AbbVie 2012 Annual Report Download - page 153

0.50% of the lesser of 3-year final average earnings (but not more than the social security
wage base in any year) or the social security covered compensation level multiplied by years of
benefit service.
C. 1.10% of 5-year final average earnings multiplied by years of benefit service prior to 2004.
The benefit for service prior to 2004 (B or C above) is reduced for the cost of preretirement
surviving spouse benefit protection. The reduction is calculated using formulas based on age and
employment status during the period in which coverage was in effect.
Final average earnings are the average of the employee’s 60 highest-paid consecutive calendar
months of compensation (salary and non-equity incentive plan compensation). The Annuity Retirement
Plan covers earnings up to the limit imposed by Internal Revenue Code Section 401(a)(17) and
provides for a maximum of 35 years of benefit service.
Participants become fully vested in their pension benefit upon the completion of five years of
service. The benefit is payable on an unreduced basis at age 65. Employees hired after 2003 who
terminate prior to age 55 with at least 10 years of service may choose to commence their benefits on
an actuarially reduced basis as early as age 55. Employees hired prior to 2004 who terminate prior to
age 50 with at least 10 years of service may choose to commence their benefits on an actuarially
reduced basis as early as age 50. Employees hired prior to 2004 who terminate prior to age 50 with less
than 10 years of service may choose to commence their benefits on an actuarially reduced basis as early
as age 55.
The Annuity Retirement Plan offers several optional forms of payment, including certain and life
annuities, joint and survivor annuities, and level income annuities. The benefit paid under any of these
options is actuarially equivalent to the life annuity benefit produced by the formula described above.
Employees who retire from Abbott prior to their normal retirement age may receive subsidized
early retirement benefits. Employees hired after 2003 are eligible for early retirement at age 55 with
10 years of service. Employees hired prior to 2004 are eligible for early retirement at age 50 with
10 years of service or age 55 if the employee’s age plus years of benefit service total 70 or more.
Mr. Alban and Dr. Leonard are eligible for early retirement benefits under the plan.
The subsidized early retirement reductions applied to the benefit payable for service after 2003
(A above) depend upon the participant’s age at retirement. If the participant retires after reaching
age 55, the benefit is reduced 5 percent per year for each year that payments are made before age 62.
If the participant retires after reaching age 50 but prior to reaching age 55, the benefit is actuarially
reduced from age 65.
The early retirement reductions applied to the benefit payable for service prior to 2004 (B and C
above) depend upon age and service at retirement:
• In general, the 5-year final average earnings portions of the benefit are reduced 3 percent per
year for each year that payments are made before age 62 and the 3-year final average earnings
portion of the benefit is reduced 5 percent per year for each year that payments are made
before age 62.
• Employees who participated in the plan before age 36 may elect ‘‘Special Retirement’’ on the
last day of any month after reaching age 55 with age plus Seniority Service points of at least 94
or ‘‘Early Special Retirement’’ on the last day of any month after reaching age 55, provided their
age plus Seniority Service points would reach at least 94 before age 65. Seniority Service
includes periods of employment prior to attaining the minimum age required to participate in
the plan. If Special Retirement or Early Special Retirement applies, Seniority Service is used in
place of benefit service in the formulas. The 5-year final average earnings portions of the benefit
in B above are reduced 12⁄3 percent for each year between ages 59 and 62 plus 21⁄2 percent for
each year between ages 55 and 59. The 3-year final average earnings portion of the benefit is
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