Christian School Pension Plan and Trust Fund

Christian School Pension Plan and Trust Fund Changes to the CSI Pension Plan March 2018

INSIDE A Summary of Plan Changes 3 Facing Challenges as a Community 4 Hard Freeze of the Plan Effective September 1, 2019 5 Soft Freeze of the Plan Effective June 30, 2018 8 Post-Freeze School Contribution Level 9 Post-Freeze Contribution Allocation Method 12 Related Plan Amendments 13 Benefit Examples 14 In Closing 16 Save the Date We will be holding webinars on April 18, 2018, to discuss these important changes, followed by a question period. Heads of School and administrators will receive an email invitation to distribute to participants and board members. 2 Christian School Pension Plan and Trust Fund

A Summary of Plan Changes This newsletter summarizes several significant changes to the CSI Pension Plan (the Plan) that affect all participating schools and plan participants who are currently accruing benefits. After reviewing recommendations from the Board of Trustees of the Plan (Plan Trustees) in February this year, the CSI Board of Trustees (CSI Board) made the following decisions: 1. There will be no new benefit accruals in the Plan on and after September 1, 2019. This is called a hard freeze. 2. There will be no new enrollments in the Plan after June 30, 2018. This is called a soft freeze. 3. Contributions payable by all participating schools will be set at a total annual amount of $16 million for the plan year starting September 1, 2019, with a five percent increase applied in each subsequent year. 4. Each participating school s portion of the total annual contributions starting on September 1, 2019, will be based on the school s total contributions to the Plan over the 25 plan years ending on August 31, 2017, in proportion to the total of all contributions of currently participating employers for these same 25 plan years. 5. Other provisions in the Plan that are affected by the hard freeze will be updated, as applicable. Each of the decisions above is explained in more detail in the following pages, along with related questions and answers. The total annual contributions and each school s share are subject to periodic review and changes. Attention all retirees! These amendments will not stop or change your pension payments. Changes to the CSI Pension Plan 3

Facing Challenges as a Community As we have shared with you before, the Plan was created and designed to be a community plan. In God s design, he created people to be in community. So it seems appropriate that the decision to stop further benefit accruals in the Plan through the hard freeze has also been informed by community feedback. Gathering ideas and opinions from all participating school communities was the central purpose of the feedback process that we started last fall. We extend our sincere thanks to everyone who got involved and provided input. As your Plan Trustees, we read every feedback form and took your comments and concerns very seriously. Although we believe strongly that input from school communities is essential for these decisions, the burden of making the recommendations lies with us, and the burden of making the final decisions lies with the CSI Board. We assure you that these responsibilities have not been taken lightly. Many hours of careful deliberation and prayerful consideration were part of this process. All Plan Trustees are also part of the CSI community, and most of us know first-hand the challenges and joys of operating a school. Because of that, we appreciate that not everyone will support these changes. 4 Christian School Pension Plan and Trust Fund Many of you will wish the changes were different in some respect or another. In your feedback, we heard that you value the Plan and how participants have been planning their futures around the security of a lifetime pension. Even among those who supported a hard freeze, there was a sense of mourning for a plan that has such a noble purpose. We also heard about strained school budgets and deeply held concerns that any further increase in contributions to the Plan would lead to matching increases in tuition and then to declining enrollment and possibly school closures. We heard from schools that had only recently joined the Plan who felt that the contribution burden placed on them was unfair, and also from schools with a long history in the Plan but with declining school populations, who also worried about the impact of the contribution allocation method. Trying to find a way forward that works for all schools has been very challenging. Each school s voice has been and continues to be important. We hope that we have found the most appropriate solution among the options available to us, which reflects the collective input of CSI participating schools.

