Liberty Mutual Retirement Benefit Plan Summary Plan Description (For U.S. Employees Only) Effective January 1, 2018 Section L BEN 67

Transcription

1 Liberty Mutual Retirement Benefit Plan Summary Plan Description (For U.S. Employees Only) Effective January 1, 2018 Section L BEN 67

2 About This Summary Plan Description The following Summary Plan Description (SPD) describes the important features of the Liberty Mutual Retirement Benefit Plan (the Plan ) as of January 1, 2018, except where specifically indicated, and supersedes any previous SPDs. It is intended to answer most of your questions about the Plan; however, it is only a summary. If there is any conflict between the description in this summary and the terms of the Plan, the terms of the Plan will govern. For additional provisions applicable to certain employees who became participants in the Plan as a result of a merger or acquisition (see Additional Provisions.) For purposes of this SPD, the following terms shall have the following meaning: Company means Liberty Mutual Group Inc. (or any successor to all or substantially all of its assets or business, or any affiliated employer within the Company s controlled group that assumes the obligations of the Company under the Plan); Compensation generally means all regular salary, regular wages (including salary differentials and differential wage payments), eligible short-term incentive bonuses, commissions and overtime pay received by you from U.S. sources during the Plan Year, plus any amounts that would have been received but were not because of a salary deferral under Sections 125, 132 or 401(k). To be counted as an eligible short-term incentive bonus, a bonus must be paid no later than the calendar year following the calendar year in which the services resulting from such payments were performed. Regular salary or wages include short-term disability benefits paid by the Company. Compensation does not include any other form of cash, property or imputed income provided to you, including without limitation the following: contributions to payments from the Plan or any other employee benefit plan (other than the Liberty Mutual Short-term Disability Plan), fund, program or arrangement, including non-qualified deferred compensation plans and arrangements, whether now or hereafter established; moving, automobile or other expense reimbursements or allowances; severance pay; trip awards; group term life insurance or other imputed compensation; employee referral awards; tuition aid; outplacement services; employee gifts or other property; sales prizes; suggestion awards; or any other items of irregular or additional compensation, such as catastrophe pay. Note: The IRS annually limits the dollar amount of compensation that can be taken into consideration when determining your pension benefit under the Plan (the dollar amount for 2018 is $275,000); Employer means the Company and affiliated employers within the Company s controlled group; and Participating Employer means the Company and any affiliated employers within the Company s controlled group that have adopted the Plan with the Company s approval. BEN 67 L-1

3 CONTENTS INTRODUCTION L 4 Benefits at a Glance ELIGIBILITY AND PARTICIPATION L 5 VESTING L 6 BREAK IN SERVICE L 7 Special Rules for Military Service RETIREMENT DATE L 8 COMMENCEMENT OF BENEFITS L 8 Suspension of Benefits CONTRIBUTIONS L 8 PENSION BENEFITS L 9 Cash Balance Formula Final Average Pay Formula Career Average Pay Formula Years of Credited Service Long-Term/Permanent and Total Disability SERVICE AFTER AGE 65 L 12 EARLY RETIREMENT L 13 RETIREMENT BENEFITS L 14 Normal Form Optional Forms DEATH BENEFITS L 16 Cash Balance Formula Benefit Qualified Pre-retirement Survivor Annuity Spouse's Benefit TERMINATION OF EMPLOYMENT L 18 Normal Form of Benefit Optional Forms of Benefit Pre-1974 Contributions Payment before Age 65 SURVIVORS' ANNUITIES - MARRIAGE REQUIREMENT L 19 L-2 BEN 67

4 TAXATION OF PENSION L 19 EARLY DISTRIBUTION PENALTY L 20 NON-ALIENATION OF BENEFITS L 20 CONDITIONS UNDER WHICH BENEFITS ARE NOT PAYABLE L 20 RETIREMENT BENEFIT CLAIM PROCEDURE L 21 LEGAL PROCEEDINGS L 22 QUALIFIED DOMESTIC RELATIONS ORDERS (QDRO) L 22 MISTAKE CONCERNING PARTICIPATION L 23 CORRECTION OF PAYMENT MISTAKES L 23 RIGHTS OF PLAN PARTICIPANTS L 23 AMENDMENT OR TERMINATION OF THE PLAN L 25 ADMINISTRATION OF THE PLAN L 25 Authority of the Plan Administrator Interpretation of the Plan ADDITIONAL PROVISIONS L 25 GENERAL PROVISIONS L 42 Administration Assets Benefit Restrictions Benefit Guarantees BEN 67 L-3

