(1) Lump Sum Increases. Each member who, on or before July 1, 1999, is or would be sixty (60) years of age or older and each beneficiary or survivor, of a member who was or would be sixty (60) years of age or older, who is receiving or entitled to receive a retirement benefit under this Ordinance and who, on or before July 1, 1999, will have received or been entitled to receive benefits for at least ten (10) years shall receive two lump sum bonuses in the amount of One Thousand Dollars ($1000) plus an additional One Hundred Dollars ($100) for each full year over ten (10) years that the member, beneficiary or survivor has received or been entitled to receive benefits. The first bonus payment shall be made no later than April 30, 1999. The second bonus payment shall be made on July 15, 2000. For purposes of this section only, the time during which a deceased member received benefits shall be included in calculating the length of time a survivor has received benefits. Any beneficiary or survivor of a member who was killed or died in the line of duty related to the work environment shall be eligible to receive the two lump sum bonuses, if such death occurred on or before July 1, 1999 regardless of the age of the member at the time of death. In addition, for purposes of determining eligibility, any member, beneficiary or survivor who does not meet the above eligibility criteria as of July 1, 1999 but who would meet the said criteria as of July 1, 2000, such member, beneficiary or survivor is eligible only to receive the lump sum bonus payment to be made on July 15, 2000.

(2) Pension Adjustment Fund.

(a) On July 1, 1999 the Board of Pensions and Retirement (the "Board") shall establish a Pension Adjustment Fund. The "fund basis" (as defined) shall be certified to the Board by its actuary which shall determine the total funded and unfunded liability of the Municipal Retirement System by valuing the total assets of the Retirement System, using the "adjusted market value of assets valuation method" (as defined) of the Pension Fund's assets. Effective June 30, 2000 and for each fiscal year thereafter, the Board shall determine whether the fund basis has been maintained and whether there are excess earnings available to be credited to the Pension Adjustment Fund pursuant to the provisions of subsection (3). The Board's determination shall be based upon the actuary's certification of the Pension Fund's total assets and prior fiscal year earnings, using the adjusted market value of the Pension Fund's assets. Available assets earnings shall be credited to the Pension Adjustment Fund as of July 1 of the then current fiscal year. The Board shall maintain (or re-establish and maintain) a Pension Adjustment Fund for each fiscal year pursuant to the requirements of this Section, provided, however, that the portion of the assets attributed to the Pension Adjustment Fund shall not be segregated from the assets of the Pension Fund. The purpose of the Pension Adjustment Fund is for the distribution of benefits as determined by the Board for retirees, beneficiaries or survivors. The Board shall make timely, regular and sufficient distributions from the Pension Adjustment Fund in order to maximize the benefits of retirees, beneficiaries or survivors. After the Board has received the actuarial certification for the fiscal year ending June 30, 2000 and every year thereafter, but not later than six (6) months following the end of every fiscal year, the Board shall develop various plans that the Board shall consider for approval, so as to ensure that if there are any funds available in the Pension Adjustment Fund on or after July 1, 2000, a distribution may be made within six (6) months and without delay in accordance with the provisions of subsection (4).

(.1) Definitions. In this subsection the following definitions shall apply:

"Adjusted market value of assets valuation method." For each fiscal year ending just prior to the annual valuation of the Pension Fund, take the market value at the beginning of that year, recognize cash flows of contributions and benefit payment being made on average in the middle of the year and roll those values forward based on the Pension Fund's assumed rate of return to the end of the fiscal year. This end of year value is called the expected market value. Subtract the expected market value from the actual market value at the end of the fiscal year. To the extent this difference is positive, there is an experienced gain on investments and, if negative, an experienced loss. Once the gain or loss is determined, include one-fifth of that amount in the annual valuation and defer four-fifths of the gain/loss to be recognized in each of the next four (4) fiscal years. Add up all remaining deferred gains and losses over the past five (5) years and subtract them from the market value of assets to get the "adjusted market value of assets valuation method."

"Fund basis." The actuarial funding level that has been achieved as of July 1, 1999 and which must be maintained in order for excess earnings to be available for credits to the Pension Adjustment Fund.

(3) Credits to Pension Adjustment Fund. For each fiscal year in which the Board establishes, re-establishes or maintains a Pension Adjustment Fund pursuant to this Section, the Board shall credit the Pension Adjustment Fund pursuant to the following parameters:

(a) The first one percent (1%) of earnings to the Pension Fund that are above the actuarial assumed earnings rate of the pension system shall remain in the Pension Fund.

