Pension Benefit Equalization Plan

Exhibit 10.2.4


THE FEDERAL HOME LOAN BANK OF BOSTON


PENSION BENEFIT EQUALIZATION PLAN


Federal Home Loan Bank of Boston (the “Bank”) adopted the Federal Home Loan Bank of Boston Pension Benefit Equalization Plan (the “Plan”), as a component of the Federal Home Loan Bank of Boston Benefit Equalization Plan, effective January 1, 1993. The Plan is herein amended and restated in order to comply with Code Section 409A, as enacted by the American Jobs Creation Act of 2004 and applicable regulations thereunder. This amendment and restatement shall be effective January 1, 2008; provided, however, that any provision required to be effective on and after January 1, 2005 in order for the Plan to comply with Code Section 409A shall become effective as of January 1, 2005 (or such later date as shall be permitted under applicable Code Section 409A transition rules); and provided further, that if the application of any amended or restated provision below to a Member’s Grandfathered Supplemental Benefit (as defined below) would constitute a “material modification” for purposes of Treasury Regulation Section 1.409A-6(a)(4), the corresponding provision of the Prior Plan shall apply in lieu of such amended or restated provision.


The Plan is established and maintained by the Bank in order to provide designated Eligible Executives with the benefits which would have been provided under the Pentegra Defined Benefit Plan for Financial Institutions (the “Qualified Plan”) if (a) their benefits under the Qualified Plan were not limited by certain limitations imposed by the Internal Revenue Code applicable to the Qualified Plan; (b) “Salary” as defined in the Qualified Plan took into account amounts paid under the Bank’s incentive compensation plan(s) and elective deferrals to the Federal Home Loan Bank of Boston Thrift Benefit Equalization Plan; and (c) certain benefit adjustments were provided to Executive Officers as described herein.


The Plan is a governmental plan under Section 4(b) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and is therefore exempt from coverage under ERISA. The Plan is unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees, and is not intended to be qualified under Section 401(a) of the Internal Revenue Code.


SECTION 1 - DEFINITIONS


Each word used herein not defined below that begins with a capital letter and is defined in the Qualified Plan shall have the same definition as the definition given to that word in the Qualified Plan. Wherever used herein, the following terms shall have the meanings hereinafter set forth:


1.1 “Administrator” means the Committee or such person or persons as may be appointed by the Committee to be responsible for those functions assigned to the Administrator under the Plan.


1.2 “Affiliate” means any entity that is a member of a “controlled group” of corporations with the Bank under Code Section 414(b) or a trade or business under common control with the Bank under Code Section 414(c); provided, however, that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of Code Section 414(b), the language “at least 50 percent” will be used instead of “at least 80 percent” each place it appears, and in applying Treasury Regulation Section 1.414(c)-2 for purposes of Code Section 414(c), the language “at least 50 percent” will be used instead of “at least 80 percent” each place it appears. In addition, to the extent that the Administrator determines that legitimate business criteria exist to use a reduced ownership percentage to determine whether an entity is an Affiliate for purposes of determining whether a Termination of Employment has occurred, the Administrator may designate an entity that would meet the definition of “Affiliate” substituting 20 percent in place of 50 percent in the preceding sentence as an Affiliate in Appendix A hereto. Such designation shall be made by December 31, 2008 or, if later, at the time a 20 percent or more ownership interest in such entity is acquired.


1.3 “Bank” means the Federal Home Loan Bank of Boston.


1.4 “Beneficiary” means the person, persons or trust designated by a Member as direct or contingent beneficiary in the manner prescribed by the Administrator. The Beneficiary of a Member who has not effectively designated a beneficiary shall be his or her estate.


1.5 “Board of Directors” means the Board of Directors of the Bank.


1.6 “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.


1.7 “Code Limitations” means (a) the cap on compensation taken into account by the Qualified Plan under Code Section 401(a)(17); and (b) the overall limitation on benefits imposed by Code Section 415(b), as such provisions may be amended from time to time, and any similar successor provisions of federal tax law.


