The Co-op Retirement Plan Committee has amended the Plan to increase the employee contribution rate from 1% to 2% of the previous year's wage base, effective October 1, 2002.  The employee contribution rate was originally set at 3.75% when the Plan was created in 1946, then lowered to 2% in 1969, then lowered again to 1% in 1990 when the Plan became significantly overfunded.  The Co-op Retirememt Plan has always relied on a shared funding arrangement between employees and employers.  This cooperative effort allows the Plan to maintain a high level of benefits and superior plan features.   Historically, the employer has contributed over three dollars for every dollar contributed by employees except in times of extreme overfunding, such as was experienced during the 1990's.

Today's funding environment is much different.  All retirement plans in America are facing a challenge due to two-plus years of sub-par investment performance.  When investments are performing poorly, more money is required from employers and employees to fund the benefits of the Plan.  The employer contribution rate in the Co-op Retirement Plan has been increased three times in the last eighteen months, and the Retirement Committee thought it appropriate for employees and employers to share the cost of the third increase.  The employer contribution rate, including administrative contributions, is 7.95% of covered payroll effective October 1, 2002.  Thus, even with the increase in the employee contribution rate, the employer is still contributing nearly four dollars for every dollar contributed by employees.

The employer's contribution rate is determined by the Plan's independent acturary, who examines the levels of Plan assets and Plan liabilities, and then, using guidelines prescribed by the Internal Revenue Service and the Pension Benefit Guaranty Corporation, establishes a contribution rate that will maintain the Plan on a sound financial footing.  By contrast, the employee contibution rate is at the discretion of the Retirement Committee, and may be changed at any time.

Because of complications related to federal pension regulations, the Retirement Committee has no current plans to raise the employee contribution rate beyond  the 2% level.