AIG 2005 Annual Report Download - page 170

Notes to Consolidated Financial Statements Continued
earned as of December 31, 2005 projected for estimated salary
15. Employee Benefits
increases to an assumed date with respect to retirement,
Continued
termination, disability or death. Projected benefit obligations
and AIG SunAmerica matched four percent of the partici- for postretirement plans represent the present value of postre-
pants’ base salaries deferred. The Plan was frozen to new tirement medical and life insurance benefits deemed earned as
contributions on March 31, 2003. of December 31, 2005 projected for estimated salary and
medical claim rate increases to an assumed date with respect to
(d) Post Employment Benefits: AIG provides certain benefits
retirement, termination, disability, or death.
to inactive employees who are not retirees. Certain of these
benefits are insured and expensed currently; other expenses are The accumulated benefit obligations with respect to both non-
provided for currently. Such uninsured expenses include U.S. and U.S. pension benefit plans as of December 31, 2005
medical and life insurance continuation, and COBRA medical and 2004 were as follows:
subsidies.
(in millions) 2005 2004
(e) Benefit Obligations: Accumulated benefit obligations repre-
sent the present value of pension benefits earned as of Non-U.S. pension benefit plans $1,210 $1,260
U.S. pension benefit plans $2,704 $2,367
December 31, 2005 based on service and compensation as of
December 31, 2005. Projected benefit obligations for defined
benefit plans represent the present value of pension benefits
The following table sets forth the change in the projected benefit obligation of the defined benefit pension plans, including the
supplemental plans, and postretirement benefit plans as of December 31, 2005 and 2004:
Pension Postretirement
Non- Non-
U.S. U.S. U.S. U.S.
(in millions) Plans Plans(a) Total Plans Plans Total
2005
Change in projected benefit obligation:
Benefit obligation at beginning of year $ 1,376 $ 2,750 $ 4,126 $35 $ 243 $ 278
Service cost 71 111 182 4 5 9
Interest cost 32 153 185 2 11 13
Participant contributions 1 – 1–––
Actuarial loss 77 241 318 3 (38) (35)
Plan amendments, mergers and new material plans 43 (29) 14 – – –
Benefits paid:
AIG assets (28) (11) (39) (1) (16) (17)
Plan assets (29) (84) (113) – – –
Effect of foreign currency fluctuation (184) – (184) 1 – 1
Other (8) – (8) (1) – (1)
Benefit obligation at end of year $ 1,351 $ 3,131 $ 4,482 $43 $ 205 $ 248
2004
Change in projected benefit obligation:
Benefit obligation at beginning of year $1,348 $2,602 $3,950 $16 $247 $263
Service cost 59 101 160 3 6 9
Interest cost 33 147 180 2 14 16
Participant contributions 2 – 2 – – –
Actuarial loss 133 59 192 11 (6) 5
Plan amendments and mergers (92) (42) (134) – – –
Benefits paid:
AIG assets (48) (8) (56) (1) (16) (17)
Plan assets (27) (71) (98) – – –
Effect of foreign currency fluctuation 67 – 67 1 – 1
Other(b) (99) (38) (137) 3 (2) 1
Benefit obligation at end of year $ 1,376 $ 2,750 $ 4,126 $ 35 $ 243 $ 278
(a) Includes excess retirement income type plans and supplemental executive type plans.
(b) With respect to AIG’s non-U.S. plans obligations, the reduction resulted from transferring to the Japanese government certain Japanese plan obligations
approximating $50 million. Additionally, the Japanese government also provided a subsidy with respect to certain Japanese plan obligations approximating
$50 million.
118 AIG m Form 10-K