The Bahamas Hotel Industry Management Pension Plan became effective January 1st, 1980. Since that time, the Board of Trustees has carefully monitored the Plan, making changes where possible, to improve the financial protection for which the Plan was designed.

This announcement outlines those changes. Read it carefully and keep it with your Plan booklet so that you'll have the most up-to-date description of the benefits available from this Plan.

Improved Pension Benefits

The formula used to determine your monthly pension once you reach age 65 and have at least 10 pension credits has been improved. The new formula, which takes into account a greater portion of your final average salary is:

(.009 of Final Average Salary)
TIMES
(Your pension Credits {up to 25}
DIVIDED BY
(12)

Since the formula used to determine Regular Pension is also the basis on which Early Retirement, Disability and Deferred Pensions are calculated, these benefits have also been improved. This new formula applies to all participants who become eligible for benefits on or after January 1st, 1985.

Improved Death Benefits

To better protect your survivors, the Plan now includes a pre-retirement death benefit of $5,000.00. This benefit will be paid to your designated beneficiary in a lump sum if:

· you die while you are still actively employed;
· you have earned at least four pension credits based on weeks of work: and
· your spouse or other designated beneficiary is not eligible under this Plan for another pre-retirement benefit payable as a result of your death.

Improved Termination/Withdrawal Benefits

If you leave the industry and employment with a participating employer for any reason other than death and you are not eligible for any of the retirement benefits available from the Plan, you may be entitled to the greater of:

· 50% of the contribution made on your behalf; or
· 50% of the present value of the benefit you have accrued

Payment of this benefit depends on the approval of your application by the Board of Trustees.

New Pro-Rata Pensions

Pro-Rata Pensions have been included in this Plan (effective September 30th, 1983) to cover employees whose years of employment are divided between this Fund (BHIMPF) and the Bahamas Hotels and Allied Industries Pension Plan. It applies when an employee would otherwise not have enough Pension Credit to qualify for a pension or would be eligible for less than a full pension because of divided employment.

It Works Like This:
If you earned Pension Credits while covered by the Bahamas Hotels and Allied Industries Pension Plan and then became a member of the Plan, the Pension Credits you earned before joining this Plan will be counted as Related Pension Credits. They will then be added to Pension Credits you earned under this Plan to form Combined Pension Credits.

You'll be eligible for a Pro-Rata Pension of you satisfy all of the following requirements:

* You would be eligible for any of the pensions available under this Plan (except a Pro-Rata Pension) if your Combined Pension Credits were treated as Pension Credits under this Plan.

* You would be eligible for a Pro-Rata Pension from the other plan based on your Combined Pension Credit.

* You are eligible for no other pension than a Pro-Rata Pension from the other plan based on the credit you earned while covered by that plan. (If you are eligible for another type of pension from the other plan, you can waive it in favor of a Pro-Rata Pension).

* You have earned at least one full Pension Credit under this Plan and contributions for it have been made to this Fund by your employer.

When It's Time To Calculate Your Pension:

If you have satisfied all of the requirements for a Pro-Rata Pension, the amount of your benefit is calculated like this:

1. First your benefit is figured as a Regular Pension under the Plan, using your Combined Pension Credits, up to 25.

2. Then, the Pension Credits you earned in this Plan are divided by your Combined Pension Credits, up to 25.

3. The fraction determined in Step 2 is multiplied by the benefit calculated in Step 1. The result is the benefit payable from the Plan. The other plan is responsible for its proportionate share of its benefit. The amount of the payment made by the other plan will be based on the pension formula used by the plan.

Here's an example:
An employee becomes a member of this Plan after earning credit for 6 years of employment under the other plan. By the time he reaches age 65, he has earned 15 Pension Credits under this Plan. Let's say his final average salary is $20.000.

1. First his Regular Pension is determined, using his Combined Pension Credit, using his Combined Pension Credit:

.009 of $ 20,000 = $180 per credit
Combined
$180 x 21 Pension = $3,780 per annum
Credits
$3,780 :- 12 = $315 per month

2. Next, the benefit fraction is determined, in this case 15 -: 21 = .714

3. Finally, step 2 is multiplied by Step 1: .714 x $315 = $ 225

This employee would receive a Pro-Rata Pension of $ 225 a month from this Plan. A separate payment will be made by the other plan for its proportionate share.