5 Introduction Liberty Mutual is committed to providing employees with a comprehensive benefits package, including plans that allow employees to build financial security. This Plan, which is subject to the Employee Retirement Income Security Act of 1974, as amended, ( ERISA ) provides eligible vested employees with a fully company-paid retirement benefit based on their pay. Benefits at a Glance Eligibility Employees who meet eligibility requirements and are regularly scheduled to work 30 or more hours per week may enter the Plan on their hire date. All other eligible employees who meet eligibility requirements may enter the Plan after working 1,000 hours during a consecutive 12 month period following their hire date. Note: Different eligibility requirements applied prior to January 1, Cash Balance Formula All eligible employees will accrue pension benefits under this formula. If you are eligible to participate in the Plan, the Company will provide you with monthly pay credits and interest credits through a cash balance account. The pay credit will be equal to 5.0% of your eligible monthly Compensation for each month that you are employed with the Company or a Participating Employer. Interest credits will be applied monthly to your opening account balance and will be based on the United States 30-year Treasury Rate in effect as of August of the preceding year, which is published in September. For 2018 the interest credit rate is 2.80%. Final Average Pay Formula If you were a participant in the Plan prior to January 1, 2014, in addition to a benefit under the Cash Balance formula, you will receive a pension benefit under this formula, which will be based on your vested credited service as of December 31, 2013, and your age and Final Average Pay as of your termination date, subject to the Plan s vesting provisions. Final Average Pay is determined by using the highest five consecutive years of your annual Compensation in the last 10 years prior to termination. Any compensation you receive after December 31, 2020 will not be included in calculating your Final Average Pay benefit. The benefit is then offset by your Social Security benefit, based on law in effect as of December 31, Career Average Pay Formula Vesting Participants will not accrue any additional benefits under this formula after December 31, (see section titled Career Average Pay Formula ) You will become 100% vested in your pension benefit once you have completed three years of vesting service. L-4 BEN 67

6 For employees who terminated on or before December 31, 2013, different vesting rules apply. Retirement Date Normal Form of Benefit Normal Retirement is age 65, regardless of your years of service with the Company. If you are single, your normal form of benefit will be a Single Life Annuity, payable to you for life. If you are married, your normal form of benefit will be a 50% Joint & Survivor Annuity. Optional Forms of Benefit In lieu of the normal form of benefit, you can elect an optional form of payment. Several annuity options are available to you depending on your marital status. (see section titled Retirement Benefits ) Lump Sum Payments Your vested benefit accrued under the Cash Balance formula is always available to you as a one-time lump sum payment as soon as administratively practicable following your termination of service. In addition, if the net present value of your vested benefit accrued under the Final Average Pay or Career Average Pay formula is less than $50,000 at your termination of service, you may elect to take that benefit in a lump sum payment. (See section titled Retirement Benefits ) Cost Reviewing your account Benefits under the Plan are paid for by the Company, at no cost to you. You may review your notional account or run retirement benefit projections on the Your Total Rewards web site or by contacting Benefits Express. The web site is accessible either through the Liberty Mutual Intranet via the Employee Center home page or at Representatives are available Monday - Friday, 9:00 a.m. - 5:00 p.m., Eastern Time to personally assist you and you may obtain your account balance through the Benefits Express automated voice system, which is available 24 hours a day, 7 days a week with the exception of 2:00 a.m. through 1:00 p.m. Eastern Time on Sunday. The toll-free number for Benefits Express is (TDD# ; International # ) Eligibility and Participation If you are regularly scheduled to work 30 or more hours per week, you become a Participant in the Plan on your date of hire. For all other eligible employees, you will become a Participant on the first of the month BEN 67 L-5

7 following the completion of 1,000 hours worked within a consecutive 12 month period following your hire date. Note: Different eligibility requirements applied prior to January 1, An eligible employee is any employee who is employed by a Participating Employer, who is not: A leased employee; A person classified by a Participating Employer as an independent contractor, or an agency employee, or a person whose Compensation is paid by the Employer other than through its payroll system, or a person whose total Compensation from an Employer is reflected on a Form 1099 regardless of how the IRS, any governmental agency or court classifies the person; A person covered by a collective bargaining agreement, unless any such agreement specifically provides for eligibility in the Plan; A person employed in Puerto Rico; A person who is (or becomes) employed by a subsidiary of the Company that is not a Participating Employer; or Any person classified in a job classification designated in writing by the Chief Executive Officer of the Company, at his or her sole discretion, as ineligible to participate in the Plan, including but limited to persons designated on the Participating Employer s payroll system or internal personnel records as internship/co-op, internship/co-op graduate, law clerk, INROADS student, or non-degree student, regardless of how the IRS, any governmental agency or court classifies the person. Employees who are non-resident aliens of the United States and who are not excluded as listed above are also eligible to participate in the Plan to the extent that they have compensation paid in United States dollars from the Participating Employer s United States payroll system. At the time you cease to be an eligible employee, your participation in the Plan will end. See the Break in Service section below for a discussion of how breaks in employment service may affect your eligibility years of service. Vesting Vesting Service is used to determine when you have a non-forfeitable right to the pension benefit you have accumulated under the Plan. You become 100% vested in your benefit once you complete three years of vesting service. Please note that the three year vesting provision does not apply for those participants whose employment with the Company terminated prior to January 1, For those participants, the vesting provision in effect as of their termination date will apply. If you are regularly scheduled to work 30 or more hours per week, you receive one vesting year of service for each 12 full months of service. (Partial months of service are aggregated; 30 days are deemed to be a month.) All other eligible employees receive one vesting year of service for each calendar year in which they work at least 1,000 hours (fractional years do not count.) You also are fully vested upon remaining employed with the Company until age 65 or upon your death if you die while employed with the Company. Refer to the "Break in Service" section below for a discussion of how a break in employment service may affect your vesting years of service. For service prior to January 1, 2014, different rules for determining years of vesting service may apply. L-6 BEN 67

