Dear YMCA Colleagues,

Since my September 18 CEO Message to you, I've received a few emails from YMCA employees and retirees. Some of them asked me whether the economic crisis could affect their money at the YMCA Retirement Fund. I thought it would be helpful and informative to share my answers with you.

Question from a YMCA retiree: I'd like to know who owns my retirement annuity and if my annuity could be reduced?

Answer: Your annuity is not owned by an outside bank or insurance company. As a church pension plan, the YMCA Retirement Fund converts your account balances into a monthly income stream. Your account balances were converted to an annuity based on your age at retirement and the annuity option you chose. Your annuity is a fixed rate life annuity. We do not issue variable rate annuities and would not reduce the monthly payment once the annuity is issued.

Question from a YMCA participant: Are there any conditions which would cause my account balances to go down at the YMCA Retirement Fund?

Answer: Just as most people's investments have taken a significant hit during this ongoing financial crisis, so have the Fund's assets that support your account balances. However, we are long-term investors with a high quality portfolio, so it is hard for me to imagine our assets being considered “permanently impaired” with no long-term expectation of recovery, thereby requiring an involuntary reduction of account balances. This has never happened, and I don’t currently anticipate any such eventuality.

Question from a YMCA CEO: How safe are my employees’ account balances and my retirees’ annuities?

Answer: With regard to "safety," the account balances and annuity payments are not government insured, backed by gold deposits or anything along those lines. The safety is a function of several primary factors:

1. The Fund has strong independent external oversight, with an actuary, auditor and investment consultant all providing support to the expertise provided by the Management and Trustees of the Fund.
   
   
2. The Fund has a high quality, highly diversified portfolio, built for the long term. Management continues to follow the Fund's Investment Policy and Guidelines, and our deeply engaged Trustees provide diligent guidance and oversight.
   
   
3. The Fund is cash flow positive. There continues to be more money coming into the Fund in the form of retirement contributions to accounts, together with dividends and interest from investments, than there is going out to pay benefits. This means that we can meet current obligations from current inflows, adding to the time we have to see the investment market and our portfolio recover. We will then replenish our surplus reserves to more traditional levels for the next time this happens.
   
   
4. Perhaps the biggest protection we have is the long-term nature of the Fund, which is reflected in our structure. Benefit payments are made to retirees on a monthly basis. This provides the recovery time necessary to withstand down markets.

Thank you for your continuing confidence.

John M. Preis
President and CEO