strength IN service summary PLaN DEsCrIPTION ThE houston FIrEFIghTErs relief and retirement FuND

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summary

PLaN

DEsCrIPTION

ThE hOusTON FIrEFIghTErs’ rELIEF aND rETIrEmENT FuND

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sTrENgTh

IN sErVICE

united by a passion and capacity

to serve, we strive to meet our

members’ retirement needs. In that

spirit of service, you will find strength

and stability in our support.

COVER PHOTO:

Commissioned by the houston Fire museum in 2002, In THE LInE Of fIRE is an original bronze statue Created by oFFiCial texas state sCulptor edd hayes. the pieCe sits on the museum’s property at the Corner oF main street and hadley in midtown, houston, and will graCe the entranCe oF the proposed Fire museum eduCation Center.

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Elizabeth Carrizal, senior benefits specialist sharon R. Johnson, senior benefits specialist Kristi Marx, Family services Counselor Dalia Montoya, benefits manager Glenna Hicks, deputy director of member services samantha stafford, senior benefits specialist Tony L. Pierce, member services education manager Michele Word, benefits Counselor

281-372-5100

1-800-666-9737

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receive smaller monthly pension benefits. This legislation incorporated the Post-retirement Option Plan (PrOP), which became effective October 1, 2007. It is a benefit option for Fund retirees and survivors who are receiving service retirement or taxable disability pension benefits from the Fund. a retired member or surviving spouse can participate in the PrOP by electing to have all or a portion of his or her monthly service pension or other taxable benefits issued by the Fund, less the ineligible amount (authorized and required deductions plus $300), credited to a PrOP account. The PrOP account shall be credited with earnings in the same manner as the Fund’s DrOP program (minimum of 5% annually, maximum of 10% annually). PrOP participants’ taxable benefits, such as monthly pensions, annual supplemental benefits and $5,000 additional retirement benefits (for new retirees), can be added to the PrOP.

Through a referendum of the Fund’s active members as provided for in section 10 of the Fund’s statute, the modified 13-year DrOP was approved and became effective November 1, 2007. This provision allows DrOP participants to elect to remain in the DrOP for an additional three years, for a total of 13 years, with two modifications. First, employee contributions would be added to the DrOP account for the first 10 years only. second, there would be a maximum of 20% of the original monthly benefit added to the benefit at retirement (no additional 2% per year credits are earned for DrOP years 11 – 13), but the monthly benefit and interest would continue to be posted to the account in those years.

These benefit enhancements will be described in further detail in all three sections of this summary Plan Description.

GUiDE TO YOUR PLAN

The houston Firefighters’ relief and retirement Fund’s summary Plan Description, or SPD, explains benefit provisions for you and your family. Often “the plan” and “the Fund” are considered to be synonymous, but actually “the plan” refers to the provision of benefits, while “the Fund” means the trust fund from which benefits

are paid or the administrative organization

that implements the plan. Information in this booklet incorporates legislative changes effective may 18, 2007, and October 1, 2007. If you have questions regarding any aspect of your benefits, please contact the Fund at

281-372-5100 or 1-800-666-9737 and ask for

a member services representative. RECENT BENEfiT ENHANCEMENTs On may 18, 2007, the governor signed hB 1390, which enhanced the Fund’s pension benefits for Fund members and eligible survivors. a member who has participated in the Deferred retirement Option Plan (DrOP) and who maintains a DrOP balance at the Fund now has the option of designating an adult child(ren), who was the member’s child by birth or adoption, as eligible with respect to survivor benefits for the member’s DrOP funds. This does not affect survivor benefits for the monthly pension benefit payable to the member or other benefits the member is entitled to receive.

another benefit enhancement is the proration of the 2% benefit in a DrOP participant’s final year of DrOP participation (if less than a full year), to be payable upon exiting the DrOP. The monthly supplemental benefit of $150 was removed from the calculation of each member’s annual retirement benefit for the purposes of determining the annual supplemental benefit. This change was to enhance the benefit for members who have been retired for a long period of time and

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TABLE Of CONTENTs

recent Benefit Enhancements 4

Financial security 6

management of the Plan 6

Board of Trustees 7

Committees 9

Plan summary 10

Overview of your Plan 10

Before-Tax advantage 11

retirement Benefit Types 12

Deferred retirement 12

service retirement 12

Deferred retirement Option Plan (DrOP) 12

Disability Benefits 19

On-Duty Disability 20

Occupational On-Duty 20

general On-Duty 20

Disability or Death from heart Disease,

Lung Disease or Cancer 21

Off-Duty Disability 21

Taxability of Disability Benefits 21

Disability Benefits Claim 23

Post-retirement Option Plan (PrOP) 23

survivor Protection 26

Eligible survivors 27

Benefit Forms available 29

annual supplemental Benefit 29

Other Pension Benefit Provisions 29

Transferring Prior service Credit 29

Proportional retirement 31

Qualified Domestic relations Orders (QDrOs) 31

applying for Benefits 32

appealing a Decision 32

Breaks in service 33

adjustments to your Benefits 33

social security 34

Important Notice 34

member services staff 34

Policies and Procedures 36

article 6243e.2(1) 77

Important Phone Numbers 114

map and Driving Directions to the Pension Fund Office 115

houston Fire stations 116

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fiNANCiAL sECURiTY

When you retire from the Houston Fire Department, your financial security will potentially come from several sources:

• Personal savings and investments • Social Security payment entitlement

from other employment

• Individual Retirement Accounts (IRAs) • Retirement plans from other

employment

• This pension plan, including the Deferred retirement Option Plan (DrOP), if you so elect

Learn as much as you can about the income you will receive from each source. use this booklet as an information resource about your pension plan.

THE THREE MAiN sPD sECTiONs

• Plan Summary starts on page 10. This is only a simplified digest of the actual legal statute that defines your pension plan.

• Policies and Procedures for benefit application begin on page 36.

• Retyped version of the Statute starts on page 77. The governing statute is article 6243e.2(1) of Texas Civil statutes (“the statute”).

you’ll find the 10-member Board of Trustees charged with the Fund’s administration on pages 7 – 8.

MANAGEMENT Of THE PLAN

The Houston Firefighters’ Relief and Retirement Fund is controlled and administered by a 10-member Board of Trustees.

Five elected members of the Fire Department represent the classified positions:

Position I: Firefighter or Engineer/Operator

from the Suppression Division

Position II: Captain or senior Captain from

the Suppression Division

Position III: District Chief, Deputy Chief or

assistant Chief from the Suppression Division

Position IV: representative from the Fire Prevention Division

Position V: representative from the Fire Alarm Operators Division or Fire Department Repair Division

a retiree who had at least 20 years of

participation in the Fund at retirement

and is elected by retirees who also had at least 20 years in the system at retirement

Two qualified voting citizens who have

lived in houston three years, who are chosen by the elected Board members, and who are not municipal officers or employees

The mayor or an authorized representative The city treasurer designee

The Board of Trustees employs a professional staff to manage the pension plan’s daily operations.