Hard Freeze of the Plan Effective September 1, 2019 What is it? A hard freeze stops the accrual of new benefits as of the effective date, September 1, 2019 (the freeze date ). Why is this happening? Where we started In 2017, a report by the CSI Pension Task Force 1 recommended that CSI implement a hard freeze of the Plan and introduce a CSI group defined contribution plan (DC Plan). Following that report, in late 2017, we provided communications explaining how a hard freeze along with a CSI group DC Plan could be compared to continuing the existing Plan in terms of benefits, contributions, the probability of needing excess contributions, and other factors. We invited school communities to review this information and provide feedback. The feedback showed that the majority of schools supported a hard freeze of the Plan (103 out of 110 responding employers). The goal of reducing risk over time The combined feedback also revealed that the majority of schools no longer want to be exposed to the investment risk and longevity risk of a defined benefit pension plan (DB plan). Looking forward, that goal can be achieved by the hard freeze and by introducing a CSI group DC Plan the most common alternative to a DB plan. However, the DB obligations made to date under the Plan cannot be reduced. As a result, the only solution that will reduce the investment risk and longevity risk of those obligations over time is to build an overfunding surplus through ongoing contributions that exceed annual plan expenses. How does this change affect participants? Under a hard freeze, the Plan continues to operate, except that: Active participants and participants on disability leave 2 will stop earning new benefits under the Plan starting on the freeze date; Active participants will retain the benefits they accrued prior to the freeze date; pensions being paid to retirees and beneficiaries will continue; and inactive participants will retain their rights to the benefits they have accrued; Active employment with a participating school after August 31, 2019, will count toward vesting for participants who have not yet met the vesting requirements; and Participants cannot make contributions to the Plan on or after the freeze date (however, schools will continue to contribute). How does this change affect schools? Each participating employer will continue to contribute to the Plan on and after September 1, 2019. 1 For information about the work of the Task Force, see the November 2017 newsletter on the CSI website at www.csionline.org under Employee Benefits > Benefits for Participants > US Pension > Publications. 2 Currently, the Plan includes a provision that has pension benefits continuing to accrue for participants on disability leave (with no associated contributions) based on their salary when they became disabled. (continued on next page) Changes to the CSI Pension Plan 5

Hard Freeze of the Plan Effective September 1, 2019 continued Q&As Q: As a participant, how will I know how much I will receive from the Plan after the hard freeze takes effect? A: Your annual pension Status Report that you receive each December shows your Pension Earned to Date. That s the annual pension you can receive at age 65, based on your participation in the Plan up to the date indicated on the Status Report, if you don t have a spouse on your retirement date. If you have a spouse when your pension starts, your pension will be payable as a joint and survivor benefit, unless you and your spouse elect otherwise. This means your pension amount is reduced in order to pay for the survivor benefit to your spouse, although the total value stays the same. You can also obtain a retirement estimate by visiting www.csionline.org/benefits and choosing Retirement Calculator US from the right navigation panel. You will reach the Benefits Portal where you can log in with your username and password to run a retirement calculation. The Benefits Portal will be updated to incorporate the hard freeze by September 1, 2018. If you re new to the Plan so that you haven t yet received a Status Report, or if you need help using the online Retirement Calculator, please contact Brenda Addie by email at brendaaddie@csionline.org or call 877.274.8796, ext 227 (toll-free), or direct at 616.284.3227. Q: What if I want to start my pension before age 65? A: If you terminate employment, you can choose to start your pension as early as age 55; however, it will be reduced compared to the amount shown as your Pension Earned to Date on your Status Report. The reduction to an early retirement pension is applied because the pension will be paid over a longer period of time. Q: My Status Report also shows a projected estimate of benefits at a future date is that estimate still valid? A: In most cases, no. If your 65 th birthday is later than September 1, 2019, any estimates of projected benefits shown on your Status Report that are at a date later than September 1, 2019, are no longer valid because of the hard freeze. The Status Report you receive after September 1, 2019, will show your pension earned up to the freeze date, which generally will remain fixed at that amount. We will no longer show a projected estimate beyond the freeze date. Q: What s the difference between the DB plan we have now and a DC plan? A: In a DC plan, such as a 401(k) or 403(b) plan, there is no formula that defines a pension. Each participant has a tax-deferred 3 personal investment account (DC account) in the plan. The amount of retirement income from a DC account depends on how much is contributed over time and the net investment return. At retirement, the balance can remain in the DC account or be transferred in a lump sum into an individual retirement account (IRA). Then, the retiree would draw income from the DC account or IRA over time. The retiree must decide how much to withdraw each year and how much to leave invested (and which investments to select) to ensure the money lasts for the retiree s lifetime. Under some plans, the DC account balance can be withdrawn from the plan and used to buy an annuity from an insurance company (an annuity operates like a pension). Please refer to the November 2017 newsletter for a comparison table showing the differences between a typical DB plan and a DC plan. You can find the newsletter on the CSI website at www.csionline.org under Employee Benefits > Benefits for Participants > US Pension > Publications. 3 This means any net investment gain is not taxed while the money remains in the account. (continued on next page) 6 Christian School Pension Plan and Trust Fund

