DB SE Seguridad Estructural.

This Section Applies to Both Plans

The City is not obligated to continue these benefits, or to offer these benefits at any particular level or cost, in whole or in part, after June 30, 2013. Rather, the City may modify or terminate these benefits in any way for any reason at any time after June 30, 2013. Before June 30, 2013, the City may not amend or terminate the Plans except as follows:

The City may terminate or amend the Plans or make reasonable Plan design changes in response to material changes in federal or state law under circumstances that include, but are not limited to, the following: if changes or termination were mandated by law; if the City’s coverage were duplicative of other coverage; or if the changes brought about by state or federal law made the City’s benefits unduly expensive.

The City will not terminate or amend the Plans for reasons other than changes in federal or state law, as described above, for those Class Members (as defined in the Settlement Agreement) who retired before August 23, 1989.

The City’s right to amend the Plans for reasons other than changes in federal or state law for remaining Class Members, is subject to the following restrictions:

♦ The City will make no Plan design changes that do not arise out of changes in law for a period of five years from July 1, 2003.

♦ After July 1, 2008, the City may make changes to the design of the Plans only with the approval of a majority of the members of a commission, the Retiree Health Benefits Commission (RHBC), impaneled by the City to consider proposed Plan design changes. The RHBC will consist of experts who will be objective and fair-minded as to the interests of both retirees and taxpayers. The RHBC will also consist of a representative of the City of Chicago and a representative of the Funds. The City may seek approval of the RHBC to make Plan design changes solely under the following circumstances:

• In response to material changes in medicine or technology;

• In response to court rulings or the settlement of other litigation;

• In response to material changes in the structure or methods by which health benefits are contracted for or provided;

• In response to material changes in market or economic conditions that would render the provision of any benefit unreasonably expensive under the circumstances.

♦ The RHBC will independently review the City’s proposed amendments to the Plans and will make recommendations as to the City’s proposal. The RHBC must take into account industry trends and market conditions existing at the time of its recommendations. The decisions of the RHBC shall not be unreasonable or arbitrary and the actions of the City pursuant to decisions of the RHBC shall not be unreasonable or arbitrary.

In appointing members of the RHBC, the City is required to choose professionals from one or more of the following categories: health benefits professionals; actuarial and/or benefit consulting

professionals; officers or principals responsible for benefits in business; professors or research academics; former officials of health insurance companies; leaders of civic organizations or retiree groups; professionals experienced in municipal finance. The City also will appoint a representative for the City. In addition, each Fund may recommend one person to sit on the RHBC and the City will

Other than for the City and Funds’ representatives, the following guidelines apply to the selection of the other members of RHBC:

♦ Members or their organizations/employers cannot be then current or potential contractors with the City or the Funds for health benefit coverage or Plan administration;

♦ No person appointed to the RHBC may have a conflict of interest by virtue of their

employer’s/organization’s relationship with the City or with one or more of the pension Funds;

♦ Members and their organizations/employers cannot be current contractors for, or affiliates, of the Funds; and

♦ Members and those in their immediate family (defined to include the Spouse, Domestic Partner, child, parent, or sibling) cannot be employees of the City or the Funds, or Annuitants, Surviving Spouse Annuitants, or Child Annuitants.

Before July 1, 2013, the RHBC will make recommendations concerning the state of retiree healthcare benefits, their related cost trends, and issues affecting the offering of any retiree healthcare benefits after July 1, 2013. However, no retiree healthcare benefits are required or guaranteed to be provided on or after July 1, 2013.

The City may offer additional healthcare plans at its own discretion and may modify, amend, or terminate any of such additional healthcare plans at its sole discretion. Any additional healthcare plans that the City may implement will not be subject to review by the RHBC and the City reserves full discretion to modify, amend, or terminate any additional healthcare plans.

All amendments to the Plans must be in writing; no oral modifications are permitted.

The Settlement Agreement provides that the City will make health benefit plans available to those persons receiving an age and service annuity from one of the City’s Pension Funds at the time of retirement, from now until June 30, 2013.

Starting July 1, 2005, the amount of City contribution for retiree health benefits will vary for new retirees, depending upon their years of City employment. Thus, for the following groups, these will be the levels of City contribution until June 30, 2013.

Group Description City Contribution

Annuitants who are retired or will retire before July 1, 2005 55% Annuitants who retire after June 30, 2005 with 20 Years of City Service 50% Annuitants who retire after June 30, 2005 with 15-19 Years of City Service 45% Annuitants who retire after June 30, 2005 with 10-14 Years of City Service 40% Annuitants who retire after June 30, 2005 with less than 10 Years of City Service 0% (Members of this group may participate in the City’s Annuitant Settlement Plans, but they will not receive the advantage of any City contribution toward the cost.)

The City has no commitment to continue to provide or subsidize retiree health benefits after June 30, 2013. In addition, City employees who leave City employment after June 30, 2013 may not be eligible to participate in City-sponsored retiree health benefit plans. In addition, those City employees who leave City service before June 30, 2013, but who are not eligible for an annuity at the time of their departure,

requirements to participate in, and the City’s obligations to contribute to, retiree health benefit plans are defined by the Settlement Agreement and the Plan documents.

Note: Only those Annuitants who are receiving an annuity from one of the City’s Pension Funds on or before July 1, 2005 will be eligible for the 55% subsidy from the City of Chicago. The subsidy for anyone whose annuity starts after July 1, 2005 will be based on years of City employment only.