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BOARD Of TRUsTEEs

KEviN J. BROLAN, CHAiR • Position IV • Trustee since 2006 • Three-year term expires January 1, 2009 • Chair of the Investment and Legislative Committees • Member of the Budget and audit, Pension Benefits, memorial, and Personnel and Procedures Committees v.E. ROGERs, viCE CHAiR • Retired Firefighter • Trustee since 2004 • Three-year term expires January 1, 2010 • Chair of the Memorial Committee • Member of the Investment, Pension Benefits,

Personnel and Procedures, Legislative, and Budget and audit Committees

TED DOWNiNG, sECRETARY • Position III • Trustee since 2007 • Three-year term expires January 1, 2009 • Chair of the Budget and audit Committee • Member of the Investment, Pension Benefits, memorial, Personnel and Procedures, and Legislative Committees HAROLD W. MCDONALD • Position V • Trustee since 2005 • Three-year term expires January 1, 2011 • Chair of the Pension Benefits Committee • Member of the Investment, Legislative, Personnel and Procedures, and memorial Committees TODD E. CLARK • Position I • Trustee since 2006 • Three-year term expires January 1, 2010 • Chair of the Personnel and Procedures Committee • Member of the Investment, Pension Benefits,

Legislative and memorial Committees GARY M. viNCENT • Position II • Trustee since 2008 • Three-year term expiring January 1, 2011 • Member of the Investment, Budget and audit,

memorial, Legislative, and Personnel and Procedures Committees

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BOARD Of TRUsTEEs (CONTiNUED) THE HONORABLE HELEN HUEY, CiTiZEN MEMBER • Trustee since 2000 • Chosen by the elected

members of the Board of Trustees for a two-year term expiring January 1, 2010

• Member of the Investment, Legislative, and

Personnel and Procedures Committees

ALBERTiNO MAYs, CiTiZEN MEMBER • Trustee since 2004 • Chosen by the elected

members of the Board of Trustees for a two-year term expiring January 1, 2009

• Member of the

Investment, Budget and audit, Personnel and Procedures, and Legislative Committees ROBERT B. sTOBAUGH, Ph.D., MAYOR’s REPREsENTATivE • Appointed by the Mayor in 2006 • Member of the Investment, Legislative, and

Personnel and Procedures Committees CRAiG T. MAsON, CiTY TREAsURER DEsiGNEE • Appointed by the City of houston in 2006 • Member of the Investment, Personnel and Procedures, Legislative, and Budget and audit Committees

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COMMiTTEEs

In addition to Board meetings, Trustees meet regularly in the following committees to manage the complex activities of the Fund: Budget and Audit

reviews and monitors operational and

administrative expenditures of the Fund. Investment

a committee of the whole Board of

Trustees, responsible for investing the Fund assets within the investment

parameters established in the Fund’s Investment Policy. The committee meets regularly to review the Fund’s asset

allocation, investment manager performance, and other related or investment topics.

Legislative

a committee of the whole Board of Trustees, responsible for reviewing legislation or

proposed legislation that could materially

impact the Fund and for establishing goals and priorities in governmental relations.

Pension Benefits

reviews applications for membership or disability, and approves or denies

the applications. Develops policies and

procedures to provide a fair and accurate system of application review. also approves

and accepts Post-Retirement Option Plan (PROP) and Deferred Retirement Option Plan (DROP) applications.

Personnel and Procedures

Evaluates matters concerning Fund

employees and changes in management and administration policy, and develops

procedures for the Fund’s adherence to laws which apply to the Fund.

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OvERviEW Of YOUR PLAN

Membership Eligibility

you are eligible for membership in the plan if you start working as a firefighter for the houston Fire Department before you attain age 36 and meet the minimum physical requirements.

you become a participant in the plan when you satisfy the plan’s eligibility requirements, are assigned to the Fire Department payroll and begin making contributions to the plan. If you transfer directly to the houston Fire Department from another Texas city’s fire department, you may be eligible to receive past service credit for participation in that other Texas city’s fire pension system (see Transferring Prior service Credit, page 29).

Contributions

Once you are accepted into the plan, you contribute 9% of your total gross pay to the Fund through biweekly payroll deductions. The City of houston contributes at least twice the amount of your contribution. For example, if your annual pay is $37,000, you will contribute $3,330 annually based on 9%, and the City will contribute at least $6,660. Benefits paid from the Fund come from three sources:

• Your contributions

• City of Houston contributions • Investment returns of the Fund

Retirement Benefits

your benefit at retirement will be based on these three elements: 1) your average monthly salary (ams), which is determined by taking the total of your highest 78 pay periods while working as a classified firefighter and then dividing that total by 36; 2) the length of participation in the Fund at the

time you retire; and 3) the type of pension benefit you receive.

your salary includes all of the salary you receive from the City of houston as a firefighter, including your regular, overtime, incentive and any other special salary payments during your years of participation. your years of participation consist of the time you work for the Fire Department after you are assigned to the Fire Department payroll and begin making contributions to the plan. all members who leave active service and start receiving a service or disability pension (or their eligible survivors) receive a one-time $5,000 additional retirement benefit, and an additional supplemental benefit of $150 per month. members receiving deferred retirements are not eligible for these benefits. The additional monthly supplemental benefit is not subject to the Cost of Living adjustment (COLa).

your average monthly salary is determined by a computer program that averages your salary from your highest 78 pay periods, calculated from your last full payroll period immediately prior to or ending on the day you leave active service. The computer program has information about your salary beginning June 8, 1984. It does not have salary information before that time. When you file your application for retirement, if you received a higher salary before June 8, 1984, please provide dates and proof of your higher salary, in writing, with your retirement application.

Refund of Your Contributions

If you terminate service with the houston Fire Department and are not eligible for a retirement benefit, you are entitled to receive a refund of the employee contributions that you have made to the Fund.

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Payments

If you are eligible for service or disability retirement benefits when you retire, you will receive monthly payments for your lifetime. When you die, your survivor(s), if eligible, will receive your benefits in accordance with the Fund’s statute.