Hard Freeze of the Plan Effective September 1, 2019 continued CSI Group DC Plan Coming Soon Q: When the freeze date occurs, can I receive my benefits from the Plan while still working? A: No. These changes do not affect how and when participants can receive their retirement benefits. The current plan provisions continue, so upon termination of employment, participants who are age 55 or older can start a pension. Q: Under the hard freeze, if I retire and start receiving a pension from the Plan and then decide to return to work at a participating school, what happens to my pension payments once I return to work? A: Once your pension has started, if you return to work half-time or more at a participating school, your pension payments from the Plan would be suspended during your period of re-employment. You would not accrue new benefits in the Plan while re-employed because the Plan would be frozen. This provision is not new it will continue to apply after the hard freeze. Although no new benefits will be accruing, if the provision was removed, it would increase the liabilities of the Plan, which is contrary to the objective of reducing risk. The CSI Pension Task Force recommended that CSI establish a group DC Plan. The CSI Board has engaged members of the Task Force to establish such a plan, with the goal of it being available by late summer 2018. Any CSI member school in the U.S. will have the option to voluntarily participate in the CSI group DC Plan, whether or not that school is now a participating employer in the current Plan. Group DC plans, such as the one that will be offered through CSI, offer the following key advantages: Lower Fee Structure Due to economies of scale, a larger pool of participants and a larger pool of assets generally have a lowering effect on fees for both employers and participants. Better, More Efficient Participant Education Plan education can best be designed and distributed on a group basis and can be provided more cost effectively when the expense is shared among all the participating schools. Reduced Fiduciary Risk The fiduciary risk of selecting and monitoring plan investments, and compliance with ERISA and other complicated tax rules, shifts away from the school and its leadership (who would otherwise be ERISA fiduciaries with personal liability for these tasks). Shared Retirement Plan Administration The likelihood of complex legal requirements being satisfied in the daily administration of the DC Plan would be increased through shared administration. Elimination of Individual School Plan Audits and Form 5500 Filings This could result in significant expense savings for schools collectively. Also, efforts are underway in Congress to encourage defined contribution Multiple Employer Plans (MEPs) because research shows that employees of small employers without plans are far less likely to save for retirement. MEPs have been viewed as one way to overcome the barriers that tend to discourage small employers from offering plans, which include cost, complexity, and insufficient staff hours to implement such plans. Look for more information to come as details of the CSI group DC Plan are finalized. Changes to the CSI Pension Plan 7

Soft Freeze of the Plan Effective June 30, 2018 What is it? Under a soft freeze, new employees are not enrolled after the effective date, while existing participants continue to accrue benefits. Why is this happening? In the feedback, schools expressed concerns about enrolling new employees in the Plan for only one year (assuming that the Plan was going to be hard frozen on September 1, 2019). How does this change affect participants? This change will not affect current participants in the Plan. It affects only new hires after June 30, 2018, who do not already have benefits in the Plan. How does this change affect schools? Schools will no longer enroll new employees in the Plan starting July 1, 2018, if those employees do not already have benefits in the Plan (i.e., from previous employment at a participating school). Q&As Q: As a current participant, if I transfer to another school after the soft freeze date, what happens to my participation in the Plan? A: If you transfer to a participating school before September 1, 2019, you continue to participate in the Plan and accrue benefits and vesting service. However, on September 1, 2019, all active participants and participants on disability leave will stop accruing new benefits in the Plan. Q: If an employee is hired before July 1, 2018, will they still join the Plan? A: Yes. The provisions regarding enrollment stay the same up to and including June 30, 2018. 8 Christian School Pension Plan and Trust Fund

