Honeywell Retirement Earnings Plan

Transcription

1 Honeywell Retirement Earnings Plan SUMMARY PLAN DESCRIPTION Describing the Bendix Salaried Formula Effective January 1, 2010

2 Honeywell Retirement Earnings Plan Summary Plan Description Table of Contents Section 1 Why Should I Read This SPD?... Page 3 Section 2 How to Participate... Page 4 Section 3 How Your Benefit Is Determined... Page 10 Section 4 When You Can Begin Receiving Benefits... Page 15 Section 5 How Benefits Are Paid... Page 23 Section 6 Survivor Benefits... Page 33 Section 7 Situations Affecting Your Plan Benefits... Page 36 Section 8 Definitions... Page 38 Section 9 Other Plan Facts... Page 43 Section 10 ERISA... Page 47 Honeywell International Inc. established the Honeywell Retirement Earnings Plan (the Plan ) effective January 1, 2000 which introduced a new simplified lump sum benefit formula, referred to as the lump sum formula. Honeywell employees covered by certain pension formulas at that time were offered the opportunity to be covered by the new lump sum formula or to remain covered by their traditional AlliedSignal or Honeywell pension plan formulas ( Pension Choice ). The Plan therefore consists of the lump sum formula as well as the traditional benefit formulas for those employees who elected to remain covered by those traditional formulas ( Old Formulas ). The Old Formulas are also relevant for employees who elected to be covered by the lump sum formula, since they have a minimum grandfathered or frozen benefit ( Protected Benefit ) under the Old Formulas that must be compared to the benefits provided under the lump sum formula. Such employees receive the greater of the lump sum formula benefit or the Protected Benefit under the Old Formula. This Summary Plan Description (SPD) provides information about the basic features of one of the Old Formulas the Bendix Salaried Formula. You should read this SPD if you elected to remain covered by the Bendix Salaried Formula during Pension Choice. This SPD is also relevant to you if you were covered by the Bendix Salaried Formula before Pension Choice but elected the lump sum formula during Pension Choice. This SPD describes how your Protected Benefit under the Bendix Salaried Formula is calculated.

3 There are other Old Formulas that may apply to you or other groups of Honeywell employees. These Old Formulas are described in separate SPDs. If you think you may be covered by Old Formulas other than the Bendix Salaried Formula and want to request the SPD that applies to you, call One Stop Your Employee Services Access Line at and select option 5 for Retirement and Pension Benefits. In the event of any inconsistency or conflict between this SPD and the Plan document, or any omission from or ambiguity in the terms of the SPD, the Plan document will control. Terms starting with capital letters throughout this SPD are defined in the appropriate section or in Section 8 - Definitions. The Company intends to continue the Plan. However, it reserves the right to modify, change, revise, amend or terminate the Plan at any time, for any reason.

4 Section 1 Why Should I Read This SPD? You should read this SPD if all or a portion of your pension benefit is calculated under the Bendix Salaried Formula. Your pension benefit may be calculated under the Bendix Salaried Formula if: You participated in the Bendix Salaried Formula at one time, but you later transferred to a new work location that provides a different pension plan or formula. You elected to remain in the Bendix Salaried Formula during Pension Choice. You elected to be covered by the lump sum formula during Pension Choice, but you participated in the Bendix Salaried Formula immediately before Pension Choice. This SPD describes the important features of the Bendix Salaried Formula. It will help you understand how your benefits are calculated and paid. However, special provisions apply to the calculation of your benefits under the Bendix Salaried Formula if you elected to be covered under the lump sum formula. You have a Protected Benefit under the Bendix Salaried Formula that is always compared to your benefit under the lump sum formula. Your benefits under the lump sum formula are not described in this SPD. For specific information about those benefits, you should obtain a copy of the Retirement Earnings Formula SPD by calling One Stop Your Employee Services Access Line at and selecting option 5 for Retirement and Pension Benefits. 3