BEfORE-TAx ADvANTAGE

your contributions to the plan are withheld from your pay before your federal income tax obligation is calculated, so you pay less tax than if you simply saved this money on your own. your contributions do not, however, affect the total gross pay amount on which your pension benefits, and the contributions themselves, are calculated. Each firefighter’s individual circumstances will be different. The example below is only an illustration of general principles. CONTRiBUTiON TO THE PLAN iNDiviDUAL sAviNGs annual pay $40,000 $40,000 Before-tax contribution (9% of annual pay) – 3,600 – 0 – Taxable income $36,400 $40,000

Federal income tax* 2,940 – 3,496

Net after federal income tax amount $33,460 $36,504

after-tax contribution – 0 – – 3,600

Take-home pay $33,460 $32,904

You take home $556 more because of the plan.

* Based on 2008 tax for a married taxpayer with one withholding allowance

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RETiREMENT BENEfiT TYPEs

The plan provides the following types of retirement benefits for firefighters and their eligible survivors:

Deferred

If you leave the Fire Department after participating in the plan for at least 10 years but less than 20 years, you may choose to receive a deferred benefit. your deferred benefit will begin at age 50, and you will receive 1.7% of your average monthly salary for each year of participation.

suppose you have 15 years of participation and an average monthly salary of $4,000: 1.7% x 15 years = 25.5%

25.5% x $4,000 = $1,020

starting at age 50, your monthly pension benefit would be $1,020.

Service

Firefighters retiring from the department with a minimum of 20 years of participation are eligible for a service retirement. your service retirement is often called the “20/50, 30/80” plan. a firefighter receives 50% of his or her average monthly salary for 20 years of participation, and 80% after 30 years. If you have between 20 and 30 years of service, the percentage of your pay at retirement is 50% (for 20 years of service), plus an extra 3% for each year as follows:

For example:

If you retire with 30 years of participation and an average monthly salary of $4,500, your benefit would be:

Benefit for first 20 years = $4,500 x 50% = $2,250 Benefit for period

between 20 and 30 years = $4,500 x 30% = $1,350 (3% per year x 10 years)

monthly service retirement benefit = $2,250 + $1,350 (or $3,600)

service retirement payments are reported to the Internal revenue service (Irs) as ordinary income.

Deferred Retirement Option Plan (DROP)

Firefighters with 20 or more years of participation have the option of entering the Deferred retirement Option Plan (DrOP). The DrOP enables a firefighter to accumulate, for up to 13 years, a separate sum of money toward retirement while still working as an active employee. The firefighter’s monthly

20/50, 30/80 Plan

years of service % Pay at retirement

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pension benefit amount is established as of the DrOP entrance date, and the value of the monthly pension benefit is credited to the firefighter’s DrOP account along with the firefighter’s own pension contributions (during the first 10 years of DrOP participation), and all interest earned while the firefighter remains employed with the houston Fire Department. DrOP account balances are available for lump-sum distribution when the firefighter leaves the Fire Department, or the firefighter can elect to leave the DrOP account balance with the Fund and take distributions according to Fund policy. an eligible surviving spouse can choose to maintain a DrOP account with the Fund.

The DrOP includes a Back-DrOP provision. The DrOP account of an active DrOP participant can be recalculated based on what the account balance would have been had the participant elected the DrOP up to three years earlier than he or she actually did. your initial DrOP entrance date cannot be backdated prior to september 1, 1995, or prior to 20 years of credited service, and must be on the first of the month you select.

as of November 1, 2007, the maximum duration in DrOP is 13 years (with years 11 – 13 being modified). In years 11 – 13, the monthly pension benefit and monthly interest are credited to the DrOP account, but the bi-weekly pension contributions that are withheld from the DrOP participant’s pay are not posted to the member’s DrOP account. The participant’s monthly benefit at actual retirement would be increased by 2% for every full year of DrOP participation for the first 10 years, for a maximum of 20% (this benefit does not apply to years 11 – 13). There is a proration of this benefit in the final year of DrOP participation if less than a full year (2% divided by 12, or 0.166% per month). The additional benefit accrual would be applied to his or her original benefit and added to the

monthly benefit on exit from the DrOP in order to determine the monthly benefit upon actual retirement, but would not be added to the DrOP account.

DROP Exit and Retirement Benefit Calculation

There are four components used in calculating the monthly pension benefit upon retirement for a DrOP participant receiving a service pension:

– Original monthly benefit

– 2% for each full year of participation, and 0.166% for each month if less than a full year (maximum 10 years)

– COLa (3% Cost of Living adjustment) when applicable

– section 4(d) monthly supplemental benefit

Example: Less Than 10 Years of DROP Participation

years in DrOP: 5 years and 7 months Original monthly benefit $3,600.00 2% for each full year

(5 years x 2% = 10%) 0.166% for each month

(7 months x 0.166% = 1.162%)

$3,600 x (10% + 1.162%) $401.83 Benefit on exit

COLas for 3 years $333.82

section 4(d) monthly

supplemental benefit $150.00

Total monthly retirement benefit $4,485.65

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Example: 10 Years in DROP

years in DrOP: 10 years

Original monthly benefit $3,600.00 2% for each full year

(10 years x 2% = 20%)

$3,600 x 20% $720.00

Benefit on Exit:

COLa for 7 years $827.54

section 4(d) monthly

supplemental benefit $150.00

Total monthly retirement benefit $5,297.54

DROP — fREQUENTLY AsKED QUEsTiONs

What is the DROP?

The DrOP is the Deferred retirement Option Plan (DrOP) that took effect september 1, 1995, as a retirement option available to firefighters.

How does the DROP work?

The DrOP allows you to accumulate a lump-sum cash amount for retirement to be paid in addition to your monthly retirement benefit. under the DrOP, you determine your future monthly pension benefit while continuing to work as an active firefighter.

here’s how it works. Once you reach the service requirements for a service retirement, you are eligible to enroll in the DrOP. When you enroll, you “lock in” your service and benefit levels as of the date your participation in the DrOP takes effect. you continue to work as an active firefighter and earn your normal pay. While you work, the Fund credits the value of your monthly retirement benefit (based on your service as of the date you entered the DrOP) into a notional DrOP account. you can participate in the DrOP for up to 13 years. as long as you participate, the value of the retirement benefit calculated for

you upon entering into the DrOP and your employee contribution amounts (during the first 10 years) are credited to your account each month, and your account earns interest. When you leave the Fire Department, your DrOP account balance will be distributed to you in a lump sum, or you can choose to leave the assets of your DrOP account with the Fund to continue earning interest and make withdrawals in accordance with the policies and procedures of the Board. When you leave the department and retire, you will start to receive your monthly pension benefits.

Do I have to decide at the time I enroll in the DROP how long I will participate and keep working for the Fire Department?

No. you can participate from 1 month to 13 years. you can decide to stop working (and end your DrOP participation) at any time during the 13 years.

Am I covered by Social Security while I participate in the DROP?

No.