Post-Freeze School Contribution Level What is it? The CSI Board has established the total contributions to the Plan starting on the freeze date of September 1, 2019, at $16 million per plan year, with a built-in increase of five percent per year. Why is this happening? In simplest terms, a post-freeze contribution level must be set because contributions to the Plan are still necessary under a hard freeze (see the Q&As). Contributions can no longer be determined in relation to the salaries of participants who are accruing benefits because benefit accruals will stop. Also, as we reported in the November 2017 newsletter, the Task Force and the Plan Trustees agreed on the following criteria that should be considered in setting contributions for the Plan: 1. It is crucial for the Plan to avoid excess contributions arising. If excess contributions become payable, they would represent a severe financial strain on most schools and tax penalties could grow rapidly. 2. It is equally essential to avoid PBGC action toward the Plan. If excess contributions did arise, and any schools were unable to pay their portion of the required amounts, the Plan would likely draw the attention of the PBGC, which has the power to declare an involuntary termination of the Plan. The outcomes of an involuntary termination would likely be very negative for schools. 3. Contributions should be set at an affordable level for schools, to the extent possible, keeping points 1 and 2 in mind. In their report, the Task Force stated that a hard freeze would help make contributions more affordable for schools because it would eliminate one element of total contributions the amount needed to pay for new benefit accruals. How does this change affect participants? This decision does not impact participants entitlement to benefits. How does this change affect schools? Starting on the freeze date, each participating school will pay a portion of the total contributions, on a monthly basis during the plan year, according to the allocation method (see page 12). Contributions will no longer be based on a percentage of salaries. The contribution add-on that is in effect for 2017 2018 and 2018 2019 will end on September 1, 2019. Q&As Q: Why do schools have to contribute to the Plan after the freeze date if no new benefits are being earned as of that date? A: The Plan continues to exist after the freeze date to pay current pensions and benefits that have accrued up to the freeze date. The participating schools remain responsible for the Plan under pension legislation. In addition, schools have told us that they no longer want the investment risk and longevity risk associated with a DB plan. The path to reducing that risk is to hard freeze the Plan and build an overfunding surplus through ongoing contributions that exceed annual plan expenses. The annual required contributions will pay the expenses for the Plan, including the premiums paid to the PBGC, which may soon approach $8 million per year. Expenses also include actuarial, legal, and pension consulting fees, and administration costs. Although paying the cost of new benefits will not be required, participating schools will be responsible for paying any contributions required under pension law (i.e., the IRS minimum contribution ). It is possible that the IRS minimum contribution for a year could be zero, so contributing only the plan expenses would be enough for that year. However, lower annual contributions such as an amount equal to expenses only over a long period would be expected to increase the likelihood of excess contributions in the future. As explained in our November 2017 newsletter, if excess contributions become payable, the required amount could be millions of dollars more than the current annual contributions for the ongoing Plan. To avoid a financial shock of needing high excess contributions in a single year or series of years, the Plan Trustees and CSI Board have determined a level of contributions starting after the freeze date that has the dual goals of covering the plan expenses and also reducing the probability of needing excess contributions. (continued on next page) Changes to the CSI Pension Plan 9

