AIG 2015 Annual Report Download - page 322

ITEM 8 / NOTE 20. EMPLOYEE BENEFITS
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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.
Plan Freeze
On August 27, 2015, we amended the qualified plan, the AIG NQRIP and the SERP, to freeze benefit accruals effective
January 1, 2016. Consequently, these plans were closed to new participants and current participants ceased earning additional
benefits as of December 31, 2015. However, interest credits continue to accrue on the existing cash balance accounts and
participants are continuing to accrue years of service for purposes of vesting and early retirement eligibility and subsidies as
they continue to be employed by AIG.
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) 2015 2014 2015 2014 2015 2014 2015 2014
Change in projected benefit obligation:
Benefit obligation, beginning of year $5,769 $ 4,882 $1,099 $ 1,072 $ 229 $ 217 $64 $52
Service cost 192 173 43 42 5 432
Interest cost 220 228 25 29 8 932
Actuarial (gain) loss (423) 780 (16) 114 (23) 10 911
Benefits paid:
AIG assets (17) (15) (9) (15) (11) (11) (1) (1)
Plan assets (285) (279) (24) (24) - ---
Plan amendment (132) -24 (1) - ---
Settlements --(15) (9) - ---
Foreign exchange effect --(67) (107) - -(3) (2)