Are my City of Houston active employee benefits affected while I am in the DROP?

No. you continue to accrue sick leave if you are eligible to do so now, and you continue to accrue vacation. any other time or day accrual for which you are now eligible also continues. your insurance coverage also continues uninterrupted, unchanged, and at current active rates.

since you are still a member of the Fire Department, you remain eligible to vote in any pension fund elections. you are also eligible to serve on the Board.

Can I enter the DROP then change my mind?

The decision about whether or not to enter the DrOP is entirely yours. you can withdraw your DrOP application at any time prior to its approval by the Pension Benefits Committee.

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That withdrawal must be in writing. Once acted upon by the Committee, your decision is irrevocable.

Does DROP participation affect disability or line-of-duty death benefits?

a participant in DrOP is ineligible for on-duty occupational disability benefits. In the case of on-duty death or on-duty general disability of a participant with a DrOP account, the death benefit (100%) or disability benefit (75%) will be calculated as though the participant had not entered the DrOP and will be paid to the eligible survivor(s) (in case of on-duty death) or participant (in the case of on-duty general disability). In addition, the DrOP account that had accumulated to date will be available to the eligible survivor(s) (on-duty death) or participant (on-duty general disability).

Am I eligible for Cost-of-Living Adjustments (COLAs) if I am participating in the DROP, and if I am, when do I receive a COLA?

yes, you are eligible for a COLa in the month of your 48th birthday and each October thereafter.

Does anything else go in my DROP account besides my normal monthly benefit payments?

If you are eligible for Cost-of-Living adjustments (COLas) that are made during your participation in the DrOP, your monthly benefit credit (being made to your DrOP account) will be adjusted by the value of the COLa.

also, since you will still be working as an active firefighter, you will continue to make “pension contributions” which are currently 9% of your gross pay. your contributions will be credited to your DrOP account only during your first 10 years of participation.

your DrOP account will be credited with earnings at an annual rate equal to the average annual return earned by the Fund over the

previous 5 fiscal years (updated each september 1). The annual rate will not be less than 5%, or more than 10%.

Can I remain active with the Fire Department after my 13 years of DROP participation?

yes, but you cannot receive any money from your DrOP account as long as you are an active employee. If you decide to continue working, credits into your DrOP account (for notional monthly benefits or earnings) will end. your account will be frozen in value, and it will earn no further interest while you are an active employee. also, you cannot receive monthly pension benefits from the Fund while you are an active firefighter. you will not be entitled to monthly pension payments until you leave active service with the Department. similarly, if you decide to retire and not participate in the DrOP, you cannot later decide to return to active service and begin participating in the DrOP.

an important note: If you continue working beyond your 10th year of DrOP participation, the 9% pension contribution continues to be deducted and goes to the Fund’s general account, not to your DrOP account. It does not increase your monthly pension benefit and is not refundable.

How are earnings determined and credited to my DROP account?

Each year that you participate in the DrOP, your account is adjusted based on the average rate of return for the Fund for the previous five fiscal years. as of september 1, 2003, the annual earnings rate applied to DrOP accounts will be subject to a minimum of 5% and a maximum of 10%. Therefore, if the 5-year average is less than 5%, 5% will be the rate for that DrOP year, and if the 5-year average is greater than 10%, the rate will be 10% for that DrOP year. If the average calculates between 5% and 10%, then the member will receive that 5-year average calculation (The

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annual DrOP rate is from september 1st through august 31st).

For example: If you entered the DrOP on september 1, 2007, the rate used in determining your earnings credit will be the average of the rates of return for the Fund’s fiscal years ending June 30, 2003, 2004, 2005, 2006 and 2007. The following september, it will be for fiscal years 2004 through 2008 and so on.

Will I receive statements advising me of the value in my DROP account?

yes. The law requires that the Fund provide you with an annual accounting of the value of your DrOP. however, the Fund will provide each DrOP participant with a balance statement quarterly.

although a separate accounting of its value is maintained, your DrOP account is not separated from the assets of the Fund until a distribution payment is made. as such, your DrOP account has no loan value and it cannot be used as collateral or guarantee.

What is Back-DROP?

Back-DrOP is a provision that gives a DrOP participant an option to go back to an earlier DrOP date for up to three years prior to his/ her original DrOP election date. The date cannot be prior to september 1, 1995, and the participant must have at least 20 years of pension service on the effective Back-DrOP date. The minimum Back-DrOP period is one month and the maximum is three years, but the effective Back-DrOP date must be on the first of a month. under a Back-DrOP election, the member’s account balance is equal to the amount that the account would have had if the member had elected to participate in the DrOP on an earlier date.

When may I Back-DROP? Can I change my mind after I sign the application?

you may Back-DrOP immediately upon

your DrOP entrance date. This option can be exercised at any time while you are in active service.

a member may revoke the Back-DrOP election by notifying the Fund in writing no later than the earlier of the date the member leaves active service or the 10th business day after the date the member signs an application form for a Back-DrOP.

How many times can I Back-DROP?

you may only Back-DrOP once, unless: The Board determines that you have incurred a catastrophic injury or illness that will cause you to leave the Fire Department earlier than previously expected, and your previous election was not for the maximum period allowed.

How is my monthly benefit increased when I exit DROP and retire?

When you exit DrOP and retire, your monthly benefit will be increased by an amount equal to a percentage of the original monthly benefit amount. This is done by multiplying your original monthly benefit by 2% for each full year of participation in DrOP, up to a maximum of 10 years. (a full year is considered to be the completion of 12 months starting on your DrOP entrance date. For example, if you started DrOP February 1st, you will have a full year completed in DrOP every January 31st.) If you do not complete a full year in the final year of DrOP participation, the 2% will be prorated (0.166%) for each month. For example: five years, seven months completed in DrOP (5 years x 2% = 10%), (7 months x 0.166% = 1.162%) therefore, 10% + 1.162% = 11.162%.

The amount determined in the previous paragraph is then added to the monthly benefit that you will receive after exiting DrOP. Finally, the section 4(d) monthly supplemental benefit is added to that amount.

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Example:

1) Original monthly benefit in DrOP = $2,500.00

2) 10 years completed in DrOP x 2% per year completed = 20%

3) Original monthly benefit $2,500.00 x 20% = $500.00 4) Benefit on exit as a result of seven

3% COLas ($3,074.69) + $500.00 = $3,574.69

5) $3,574.69 + section 4(d) benefit ($150.00 per month) = $3,724.69

Therefore, the total monthly retirement benefit is $3,724.69.

How is the DROP account money paid out and distributed?