Let's look at another situation:
An employee becomes a member of this Plan after earning credit for 9 years of employment under the other plan. By the time she reaches age 65, she has earned 21 Pension Credits under this Plan. Let's say her final average salary is $ 25,000.

1. First her Regular Pension is determined, using her Combined Pension Credits. Since she has 30 Combined Pension Credits and the Plan limit is 25, the Plan will use the full 21 Pension Credits earned under this Plan and 4 Pension Credits from the other plan. (Please note, the value of Pension Credits earned under this Plan is greater than the value of Pension Credits under the other plan.) Here's how the formula works:

.009 of $ 25,000 = $ 225 per credit
Combined
$225 x 25 Pension = $ 5,625 per annum
Credits
$ 5,625 -: 12 = $ 468.75 per month

2. Next, the benefit faction is determine, in this case 21-: 25 = .84.

3. Finally, Step 2 is multiplied by Step 1: .84 x $468.75 = $ 393.75.

This employee would receive a Pro-Rata Pension of $393.75 a month from this Plan. A separate payment will be made by the other plan for its proportionate share.

When Benefits Are Payable:
The age and service requirements that determine when benefits are payable for other pensions available from this Plan also apply to Pro-Rata Pensions. If you are eligible for more than one type of pension under this Plan, you can choose the type of pension you will receive. For example, if you are eligible for a Pro-Rata Pension and meet the age and service requirements for an Early Retirement, you can choose to receive your Pro-Rata Pension early in a reduced amount.

Like other pensions payable from the Plan, you must submit an application to the Trustees on a form provided by the Office of the Fund.

The Bahamas Hotel Industry Management Pension Fund's Board of Trustees in pleased to announce three important Benefit improvements which will affect Pension Plan participants, pensioners and beneficiaries. The changes are as follows:

- Monthly benefit increase for current pensioners and beneficiaries who are receiving a benefit as of 30th November, 1996.

- Accrual rate increase for participants who retire on or after 1st December, 1996.

- Early Retirement calculation improvement for participants who retire with an Early Retirement Pension on or after 1st December 1996.

Monthly Benefit Increase

Effective 1st December, 1996, the monthly benefit for pensioners and beneficiaries who are receiving a benefit as of 30th November, 1996, will increase by 33-1/3%. The increase will be provided in the same way you currently receive your monthly payment. For instance, if your cheque is directly deposited into your bank account, the increased benefit will also be directly deposited into your bank account.

An Example:
If your monthly benefit from the Plan on 1st November, 1996, is $ 300.00, you will receive a monthly benefit of $ 400.00, beginning 1st December, 1996.

Accrual Rate Increase

The accrual rate used to calculate all pensions has been increased. This improvement affects all participants (including inactive vested participants) who retire on or after 1st December, 1996. The new accrual rate is 1.2% per pension credit, with a maximum benefit of 30.0% of final average salary at 25 pension credits.

An Example:
Suppose you have 20 pension credits, a final average salary of $ 30,000 and decide to retire on your 65th birthday with a Regular Pension. Under the Plan's prior accrual rate, your monthly benefit would be $450.00. With the new accrual rate, your monthly benefit is $600.00 - or, an increase of 33-1/3%.

Early Retirement Calculation Improvement

The calculation used to determine an Early Retirement Pension is improving. This change affects all participants (including inactive vested participants) who retire on or after 1st December, 1996, with an Early Retirement Pension.

As in the past, the Early Retirement Pension will be figured like the Regular Pension, but will then be reduced for each month you are younger than age 65 when your pension starts. This reduction is made to account for the longer period of time you are expected to receive pension benefits. For those years between ages 65 and 60, the reduction has been changed from 6% per year (or .0050 per month) to 3% per year (or .0025 per month); between ages 60 and 55, the reduction remains at 6% per year (or .0050 per month).

An Example:
Suppose you have 25 pension credits, a final average salary of $ 25,000 and decide to retire on your 95th birthday with an Early Retirement Pension. Under the Plan's prior reduction percentages, your monthly benefit would be $ 300.00. Now, by using both the new reduction percentages and the increased accrual rate, your monthly benefit would be $ 493.75 - or, an increase of 64%.