1.8 “Committee” means the Personnel Committee of the Board of Directors, which is authorized to perform the functions described in Article V.


1.9 “Disability” means that the Member (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (b) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Bank; or (c) has been determined to be totally disabled by the Social Security Administration. Notwithstanding the foregoing, whether a Member has incurred a Disability with respect to his or her Grandfathered Supplemental Benefit shall be determined under the provisions of the Prior Plan.


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1.10 “Effective Date” means January 1, 2008. The Plan was initially effective January 1, 1993 and was restated effective January 1, 1997. Any provision of this amendment and restatement required to be effective on and after January 1, 2005 in order for the Plan to comply with Code Section 409A shall become effective as of January 1, 2005 (or such later date up to January 1, 2008 as shall be permitted under applicable Code Section 409A transition rules).


1.11 “Eligible Executive” or “Executive” means an employee of the Bank who is a corporate officer and (a) is eligible to participate in the Thrift BEP, or (b) has been selected to be an Eligible Executive by the Committee.


1.12 “Executive Officer” means an Eligible Executive who is designated as an Executive Officer by the Board of Directors or the Committee.


1.13 “Grandfathered Supplemental Benefit” means, for any Member in the Plan on or before December 31, 2004, the present value of the amount to which the Member would have been entitled under the Plan if he or she had voluntarily terminated service without cause on December 31, 2004 (or his or her earlier termination of employment), and received a payment of the benefits available from the Plan on the earliest possible date allowed under the Plan in the form with the maximum value. Notwithstanding the foregoing, for any subsequent Plan Year, the Grandfathered Supplemental Benefit may increase to equal the present value of the benefit the Member actually becomes entitled to, in the form and at the time actually paid, determined under the terms of the Plan (including applicable Code limits), as in effect on October 3, 2004, without regard to any further services rendered by the service provider after December 31, 2004, or any other events affecting the amount of or the entitlement to benefits (other than the Member’s election with respect to the time or form of an available benefit). For purposes of calculating the present value of the Grandfathered Supplemental Benefit, reasonable actuarial assumptions and methods must be used. The Grandfathered Supplemental Benefit shall be calculated in accordance with the rules and regulations promulgated under Code Section 409A in order to treat the greatest proportion of accrued benefit possible as not subject to Section 409A because it was vested and accrued prior to January 1, 2005.


1.14 “Incentive Compensation” means annual bonus under the Bank’s Executive Incentive Plan and, if applicable, any long-term incentive compensation payable to a Member under the Bank’s incentive compensation plan(s).


1.15 “Member” means a participant in this Plan, unless it is clear from the context that participation in the Qualified Plan is referenced.


1.16 “Non-Grandfathered Supplemental Benefit” means the amount of the Member’s accrued benefit under the Plan, other than his or her Grandfathered Supplemental Benefit, if any.


1.17 “Pension Commencement Date” means the first day of the first period for which a Supplemental Benefit is paid as an annuity or lump sum. The Pension Commencement Date is determined separately for Grandfathered and Non-Grandfathered Supplemental Benefits.


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1.18 “Plan” means The Federal Home Loan Bank of Boston Pension Benefit Equalization Plan, as set forth herein or as it may be amended or restated from time to time.


1.19 “Plan Year” means the calendar year.


1.20 “Prior Plan” means the Plan as in effect on October 3, 2004.


1.21 “Qualified Plan” means the Pentegra Defined Benefit Plan for Financial Institutions, as from time to time amended. Any reference to a section of the Qualified Plan herein shall be deemed to refer to any successor provision of the Qualified Plan which may govern the subject matter of the referenced section in the future.


1.22 “Qualified Plan Retirement Benefit” means the benefit payable to a Member pursuant to the Qualified Plan.