When you leave the Department, your money will be distributed as you choose in one the following ways:

a check for the entire amount (less applicable withholding) will be made payable to you, or (if you prefer) electronically transferred to a bank or credit union account in your name, or

The contents of your account will be transferred, in whole or in part, by the Pension Fund to an Individual retirement account (Ira) in your name, or

The contents of your account will be transferred, in whole or in part, by the Pension Fund to an Irs-qualified retirement plan (such as an employer-sponsored 401(k) plan), or The contents of your account, in whole or in part, can be left with the Fund. The Fund will account for your assets and you will earn interest at the same rate as normally calculated under the DrOP. If you choose to leave your money in the Fund, you can make four withdrawals during the calendar year (January to December). If you make a fifth

withdrawal within a calendar year, you would be required to withdraw the entire balance of the account.

How is my DROP distribution taxed?

If you authorize the Fund to roll over your DrOP proceeds directly to an Ira or another qualified retirement plan, or if you choose to leave your assets with the Fund, there are no immediate tax consequences. you will pay taxes on these funds only when you receive a distribution from your Ira, qualified retirement plan, or from the Fund.

If you receive the DrOP account proceeds, the distribution will be treated as ordinary income to you in the year you receive it. The minimum federal income tax rate that must be withheld is 20%.

If you receive payment and are not at least age 50 by the end of the calendar year in which you leave active service, or if you withdraw money from a rollover account before you reach age 59-½, you may be subject to a 10% early distribution tax penalty.

Keep in mind that tax laws can change, and they are complex. We urge you to seek the advice of a tax professional to determine what is best for you and how you will be affected.

What happens to my DROP account proceeds in the event of my death while in the DROP?

In accordance with section 5(j) of article 6243e.2(1), the following apply:

(1) If there is an eligible spouse who you were married to on your DrOP effective date and no eligible children, your entire DrOP account balance is paid to the eligible spouse, or the eligible spouse may elect to keep the balance in the Fund. (2) If you die and are survived by an eligible

spouse (as described above) and one or

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more eligible children, one-half of your DrOP account balance is paid to the eligible spouse (or the spouse may elect to keep the balance in the Fund), and the remaining one-half is divided equally among the eligible children. (Note: Only

the eligible spouse’s portion may be kept in the Fund. An eligible spouse or eligible child may choose to roll over their portion of the DROP balance to an IRA or other qualified plan.)

(3) If there are one or more eligible children but no eligible spouse, your DrOP account balance is divided equally among the eligible children, which, for this purpose, includes children who are less than 23 years of age, unmarried, and full-time students;

(4) If there is not an eligible spouse and there are not any eligible children, your DrOP account balance can be paid to a dependent parent; and

(5) If there is not an eligible spouse, eligible children, or an eligible parent, your DrOP account balance is distributed in accordance with your beneficiary designation as filed with the Board, or to your estate if there is no beneficiary. Notes: you may elect to extend survivor benefit payments to children through age 22, unmarried, and full-time college students when there is an eligible spouse. you must complete the appropriate forms in order to notify the Fund of your desire to extend survivor benefits to a child who meets these criteria. Otherwise, survivor benefits would be extended as outlined in the statute.

you may also elect to designate an adult child (or children) as an eligible child (or children) for the DrOP proceeds. “Beneficiary adult child” is a child of a member by birth or adoption

who is not an eligible child; and is designated as a beneficiary of a member’s DrOP account by valid designation under section 5(j-1) of the statute.

If I marry or remarry after entering the DROP, does my new spouse qualify as an eligible survivor for my DROP

account benefits?

after the effective date of your participation in the DrOP, any person who subsequently becomes your spouse will be eligible for a reduced portion of your DrOP account, based on the percentage of time this spouse was married to you between the date of your DrOP election and your last day of active service. The remainder of your DrOP account would be distributed to other eligible survivors as provided for in the statute. after leaving active service, any person who subsequently becomes your spouse will not be considered an “eligible spouse.” you may designate such spouse on a “Beneficiary Designation Form.” In the event of your death, your DrOP account would be distributed to your eligible survivors, if any. If there are no eligible survivors, the DrOP account would be distributed to the designated beneficiary or beneficiaries.

If I have a Qualified Domestic Relations Order (QDRO) in place before entering the DROP, does it affect the value of my DROP?

No.

What happens if I’m divorced but there has been no QDRO letter ruling from the Fund?

The fund will not distribute DrOP benefits or monthly pension benefits to alternate payees without a QDrO.

If a portion of my DROP is awarded to my ex-spouse through a QDRO, how will the Fund administer it?

The full value of your monthly benefit is credited to your DrOP account. If a QDrO is in place and is specifically attached to the

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proceeds of your pension either before or after you enter the DrOP, payments to an alternate payee will not commence until you actually leave the Fire Department.

What do I need to do when I’m ready to leave the Department and exit the DROP?

The timing of your departure is your responsibility, but when you start thinking about your retirement, and in order to maximize your retirement benefits, contact the Fund at 281-372-5100 or 800-666-9737 and ask for member services. The Fund offers a “one-stop” retirement shop for our members. To ensure that all members considering retirement are fully informed regarding their pension options and retirement benefits, you are required (hFD Bulletin No. 36) to attend a personal pre-retirement counseling meeting with a Fund member services representative to discuss your pension options prior to applying for retirement.

Once you are ready to retire, contact the Fund and ask for a member services representative to apply for Phase Down, Lump sum, Disability, or service retirement. The hFD human resource Department no longer processes retirement applications for classified members of hFD.

Firefighters wishing to retire have only two options regarding compensation for leave balances:

1. Phase Down Program (PDP) — “ride out” all eligible leave balances (vacation, holidays, and compensatory time) or,

2. Lump sum — Not enter PDP and elect to get paid for all eligible accrued leave.

Be sure and work closely with a Fund member services representative if you plan on “riding out” your eligible leave time balances. Once you enter PDP, you must ride out all eligible accrued leave, not just a portion of it. The option of selling back leave is eliminated once you enter PDP.

DisABiLiTY

The plan may provide benefits for a firefighter who is disabled on duty or off duty. The amount of the disability benefit depends on whether the disability is on-duty or off-duty and, if on-off-duty, whether the disability is “general” or “occupational.” If you are eligible for a service retirement at the time you become disabled, the service retirement benefit and disability benefit will both be determined. If the service retirement benefit is higher, you will receive the disability benefit plus the percentage of the service benefit that is higher than the disability benefit.

you are considered disabled and entitled to some form of benefit if the Pension Benefits Committee determines from your application, physicians’ exams and other evidence that you are eligible for the particular type of disability benefit you are applying for, based on the Fund’s statute. The Pension Benefits Committee must determine that the condition is likely to be permanent for the benefit application to be approved.