8 Break in Service If you are regularly scheduled to work 30 or more hour per week, a one-year break in service results with respect to each 12 consecutive month period after your "service termination date" (as defined in the Plan; generally, the date your employment ends) in which you are not credited with an hour of service. For all other eligible employees, a one-year break in service occurs for any twelve month consecutive period in which you are credited with fewer than 501 hours of service. If you have at least five consecutive one-year breaks in service, your vesting service prior to the breaks may be lost. Whether that occurs will depend on whether you are vested: If you are vested, you cannot lose your vesting service for any reason, including a five-year break in service. If you are not vested, your service will be lost if you incur five consecutive one-year breaks in service. Previous pension credits will be lost if you are not vested AND you have a period of consecutive one-year breaks in service that equal or exceed five years of service. Your service before any such breaks in service will be disregarded when determining rights to participate and vest in the Plan upon returning to the Company. For example, if you earn two years of vesting service prior to termination, and then return to employment with a Participating Employer after five or more consecutive one-year breaks in service, all pension benefits you earned prior to such break will be permanently forfeited. In addition, all service prior to such breaks in service shall be disregarded for all purposes. Solely for the purpose of determining whether a break in service has occurred for eligibility and vesting purposes, part-time employees will be credited with up to 501 hours of service for an absence from work because of a parental leave of absence or a Family Medical Leave (FML) leave of absence. During this period of absence, you will be treated as having completed the number of hours of service, up to 501, that normally would have been credited but for the absence. The hours of service shall be credited in the year the absence begins, if necessary, to prevent a break in service in that year; otherwise, they shall be credited in the following year. For full-time employees who are on a parental leave of absence or FML, a service termination date will generally not occur for purposes of these break in service rules until the second anniversary of the date you began your leave of absence. The Company may require you to furnish information necessary to establish that the leave was taken for one of the reasons listed above. Note: Different break in service rules applied before Any service lost under the prior break in service rules is not restored. Special Rules for Military Service The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) created certain rights for employees who are away from work due to qualified military service. The rules that apply to the Plan are discussed in this section. In general, qualified military service means service in the uniformed services, including the Army, Navy, Marines, Air Force, Coast Guard, Reserves, and National Guard. Service is not qualified military service if you were a temporary employee prior to your period of military service, or if your period of military service exceeds 5 years (subject to certain exceptions). You must provide your employer with advance notice of your military service, unless military necessity prevents giving notice, or giving notice is otherwise impossible or unreasonable. Your employer may require documentation of your military service upon your return. Under USERRA, if you return to employment within 90 days of your release from active duty, you will not be treated as having incurred a break in service due to your military service, and your period of military service will count both towards your vesting years of service. Eligible Compensation, including differential pay, which you BEN 67 L-7

9 may receive from the Company or Participating Employer while you are on a military leave, will be taken into account under the Cash Balance formula. The Heroes Earning Assistance and Relief Tax Act of 2008 (HEART) created rights for employees who are away from work due to qualified military service or die while performing qualified military service. In accordance with HEART, differential pay to employees on military leave will be treated as Plan eligible Compensation. In addition, if you die while performing qualified military service you will become 100% vested in your Plan benefit. Retirement Date Your Normal Retirement Date is the first day of the month in which you attain age 65. If you have an accrued vested benefit under the Final Average Pay benefit, you may retire from the Company as early as age 55 (see section titled "Early Retirement"). You may use your accrued Flexible Time Off (with approval of your supervisor) prior to your retirement date. Any accrued Flexible Time Off unused as of your retirement date will be paid to you in a lump sum. Commencement of Benefits Your first pension payment will be made on your retirement date, which is the first day of any month following retirement, with monthly payments continuing for life. Early retirees may begin to receive their pension as early as age 55, starting on the first day of any month coincident with or following the attainment of age 55, but no later than the first day of the month in which they attain age 65. If you continue to work for the Company or a Participating Employer after you reach age 65, your benefits will be deferred until you terminate employment with the Company or a Participating Employer. However, your pension benefit under the Final Average Pay formula or the Career Average Pay formula will begin no later than April 1 of the calendar year following the year in which you attain age 70-1/2 (see section titled "Service After Age 65"). You may not begin payment of your benefit under the Cash Balance formula until you terminate employment with the Company or a Participating Employer. You should start the retirement process 45 to 90 days before your retirement date to meet legal and administrative requirements that affect the timing of your benefits. To start the process, you may either log on to the Your Total Rewards web site at or call Benefits Express at Suspension of Benefits If you have commenced your benefit as a monthly annuity and are re-employed by the Company or a Participating Employer, your Final Average Pay formula or Career Average Pay formula benefit will be suspended for any month in which you work 40 hours or more. The suspension of benefit provision will not apply if you are currently receiving a Cash Balance formula benefit and become eligible to participate in the Plan upon re-employment. Instead, a new notional account will be established for you, and you will receive additional benefits under the Cash Balance formula. Contributions From the inception of the Plan in 1934 to June 1, 1973, employees contributed toward the purchase of their retirement benefits. On June 1, 1973, the Company assumed the full cost of future benefits provided by the L-8 BEN 67