1.23 “Qualified Plan Survivor Benefit” means the death benefit payable under the Qualified Plan upon the death of a Member prior to his or her Pension Commencement Date, including (if applicable) any “Active Service Death Benefit” (as described in Article V, Section 4, of the Qualified Plan).


1.24 “Supplemental Benefit” means a Supplemental Retirement Benefit or Supplemental Survivor Benefit payable under the terms of the Plan.


1.25 “Supplemental Retirement Benefit” means the benefit payable to a Plan Member pursuant to the Plan.


1.26 “Supplemental Survivor Benefit” means the benefit payable under the Plan with respect to the death of a Member prior to the Pension Commencement Date.


1.27 “Thrift BEP” means the Federal Home Loan Bank of Boston Thrift Benefit Equalization Plan, as it may be amended or restated from time to time.


1.28 “Termination of Employment” means the severing of employment with the Bank and any Affiliates, voluntarily or involuntarily, for any reason. A Termination of Employment will be deemed to have occurred if the facts and circumstances indicate that the Bank and the Member reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Member will perform for the Bank and its Affiliates after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the employer if the Member has been providing services to the Bank and its Affiliates less than 36 months). A Member will not be deemed to have incurred a Termination of Employment while he or she is on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months or such longer period as the Member’s right to reemployment with the Bank is provided either by statute or by contract. For this purpose, a leave of absence is bona fide only if there is a reasonable expectation that the Member will return


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to employment at the conclusion of the leave. If the period of leave exceeds six months and the Member’s right to reemployment is not provided either by statute or by contract, the Termination of Employment will be deemed to occur on the first date immediately following such six-month period. Whether a Member incurs a Termination of Employment will be determined in accordance with the requirements of Code Section 409A.


Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only and are not to be construed so as to alter the terms hereof.


SECTION 2 - ELIGIBILITY AND PARTICIPATION


2.1 Participation. Each Member of the Plan on December 31, 2007 will continue as a Member on the effective date of the amendment and restatement of this Plan and thereafter to the extent eligible. Each other Eligible Executive who is a participant in the Qualified Plan shall become a Member on the earlier of (a) the effective date of the Eligible Executive’s election to participate in the Thrift BEP or January 1, 2008, if later; or (b) the effective date as of which he or she is designated as a Member in the Plan by the Committee. Within thirty (30) days of becoming a Member (or a participant in any similar non-account balance, non-qualified deferred compensation plan maintained by the Bank), the Member shall file an election with the Administrator designating how his or her Supplemental Benefit shall be paid. If an Eligible Executive became a Member under clause (a) above and is subsequently designated as eligible for enhanced benefits under clause (b) above, the distribution election made in connection with his or her initial participation shall continue to apply. The Surviving Spouse of a Member described above who dies prior to the Member’s Pension Commencement Date shall be eligible to receive a Supplemental Survivor Benefit, as set forth below.


2.2 Elections under Section 409A Transition Rules. Pursuant to Internal Revenue Service (“IRS”) Notice 2005-1, Q&A-19(c), as extended by Notice of Proposed Rulemaking REG-158080-04 and IRS Notice 2007—86, a Member who (a) has not incurred a Termination of Employment or (b) has incurred a Termination of Employment but has neither entered pay status under the Plan nor had an annuity purchased in connection with his or her benefits under the Plan, may, in 2008, modify or make a new election regarding distribution of his or her Non-Grandfathered Supplemental Benefit at such time and in such form as the Administrator shall designate; provided, however, that no such distribution election made in 2008 may affect payments that the Member would otherwise receive in 2008 or cause payments to be made in 2008. In addition, pursuant to Internal Revenue Service Notice 2005-1, Q&A-23, as extended, in the case of a distribution commencing on or before December 31, 2008 (or such later date as shall be permitted by the Administrator consistent with Code Section 409A and regulations thereunder), an election as to the time and form of payment of the Member’s benefit under the Qualified Plan shall govern distribution of the Member’s Non-Grandfathered Supplemental Benefit under this Plan, to the extent provided under the terms of the Prior Plan.