Two types of disability benefits are based upon how the disability occurred: on duty or off duty. Both types of disability benefits cover mental and physical disabilities. The amount you receive as a disability benefit depends on the date of disability, if the condition is likely to be permanent, whether your disability occurred off duty or on duty, and, if on duty, whether you are “occupationally” or “generally” disabled. page

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On-Duty Disability

you may be eligible to receive a disability benefit if you become disabled while you are on duty as a firefighter. The amount of your disability benefit will depend on whether you have an “occupational” or “general” disability.

Occupational On-Duty Disability

If you become disabled on duty and believe you are no longer capable of performing the usual and customary duties of a firefighter but might be capable of other employment, you are eligible to apply for an occupational on-duty disability benefit (DrOP participants are not eligible for occupational on-duty disability benefits). If medical evidence substantiates this type of disability and your application is approved, you will receive a benefit allowance under occupational on-duty disability retirement. This amount will be 50% of your average monthly salary. If your normal service retirement benefit would be higher, you will also receive an additional amount equal to such excess.

suppose you become “occupationally” disabled while on duty and performing the duties of a firefighter, and that you have 25 years of participation and an average monthly salary of $3,000:

$3,000 x 50% = $1,500 (your

occupational on-duty disability benefit —

not taxable)

$3,000 x 15% = $450 (the excess amount you would have received under a regular service retirement — taxable) your monthly pension benefit would be $1,950.

General On-Duty Disability

This benefit formula will apply if your disability or injury is so severe that, not only are you unable to perform the duties of a firefighter,

you are no longer capable of performing any substantial gainful activity (any full-time work of 40 or more hours per week). In this case, you will apply for a general on-duty disability benefit. If medical evidence substantiates this type of disability and your application is approved by the Pension Benefits Committee, you will receive a benefit allowance under general on-duty disability retirement. This benefit will be 75% of your average monthly salary. again, if your normal service benefit would be higher (for example, if you have more than 29 years of service at the time you become disabled), you will also receive an additional amount equal to such excess. Firefighters should be aware that on-duty general disability is intended only for firefighters who have sustained catastrophic injury or disability while on duty. The Board has adopted strict guidelines for determining initial eligibility for this benefit, as well as continued eligibility. The Board will require annual reporting on all persons receiving this benefit. since the individual should be unable to perform any gainful employment, income reports (including tax forms) must be submitted annually under the Board’s guidelines. If you later become capable of performing substantial gainful activity, the portion of your benefit attributable to the general disability classification could be eliminated.

suppose that you become disabled and qualify for a general disability benefit, and that you have 29 years of participation and an average monthly salary of $4,000:

$4,000 x 75% = $3,000 (your general on-duty disability benefit — not taxable) $4,000 x 2% = $80 (the excess amount you would receive under a regular service retirement — taxable)

your monthly plan benefit would be $3,080.

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If you have any questions regarding the two levels of on-duty disability benefits, please call the Fund at 281-372-5100 or 1-800-666-9737 and ask for a member services representative.

Disability or Death from Heart Disease, Lung Disease, or Cancer

If you have participated in the plan for at least six years, your plan may provide benefits if you become disabled or die of heart disease, lung disease, or cancer. To receive a benefit for any of these medical conditions, it must be determined that there is no clear and convincing evidence to rebut the on-duty presumption. If, at the time you entered the department, you passed a physical examination that did not show evidence of cancer or of a condition or disease of the lungs or heart, and you die or become disabled from heart disease, lung disease, or cancer, such death or disability shall be presumed to be job-related and you or your eligible survivors may be entitled to receive a disability or death benefit from the plan, unless the presumption is rebutted as described above. To review the provisions for disability benefits, see page 19.

The amount of your disability benefit from heart disease, lung disease, or cancer will depend on whether your condition meets the definition of an “occupational” (50% of your average monthly salary) or “general” (75% of your average monthly salary) disability. If your regular retirement benefit would be higher, then you will be paid the higher amount. all disability benefits may be affected by a QDrO. (see pages 54 – 58 for a more detailed explanation of QDrOs.)

Off-Duty Disability

you may be eligible to receive a disability benefit if you become disabled while you are off duty.

The benefit will equal 25% of your average monthly salary at the time you become disabled, plus 2.5% for each full year of participation in the plan.

The maximum monthly benefit you can receive is 50% of your average monthly salary (or your full service retirement benefit, if higher). suppose that you become disabled while you are off duty, and that you have five years of participation in the plan and an average monthly salary of $3,700:

$3,700 x 25% = $925

$3,700 x (2.5% x 5 years) = $462.50 your monthly plan benefit would be $1,387.50.

you will also receive a $5,000 additional retirement benefit when your retirement is due to a disability. In addition, all persons receiving a disability pension will receive $150 per month in accordance with section 4(d) of the statute. This additional benefit will not be subject to the Cost of Living adjustment (COLa).

Taxability of Disability Benefits

The following is not intended as legal or tax advice and may not be used as such. Keep in mind that tax laws can change, and they are complex. We urge you to seek the advice of a tax professional to interpret tax laws and revenue rulings and determine what is best for you and how you will be affected.

On occasion, the Fund will seek a private letter ruling from the Irs to allow for more favorable tax treatment to certain types of disability recipients. a private letter ruling is a document that gives reliable tax guidance to the Fund and its members.

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Through private letter rulings, the Irs has ruled that benefit recipients receiving occupational duty disability benefits or general on-duty disability benefits are tax-exempt, to the extent that they do not exceed 50% and 75% of the member’s average monthly salary (ams), respectively. If the member’s service retirement calculation would be higher, the excess over 50% for occupational on-duty disability recipients, or over 75% for general on-duty disability recipients, will be subject to federal income tax.

For example:

The Pension Benefits Committee approves your application for occupational on-duty disability benefits, to be effective June 1, 2008. your ams is $4,200 and you have 25 years of credited pension service. your monthly base benefit would be $2,730. your tax liability on your monthly base benefit received from the Fund would be calculated as follows:

$4,200 x 65% = $2,730

(your monthly benefit is calculated using the basic formula on page 12.)

$4,200 x 50% = $2,100

(50% of your ams is attributable to the on-duty disability benefit and is not taxable.)

$4,200 x 15% = $630

(The remaining 15% of your ams is attributable to the service retirement portion and is therefore taxable.)

Through an additional private letter ruling issued January 23, 2001, and subsequent amendments to the Fund’s policies, the following applies:

section 6(d) of the statute (heart disease, lung disease or cancer provision) was amended on November 1, 1999, to include a rebuttable presumption (as described on pages 93 – 94). any on-duty disability recipient receiving pension benefits under section 6(d) will not be

subject to taxes on the benefits received from the Fund that are attributable to the on-duty disability benefit.

