Exhibit 10.4

Exhibit 10.4

    SECOND
      AMENDMENT

    TO
      THE

    PMA
      CAPITAL CORPORATION PENSION PLAN

    (As
      Amended and Restated Effective January 1, 1999)

     

     

    WHEREAS,
      PMA
      Capital Corporation
      (the
“Company”) maintains the PMA
      Capital Corporation Pension Plan (the
      “Plan”) for the benefit of certain of its eligible employees, and the eligible
      employees of certain participating affiliates; and

     

    WHEREAS,
      the
      Plan was most recently amended and restated effective January 1, 1999 and has
      since been modified by the First Amendment thereto effective January 1, 2003;
      and

     

    WHEREAS,
      the
      Company wishes to amend the Plan to (i) close the Plan to new participants,
      and
      (ii) freeze all benefit accruals thereunder, with both changes to be effective
      December 31, 2005; and

     

    WHEREAS,
      in
      conjunction with such amendment to the Plan, the Company has determined that
      the
      PMA Capital Corporation Retirement Savings Plan (the “Retirement Savings Plan”)
      and the PMA Capital Corporation Retirement Savings Excess Plan (the “Retirement
      Savings Excess Plan”) shall be amended to provide that, in lieu of future
      benefit accruals under the Plan, eligible employees shall be entitled to receive
      non-matching, age-based employer contributions under the Retirement Savings
      Plan
      and, if eligible, additional retirement credits under the Retirement Savings
      Excess Plan; and

     

    WHEREAS,
      under
      Sections 9.1 and 15.4 of the Plan, the Company has reserved the right to amend
      the Plan with respect to all Participating Companies at any time, subject to
      certain inapplicable limitations;

     

    NOW,
      THEREFORE,
      effective December 31, 2005 (or such other dates as may be expressly provided
      herein), the Company hereby amends the Plan as follows:

     

    1. Effective
      January 1, 2006, Sections 1.55, 1.56 and 1.57 are renumbered as 1.95, 1.96
      and
      1.97 respectively, and amended to read as follows:

     

    “1.95 Trust
      shall
      mean the trust established and maintained pursuant to this Plan for the purpose
      of providing benefits hereunder.

     

    1.96 Trust
      Agreement
      shall
      mean the document executed by the Trustee and the Plan Sponsor fixing the
      rights, duties and liabilities of each with respect to holding and administering
      the Trust. The terms of the Trust Agreement shall be deemed incorporated herein
      as part of this Plan.

     

    1.97 Trustee
      shall
      mean any individual(s) or corporate Fiduciary appointed by the Board by its
      President or any duly appointed successors, functioning in that capacity in
      accordance with the Trust Agreement.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    All
      Section numbers from 1.58 through the end of Article I (and all applicable
      cross-references) are renumbered as necessary.

     

    2. Section
      7.4 is amended effective March 28, 2005 to read as follows:

     

    “7.4 Cash-Out.
      Except
      as otherwise provided in Section 4.6(b)(i) with respect to assets to be
      transferred from this Plan to the PMA Foundation Pension Plan, if at the time
      of
      a Participant’s retirement or Separation from Service, the Present Value of his
      or her vested Accrued Benefit does not exceed $1,000, and if such Participant
      is
      entitled to an immediate or deferred Benefit hereunder, the Administrator shall
      direct that the Participant be paid the Present Value of such Accrued Benefit
      in
      a lump sum without his or her consent provided that such payment shall be made
      no later than the close of the second Plan Year following the Plan Year in
      which
      his or her retirement or Separation from Service occurred. If the Present Value
      of a Participant’s vested Accrued Benefit is zero, the Participant shall be
      deemed to have received a distribution of such vested Accrued
      Benefit.

     

    (a) Resumption
      of Employment.
      If
      following such distribution the Participant resumes employment covered under
      this Plan, then except as otherwise provided in Section 7.4(b), below, the
      Participant shall not have any right to have his or her prior years of Benefit
      and Vesting Service attributable to that distribution reinstated.

     

    (b) Restoration.
      If a
      Participant receives a distribution pursuant to this Section 7.4 before the
      close of the second Plan Year following the Plan Year in which his or her
      retirement or Separation from Service occurred and the Participant resumes
      covered employment under the Plan, he or she shall have the right to restore
      his
      or her Accrued Benefit (including all optional forms of Benefit and subsidies
      relating to such Benefit) to the extent forfeited upon the repayment to the
      Plan
      of the full amount of the distribution plus interest, compounded annually from
      the date of distribution at the rate of interest determined for purposes of
      Code
      Section 411(c)(2)(C). Such repayment must be made before the earlier of (i)
      five
      years after the first date on which the Participant is subsequently reemployed
      by the Employer or (ii) the date the Participant incurs five consecutive
      One-Year Service Breaks or a Break in Service of five consecutive years (as
      applicable) following the date of distribution. If a Participant is deemed
      to
      receive a distribution pursuant to this Section 7.4, and the Participant resumes
      employment covered under this Plan before the date the Participant incurs five
      consecutive One-Year Service Breaks or a Break in Service of five consecutive
      years (as applicable), upon the reemployment of such Participant, the
      Employer-provided Accrued Benefit will be restored to the amount of such Accrued
      Benefit on the date of the deemed distribution. Notwithstanding the foregoing,
      if, prior to January 1, 2002, a Participant receives a distribution under
      Section 7.4 later than the close of the second Plan Year following the Plan
      Year
      in which his or her retirement or Separation from Service occurred and later
      resumes covered employment under the Plan, no repayment of the amount of his
      or
      her distribution shall be permitted and his or her Benefit and Vesting Service
      earned prior to such retirement or Separation from Service shall not be
      disregarded in any subsequent determination of his or her Accrued Benefit under
      the Plan, but his or her Accrued Benefit shall be offset by an amount which
      is
      the Present Value of the distribution received.

