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A MESSAGE FROM YOUR PENSION BOARD
IN RESPONSE TO RECENT INQUIRIES
OCTOBER 15, 2008

ARE MY PENSION BENEFITS SAFE?

YES. YOUR PENSION BENEFITS ARE SAFE AND PROTECTED BY THE STATE LAW WHICH WE OPERATE UNDER. THE FIREFIGHTERS' PENSION PLAN IS A DEFINED BENEFIT PLAN WHICH IS MORE COMMON IN THE PUBLIC EMPLOYEE SECTOR. YOUR LIFETIME PENSION BENEFITS ARE DETERMINED BY A RETIREMENT FACTOR MULTIPLIED BY YOUR HIGHEST 36 MONTHS AVERAGE SALARY WHICH IS THEN MULTIPLIED BY YOUR YEARS OF SERVICE AT RETIREMENT. (THIS IS UNLIKE A DEFINED CONTRIBUTION PLAN SUCH AS A 401K, WHICH IS MORE COMMON IN THE PRIVATE SECTOR AND WHICH CAN BE DIRECTLY AFFECTED BY MARKET FLUCTUATIONS.)

IN ADDITION, THE RETIRED FIREFIGHTERS' VESTED BENEFITS AND ACTIVE FIREFIGHTERS WHO ARE VESTED IN THE PLAN ARE SPECIFICALLY PROTECTED BY THE TEXAS CONSTITUTION. THESE VESTED BENEFITS CANNOT BE REDUCED.

HOW IS THE PENSION FUND FARING AS A RESULT OF THE RECENT MARKET MELTDOWN?

THE FUND WAS DOWN 13.2% AS OF 9/30/08. AS A SIDE NOTE, IT WAS DOWN WELL OVER 30% INTRA-YEAR 2000 AFTER THE "TECH BUBBLE BURST". IT HAS BEEN A VERY CHALLENGING YEAR. HOWEVER, THE PENSION PLAN TAKES A LONG-TERM OUTLOOK, NOT JUST A FEW QUARTERS OR EVEN A FEW YEARS FOR THAT MATTER. THE INVESTMENTS ARE MANAGED BY AN EXPERIENCED TEAM OF INVESTMENT PROFESSIONALS AND ARE DIVERSIFIED AMONG A BROAD ARRAY OF ASSET CLASSES. THIS APPROACH HELPS MANAGE THE RISK AND MINIMIZE THE IMPACT OF SUCH VOLATILE MARKET CONDITIONS AS WE HAVE SEEN RECENTLY.

IN SUMMARY:

THE GOOD NEWS IS THAT YOUR PENSION BENEFITS ARE SAFE AND SOUND. THE PENSION FUND INVESTMENTS ARE DIVERSIFIED AND POSITIONED FOR THE LONG TERM. THE FUND SURVIVED SETBACKS IN THE PAST SUCH AS BLACK MONDAY, THE TECH BUBBLE AND 9-11. WE LOOK FORWARD TO A MORE STABLE MARKET ENVIRONMENT IN THE NEAR FUTURE.