10 Plan. You may withdraw your contributions plus interest, but your join date in the Plan would be changed to June 1, 1973, and the benefits at retirement would be reduced accordingly. That is, you will forfeit all pension benefits attributable to your service prior to June 1, If you withdraw your contributions, interest is credited, compounded annually at 2% through December 31, 1975; at 5% through December 31, 1987; and beginning January 1, 1988, at 120% of the Federal Mid-term rate in effect the first day of each Plan Year. The Company's contribution is determined by an independent actuarial firm that calculates the annual amount required by law. Pension Benefits The full Company pension, payable at retirement, will be based on the sum of the following: 1. Benefits credited to you during the period you were required to contribute to the Plan (before June 1, 1973), and 2. Benefits credited to you after June 1, 1973, when the Company started paying the full cost of future benefits. Before 1976, benefits were available only to full-time employees. After January 1, 1976, benefits are also credited, as described below, to eligible part-time employees who work 1,000 hours or more in a Plan Year. At retirement, you will receive a pension benefit earned under the Cash Balance formula. In addition, if you were a participant in the Plan prior to January 1, 2014, you will receive the higher of a benefit determined under the Final Average pay formula or the Career Average Pay formula. Cash Balance Formula Under the Cash Balance formula, your notional account will grow with monthly pay credits and interest credits provided by the Company. Pay credits applied monthly to your cash balance account will be equal to 5.0% of your monthly eligible Compensation. Pay credits will be applied to your account at the end of the month up to your termination date. In addition, eligible Compensation paid within 14 (fourteen) days following your termination will be eligible for a pay credit. Interest credits will also be applied to your opening cash balance account and will be determined using the United States 30-year Treasury Rate in effect as of August of the preceding year, which is published in September. Interest credits will be applied at the end of every month you have an account balance under the Plan. Final Average Pay (FAP) Formula (Effective January 1, 2014, participants will not accrue additional credited service under the FAP formula.) If you have an accrued benefit under the FAP formula as of December 31, 2013, your FAP is determined by using your eligible Compensation for the highest five consecutive years in the last 10 years prior to your termination date, divided by five. For Plan Years prior to 2013, the Compensation used for any given year is the highest annual salary rate in effect within the calendar year (including the Management Incentive and Variable Incentive Plans or other similar short-term incentive bonuses), or the prior year's Compensation, if BEN 67 L-9

11 higher. For Plan Years after 2012, eligible Compensation for FAP purposes will be annual Compensation paid during the Plan Year. However, in the year of termination the FAP will be the greater of: (i) Compensation paid in the current year; or (ii) Highest annual salary for the current year, plus your short-term bonus paid during the current year. Although you will not earn additional service after December 31, 2013 your Final Average Pay benefit will be adjusted for increases or decreases in Compensation that you earn from the Company after December 31, Any compensation you receive after December 31, 2020 will not be included in calculating your Final Average Pay benefit. If your service termination date in a Plan Year is prior to the last business day in January, your FAP will be determined as of December 31 of the previous year. Compensation is determined with respect to all of your service with a Participating Employer in the Plan. Note: If you have a break-in-service that is greater than one year (see section titled Break In Service ) any Compensation on or after your rehire date will not be included in the calculation of your FAP benefit. To determine your benefit under the FAP: Part 1: For Service through 12/31/2010 Step 1: Multiply your FAP by 54% Step 2: Subtract 50% of your Social Security Benefit PLUS Part 2: For Service from 1/1/ /31/2013 Step 1: Multiply your FAP by 35% Step 2: Subtract 35% of your Social Security Benefit PLUS Part 3: For Credited Service Over 35 Years (as of 12/31/2013) Add 1/2 of 1% times your FAP for each year over 35 years up to a maximum of 40 years Step 3: Multiply your years of service up to 35 years by the results of Steps 1 and 2 Step 4: Divide the result of Step 3 by 35 Step 3: Multiply your your years of service between 1/1/2011 and 12/31/2013 by the results of Steps 1 and 2 Step 4: Divide the result of Step 3 by 35 Note: The sum of your credited service under Part 1 and Part 2 above may not exceed 35 years. If you had more than 35 years of credited service as of 12/31/2013, Part 3 will apply. In no case will you accrue additional service under this formula beyond 12/31/2013. If you are a full-time employee, a vested part-time employee, or a terminated vested participant not receiving payments from the Plan, you may project your retirement benefits on the Your Total Rewards website at Note: In calculating your Social Security benefit for purposes of the offset under the FAP formula, in the event the Company does not have readily available actual wage history for all working years with the Employer, such wage history shall be estimated on a National Average Wage regression basis. If you, your spouse, or Contingent Annuitant supplies documentation of your actual wage history, your benefits will be adjusted to reflect the offset based on actual wage history of years previously estimated. A recalculation to adjust the offset will only be performed if the recalculation would result in a higher benefit. The document of actual wage L-10 BEN 67