(b) The Board shall credit the Pension Adjustment Fund with fifty percent (50%) of the excess earnings to the Pension Fund that are between one percent (1%) and six percent (6%) above the actuarial assumed earnings rate. For example, if the assumed earnings rate were nine percent (9%) and the actual earnings rate were ten percent (10%), the Pension Fund would retain all earnings; if the actual earnings rate were between ten percent (10%) and fifteen percent (15%), the Pension Fund would retain fifty percent (50%) of the excess earnings and the Pension Adjustment Fund would be credited with fifty percent (50%) of the excess earnings.

(c) All earnings in excess of six percent (6%) of the actuarial assumed earnings rate will remain in the Pension Fund.

(d) In determining the amount of credits to be allocated to the Pension Adjustment Fund for any fiscal year, the Board's actuary shall use the adjusted market value of assets valuation method.

(e) No credits shall be made to the Pension Adjustment Fund for any fiscal year in which the total fund basis of the Retirement System, as determined by the Board's actuary, using the adjusted market value of assets valuation method, are less than the fund basis established as of July 1, 1999.

(4) Distributions from Pension Adjustment Fund.

(a) Every year within sixty (60) days of the end of the fiscal year, by majority vote of its members, the Board shall consider whether sufficient funds have accumulated in the Pension Adjustment Fund to support an enhanced benefit distribution (which may include, but is not limited to, a lump sum bonus payment, monthly pension payment increases, ad-hoc cost-of-living adjustments, continuous cost-of-living adjustments or some other form of increase in benefits as determined by the Board) to retirees, their beneficiaries and their survivors, and the Board may, by majority vote of its members, authorize distributions from the Pension Adjustment Fund. The Board shall also review the accumulated assets of the Pension Adjustment Fund at least every three years to assess whether additional distributions may be appropriate. Prior to a determination that a distribution shall be made, the Board shall have an actuarial impact statement provided. No distribution shall be made unless that statement certifies that the Pension Adjustment Fund assets are sufficient to provide the full cost of the proposed benefit adjustment.

(.1) Definitions. In this paragraph the following definitions shall apply:

"Ad-hoc cost-of-living adjustment." A single cost-of-living adjustment that increases the retiree's, beneficiary's and survivor's benefit on a perennial basis for life.

"Continuous cost-of-living adjustment." Multiple cost-of-living adjustments which provide annual increases for retirees, beneficiaries and survivors for life.

"Lump sum bonus payments." One time payments to retirees, beneficiaries and survivors which do not increase monthly pension payments.

(b) The Board shall report, in writing, to City Council, no later than thirty (30) days after the end of the fiscal year, any distributions that have been made or are proposed to be made from the current balance of the Pension Adjustment Fund. If no distributions were made in the previous fiscal year, the Board will explain, in writing, the reasons therefor. Subject to the availability[16] of funds in the Pension Adjustment Fund, if no distributions have been made by no later than eighteen (18) months after the creation of the Pension Adjustment Fund, or any eighteen (18) month anniversary thereafter, and if the Board has not voted on and approved an enhanced[17] benefit distribution plan at that time, the Board shall notify City Council of such inaction, in writing, and explain why no distributions have been made and provide a full financial report on the current balance of the Pension Adjustment Fund. The Council expressly reserves the right to provide at any time, by ordinance, for enhanced[18] benefit distributions from the Pension Adjustment Fund, if the Board fails to provide for any distributions, or if deemed by Council an inadequate distribution, during any period of eighteen (18) consecutive months. The Council shall follow the same procedures as are required of the Board pursuant to this Section before any distributions may be authorized.

(c) If in any period of two (2) consecutive fiscal years, the Pension Adjustment Fund does not receive any credits, even though the Pension Fund's rate of return exceeds one percent (1%) above the actuarial assumed earnings rate in each of the two consecutive fiscal years using an adjusted market value of assets valuation methodology, the Board shall make a report, in writing, within thirty (30) days of the end of the two (2) consecutive fiscal year period to City Council to explain these circumstances. City Council reserves the right to make any amendments to the authorizations, directives or provisions of this Ordinance or to take any other action in order to correct this circumstance or any other circumstance, as the Council deems proper.

(5) It is the intent of Council that distributions to retirees, their beneficiaries and their survivors through the Pension Adjustment Fund pursuant to this Section should be funded solely from investment returns generated by Pension Fund assets. Nothing in this ordinance is intended to require the City of Philadelphia to make any contributions from the General Fund to support the Pension Adjustment Fund in any way except, by Ordinance of City Council.