AIG 2010 Annual Report Download - page 360

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
completed 12 months of continuous service are eligible to participate in the plan. Employees generally vest after
five years of service. Unreduced benefits are paid to retirees at normal retirement (age 65) and are based upon a
percentage of final average compensation multiplied by years of credited service, up to 44 years. Non-U.S. defined
benefit plans are generally either based on the employee’s years of credited service and compensation in the years
preceding retirement or on points accumulated based on the employee’s job grade and other factors during each
year of service.
AIG also sponsors several unfunded defined benefit plans for certain employees, including key executives,
designed to supplement pension benefits provided by AIG’s other retirement plans. These include the AIG Excess
Retirement Income Plan (Excess), which provides a benefit equal to the reduction in benefits payable to certain
employees under the AIG U.S. qualified retirement plan as a result of federal tax limitations on compensation
and benefits payable and the Supplemental Executive Retirement Plan (Supplemental), which provides additional
retirement benefits to designated executives. Under the Supplemental plan, an annual benefit accrues at a
percentage of final average pay multiplied by each year of credited service, not greater than 60 percent of final
average pay, reduced by any benefits from the current and any predecessor retirement plans (including the Excess
plan and any comparable plans), Social Security, if any, and from any qualified pension plan of prior employers.
AIG has complied with the Special Master’s mandate to freeze future benefits in the non-qualified retirement
plans for the Top 100 employees of AIG. The impact to AIG’s financial statements was not significant.
Postretirement Plans
AIG and its subsidiaries also provide postretirement medical care and life insurance benefits in the U.S. and in
certain non-U.S. countries. Eligibility in the various plans is generally based upon completion of a specified period
of eligible service and attaining a specified age. Overseas, benefits vary by geographic location.
U.S. postretirement medical and life insurance benefits are based upon the employee electing immediate
retirement and having a minimum of ten years of service. Medical benefits are contributory, while the life
insurance benefits are non-contributory. Retiree medical contributions vary from requiring no cost for pre-1989
retirees to requiring actual premium payments reduced by certain credits for post-1993 retirees. These
contributions are subject to adjustment annually. Other cost sharing features of the medical plan include
deductibles, coinsurance, Medicare coordination and a lifetime maximum benefit of $5 million.
344 AIG 2010 Form 10-K