12 history must be submitted within 90 days of the communication statement date. Career Average Pay Formula (Effective January 1, 2014 any accrued benefit has been frozen) Participants in the Plan prior to December 31, 2004 accrued a benefit under the Career Average Pay formula as outlined below: For service through December 31, 2004 For all participants, the method of determining the benefit to be credited for service through December 31, 2004 is to use the career average Compensation (defined as the annual salary rate being paid on January 1 or the prior year's Annual Compensation, if higher), and apply the following formula: 1.2% of career average Compensation up to $6,000, plus 2.0% of career average Compensation in excess over $6,000, plus Supplemental benefits of: 10% of the accumulated benefits to December 31, 1972, if the participant contributed from January 1, 1969, to December 31, % of the benefits credited from January 1, 1973, through December 31, For service from January 1, 2005 December 31, 2013 New hires and rehires after December 31, 2004, will not accrue benefits under the career average pay formula Existing employees under age 50 as of December 31, 2004, will not accrue future benefits under the career average pay formula Existing employees age 50 or older as of December 31, 2004, will accrue future benefits through December 31, 2013, using the career average Compensation, and applying the following formula: - 1.2% of career average Compensation up to $6,000, plus - 2.0% of career average Compensation in excess of $6,000, up to a maximum career average Compensation limit of $50,000. To find your annual career pay benefit at retirement, you simply add up the credited benefit from each year of credited service, under the applicable formula, up to a maximum of 40 years (or, if greater, your years of credited service under the Plan as of December 31, 1987), plus the supplemental benefit, if applicable. If your service termination date in a Plan Year is prior to the last business day in January, your annual salary rate and prior year s Annual Compensation will be determined as if your termination occurred on December 31 of the prior year. Years of Credited Service Effective January 1, 2014, employees will no longer accrue credited service under the Plan. The following explains how credited service was determined prior to January 1, Full-time Employees: A year of credited service accrued for each 12 full calendar months of service (whether or not consecutive) between your Plan entry date and your "service termination date" (as defined in the Plan; generally, the date your employment terminates). For purposes of the Final Average Pay and Career Average Pay formulas, partial months of employment do not count for credited service or pay purposes. You do not receive credit for any period in which you were not actively employed, not an eligible employee, on an unpaid non-military leave of absence, or during which you did not make required contributions to the Plan. BEN 67 L-11

13 Part-time Employees: For the Career Average Pay Formula, a year of credited service accrued for each calendar year of participation in which you were credited with 1,000 or more hours of service. For the Final Average Pay Formula, a year of credited service accrued for each calendar year of participation in which you were credited with at least 1,900 hours of service. No service was credited for a year in which you worked less than 1,000 hours. If you are credited with 1,000 hours or more but less than 1,900 hours, you were credited with the percentage of a year that the number of hours worked bears to 1,900 hours. For both formulas, special rules applied in the year you entered the Plan and the year you terminate employment. Contact Benefits Express at for further information. Long-Term/Permanent and Total Disability Employees on Long-Term Disability received credited service under the Plan through December 31, After January 1, 2014, employees on Long-Term Disability will not accrue service under the Plan. If you are on an approved claim and are receiving benefits under any Liberty Mutual Long-Term Disability Plan or are permanently and totally disabled as of December 31, 2013, you will receive credited service through that date. After December 31, 2013, you will not accrue credited service under the Plan while on an approved Long-Term Disability claim or permanent disability status. If you are approved for benefits under any Liberty Mutual Long-Term Disability Plan or are declared permanently and totally disabled on or after January 1, 2014, you will not accrue credited service under the Plan and your long-term disability benefit payments received under any Liberty Mutual Long-Term Disability Plan are not eligible compensation for purposes of the Cash Balance formula.. If you were on an approved Long- Term Disability leave or were permanently disabled as of December 31, 2013, and you do not return to work prior to your retirement, the Cash Balance formula will not apply to your benefit calculation. Your benefit will be calculated using the Final Average Pay or Career Average Pay formulas and your eligible credited service accrued through December 31, Service after Age 65 If you continue to work with the Company beyond age 65, your retirement benefit will generally not begin until your postponed retirement date, which is the first day of any month following your attainment of age 65. However, your benefit under the FAP or Career Average Pay formula must commence April 1 following the year in which you attain age 70 ½, even if you are still employed. In this case, benefits will be paid in the form of a single life annuity if you are not married, and in the form of a subsidized 50% joint and survivor annuity if you are married. When you actually retire, you may select a new benefit payment option. Note: Your Cash Balance formula benefit will not begin until your termination date. You may request further information regarding these rules from the Plan Administrator at any time. If you continue to work with the Company beyond age 65, the following additional rules apply: The maximum number of years of credited service taken into account in calculating your pension benefit is 40 years of credited service. Compensation earned after you have reached this limit on years of credited service will be taken into account in calculating your final average salary under the final average pay formula. Any additional accrual required in a Plan Year on account of your post-65 service will be offset by the value of any pension benefits paid to you during that period. See section titled "Commencement of Benefits" for a discussion of suspension of benefits on reemployment. L-12 BEN 67