Post-Freeze School Contribution Level continued Q: Until the hard freeze takes effect on September 1, 2019, what will schools contribute to the Plan? A: For the 2018 2019 plan year, the contribution add-on will remain the same as for the current 2017 2018 plan year. Schools will pay this contribution add-on plus their plan level contributions, as applicable, under the Regular Plan or the Employer Contribution Plan. Q: Can a school drop down a plan level as of September 1, 2018? A: The provisions related to dropping down plan levels have not changed. Specifically, a plan change gave schools the option to choose to drop down one or two plan levels beginning September 1, 2017. If a school decided not to drop down a plan level on September 1, 2017, that school can still drop down one or two plan levels on September 1, 2018. A school that has dropped down one plan level will still have the option to drop down one additional plan level on September 1, 2018. The lowest plan level remains 2%. Schools can also increase a plan level. Starting September 1, 2019, plan levels will no longer be relevant in terms of determining contributions from participating schools the allocation method will determine contributions (see page 12). Probability of Excess Contributions Q: Will setting the level of contributions at $16 million per year with the five percent increase per year prevent the Plan from ever needing excess contributions? A: Our current studies show it does not eliminate the possibility of needing excess contributions in the future, but it makes progress toward lowering the probability over the short- to medium-term. There are many variables that could impact this possibility over time. The following table shows some of the contribution levels considered and the estimated probability of excess contributions under each scenario. The fourth row shows the selected post-freeze contribution level. You can see that even a significant change from $16 million to $23 million moves the probability by only 3% after five years and 16% after 15 years. Contribution Scenario Ongoing Plan with contribution add-on continuing for all years Elapsed Time 3 years 5 years 7 years 10 years 15 years 5% 14% 29% 40% 42% $10 million + 12% per year increase 5% 16% 31% 40% 32% $13 million + 5% per year increase 5% 15% 30% 39% 39% $16 million + 5% per year increase 5% 14% 25% 33% 30% $18 million + 5% per year increase 5% 13% 23% 30% 23% $20 million + 5% per year increase 5% 12% 21% 26% 18% $23 million + 5% per year increase 5% 11% 18% 21% 14% (continued on next page) 10 Christian School Pension Plan and Trust Fund

Post-Freeze School Contribution Level continued Q: After the freeze date, will schools need to contribute to the Plan forever? A: No. However, the exact period over which contributions will be required and any increase or decrease in the total contributions will depend on net investment returns; changes in PBGC premiums and other expenses; and plan experience (how many participants end employment, retire, and die each year). The longest possible period that participating schools could pay contributions under the Plan would be equal to the period of total pension payments paid to the longest-living participant of all the participants in the Plan on June 30, 2018 (because no one will be enrolled after that date). For example if the youngest participant was age 25 on that date, started a pension from the Plan at retirement age, then lived to age 95, contributions could be required for 70 years (and also for the life of the surviving spouse, if applicable). However, over time, the number of people who are eligible to receive benefits and who are actually receiving benefits will diminish. As a result, the Plan would probably reach a point at which the funded status would be high enough that the Plan could undergo a standard termination a formal, regulated process that transfers the assets in the fund to an insurance company so that annuities can be purchased to secure the remaining pensions for the lifetime of the remaining retirees (and surviving spouses, if applicable). Using our current data and the established post-freeze contribution level, at the 50 th percentile of projections, it appears that it will take about 18 years for the Plan to be fully funded on a termination basis (50th percentile means half the projections show a more favorable outcome and half show a less favorable outcome). Q: What will a school have to pay if it closes or if it merges with another school after the hard freeze? A: If a school were to close, the school would need to pay the withdrawal liability amount. Each school received a letter indicating this amount. If a participating school merges with another school after the hard freeze whether or not that other school is a CSI-affiliated school the new combined school could choose to either pay the withdrawal liability amount, or join CSI and pay the monthly hard freeze contributions. Pension legislation does not permit the obligations to the Plan to be discontinued via a merger. Changes to the CSI Pension Plan 11

