RTDATU 1001 Pension Plan February 9 2016 Pension

January 1, 2015 Valuation Highlights (the plan is in funding peril) Ã Contributions are not sufficient to fund the liabilities ► The amount of insufficiency has improved ► Total actuarial requirement is 25. 21% (prior year was 27. 14%) ; 18. 0% scheduled for receipt in 2015 ► The contribution deficiency decreased, from 11. 14% of payroll to 7. 21% Ã Fund is projected to be fully depleted by 2040; last year was 2036 and the prior year was 2032 ► Assuming 6% earnings the depletion date is 2035; at 8% there is no depletion date in the 30 year projection period Ã Actuarial Accrued Liability increased by $1. 0 million ► From $426. 3 million to $427. 3 million Ã Actuarial Value of Assets returned 7. 36%, exceeding the assumed 7. 0% ► Increased by $4. 6 million, from $207. 4 million to $212. 0 million ► Market value increased from $213. 0 million to $214. 5 million 2

January 1, 2015 Valuation Highlights (the plan is in funding peril) Ã Unfunded Actuarial Accrued Liability decreased by $3. 5 M ► From $218. 8 M to $215. 3 million ► This decreased the actuarially determined contribution 3

January 1, 2015 Valuation Highlights Ã The normal cost decreased from 11. 81% of pay (including admin expenses) to 10. 79% ► The scheduled contribution is 18% of pay Ã Actuarially determined contribution (ADC) decreased by 1. 93% of pay ► Decrease due to investment gains, salary increases less than expected and retirements fewer than expected (with that related assumption change) ► ADC will keep increasing as the actuarially determined contributions are “missed” Ã Funded ratio increased from 48. 7% funded on an actuarial basis to 49. 6% Ã Total active participant count increased by 106 ► From 1, 581 to 1, 687 ► New hires will continue to “bend down” the normal cost, so more funding can go to the unfunded accrued liability 4

History of the Funded Ratio 5 Valuation Date- January 1, Funded Ratio 2002 106. 39% 2003 82. 96 2004 91. 09 2005 91. 73 2006 89. 06 2007 87. 07 2008 86. 03 2009 72. 57 2010 73. 08 2011 68. 67 2012 52. 24 2013 47. 52 2014 48. 66 2015 49. 61

The scheduled contribution amount was insufficient, starting in 2003 6 Plan Year Ended December 31, Percentage of ARC contributed 2002 102. 2% 2003 53. 7 2004 60. 9 2005 75. 3 2006 64. 2 2007 64. 6 2008 67. 8 2009 44. 5 2010 59. 0 2011 47. 3 2012 33. 5 2013 46. 2 2014 57. 4 2015 --

Long-Term Funding-Reforms to improve the plan Ã Total ARC is 25. 21% of payroll compared to the total scheduled contribution rate of 18. 00% of payroll. Ã Amendment #22 was adopted in 2010 with the following changes in effect for participants hired on or after January 1, 2011 (Tier 2): ► New benefit schedule listed in Section 6. 01 of the Plan provisions • Vesting is changed from 5 years to 10 years • The benefit multiplier is changed from 2. 5% to 1. 0% • Unreduced retirement is changed from age 55 with 20 years of service to age 60 with 20 years of service • Early retirement reduction is changed from 5. 0% from age 55 to 2. 5% from age 60 • The maximum service included in the benefit calculation is reduced from 30 years to 25 years ► Sick and vacation payouts are no longer included in the pension benefit calculation ► Interest on employee contributions is changed from 5% to 3% Ã Due to amendment #22, a drop in the normal cost rate is expected as new hires enter the plan. ► The normal cost last year was 11. 81% and this year it is 10. 79% 7

Long-Term Funding-Reforms to improve the plan Ã On February 27, 2013, a tentative agreement was reached with the following schedule for contributions: Year RTD Members Total 2013 12% 4% 16% 2014 12% 4% 16% 2015 13% 5% 18% 2016 13% 5% 18% 2017 13% 5% 18% Ã Agreement also included specific short-term salary increases (less than 3% per year) 8

Long-Term Funding Considerations Ã If all actuarial assumptions are met each year, including a net investment return of 7. 0% per year, and annual contributions equal those stated in the tentative agreement: ► Assets will be fully depleted by 2040 Ã Members are not retiring as quickly as assumed ► Based on a five year history, 745 members were expected to elect normal (non reduced) retirement and 185 were expected to elect early retirement. ► 194 elected normal retirement and 40 elected early retirement ► The retirement probabilities have been changed to reflect this slow down in retirement 9

RTD/ATU Summary Ã There are positive signs that the pension reforms are working ► Decrease in the normal cost rate ► Decrease in the actuarially determined contribution ► Improvement in the funded ratio ► Gained four more years in the future depletion date (have gained 8 years in the past two years) Ã But the plan is “not out of the woods yet”. ► Projections (based on an assumed 7% return) still show depletion in 2040 ► This is a highly volatile calculation; one year of poor returns could bring that number much closer to today 10