parti
pant reaches age 55.
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DEFERREB CONPENSI%TIQN PLAN
7.2 OTiiER TEN4INA'l'IOl: In the event of termination of employmer
before retirement for reasons other khan those specified in
Section 7.3 and Section 7.4, then the full benefits credited
to Participant's IDC Account, plus or minus subsequent gains
or lGsses, shall be distributed to him in any one or inore of the following ways, pre-elected at the time of enrollment:
7.2(a) In a lump sum.
7,2(b) In monthly payments over a period not to exceed ten
(10) years from date distribution begins.
7.2(c) In payments, under 7.2(a) or 7.2(b) above, postponed by pre-election at time of enrollment until Particip
reaches age 55.
7.3 TOTAL PEFNAiWNT DISABILITY: In the event of the total permai disability of a Participant while he is an Employee of the
Employer, the Employer shall pay to the Participant an amoun-
equal to the balance of the Participant's IDC Account as of . month-end following the Employer's det~ermination of such dis-
ability, such ainount to be paid in the manner pre-elected by the Participant at the time of enrollment pursuant to the
options in Section 7.1, above,
7.4 HARDSHIP: In the event of occurrence to the Participant of E
unforseeable emergency event to be determined by the Ernployex
in his sole discretion, the Employer may pay to the Participz
Account as of the month-end following the date when such de&
mination is made. As used herein, emergency event shall mear only a real emergency which has occurred, which is or was be) control of the .Participant, and the occuxrence of which has c
would cause the Participant great financial hardship. The amount that will be paid out shall be limited to the amount
necessary to alleviate that hardship.
Any distribution under this section shall be deemed a revocat under Section 4.4 and no further deferral of Compensation wil
be made unless Participant subsequently re-elects to particip
as provided in 4.4.
.all or any portion of the amount in-such Participant's IDC
7.5 DEATH: In the event of death of any Participant, either befo
or after termination of employment, then the full benefits
credited to his IDC Account shall be distributed to his Rene-
ficiary in a manner described in Sections 7.l(a), 7.l(b) and
7,l(c) as pre-elected at time of enrollment.
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0 0
DEFERRED COMPENSATION PLAN
SECTION 8 e MISCELLANEOUS
8.1 The contractual obligation of the Employer to the Participai established by the Plan shall not be assignable in whole or
part, voluntarily or by operation of law, and no right or
interest of a Participant pursuant to the Plan shall be
subject to any obligation or liability of such Participant (
his Beneficiary, except as provided in the next paragraph
hereinbelow.
No Participant or other person shall have any legal or equi right against the Employer except as provided in the Plan,
in no event shall the terms of employment of any Employee o Participant be modified or in any way affected thereby-
8.2
8.3 Each Participant herein expressly agrees for himself and hi
Beneficiary that he shall look solely to the general assets of the Employer for the payment of any such benefit to whic
he may become entitled under the Plan, and acknowledges tha
all amounts deferred hereunder shall be available to satisf the general obligations of the Employer,
The Plan has been adopted in the State of California and sh
be construed and governed and administered in compliance wi all applicable State law.
Captions used in the Plan are for the purpose of convenienc
only, and shall not limit, restrict or enlarge the provisic
..
8.4
8.5
. of the Plan.
8-6 The Plan shall be binding upon and shall inure to the benef of the Employer, its successors and assigns, all Participar
and Beneficiaries, and their heirsp and legal representatiT
8.7 As used in the Plan, the masculine or feminine or neuter gc and the singular OK plural number shall each be deemed to
include the others unless the context clearly indicates otS wise e
Any notice or other commmication required or permitted unc
the Plan shall be in writing and, if directed to the EmploT
shall be sent to the Administrator at his principal office
and, if directed to a Participant or a Beneficiary, shall
sent to such Participant or Beneficiary at his last known address as it appears on the Employer's records. Such not shall be deemed given when mailed.
8.8
8.9 Deductions for Participant's contributions to retirement shall be made without reference to amounts deferred pursua
to the Plan.
An approved leave of absence with pay shall not affect agr
ments to participate in the Plan. 8.10
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0 e DEFERRED C OM? EN SAT' I ON PLAN
8.11 An approved leave of absence without pay shall be considerec
be a temporary suspension of participation in the Plan,
Participation shall be automatically reinstated as of the fi
day of the next Pay Period subsequent to the termination of
such leave of absence status.
.'
8.12 The Employer shall make no loans or advances to the Partici]
or Beneficiary based upon IDC Accounts, described herein, o
upon any other obligations under the Plan.
SECTION 9, TEPVXINATION OF PLAN 3Y EMPLOYER
The Plan may be amended or terminated by the Employer at any time
the Employer may, without amending or terminating the Plan, cease
set aside assets under the Plan. Mo amendment or termination of
Plan, and no cessation of the setting aside of assets by the Empl shall reduce or impair the rights of any Participant or Beneficia
which may already have accrued.
9.1 If the Plan is terminated by the Employer, the Employer may
elect to distribute, in the same manner to all Participants
amounts equal to the balance of their IDC Accounts as of th
.month-end following such termination,
If Employer does not elect to pay accrued benefits on termj
of the Plan, he shall cease all deferrals of Compensation,
payments of benefits shall be made pursuant to the applical
provisions of Section 7 of the Plan and the irrevocable el€
of the various Participation Agreements then in effect,
..
9.2
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