Post-Freeze Contribution Allocation Method What is it? This is the method for dividing up the total contributions to the Plan, after the freeze date, among participating schools. Why is this happening? Currently, contributions are based on the salaries of participating employees, plus a contribution add-on. When no new benefits are being earned, it no longer makes sense to connect contributions to salaries, so another method must be used. How does this change affect participants? This decision does not impact participants entitlement to benefits under the Plan. How does this change affect schools? Each participating school s portion of the total annual contributions starting on September 1, 2019, will be based on that school s total contributions to the Plan over the 25 plan years ending on August 31, 2017, in proportion to the total of all plan contributions of currently participating employers for these same 25 plan years. The contributions are weighted to account for the reduced benefit accrual that began on September 1, 2005. Q&As Q: Why was August 31, 2017, chosen as the end date for calculating the allocation for each school? A: The end date of August 31, 2017, will be used because contributions after that date are impacted by recent plan provision changes leading up to the hard freeze. Q: Why was the period of 25 years chosen? A: The feedback we received requested that the method of allocating contributions should, to the extent possible, recognize the actual history of each school within the Plan. Although the Plan has been operating since 1943, we concluded that a 25-year look-back was the most appropriate time period to access relevant contribution history. Q: How will schools know how much their portion of the total contributions will be under the hard freeze? A: Each Head of School received a letter indicating the amount of their school s 2019 2020 plan year contribution and how it was calculated. Q: Could the allocation method change in the future? A: Every school s proportion of total contributions will be adjusted if there is a change in the total number of schools that participate in the Plan. For example, there would be change if a school were to decide to pay the withdrawal liability and withdraw from the Plan. If needed, adjustments will occur once per year with advance notice. 12 Christian School Pension Plan and Trust Fund

Related Plan Amendments The CSI Board, at the recommendation of the Plan Trustees, approved several plan amendments that are related to the hard freeze of the Plan. Additional housekeeping amendments will also be made to bring the plan document in alignment with the amendments described in this newsletter. End of short-term disability benefit The Plan currently provides participants with a short-term disability benefit that is 75 percent of monthly salary for a maximum of five months after a four-week waiting period has been satisfied. This benefit will no longer be available for disability leaves where the onset of disability is on or after September 1, 2019. Benefits already in pay status on that date will continue until earlier of the date the individual returns to work or the date that he or she has received the maximum permitted benefit. End of contribution waiver during disability leave Currently, participants continue to accrue benefits under the Plan during an approved disability leave, but contributions are waived. Since no benefits will accrue on and after September 1, 2019 including for participants on disability leave there is no longer a need for a contribution waiver. Interest no longer credited on pre-tax contribution accounts Currently, interest is credited on all participant contribution accounts. However, for participants in the Employer Contribution Plan in which employers made both the participant and employer contributions this interest crediting will end starting on September 1, 2019. Interest will continue to be credited on contribution accounts for participants under the Regular Plan. This aligns with regulatory requirements for such accounts. End of the 200% special withdrawal privilege Currently, a participant who meets both of the following conditions is entitled to withdraw 200% of their contributions plus interest when terminating from the Plan instead of receiving a lifetime pension: 1. The participant was employed by a participating school when the school first joined the Plan, and the school joined the Plan on or after September 1, 2003. 2. The participant is continuously employed with the school until the participant s employment terminates after age 55 but before age 65, and the participant s benefits have not vested. This provision will be discontinued on September 1, 2019, for participants who terminate from the Plan on or after that date. Changes to the CSI Pension Plan 13

