AIG 2014 Annual Report Download - page 324

ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
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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.
In the U.S. 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
(SERP), which provides additional retirement benefits to designated executives. Under the SERP, 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), Social Security,
and any benefits accrued under a Company sponsored foreign deferred compensation plan.
Postretirement Plans
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
of employment. 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 postretirement plans is
November 30, consistent with the fiscal year end of the sponsoring companies. For all other plans, measurement
occurs as of December 31.
As of or for the Years Ended Pension Postretirement(a)
December 31, U.S. Plans(b) Non-U.S. Plans(b) U.S. Plans Non-U.S. Plans
(in millions) 2014 2013 2014 2013 2014 2013 2014 2013
Change in projected benefit obligation:
Benefit obligation, beginning of year $4,882 $ 5,161 $1,072 $ 1,205 $ 217 $ 255 $52 $66
Service cost 173 205 42 47 4 523
Interest cost 228 201 29 29 9 822
Actuarial (gain) loss 780 (454) 114 13 10 (41) 11 (15)
Benefits paid:
AIG assets (15) (14) (15) (13) (11) (10) (1) (1)
Plan assets (279) (217) (24) (27) - ---
Plan amendment --(1) - - ---
Curtailments ---(1) - --(3)
Settlements --(9) (35) - ---
Foreign exchange effect --(107) (126) - -(2) (1)
Other --(2) (20) - --1
Projected benefit obligation, end of year $5,769 $ 4,882 $1,099 $ 1,072 $ 229 $ 217 $64 $52
Change in plan assets:
Fair value of plan assets, beginning
of year $4,024 $ 3,720 $738 $ 727 $ - $ - $ - $-
Actual return on plan assets, net of expenses 266 520 71 92 - ---