14 Early Retirement Under the Final Average Pay and Career Average Pay formula, if you have an accrued vested benefit under the Final Average Pay or Career Average Pay formula and at least five years of continuous employment with the Company since your most recent date of employment, you may terminate employment on the first day of any month on or after age 55. Note: The Early Retirement provisions do not apply to your benefit accrued under the Cash Balance formula. Employees determined by a court to have engaged in Wrongdoing as defined below are not eligible for the Plan s Early Retirement provisions. Wrongdoing means: If you are convicted or enter a plea of guilty, no contest or nolo contendere to a felony(ies) involving theft, fraud, misappropriation of funds, embezzlement, dishonesty or similar conduct having a material adverse impact on a Participating Employer or any of their respective subsidiaries; provided such actions were intended to result in, or resulted in, direct personal financial gain; or If a court of competent jurisdiction has found by final judgment that you have engaged, are engaging or plan to engage in a material breach of duty of loyalty to a Participating Employer or any of their respective subsidiaries, provided such actions were intended to result in, or resulted in, direct personal financial gain. During the pendency of any judicial proceeding in which you are a defendant and that may result in a conviction, plea, or finding under either of the above, you will not be entitled to Early Retirement Benefits under the Plan, but instead will be eligible for early payment of benefits as described under the Termination of Employment section. Your early retirement benefit is the highest benefit that could have been payable at any date after age 55 and up to your actual date of your retirement. The benefit payable is computed on the basis of your pay and years of credited service with a Participating Employer to the time of your early retirement. For purposes of calculating your benefit under the final average pay formula, your primary Social Security benefit will be determined as follows: Retirement on or after age 62: Generally, the Social Security benefit to which you are entitled in the month containing your Early Retirement Date. Retirement before age 62: Generally, the projected Social Security benefit you will be entitled to receive upon attaining age 62. The benefit you will receive if you retire under the Early Retirement provision is aligned with your Social Security normal retirement age. For existing employees who were age 50 or older as of December 31, 2005, and who remain employed with the Company until their retirement date, the following Pre-2006 factors will apply for purposes of calculating early retirement benefits. For employees who were under age 50 as of December 31, 2005, and employees hired or rehired on or after January 1, 2006, the following Post-2005 factors will apply for the purposes of calculating early retirement benefits. BEN 67 L-13

15 Factors Post December 31, 2005 Retirement Pre-2006(*) Year of Birth: Year of Birth: Age Factors 1964 and earlier 1965 and later (*) The Early Retirement Factors used for the period January 1, 2001 through December 31, Please contact Benefits Express at to obtain the Early Retirement factors used prior to January 1, Retirement Benefits (For termination benefits under the Final Average Pay and Career Average Pay formulas, see "Termination of Employment on L-19) (For pension benefits, see Pension Benefits on L-9). Normal Form The normal form of benefit for unmarried participants is an annuity payable each month for life. The normal form of benefit for married participants is a 50% qualified joint and survivor annuity payable each month, which is fully subsidized for the Final Average Pay and Career Average Pay benefits. The benefit is "fully subsidized" because your retirement benefit is not reduced during your lifetime even though benefits will continue to your spouse after your death. If a married participant terminates prior to meeting the retirement provisions, the normal form of benefit is a non-subsidized 50% qualified joint and survivor annuity. Note: The joint and survivor annuity option is never subsidized under the Cash Balance formula. This is an annuity payable for your life, with 50% of your benefit continuing to your surviving spouse after your death. Optional Forms You may elect to take an optional form of benefit at any time within 90 days prior to the starting date of your pension. You may revoke the election any time during this 90-day election period. Cash Balance Formula (Optional forms for Termination and Retirement) Married and unmarried participants may elect a lump sum payment. If you elect this optional form, your entire cash balance account will be paid to you in a lump sum. You may be eligible to rollover the lump sum payment to an IRA or to another qualified plan. If you are married, this option can only be selected if your spouse consents to waive the qualified joint and survivor annuity. This consent must be in writing, witnessed by a notary public and name the specific non-spouse beneficiary. Married and unmarried participants who terminate on or after age 55 may elect a single life annuity or a joint and survivor annuity option, in which 50%, 66-2/3%, 75%, or 100% of your benefit payment continues after your death to your surviving spouse or designated beneficiary. Joint and survivor annuity options are not subsidized. L-14 BEN 67

