AIG 2013 Annual Report Download - page 332

We offer various defined benefit plans to eligible employees.
The U.S. AIG Retirement Plan (the qualified plan) is a noncontributory defined benefit plan, which is subject to the
provisions of ERISA. U.S. salaried employees who are employed by a participating company and who have
completed 12 months of continuous service are eligible to participate in the plan. Effective April 1, 2012, the qualified
plan was converted to a cash balance formula comprised of pay credits based on six percent of a plan participant’s
annual compensation (subject to IRS limitations) and annual interest credits. In addition, employees can take their
vested benefits when they leave AIG as a lump sum or an annuity option after completing at least three years of
service. However, employees satisfying certain age and service requirements (i.e. grandfathered employees) remain
covered under the old plan formula, which is based upon a percentage of final average compensation multiplied by
years of credited service, up to 44 years. Grandfathered employees will receive the higher of the benefits under the
cash balance or final average pay formula at retirement. 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.
We also sponsor several non-qualified unfunded defined benefit plans for certain employees, including key
executives, designed to supplement pension benefits provided by the qualified plan. These include the AIG
Non-Qualified Retirement Income Plan (AIG NQRIP), which provides a benefit equal to the reduction in benefits
under the qualified 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 AIG NQRIP Plan), Social Security, and any benefits
accrued under a Company sponsored foreign deferred compensation plan.
We 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 attaining the age of 55 and
having a minimum of ten years of service. Eligible employees who have medical coverage can enroll in retiree
medical upon termination. Medical benefits are contributory, while the life insurance benefits are generally
non-contributory. Retiree medical contributions vary from none for pre-1989 retirees to actual premium payments
reduced by certain subsidies for post-1992 retirees. These contributions are subject to adjustment annually. Other
cost sharing features of the medical plan include deductibles, coinsurance and Medicare coordination. Effective
April 1, 2012, the retiree medical employer subsidy for the AIG Postretirement plan was eliminated for employees
who were not grandfathered. Additionally, new employees hired after December 31, 2012 are not eligible for retiree
life insurance.
The following table presents the funded status of the plans reconciled to the amount reported in the
Consolidated Balance Sheets. The measurement date for most of the non-U.S. defined benefit pension and
21. EMPLOYEE BENEFITS
Pension Plans
Postretirement Plans
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AIG 2013 Form 10-K314
ITEM 8 / NOTE 21. EMPLOYEE BENEFITS
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