First, a brief history:

The Annuity Fund was created on November 7, 1968, through a collectively bargained agreement. On July 1, 1991, the contributions received from the City of New York were increased to our current level of $2 per day for a total of $522 per year. On July 1, 1994, the fund went from trustee-directed (where the trustees made all the decisions on investments) to member-directed, allowing members to select investment options from a group of investments selected by the Trustees. This plan design is still in effect today.

Some questions frequently
asked by members:

• Why can’t we go on-line and see our account?
• Why can’t we have more of a complete and diverse array of fund options?
• Why can’t we make daily transactions instead of the current monthly transactions?

Since the fund’s inception, members have been unable to make daily transactions or view account information via the Internet. To provide these services efficiently and effectively, we decided to outsource the fund’s administration to a professional, top-rated financial services company that has experience with qualified retirement plans.

As a result, effective June 15, we now have a financial services company that provides these extra services.

Our first step in selecting the appropriate firm was to send out a Request For Information (RFI).

With the assistance of AON Consulting, our health & welfare consultants, we sent a letter of intent to outsource to the following financial service companies:

• Citistreet
• Fidelity
• Invesco
• Merrill Lynch
• Prudential Putnam
• Scudder
• T. Rowe Price
• Van Guard
• Wells Fargo

Next, we issued a Request For Proposal (RFP). During the RFP process, we contacted and interviewed candidates and bids were thoroughly analyzed, enabling the fund’s trustees to select the firm that could best serve the membership’s needs. After a complete review process, Wells Fargo was chosen to administer the PBA Annuity Fund. Wells Fargo was chosen based on its ability to administer an account of our size, which is approximately $180 million dollars. Wells Fargo also offered a full range of services, including:

• Ability to go online to review account information. (Account balances updated on a daily basis; 24/7 account access via the Internet or toll-free voice response unit.)
• Ability to request daily trades. (Members are no longer restricted to trading once a month.) Full array of investment options. (Low-risk return to a high-risk return.)
• Expanded live customer service. (Mon. - Fri. 8 a.m.- 11 p.m.)
• Faster turn-around time on distributions

Wells Fargo also proposed to provide these services at a lower administrative fee than any of the other firms that submitted a bid.

The Annuity Fund’s administrative fees have fluctuated from year to year from as high as $33.41 per year for fiscal year 1997 to fiscal year 2005, when this PBA board brought the fees under $20. Under the new program, we expect administrative fees to be in the area of $23.

What remains the same?
What’s new?

Of the eight investment options that we had prior to Wells Fargo’s administration of the fund, the following six will remain:

• Fidelity Puritan
• Fidelity Magellan
• SEI Diversified Conservative Income
• SEI Diversified Stock
• Merrill Lynch
• SEI Diversified Global Stock

The following two investment options will no longer be part of our fund:

• PBA Fixed Income
• Principal Bond & Mortgage

The PBA Fixed Income Fund and the Principal Bond Mortgage Fund were replaced by the Wells Fargo Stable Return Fund and the Wells Fargo Advantage Total Return Bond Fund, respectively, because those funds were unable to process daily transactions, which was a requirement for the new program. According to Wells Fargo, the Stable Return Fund is one of the most diversified stable value funds compared to its peer group and has provided consistent and strong historical performance. The Advantage Total Return Fund, according to Wells Fargo, currently reflects a slightly higher overall credit quality rating and a very competitive and consistent performance.

Members who were in PBA Fixed Income have automatically been mapped into the Stable Return Fund and those who were in Principal Bond & Mortgage have automatically been switched into the Advantage Total Return Bond Fund, if no action was taken by the member.

We ask members to consider all the alternatives before deciding whether to continue in these funds. Members are immediately able to redirect their contributions into any of the other investment options.

Also, under Wells Fargo’s administration, we have now added 11 new investment options, for a total of 17. This will give us a complete array of options to choose from as shown in illustrations 1 and 2.

Your annuity fund beneficiary designation

Make sure you have completed an Annuity Beneficiary Designation form and that the person you have designated as your beneficiary is correct. If you wish to update your beneficiary designation, you may do so by completing an Annuity Beneficiary Designation Form, which can be obtained from the PBA Funds Office or downloaded from the PBA website.

Make sure you choose an investment election

Since the PBA Annuity Fund went member-direct in 1994, approximately 7,000 members have not made an investment selection. If you do not make an investment election, your contributions will automatically go into a default fund, which currently is the Stable Return Fund. Letters will be mailed out annually to all members to advise them if they have not yet made an investment election.

Please read the Transition Booklet, which has been mailed to every member. Alternatively, you may review the information contained in the booklet online at the PBA website. You will find instructions in the booklet on how to make an investment election.

If you have any questions, call the Wells Fargo toll-free helpline at 1-888-245-9798 or contact the PBA Health & Welfare Funds Office at 212-349-7560. Remember, it’s your money. Invest wisely.