16 Married participants who terminate prior to age 55 may elect a joint and survivor annuity option, in which 50%, 66-2/3%, 75% or 100% of your benefit payment continues after your death to your surviving spouse or designated beneficiary. Joint and survivor annuity options are not subsidized. Unmarried participants who terminate prior to age 55 may elect a single life annuity. Note: If a married participant elects a single life annuity, spousal consent will be required. Final Average Pay and Career Average Pay Formulas Voluntary Lump Sum Final Average Pay and Career Average Pay Benefits: If at termination, the net present value of your accrued vested benefit is greater than $5,000 but not more than $50,000, you will have the opportunity to elect a voluntary lump sum payment. In lieu of the lump sum: If you are younger than age 55 at the time of termination, and your accrued benefit meets the conditions described above, you may elect an immediate 50% or 75% joint survivor annuity if you are married or an immediate single life annuity if you are unmarried. If you are age 55 or older at the time of termination, and your accrued benefit meets the conditions described above, you may also elect other forms of annuity as described below. Note: If offered an opportunity to elect a lump sum of your Final Average Pay or Career Pay formula benefit at termination and you elect not to receive your benefit you will not be offered a subsequent opportunity to elect a lump sum payment option. Joint & Survivor Annuities Married participants may elect a joint and survivor annuity that will provide a larger annuity benefit to the surviving spouse than the qualified 50% joint and survivor annuity described above. You may elect to have either 66-2/3%, 75%, or 100% of your benefit payment continue after your death to your surviving spouse. This increased survivor benefit, however, is not fully subsidized; that is, the amount of your retirement benefit will be reduced to reflect the value of the larger payments continuing to your surviving spouse after your death. This form of benefit will, however, be actuarially equivalent to the Normal Form of benefit described above. Married and unmarried participants may elect to have payments continue after their death to a surviving Contingent Annuitant other than the spouse. This benefit is called a Contingent Annuitant Option. You may elect to have either 25%, 33-1/3%, 50%, 66-2/3%, 75%, or 100% of your retirement benefit continue after your death to your surviving Contingent Annuitant. This benefit is not subsidized; that is, your retirement benefit is reduced to reflect the value of payments continuing after your death to your surviving Contingent Annuitant. This benefit will be actuarially equivalent to your retirement benefit payable as a single life annuity. If you are married, this option can only be selected if your spouse consents to waive the qualified joint and survivor annuity. This consent must be in writing, witnessed by a notary public and name the specific non-spouse beneficiary. Married and unmarried participants may elect an inflation adjusted annuity option. The option is available for the single life, 50%, 66-23%, 75%, or 100% annuity option. The inflation adjusted annuity option allows you to elect to receive a lower retirement benefit at the time that your benefits begin, in exchange for a higher benefit when you reach age 75. The benefit at age 75 would then increase by 4.0% annually thereafter. BEN 67 L-15

17 Small Benefits If the present value of your total retirement benefit, that is, any benefit you are eligible to receive under the Plan is $1,000 or less at your retirement or termination date, you will receive the amount in a lump sum. The Plan will make no additional payments to you or any surviving annuitant. Similarly, if the value of the qualified pre-retirement survivor annuity or spouse s benefit under the Plan is $1,000 or less at the time of your death, your surviving annuitant will receive the benefit in a lump sum. If the present value of your total retirement benefit under the Plan is between $1,001 and $5,000 at your retirement or termination date and you do not elect to either receive the amount in cash or roll it over to a qualified plan or Individual Retirement Account (IRA) of your choice, the present value of your retirement benefit will be automatically rolled over to an IRA provider. Similarly, if the value of the qualified preretirement survivor annuity or spouse s benefit under the Plan is between $1,001 and $5,000 at the time of your death and your surviving annuitant does not make an election to either receive that amount in cash or roll it over to a qualified plan or Individual Retirement Plan (IRA), the present value of the retirement benefit will be automatically rolled over to an IRA provider. In accordance with the U.S. Department of Labor regulations, the Plan fiduciaries have designated Millennium Trust Company, LLC as an IRA provider to receive automatic rollover distributions from the Plan. If you do not elect a distribution from the Plan and receive an automatic rollover distribution to the Millennium Trust, you will no longer be a Plan Participant, but will be the owner of the IRA, have investment direction over the IRA proceeds and may enforce the terms of the IRA. Until you direct the investment of the IRA proceeds, the money will be invested in the FDIC Insured Bank Money Market Demand Account associated with Millennium Trust. The investment is designed to preserve principal, and provide a reasonable rate of return while maintaining liquidity. A $25.00 account set-up fee will be deducted from the IRA following the automatic rollover distribution and prospective fees will be deducted from the IRA pursuant to the rollover IRA fee schedule of Millennium Trust Company, LLC. For further information on Automatic Rollover rules or additional information regarding Millennium Trust Company, LLC the FDIC Insured Bank Money Market Demand Account and IRA fees you may contact: Millennium Trust Company, LLC Automatic Rollovers Department 2001 Spring Road, Suite 700 Oak Brook, Illinois Death Benefits Your retirement benefit may be payable in the form of a joint and survivor annuity. After your death, benefit payments generally continue to your named annuitant. If, however, you or your named annuitant die before your retirement date, your joint and survivor annuity election is automatically canceled. If you have begun receiving benefits in the form of a joint and survivor annuity and your named annuitant dies before you, your benefit is not increased because of the death of your named annuitant, and no benefit payments continue after your death. Also, your selection of a survivor annuity cannot be canceled after your retirement benefits begin. In all cases, if you or your named annuitant die before payment of pension benefits in an amount equal to your pre-1974 contributions, if any are paid, the remainder of your contributions plus interest will be paid to your beneficiary or to your estate if no beneficiary survives you. If you die before your retirement benefits begin, the following death benefits may be payable from the Plan: L-16 BEN 67

