Eli Lilly 2013 Annual Report Download - page 141

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2 Dr. Lechleiter is currently eligible for full retirement benefits under the old plan formula (pre-2010 benefits) and
qualifies for early retirement under the new plan formula (post-2009 benefits) as described below.
The retirement plan benefits shown in the table are net present values. The benefits are not payable as a lump
sum; they are generally paid as a monthly annuity for the life of the retiree and, if elected, any qualifying survivor.
The annual benefit under the retirement plan is calculated using years of service and the average of the annual
earnings (salary plus bonus) for the highest five out of the last 10 calendar years of service (final average
earnings).
Post-2009 Plan Information: Following amendment of our retirement plan formulae, employees hired on or after
February 1, 2008 have accrued retirement benefits only under the new plan formula. Employees hired before
that date have accrued benefits under both the old and new plan formulae. All eligible employees, including
those hired on or after February 1, 2008, can retire at age 65 with at least five years of service and receive an
unreduced benefit. The annual benefit under the new plan formula is equal to 1.2 percent of final average
earnings multiplied by years of service. Early retirement benefits under this plan formula are reduced 6 percent
for each year under age 65. Transition benefits were afforded to employees with 50 points (age plus service) or
more as of December 31, 2009. These benefits were intended to ease the transition to the new retirement
formula for those employees who are closer to retirement or have been with the company longer. For the
transition group, early retirement benefits are reduced 3 percent for each year from age 65 to age 60 and
6 percent for each year under age 60. All named executive officers except Dr. Lundberg are in this transition
group.
Pre-2010 Plan Information: Employees hired prior to February 1, 2008 accrued benefits under both plan
formulae. For these employees, benefits that accrued before January 1, 2010 were calculated under the old plan
formula. The amount of the benefit is calculated using actual years of service through December 31, 2009, while
total years of service is used to determine eligibility and early retirement reductions. The benefit amount is
increased (but not decreased) proportionately, based on final average earnings at termination compared to final
average earnings at December 31, 2009. Full retirement benefits are earned by employees with 90 or more
points (the sum of his or her age plus years of service). Employees electing early retirement receive reduced
benefits as described below:
• The benefit for employees with between 80 and 90 points is reduced by 3 percent for each year under
90 points or age 62.
• The benefit for employees who have less than 80 points, but who reached age 55 and have at least 10 years
of service, is reduced as described above and is further reduced by 6 percent for each year under 80 points
or age 65.
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1 The following standard actuarial assumptions were used to calculate the present value of each individual’s
accumulated pension benefit:
Discount rate: 5.15 percent
Mortality (post-retirement decrement only): RP 2000CH
Pre-2010 joint and survivor benefit (% of pension): 50% until age 62; 25% thereafter
Post-2009 benefit payment form: life annuity