5 Section 2 How to Participate A. Eligibility You are an Eligible Employee in the Bendix Salaried Formula if you elected to remain covered by the Bendix Salaried Formula during your Pension Choice, and you are not in any of the following categories: You are employed by a location, division, company or other affiliate of the Company that does not participate in the Plan or by an Employer that does not offer the Bendix Salaried Formula to its eligible employees; or You are accruing a pension benefit under a formula other than the Bendix Salaried Formula; or You are covered by a collective bargaining agreement, unless such agreement specifically provides for your participation in the Bendix Salaried Formula; or You are classified by an Employer as a project employee (that is, is designated as a project employee or similar designation because you are employed to work on a specific project or projects), a student, co-op student or summer intern; or You are a citizen or resident of a country other than the United States and are employed by a division that is predominantly involved in international operations unless the Plan Administrator determines that you are eligible to participate in the Bendix Salaried Formula; or You are retained under a contract or agreement specifying that you are not eligible to participate in the Plan or the Bendix Salaried Formula (including, but not limited to, an employee hired in connection with a government or other contract that does not permit participation in the Plan or the Bendix Salaried Formula); or You are a leased employee; or You are classified as something other than a common law employee (e.g., an independent contractor, a consultant or a non-employee director), and any reclassification as an employee shall not entitle you to participate in the Plan or the Bendix Salaried Formula. Note: No employees initially hired after December 31, 1999 are eligible for the Bendix Salaried Formula. 4

6 Rehires If you participate in the Bendix Salaried Formula, have a Termination of Service and are later rehired as an Eligible Employee, the length of time between your Termination of Service and your rehire date determines the pension formula in which you participate after your rehire: IF. AND. THEN. You participated in the Bendix Salaried Formula before your Termination of Service You participated in the Bendix Salaried Formula before your Termination of Service You are rehired as an Eligible Employee within 12 months of the later of your last day of active employment with the Employer, or the end of the notice period under any Employer-sponsored severance plan You are rehired as an Eligible Employee after 12 months of the later of your last day of active employment with the Employer, or the end of the notice period under any Employer-sponsored severance plan You will participate in the Bendix Salaried Formula following your rehire date You will participate in the lump sum formula or the formula applicable to that location, if any, following your rehire date; your postrehire employment will be recognized only for vesting and eligibility purposes under the Bendix Salaried Formula If you participate in the Bendix Salaried Formula, have a Termination of Service in connection with a divestiture, outsourcing or similar transaction, and assets and liabilities were transferred from the Plan to the pension plan maintained by the successor employer, you will be treated as a new hire upon your rehire by an Employer. If assets and liabilities were not transferred from the Plan to the pension plan maintained by the successor employer, you will be treated as a rehired employee upon your rehire by an Employer. For more information, call One Stop Your Employee Services Access Line at and select option 5 for Retirement and Pension Benefits. B. Some Facts About Service 1. Types of Service There are two types of service in the Plan: Vesting (eligibility) Service and Credited Service. 5

7 Vesting Service Vesting Service is used to determine whether you are eligible for a benefit under the Bendix Salaried Formula and is usually measured by your period of employment with the Company and its affiliates. You are vested in that is, earn a permanent right to your pension benefit after you complete five (5) years of Vesting Service. Vesting Service is credited according to the following rules: For employment after December 31, 1999, you will be credited with Vesting Service beginning on January 1, 2000 and ending on your Severance from Service Date. Vesting Service is expressed in completed years and days. The Company may grant Vesting Service for periods of employment with a prior employer in connection with an acquisition. You will be notified if this applies to you. If you have a Severance from Service Date because of a quit, discharge or retirement and you are reemployed by the Company or an affiliate before you have a One-Year Period of Severance, you will be credited with Vesting Service (not in excess of 12 months) for the period of absence. If you are absent from service for a reason other than a quit, discharge or retirement, you have a Termination of Service during the absence, and you are reemployed by the Company or an affiliate before the first anniversary of the original absence, you will be credited with Vesting Service (not in excess of 12 months) for the period of absence. If you were a leased employee and you subsequently become a participant in the Plan, you will be credited with Vesting Service (but not Credited Service) for your period of leased employment. In no event will your Vesting Service be less than your Credited Service for purposes of the Bendix Salaried Formula. Credited Service Credited Service is used to calculate the dollar amount of your benefit. Credited Service under the Bendix Salaried Formula is credited according to the following rules: For employment after December 31, 1999 and except as otherwise described below, Credited Service will equal your Vesting Service reduced by Vesting Service for a period before you became a participant in the Bendix Salaried Formula; and Vesting Service for any period when you are an Inactive Participant. Credited Service for any period after termination of your employment relationship where you remain on the Company s payroll (including where you receive severance pay) will not exceed 12 months. If you are an Expatriate Employee, Credited Service will include all employment periods with nonparticipating affiliates. 6