Benefit Examples The impact of the hard freeze will affect participants differently depending on how many years they have participated in the Plan. The following examples show the difference between the projected benefits that participants may have been expecting to receive at normal retirement and the estimated benefits they will receive now that the hard freeze will occur on September 1, 2019. To consider your own situation, refer to your Status Report. Example 1: Margaret Margaret will be age 65 on August 31, 2022. She expected to have 30 years in the Plan at retirement. She will have 27 years in the Plan at the hard freeze date. Her current average annual salary is $45,000. Her school is participating in the 5% plan. Service Period Details Projected Pension to Age 65 (30 years in the Plan) Pension up to the Hard Freeze Date (27 years in the Plan) Employee contributions: $29,000 x 5% x 13 = $18,850 $18,850 13 years with Multiplier for this period x 60% x 60% 60% multiplier Annual pension = $11,310 = $11,310 Employee contributions: $37,000 x 5% x 12 = $22,200 $22,200 12 years with Multiplier for this period x 50% x 50% 50% multiplier Annual pension = $11,100 = $11,100 2 years with Employee contributions: $42,000 x 5% x 2 = $4,200 $4,200 40% multiplier Multiplier for this period x 40% x 40% (to Sep 1, 2019) Annual pension = $1,680 = $1,680 Employee contributions: $45,000 x 5% x 3 = $6,750 N/A 3 years with Multiplier for this period x 40% N/A 40% multiplier Annual pension = $2,700 N/A Total Annual Pension $26,790 $24,090 Margaret s benefit for her first 25 years in the Plan remains the same. Benefits already earned cannot be reduced. The light purple area shows the impact of the hard freeze. If the Plan had continued, and Margaret stayed in the Plan to age 65, she would have retired with a pension benefit of $26,790 per year (assuming the salary adjustments as shown). After the hard freeze, Margaret s pension will be frozen at $24,090. The hard freeze results in a decrease in pension of $2,700 per year, or $225 per month. If Margaret wants to ensure that she will still have the same retirement income she was anticipating, she has three years to save enough to make up for the $225 per month that she will not be receiving from the Plan. Participation in a DC plan could help her achieve that goal. 14 Christian School Pension Plan and Trust Fund

Example 2: Graham Graham will be age 65 on August 31, 2032. He expected to have 30 years in the Plan at retirement. He will have 17 years in the Plan at the hard freeze date. His current average annual salary is $49,000. His school is participating in the 5% plan. Service Period Details Projected Pension to Age 65 (30 years in the Plan) Pension up to the Hard Freeze Date (17 years in the Plan) Employee contributions: $32,000 x 5% x 3 = $4,800 $4,800 3 years with Multiplier for this period x 60% x 60% 60% multiplier Annual pension = $2,880 = $2,880 Employee contributions: $37,000 x 5% x 12 = $22,200 $22,200 12 years with Multiplier for this period x 50% x 50% 50% multiplier Annual pension = $11,100 = $11,100 2 years with Employee contributions: $42,000 x 5% x 2 = $4,200 $4,200 40% multiplier Multiplier for this period x 40% x 40% (to Sep 1, 2019) Annual pension = $1,680 = $1,680 Employee contributions: $49,000 x 5% x 13 = $31,850 N/A 13 years with Multiplier for this period x 40% N/A 40% multiplier Annual pension = $12,740 N/A Total Annual Pension $28,400 $15,660 Graham s benefit for his first 15 years in the Plan remains the same. Benefits already earned cannot be reduced. The light purple area shows the impact of the hard freeze. If the Plan had continued, and Graham stayed in the Plan to age 65, he would have retired with a pension benefit of $28,400 per year (assuming the salary adjustments as shown). After the hard freeze, Graham s pension will be frozen at $15,660. The hard freeze results in a decrease in pension of $12,740 per year, or about $1,062 per month. If Graham wants to ensure that he will have the same retirement income he was anticipating, he has 13 years to save enough to make up for the $1,062 per month that he will not be receiving from the Plan. Participation in a DC plan could help him achieve that goal. Changes to the CSI Pension Plan 15

In Closing Making the decision to hard freeze the CSI Pension Plan was a difficult one, and we thank our school community for staying informed and providing feedback as we moved through the decision-making process. The Plan binds us together as a community of participating schools. We give thanks to God for the benefit the Plan has provided and continues to provide to our dedicated Christian school employees. We also remain optimistic that this sense of community will continue as we move forward with a CSI group DC Plan and look to continue to provide meaningful retirement benefits to those who serve in our Christian schools. God has promised to be faithful and his love for us never fails. We thank you for your prayers, and will continue to lean on God for guidance as we continue our best efforts to balance stewardship of God s resources, care for our communities, concern for our governing boards, and providing for our dedicated participants. Questions? If you have any questions, please contact Howard Van Mersbergen, vice president of employee benefits, at 877.274.8796, ext 226, or hvanmersbergen@csionline.org. For details about the Christian School Pension Plan, visit the Employee Benefits website: www.csionline.org/benefits and choose US Pension. 16 Christian School Pension Plan and Trust Fund