18 Cash Balance Formula Benefit If you are married, your designated beneficiary is your spouse; however, you may designate a beneficiary or beneficiaries other than your spouse, including a trust (with your spouse s consent). Spousal beneficiaries may elect the Cash Balance formula benefit as a lump sum or a single life annuity. Your beneficiary may defer the payment of the benefit to the date you would have attained age 55 or the date on which a payment is made under the Final Average Pay or Career Pay formulas. Non-spousal beneficiaries (if elected by a married participant with spousal consent) and beneficiaries of unmarried participants will receive a lump sum payment of your vested benefit accrued under the Cash Balance formula as soon as administratively practicable. In the event no beneficiary is designated or your designated beneficiary is deceased, the Plan Administrator shall direct that payment be made to your surviving spouse, if any, otherwise to your surviving children in equal parts or if you have no surviving children, to your father or mother or both in equal parts or if none of the above survives to your executors or administrators. Any such payment will be a complete discharge of the liabilities of the Plan. Qualified Pre-retirement Survivor Annuity The Plan provides that a "qualified pre-retirement survivor annuity" must be paid if you are married and die before payment of your vested benefit has begun. This is a pension benefit that will make monthly payments to your spouse after your death, beginning on the first day of the month following the later of: The date you would have attained age 55 or The date on which you died. The amount of payments to your spouse is to be the same as (or the actuarial equivalent of) the amount of the payments that would have been made under a 50% qualified joint and survivor annuity, which is described on the Joint and Survivor Annuity section, if: 1. In the case of death after age 55, you had retired with an immediate qualified joint and survivor annuity on the day before death; 2. In the case of death at or before age 55, you had Terminated employment on the date of death, Survived to age 55, Retired with a qualified joint survivor annuity at age 55, and Died on the day after attaining age 55. If you die after retirement, or before retirement but while still employed by the Company or a Participating Employer, the qualified pre-retirement annuity will be calculated (1) based on a "subsidized" 50% qualified joint and survivor annuity, and (2) using the reduction factors specified under "Early Retirement". Otherwise, the benefit will be calculated (1) on the basis of a non-subsidized 50% qualified joint and survivor annuity, and (2) using the reduction factors specified under the "Termination of Employment" section. Spouse's Benefit The Plan also provides a spouse's benefit for certain married participants who die while still employed by the Company. This benefit may be payable to your surviving spouse if the following conditions are met: You die after attaining age 50; or prior to age 50 with at least 25 years of service with a Participating BEN 67 L-17

19 Employer in the Plan, and; Your spouse is shown as your beneficiary under the Plan. The spouse's benefit is 50% of your benefit computed at the time of your death. The benefit begins on the first day of the month following your death, and payments are made monthly for your spouse's lifetime. If, however, your spouse is more than 5 years younger than you, the spouse's benefit is reduced. The reduced benefit will be the actuarial equivalent of the benefit that would have been payable if your spouse were exactly five years younger than you. If your spouse dies before receiving benefits equal to your pre-1974 contributions, if any, the remainder of your contributions, plus interest, will be paid to your beneficiary, or to your estate if no beneficiary survives you. If your spouse qualifies for both the qualified pre-retirement survivor annuity (described above) and the spouse's benefit, only the higher of the two benefits will be paid. Generally, this will be the spouse's benefit. To compute the spouse's benefit under the Final Average Pay formula, the Company uses the Social Security benefit you would be expected to receive at age 65 on the basis of your earnings to the date of your death. You also are considered to be age 65 at the date of your death, and there is no reduction for starting benefit payments immediately. Important Note: If the value of the qualified pre-retirement survivor annuity or spouse s benefit is accrued under the Final Average Pay or Career Average Pay formulas and is greater than $5,000, but not more than $50,000, at the time of your death, your spouse may elect a lump sum payment or an immediate single life annuity. Termination of Employment If you terminate employment before you are eligible for early retirement benefits and have met the vesting requirements of the Plan, you are entitled to a deferred retirement benefit. This benefit may begin as early as age 55. The following paragraphs discuss the benefit you are entitled to receive. For purposes of calculating your benefit under the final average pay formula, your primary Social Security benefit is the projected Social Security benefit you will be entitled to receive in the month containing your 65 th birthday. Normal Form of Benefit If you are married at the time your benefit payments are to begin, you will receive your pension benefits in the form of a non-subsidized 50% qualified joint and survivor annuity. This benefit is not subsidized. That is, your pension benefit is reduced so that a survivor annuity may be paid to your surviving spouse. If you are not married, you will receive your pension benefit in the form of a single life annuity. Benefit payments will begin on the first day of the month in which you attain age 65. Benefits will be paid in monthly installments for your lifetime, or, if the benefits are payable in the form of a qualified joint and survivor annuity, for the lives of you and your spouse. If the present value of your benefit accrued benefit is $5,000 or less (see the Small Benefit section). At your death the excess, if any, of your pre-1974 contributions over the benefits paid will be paid to your beneficiary or to your estate if no beneficiary survives you. L-18 BEN 67