2.3 Cessation of Participation. An Executive shall cease to be a Member in the Plan if (a) he or she incurs a Termination of Employment for any reason, (b) he or she remains in the service of a Bank but ceases to be an Eligible Executive as described in Section 1.11 due to a


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change in employment status, except to the extent that the Committee determines otherwise, or (c) the Plan is terminated or otherwise amended so that the Executive ceases to be eligible for participation; provided, however, that such individual shall continue to be a Member solely with respect to his or her benefits accrued through the date of such cessation, to the extent that such benefits are or become vested prior to the Member’s Termination of Employment. Such cessation of participation shall be effective upon the date of the change in status described in clause (a) or (b) above, or upon the effective date of an amendment or termination of the Plan described in clause (c) above.


2.4 Vesting. A Member (or his or her Beneficiary, as the case may be) shall be or become vested in his or her Supplemental Benefit as and to the same extent that he or she is vested under the terms of the Qualified Plan.


SECTION 3 - SUPPLEMENTAL RETIREMENT BENEFIT


3.1 Amount. The Supplemental Retirement Benefit payable to a Member on or after his or her Normal Retirement Date shall be a monthly amount equal to the difference between either (a) or (b) below, as applicable, minus (c) below, adjusted as determined in accordance with Section 3.2 or 3.3, as applicable, where:


(a) in the case of an Eligible Executive described in clause (a) of Section 1.11 who becomes a Member under clause (a) of Section 2.1 as a result of participation in the Thrift BEP, the monthly amount of the Qualified Plan Retirement Benefit to which the Member would have been entitled under the terms of the Qualified Plan if such benefit were computed by including in the definition of “Salary” any amounts voluntarily deferred by the Member under the Thrift BEP; or


(b) in the case of an Eligible Executive described in clause (b) of Section 1.11 who becomes a Member under clause (b) of Section 2.1, the monthly amount of the Qualified Plan Retirement Benefit to which the Member would have been entitled under the terms of the Qualified Plan if such benefit were computed:


(i) including in the definition of “Salary” any amounts voluntarily deferred by the Member under the Thrift BEP;


(ii) without regard to Code Limitations;


(iii) including in the definition of “Salary” any Incentive Compensation paid during the applicable Plan Year (determined prior to any deferral under the Thrift BEP);


(iv) by recognizing the Member’s years of service from his or her initial date of employment with any employer participating in the Qualified Plan to his or her date of membership in the Qualified Plan as benefit service under the Qualified Plan; and


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(v) solely with respect to Executive Officers hired by the Bank prior to January 9, 2006 and appointed as an Executive Officer effective on or prior to January 1, 2008, by applying an increased annual pension accrual rate of two and three-eighths percent (2.375%); provided, however, that aggregate pension benefits payable to such Executive Officers (taking into account benefits determined under this Plan and the Qualified Plan, and from any other defined benefit pension plan in which the Member participated during any period of service taken into account in calculating the Member’s benefit hereunder) shall not exceed a percentage of the Member’s “High-3 Salary” (taking into account compensation described in clauses (i), (ii) and (iii) above) equal to sixty-five percent (65%) for Senior Vice Presidents, seventy percent (70%) for Executive Vice Presidents and eighty percent (80%) for the President;


MINUS


(c) the monthly amount of the Qualified Plan Retirement Benefit payable to the Plan Member under the terms of the Qualified Plan.


Notwithstanding the foregoing, the amount of a Member’s Supplemental Retirement Benefit shall not be less than zero. Subject to Section 6.1 and the provisions of Code Section 409A, the method for calculating a Member’s Non-Grandfathered Supplemental Benefit may be modified from time to time in an offer letter or employment agreement approved by the Committee and accepted by the Member, or other writing specifically approved by the Committee and maki ...