8 Credited Service while you are Disabled will include the applicable period described under Section 4-When You Can Begin Receiving Benefits. Credited Service will include periods after a transfer of employment as described below. 2. Bridge Leave of Absence To be eligible for a bridge leave of absence, your employment with an Employer must be terminated under circumstances whereby you have received periodic severance pay. If, at the end of those severance payments, you are: Within 24 months of regular early retirement, or Within 36 months of 80-point early retirement, or Within 36 months of reaching Normal Retirement Age, if you are not eligible for any early retirement benefit before this time frame, then you will be placed on an unpaid bridge leave of absence to get you to your maximum retirement benefit eligibility. Once you reach your maximum retirement eligibility, your bridge leave will end. You may stop the bridge leave at any time and begin receiving any pension benefit for which you are then eligible. You will continue to earn Vesting and Credited Service during your bridge leave so that you can receive the maximum retirement benefit available to you based on your age and service at the expiration of your bridge leave. 3. Break in Service Some situations could affect the way your service is counted. You continue earning Vesting Service and Credited Service until your Severance from Service Date. If you have a Severance from Service Date and don't complete an Hour of Service within 12 months from such date, you have a One-Year Period of Severance. If you have a Severance from Service Date and return to work for the Company or an affiliate before you have a One-Year Period of Severance, you will receive Vesting Service and Credited Service for the time you were away, up to 12 months. The pension formula in which you will participate after your rehire date is determined in accordance with the rehire rules described above. Special rules apply if your employment status changes (for example, you change from coop or intern class to employee class). For more information, call One Stop Your Employee Services Access Line at and select option 5 for Retirement and Pension Benefits. 4. Transferred Employees If you transfer to any location within the Company or its affiliate, you continue to earn Vesting Service under this Bendix Salaried Formula. 7

9 If you transferred before April 1, 2000 within the Company or an affiliate to a location that does not participate in this Bendix Salaried Formula, but does participate in another non-lump sum based salaried retirement formula that uses final average compensation as part of the benefit calculation, you ll continue to earn Vesting Service under this Bendix Salaried Formula. When you eventually have a Termination of Service, your benefits under this Bendix Salaried Formula are determined taking your total credited service into account. This amount is then multiplied by a ratio, equal to your actual Credited Service under this Bendix Salaried Formula divided by your total Credited Service to determine your benefit under this Bendix Salaried Formula. If you transfer after March 31, 2000, you continue to earn Vesting Service under this Bendix Salaried Formula. However, other special transfer rules apply. For example: If you transfer to a location that provides pension plan coverage and offered Pension Choice to its employees, you remain covered under this Bendix Salaried Formula and continue to earn Credited Service and Vesting Service. Except as otherwise provided below, if you transfer to a location that does not offer pension plan coverage, you stop accruing Credited Service, but your future earnings will be considered in determining your benefit under the Bendix Salaried Formula. If you transfer to a union position, your benefit under this Bendix Salaried Formula is frozen, and you start accruing service under the applicable union formula, if any. If you transfer from an Eligible Employee status to a position where you are not an Eligible Employee, you will continue to participate in the Bendix Salaried Formula after your transfer if all of the following requirements are met: You must directly transfer from an Employer after December 31, 2004 to a nonparticipating location, division, business unit or affiliate that was acquired on or after December 18, 2004; and You must be an Eligible Employee immediately before the transfer; and Your continued participation under the Bendix Salaried Formula will end on the earlier of the date you would no longer satisfy the definition of Eligible Employee if you were employed by the Employer, or your Termination of Service; and If you are not directly transferred from common law employment of the Employer to common law employment of a non-participating location, division, business unit or affiliate, this transfer rule does not apply; and For the avoidance of doubt, this transfer rule does not apply to the following transfers from an Employer: o If you transfer to a non-participating union group; or o If you transfer to an HTSI or DMC plant, location, division, business unit or affiliate that does not participate in the Plan; or 8