The January 23, 2001, private letter ruling also allows all benefits payable to an on-duty disability recipient (section 6 of the statute) to be excludable from taxes at the same rate that their monthly pension benefit is excludable from taxes. This tax treatment would include (but is not limited to) COLas, lump sum payments, supplemental payments and the section 4(d) benefit that is currently $150 per month.

(using the previous example, with an effective date of July 1, 2008):

The monthly benefit would be $2,730. Of this amount, $2,100 is non-taxable and $630 is taxable. The method of determining the taxability of the entire benefit is shown below:

Non-taxable $2,100 ÷ $2,730 = 76.92% Taxable $630 / $2,730 = 23.08% This would mean that 76.92% of the COLas, lump sum payments, supplemental payments and section 4(d) benefits for this individual would not be taxable.

The January 23, 2001, private letter ruling also allows for benefits payable to survivors (attributable to a deceased member’s benefit under section 6 of the statute to be excludable from taxes in the same proportions as the member’s benefit would have been excludable under section 6).

Pension benefits payable to survivors of line-of-duty death members are non-taxable. Off-duty disability benefits are taxable.

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If you have any questions about the taxability of disability benefits, or if you or your tax advisor would like a copy of an Irs private letter ruling for your tax files, please call the Fund at 281-372-5100, or 1-800-666-9737 and ask for a member services representative.

Disability Benefits Claim

The Pension Benefits Committee reviews each request for disability benefits using its established policies and procedures. you will not be entitled to a disability benefit if your disability is the direct result of a condition that pre-existed when you joined the plan.

you must apply for disability benefits at the Fund’s office. you will also need to submit certificates of disability signed by you and your doctor.

The application process may require 60 days or more before action is taken by the Pension Benefits Committee.

The Pension Benefits Committee will review all applications for disability benefits and will determine whether an application should be granted or denied. If the application is denied, a written appeal may be submitted to the Board for review. The Board will then make a final determination.

The Committee reserves the right to send you to a doctor of its choice to confirm the disability. The committee may also require you to be re-examined periodically by a doctor appointed by the Board to confirm that the disability still exists. Certain categories of disability recipients are obligated to file income statements as described beginning on page 19. a complete description of the procedure for disability benefits begins on page 32.

POsT-RETiREMENT OPTiON PLAN (PROP) The following frequently asked questions will address the provisions of PrOP:

What is PROP?

The Post-retirement Option Plan (PrOP) became effective October 1, 2007, as an option for retired members and eligible spouses to defer taxable pension benefits to a notional account at the Fund, and accrue earnings on the balance each month.

a retired member or surviving spouse can participate in the PrOP by electing to have all or a portion of his or her monthly service pension or other taxable benefits issued by the Fund, less the ineligible amount (authorized and required deductions, plus $300) credited to the participant’s PrOP account. The PrOP account shall be credited with earnings in the same manner as the Fund’s DrOP program (minimum of 5% annually, maximum of 10% annually). at any time, the participant may elect to stop the amounts being credited to the PrOP account and elect to resume receiving the full monthly service pension or other taxable benefits issued by the Fund.

How much can I put into my PROP account each month (minimum/maximum)?

The minimum monthly PrOP credit is $50. The maximum amount you can deposit each month to your PrOP account is your monthly service pension or off-duty disability pension (including the $150 supplemental benefit), less the ineligible amount (your authorized and required deductions, plus $300). If you are receiving an on-duty disability pension with a portion that is subject to taxation, you may be able to credit your taxable portion of the benefit to your PrOP account (contact a Fund member services representative for more detailed information). page

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How many times can I take money out of my PROP account?

you can take up to four distributions from your PrOP account each calendar year (and still maintain a PrOP balance). If you request a fifth distribution, the entire PrOP balance will be distributed to you.

When are my PROP credits subject to taxation?

When you credit a portion of your taxable pension benefits to your PrOP account, you are deferring the distribution of those funds to a later date. When you elect to take money out of your PrOP account, the Fund must take a minimum of 20% federal income tax out of the distribution.

Will my DROP account balance be rolled into my PROP account?

DrOP accounts will be separate from PrOP accounts and transfers between accounts will not be permitted.

Can we roll money into PROP (from deferred compensation, IRAs, etc.) or add to PROP from our personal savings or other income?

a PrOP participant will not be able to add money to the PrOP other than through the designation of all or a portion of taxable benefits that the participant is entitled to receive from the Fund.

If I stop my monthly PROP credits, can I resume at a later date?

If you elect to stop contributing to PrOP on a monthly basis, you will not be able to contribute to PrOP for the remainder of that calendar year. you may elect to resume your monthly PrOP credits at any time after that calendar year.

What happens to my PROP account when I die?

your PrOP account balance will be distributed to your eligible survivors upon your death.

your eligible spouse will have the option to elect a direct rollover to an Ira or other qualified plan, take the distribution and pay the taxes, or leave the PrOP balance at the Fund. Eligible children will not be able to leave their portion of the PrOP account at the Fund. If you do not have eligible survivors, your PrOP balance will be distributed to your designated beneficiaries.

Can I designate my adult children as beneficiaries for my PROP?

yes. you can designate one or more adult children as beneficiaries for your PrOP. This designation would not apply to your monthly pension or other pension benefits.

When my medical costs increase, will my PROP deduction be automatically adjusted?

No. The $300 additional amount that is over the elected deduction amounts will act as a buffer for slight fluctuations. The member services staff will monitor the changes in the deduction amounts and contact you to discuss any changes you wish to make in your monthly PrOP credit amount.

Will I be able to view my PROP balance on the web?

The PrOP balances are available on the Web calculator section of the Fund’s Web site.

If I divorce and I have joined PROP, can my ex-spouse get money from this account?

any pension benefit is subject to division in a divorce case.

If I am on a disability pension, can I still participate in PROP?

If any portion of your monthly pension benefit is taxable, you can participate in PrOP.

Will I receive my PROP statement quarterly (in the same manner as my DROP)?

yes. you will receive quarterly PrOP statements.

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If I have a Power of Attorney, can my spouse remove money from my PROP?

If the Fund has a copy of your Durable Power of attorney, your spouse can complete a PrOP distribution form on your behalf. If the Power of attorney is only in effect in the event of your incapacitation, the Fund will have to determine if you are incapacitated.

Will I receive a 1099-R for DROP and one for PROP?

you will receive 1099-rs for each type of distribution (rollovers, disability distributions, regular distributions, etc.). For example, if you elect a rollover of DrOP, and another rollover of PrOP funds, those would be included on one 1099-r.

If I remove all of my PROP account from the Fund, can I elect to participate in PROP at a later date?