     

    
      
        
        

      

      
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    (c) Spousal
      Consent.
      Following a Participant’s Benefit commencement date, a partial or total cash-out
      of the Present Value of the Qualified Joint and Survivor Annuity or the
      preretirement survivor annuity shall not be made even if such value, as
      determined in the same manner as prescribed above, does not exceed $1,000 unless
      the cash-out is consented to in writing by the Participant and the Participant’s
      Spouse, if any, or where the Participant has died, by the surviving
      Spouse.”

     

    3. Section
      7.6 is amended effective March 28, 2005 to read as follows:

     

    “7.6 Consent
      to Distributions.
      If the
      Present Value of a Participant’s vested Accrued Benefit exceeds $1,000, or there
      are remaining payments to be made with respect to a particular distribution
      option that previously commenced, and the Accrued Benefit is immediately
      distributable, the Participant and the Participant’s Spouse (or where either the
      Participant or the Spouse has died, the survivor) must consent to any
      distribution of such Accrued Benefit in other than the normal form of Benefit.
      The consent of the Participant and the Participant’s Spouse shall be obtained in
      writing within the 90-day period ending on the Annuity Starting Date. The
      Employer shall notify the Participant and the Participant’s Spouse of the right
      to defer any distribution until the Participant’s Accrued Benefit is no longer
      immediately distributable. Such notification shall include a general description
      of the material features, and an explanation of relative values, of the optional
      forms of Benefit available under the Plan in a manner that would satisfy the
      notice requirements of Section 417(a)(3) of the Code, and shall be provided
      no
      less than 30 days and no more than 90 days prior to the Annuity Starting Date.
      Notwithstanding the foregoing, only the Participant need consent to the
      commencement of a distribution in the form of a Qualified Joint and Survivor
      Annuity while the Accrued Benefit is immediately distributable. Neither the
      consent of the Participant nor the Participant’s Spouse shall be required to the
      extent that a distribution is required to satisfy Section 401(a)(9) or 415
      of
      the Code.

     

    (a) For
      purposes of this Section 7.6, Present Value shall be determined in accordance
      with Section 7.5 hereof.

     

    (b) An
      Accrued Benefit is immediately distributable if any part of the Accrued Benefit
      could be distributed to the Participant (or surviving Spouse) before the
      Participant attains (or would have attained if not deceased) the later of Normal
      Retirement Age or age 62.”

     

    
      
        
        

      

      
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    4. Section
      9.1(c) of the Plan is deleted in its entirety effective October 1, 2005, and
      Subsection 9.1(d) is renumbered as 9.1(c).

     

    5. A
      new
      Article XVI is added to the Plan to read as follows:

     

    “ARTICLE
      XVI - FREEZING OF THE PLAN

     

    16.1 Freezing
      of the Plan.
      The
      Plan shall be frozen effective December 31, 2005 (the “Freeze Date”). Pursuant
      to the freezing of the Plan:

     

    (a) No
      Eligible Employee shall become a Participant nor resume active participation
      in
      the Plan after the Freeze Date;

     

    (b) Each
      Participant’s Accrued Benefit shall be deemed to be frozen as of the Freeze
      Date, and the amount of such Accrued Benefit shall be unaffected by any Service
      performed or Compensation paid after the Freeze Date, or in any changes in
      Covered Compensation after the Freeze Date; and

     

    (c) Following
      the Freeze Date, each Participant shall continue to be credited with Vesting
      Service in accordance with Article II of the Plan.

     

    Any
      provision of the Plan that would otherwise provide for either (1) the
      commencement or resumption of Plan participation, or (2) the continuing accrual
      of benefits, after the Freeze Date (including, without limitation, Sections
      1.1,
      1.17, 1.18, 1.67, 1.100, 1.101, 2.3, 2.4, 2.5, 3.2, 3.3, 5.1, and 5.3) is hereby
      superseded to the extent that it would so provide.”

     

     

    IN
      WITNESS WHEREOF, PMA CAPITAL CORPORATION
      has
      caused these presents to be duly executed, under seal, this 24th day of October,
      2005.

     

     

    
      	
              Attest:

            	
              PMA
                CAPITAL CORPORATION

            
	
              [SEAL]

            	 
	 	 
	
              /s/
                Robert L. Pratter

            	
              /s/
                William E.
                Hitselberger                          
                

            
	
              Robert
                L. Pratter, Secretary

            	
              William
                E. Hitselberger, Executive Vice President and Chief Financial
                Officer

            


    

     

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