10 o If you transfer to Universal Oil Products. Additional rules apply for other types of transfers. For more information about transfers, call One Stop Your Employee Services Access Line at and select option 5 for Retirement and Pension Benefits. Section Definitions For purposes of this service crediting section, the following definitions apply: Expatriate Employee Any individual who is a citizen or resident of the United States, who is employed by a foreign affiliate of the Company or an affiliate designated by the Company, and who is covered by an agreement under Section 3121(l) of the Code, provided such individual: (a) is hired by or transferred to the foreign affiliate while in the United States; (b) is employed outside the United States; and (c) is expected to transfer back to the United States before his or her Termination of Service. Hour of Service Each hour for which you are directly or indirectly paid or entitled to payment by the Company or an affiliate for the performance of duties or for a period of approved absence. For purposes of crediting Hours of Service, the Plan Administrator shall follow Department of Labor Regulation Sections b 2(b) and (c). Inactive Participant An employee who was a participant, has incurred a Termination of Service, and has not taken a complete distribution of his Plan benefit. One-Year Period of Severance A 12-consecutive-month period beginning on your Severance from Service Date and ending on each anniversary of such date if you do not perform an Hour of Service for the Company or its affiliate during that period. Severance from Service Date The earlier of (a) the date you quit, are discharged, retire or die (provided that you are not deemed to be discharged before your Termination of Service), and (b) the later of (i) the first anniversary of the first day of your absence from employment with the Company or an affiliate, with or without pay, for any reason not described in clause (a) or (b)(ii) (such as vacation, holiday, disability (excluding periods where you continue to accrue Credited Service because you are Disabled), maternity and paternity leave, layoff or military service, and (ii) the date next following the expiration of an authorized leave of absence. Termination of Service Defined in Section 8-Definitions. 9

11 Section 3 How Your Benefit Is Determined Your benefit under the Bendix Salaried Formula is determined using several factors: your Final Average Compensation, Credited Service and, under some formulas, estimated Social Security retirement benefits. A. Final Average Compensation The Bendix Salaried Formula uses Final Average Compensation to determine your retirement benefit. Final Average Compensation is the greater of the following: The sum of the Compensation in the five complete calendar years beginning after December 31, 1965 that produces the highest total, divided by 60 (provided however that solely for purposes of this sum, short-term executive incentive compensation is included in the year paid not the year earned) ; or The monthly average of your Compensation for the 60 consecutive highest-paid calendar months out of the 120 calendar months immediately preceding your Termination of Service. If you have less than five complete calendar years or 60 full calendar months of Compensation before retirement or termination, your Compensation is averaged over your period of employment. For purposes of determining consecutive months, any month in which you received no Compensation will be ignored. B. How Social Security Affects Your Benefits Each year, you and the Company share the cost of Social Security contributions, up to an annual limit. These contributions earn you the right to a Social Security benefit. Because the Company has already contributed to your retirement income through these Social Security contributions, the Bendix Salaried Formula takes your estimated Social Security retirement benefits into account when determining your retirement benefits. Your Social Security retirement benefit is the estimated monthly amount you would be entitled to receive at the later of age 65 or your Termination of Service, under the Social Security Act in effect on the January 1 coincident with or next preceding the earlier of your Termination of Service or your date of Disability. Changes made to the Social Security Act after this January 1 are disregarded. Only your Social Security retirement benefit is counted; Social Security benefits payable to other members of your family aren't used in calculating your retirement benefit. For this purpose, the Bendix Salaried Formula assumes you have: Level earnings from your termination date to your normal retirement age if you are eligible for a vested retirement benefit (but not an early retirement benefit). No future earnings if you are eligible for an early retirement benefit. 10

12 Using Social Security retirement benefits to determine your retirement benefit doesn't affect the amount you actually receive from Social Security. You collect, in full, any estimated Social Security retirement benefits you re entitled to receive. If Social Security retirement benefits increase after you begin receiving your retirement benefits, your retirement benefits won't be affected. Also, note that the date for estimating your Social Security retirement benefit for purposes of the Bendix Salaried Formula may be different than the date you elect to begin receiving your actual Social Security benefits. If you begin receiving your Social Security benefits before the later of age 65 or your Termination of Service, the amount of the estimate and your actual Social Security benefits will be different. Since the Plan s Basic Formula uses estimates of your wages to determine your estimated Social Security retirement benefit, the Social Security retirement benefit calculated by the Bendix Salaried Formula may be different from your actual Social Security retirement benefit. However, you may have your actual Social Security wage history used in calculating the estimated Social Security amount. If you submit your actual wage history, your estimated Social Security benefit will be recalculated by replacing estimated earnings with actual earnings for all years that the Social Security Administration provides wage information for you. When your actual wage history is used instead of the estimate, the Social Security amount may be different smaller or larger which could affect your retirement benefits. In order to have your actual wage history used, contact the Social Security Administration at or online at and request a "Personal Earnings and Benefit Estimate Statement. The Social Security Administration suggests you check your records regularly to make sure your earnings are being credited properly. You must apply for a recalculation using actual Social Security wage history within 90 days of the date you are notified in writing of your right to have your actual Social Security wage history. If the recalculation produces a greater retirement benefit, an adjustment will be made retroactively and will be reflected in your future payments. However, if a lesser retirement benefit is produced, the adjustment will be made for future pension payments only. C. The Plan Formulas Two formulas are used to determine your benefits under the Bendix Salaried Formula the benefits under each are compared, and you receive the greater amount. 11