Once you remove all of the PrOP balance from the Fund, you will not be able to participate in PrOP in the future.

I’m over 70-1/2. Can I participate in PROP?

yes. Each year, you will receive a letter from the Fund regarding your required minimum Distribution (rmD). you will have to take out a certain portion of your PrOP balance each year. We suggest you seek professional tax advice to determine the rmD each year. (The Fund has a financial calculator on the Web site under “member services” to assist with rmD calculations.) here are some examples of rmD amounts from current tables:

account balance at 12/31 $15,000.00 your age as of 12/31 72 rmD $585.94 account balance at 12/31 $25,000.00 your age as of 12/31 75 rmD $1,091.70 account balance at 12/31 $50,000.00 your age as of 12/31 71 rmD $1,886.79 account balance at 12/31 $100,000.00 your age as of 12/31 71 rmD $3,773.58 account balance at 12/31 $200,000.00 your age as of 12/31 73 rmD $8,097.17 account balance at 12/31 $300,000.00 your age as of 12/31 71 rmD $11,320.75 account balance at 12/31 $425,000.00 your age as of 12/31 78 rmD $20,935.96 account balance at 12/31 $500,000.00 your age as of 12/31 75 rmD $21,834.06

How/When can I sign up for PROP?

you must contact a Fund member services representative and have a PrOP counseling session at least 45 days before entering PrOP. applications for PrOP must be signed at least 30 days before entering PrOP. a retiree or surviving spouse can only enter PrOP on the first of a month.

I retired at the age of 48. Am I subject to the 10% early withdrawal penalty?

If you left active service before the calendar year you reached 50 years of age, you would be subject to the 10% early distribution penalty until you reach age 59-1/2.

Can I change my monthly PROP credits?

you can change your monthly PrOP credits up to four times per calendar year. you would need to obtain a form from the Fund to request this change and that form must be received by the Fund by the fifth day of the month prior

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to the date that you elect to make the change effective.

Can I borrow against my PROP?

you will not be able to borrow against your PrOP account. This is a notional account and the PrOP assets are not separated from the Fund until you take distributions from your PrOP account.

Which pension benefits can be credited to PROP?

your taxable monthly pension benefits (less any ineligible amount), your taxable $5,000 additional retirement payable upon retirement, and your taxable annual supplemental benefit can be credited to your PrOP account. sURvivOR PROTECTiON

The plan includes provisions for your eligible beneficiaries if you are entitled to receive, or are receiving, a benefit from the plan when you die. Eligible survivors are defined exclusively in Section 7 of the Statute and include:

• Your surviving spouse, who is married to you at the time of your death. however, a surviving spouse who marries a firefighter after retirement can receive 20% of the firefighter’s death benefit for each full year of marriage, up to 100% after five years.

• Your child or children under age 18 (they must be unmarried and depend on you for support).

• Your child or children ages 18 through 22 (they must be unmarried and attending school full-time) if there is no eligible spouse or if you submit an election form to extend survivor benefits to your children through age 22 even if there is an eligible spouse.

• Your child or children of any age who are totally disabled from a physical or mental illness, injury or retardation at the time of your death.

• Your dependent parent who meets the guidelines for a dependent as established by the Board (and as further defined in section 6.05 of the Policies and Procedures).

If you have a child who is permanently and totally disabled from a mental or physical illness, injury or retardation, please notify the Fund office to certify your child’s disabled status.

stepchildren and grandchildren are ineligible for survivor benefits unless legally adopted by you.

Benefits for dependent children and/or parents will be paid to the person with custody (i.e., legal guardian) unless you designate by notification to the Board, a testamentary trustee to receive the children’s and/or parent’s benefit.

No benefit will be paid if you die from suicide or complications from attempted suicide before you have participated in the Fund for two years.

If you do not have any of the eligible survivors listed above, you can designate a beneficiary to receive a refund of your contributions if you die before retirement. If you die after participating for 10 or more years in the Fund, your beneficiary will also receive 5% simple interest on your contributions. If you do not designate a beneficiary for a refund of your contributions, the executor of your estate may apply to have your contributions paid to your estate. PLAN s UMMAR Y policie s and pr ocedure s the s ta tute

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you may elect to extend survivor benefit payments to an eligible child (or children) who are less than 23 years of age, unmarried and full-time college students, even when there is an eligible spouse. you must complete forms to notify the Fund of your desire to extend survivor benefits to a child who meets these criteria. Otherwise, survivor benefits would be extended as outlined in the statute.

If a retiree is married after leaving active service, the new spouse would not be entitled to the spouse’s full survivor benefit until the retiree and spouse have been married for five years. If the retiree dies before five years of marriage, the monthly pension benefit would be 20% for each year of marriage. see example below: retiree is married for 4.5 years on the date of his death. The spouse would receive 4.5 x 20% = 90% of the monthly pension benefit. This proration would apply to the annual supplemental benefit, but not to the monthly supplemental benefit of $150.

Eligible Survivors

your eligible survivors will receive a benefit equal to 100% of your average monthly salary if:

• You die as an active firefighter from an injury suffered in the line of duty

• You die while on disability from an injury suffered in the line of duty and the disability results in your death

On-duty death benefits are tax exempt when the firefighter is killed in the line of duty. If you die from an off-duty illness or injury before you retire, your eligible survivor(s) will receive a survivor benefit equal to the benefit you would have received if you had retired with an off-duty disability on the day you died.

If you die after retirement (other than while on disability from an injury suffered in the line of duty which resulted in your death), your eligible survivor(s) will receive a survivor benefit equal to the benefit you were receiving at the time of your death. The benefits will be payable to your eligible survivor(s) as follows: • If you leave an eligible spouse and

no eligible children, your spouse will receive 100% of your benefit. Benefits to your spouse will cease upon the death of your spouse.

• If you leave an eligible spouse and at least one eligible child under age 18 (or up to age 23 if unmarried and a full-time student and if you so designate), your spouse will receive 50% of the benefit and your children will receive the other 50%. If there is more than one eligible child, each receives an equal share. The minor children’s benefits will be paid to the person with custody (i.e., the legal guardian) unless you notify the Board in writing of your choice of a testamentary trustee to receive the children’s benefits and notify the Board of your choice in writing. Benefits to the children stop when they are no longer eligible to receive a benefit.

• If you leave no eligible spouse, your eligible children will receive 100% of the benefit. again, the minor children’s benefits will be paid to the person with custody unless you name a testamentary trustee to receive the children’s benefits and notify the Board of your choice in writing. Benefits to the children cease when they are no longer eligible to receive a benefit. If there is more than one eligible child, then each receives an equal share. • If you leave no eligible spouse or eligible

children, each parent who is dependent on

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