EMPLOYEE CONTRIBUTION RATE INCREASED EFFECTIVE 7/1/03; BENEFIT ACCRUAL RATE REDUCED EFFECTIVE 10/1/03.

As the national pension-funding crisis grows more severe, pension plan sponsors are being forced to contribute record-high amounts to keep their plans in compliance with federal funding regulations. While the Co-op Retirement Plan has not been affected as greatly as some other plans, the impact has nevertheless been significant and burdensome on cooperative employers. In response to this challenging situation, the Retirement Committee voted April 12, 2003 to make two significant changes to make the Plan more affordable to employers:

1. The EMPLOYEE CONTRIBUTION RATE will be temporarily increased to 3% of a participant’s previous year’s wages beginning July 1, 2003. While the increase in employee contributions is considered temporary, it is impossible at this time to know when the employee contribution amount will be adjusted again. Any factor that would improve the Plan's funding situation, such as Congressional pension-funding relief or improved performance by the financial markets, could result in an accelerated return to lower employee contribution rates.

2. The BENEFIT ACCRUAL RATE will be prospectively reduced from 1.75% to 1.25% effective October 1,2003. As a result, the Benefit Formula of the Plan will be the sum of two parts:

FINAL AVERAGE WAGE X 1.75% X CREDITABLE SERVICE EARNED PRIOR TO 10/01/03
PLUS
FINAL AVERAGE WAGE X 1.25% X CREDITABLE SERVICE EARNED AFTER 10/01/03
EQUALS
ACCRUED BENEFIT, PAYABLE BEGINNING AT AGE 65

The same Final Average Wage will apply to both parts of the formula.The benefit accrual rate will be reviewed by the Retirement Committee each April 1st, and it is their hope that the accrual rate can be increased when the long-term funding condition of the Plan improves.

These changes will come as a disappointment to many, but had the Retirement Committee taken no action employers might have faced funding contributions ranging from 13% to 18% of payroll for the next four or five years, an amount that was judged to be unacceptable. The net effect of these recent changes resulted in an employer funding contribution rate of 9.9% of payroll in the Plan’s fiscal year beginning April 1, 2003. The benefit accrual rate and the employee contribution rate will be reviewed on a periodic basis by the Retirement Committee.