13 1. Basic Formula Here s how your monthly retirement benefits are determined under the Basic Formula: 2.0% of Final Average Compensation times Credited Service to a maximum of 25 years PLUS MINUS 0.5% of Final Average Compensation times Credited Service in excess of 25 years 2.0% of estimated Social Security benefit times Credited Service to a maximum of 25 years 2. Minimum Formula Here s how your monthly retirement benefits are determined under the Minimum Formula: 0.75% of Final Average Compensation plus $8.00 TIMES Credited Service to a maximum of 30 years 12

14 Example: Assume an employee, Chris, plans to retire at his normal retirement date. Chris has 30 years of Credited Service, Final Average Compensation of $4, a month, and estimated Social Security benefits of $1, a month. Here s how Chris monthly benefit would be calculated under each formula: Under the Basic Formula: (2.0% x $4,200.00) x 25 = $2, plus (0.5% x $4,200.00) x 5 = $2, minus (2.0% x $1,500.00) x 25 = $1, Under the Minimum Formula: [(0.75% x $4,200.00) + $8.00] x 30 = $1, Chris would receive the larger, Basic Formula retirement benefit of $1, per month. Note that this benefit, when added to Chris estimated Social Security benefit, equals 70.4% of Chris Final Average Compensation [($1, $1,500.00) $4,200.00]. D. Protected Benefit for Participants Who Elected to Be Covered by the Lump Sum Formula Special rules apply if you elected to be covered by the lump sum formula during Pension Choice. Your benefit under the Bendix Salaried Formula was frozen and became your Protected Benefit on the date just before your election to participate in the lump sum formula became effective. You can never receive less than your Protected Benefit when you terminate or retire. Your pension will be the greater of your benefit under the lump sum formula or your Protected Benefit under the Bendix Salaried Formula. Your Protected Benefit is calculated using the Bendix Salaried Formula on the date just before your Pension Choice became effective ( Pension Choice Effective Date ). This Protected Benefit is calculated using your earnings, Credited Service and Social Security on your Pension Choice Effective Date. Any earnings or Credited Service earned after your Pension Choice Effective Date is ignored for this calculation. However, any Vesting Service you earn after your Pension Choice Effective Date is counted in the calculation. For example, your service after your Pension Choice Effective Date may allow your Protected Benefit to become vested or eligible for early or normal retirement benefits. 13

15 Example: Assume an employee, Chris, elected the lump sum formula during Pension Choice. At the time of Chris election, Chris is age 45 with 10 years of Credited Service and has monthly Final Average Compensation of $4, and an estimated Social Security benefit of $1, a month. Because Chris is only eligible for a terminated vested benefit, his benefit is calculated using Credited Service projected to his Normal Retirement Date, and then multiplied by the ratio of actual Credited Service to projected Credited Service. Here s how Chris monthly Protected Benefit would be calculated under each formula: Under the Basic Formula: 2.0% x $4, x 25 = $2, plus 0.5% x $4, x 5 = minus (2.0% x $1,500.00) x 25 = $1, $1, x 10/30 = $ Under the Minimum Formula: [(0.75% x $4,200.00) + $8.00] x 30 x 10/30 = $ At age 65, Chris Protected Benefit would equal the larger, Basic Formula benefit of $ per month. If Chris retires at age 65, Chris can never receive less than this benefit. You can elect to receive your Protected Benefit in any of the forms described in this summary. In addition, a lump sum option is available. The lump sum is generally equal to the Actuarial Value of your Protected Benefit payable at age 65. The Actuarial Value of your Protected Benefit is determined using legally required interest rate and mortality assumptions. This does not reflect the enhanced value of any Early Retirement benefits to which you may otherwise be entitled. The Actuarial Value of the lump sum may be less than the Actuarial Value of the other forms of benefit available to you before age 65 (such as the Qualified Joint and Survivor Annuity or the Single-Life Annuity). You are strongly encouraged to consult with your financial advisor before electing to receive payment of your Protected Benefit in a lump sum. E. Medicare Rebate After you reach age 65, your normal or early pension payments will be increased by $8.20 per month if you are enrolled in Medicare Part B or Medicare+Choice. After you die, this additional benefit will be paid to your surviving Spouse if he or she is enrolled in Medicare Part B or Medicare+Choice and is entitled to a survivor benefit under this Bendix Salaried Formula. If you are receiving a disability pension, this amount will be paid once the Plan Administrator receives proof that you are enrolled in Medicare Part B or Medicare+Choice as a disabled beneficiary. 14

