AbbVie 2013 Annual Report Download - page 160

Pension Plan
The Pension Plan covers most AbbVie employees in the United States, age 21 or older, and
provides participants with a life annuity benefit at normal retirement equal to A plus the greater of B
or C below.
A. 1.10% of 5-year final average earnings multiplied by years of benefit service after 2003.
B. 1.65% of 5-year final average earnings multiplied by years of benefit service prior to 2004 (up
to 20); plus 1.50% of 5-year final average earnings multiplied by years of benefit service prior
to 2004 in excess of 20 (but no more than 15 additional years); less
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 Pension 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 employment 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 before 2004 who terminate
employment 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 before 2004 who terminate
employment prior to age 50 with fewer than 10 years of service may choose to commence their benefits
on an actuarially reduced basis as early as age 55.
The Pension 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 AbbVie 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 before 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. Gonzalez, Ms. Schumacher, and Mr. Alban 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.
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