16 Section 4 When You Can Begin Receiving Benefits A. Normal Retirement You can take normal retirement if you are employed by the Company or an affiliate on your Normal Retirement Date. Your normal retirement benefit is calculated under the formula described in Section 3 How Your Benefit is Determined. As long as you have a Termination of Service and file an application for retirement benefits within 90 days before your Normal Retirement Date, pension payments may begin on your Normal Retirement Date. B. Early Retirement You are eligible for early retirement if you have a Termination of Service after the date you meet the following requirements: Regular Early Retirement You are eligible for regular early retirement if you are at least age 55 and have at least five years of Vesting Service. 80-Point Early Retirement You are eligible for 80-point early retirement if your age plus years of Vesting Service equals 80 or more. For example, if you are age 49, you need 31 years of Vesting Service to retire under an 80-point early retirement. When you reach age 62 the earliest age at which you can begin receiving Social Security benefits the Social Security offset portion of the Basic Formula applies. In other words, the Bendix Salaried Formula does not offset your monthly payment for Social Security benefits until you actually are eligible to receive them, regardless of whether you have applied for them. You will receive pension payments determined under the portion of the benefit formula that produces the greatest benefit that is, the highest pre-age 62 retirement benefit and the highest post-age 62 retirement benefit calculated under the Basic or Minimum Formula. You can begin receiving benefits as of the first day of any month after the date you become eligible for early retirement, as long as you have a Termination of Service and you timely apply for benefits. If you retire early, your retirement benefit will be based on the same benefit formula as your normal retirement benefit, counting Credited Service until your Termination of Service. Since it is assumed that you will receive retirement benefits for a longer period of time than if you had retired at your Normal Retirement Date, your benefit will be reduced as described in this summary. 1. Regular Early Retirement Reductions The reduction applied to your retirement benefit under the Basic Formula (excluding the Social Security offset) is 1/6 of 1% for each of the first 60 months retirement benefits are paid before the first day of the month next following your 65th birthday, plus an 15

17 additional 1/3 of 1% for each such month in excess of 60. The Social Security offset portion of the Basic Formula is reduced for early commencement using the Social Security Administration s reduction factors, available online at: The reduction applied to your retirement benefit under the Minimum Formula is 6/10 of 1% for each of the first 60 months retirement benefits are paid before the first day of the month next following your 65th birthday, plus an additional 4/10 of 1% for each for each such month in excess of 60. The reductions described above are based on your age at benefit commencement and are set forth in the table below: If You Commence At: You Will Receive This Percentage of Your Unreduced Normal Retirement Benefit: Age Basic Formula Minimum Formula % 92.8% Example: Let's look at Chris situation again. Assume Chris retires at age 55 with 20 years of Credited Service, Final Average Compensation of $4, and an estimated age 62 Social Security retirement benefit of $1, per month. Remember, Chris monthly pension payments will not be offset for Social Security until Chris reaches age 62. Under the Basic Formula: Benefit Payable [(2.0% x $4, x 20] x 70%* = $1, to Age 62 Benefit Payable $1, [(2.0% x $1,200.00) x 20] = $ after Age 62 Under the Minimum Formula: {[(0.75% x $4,200.00) + $8.00] x 20} x 40%* = $ *Early commencement reduction factor from the table above. Since the Basic Formula provides a greater retirement benefit than the Minimum Formula 16

18 under both the pre-age 62 and post-age 62 portions, Chris monthly regular early retirement benefit before age 62 would be $1, After age 62, Chris retirement benefit would be $ per month Point Early Retirement Reductions Retirement benefits determined under the Final Average Compensation portion of the Basic Formula are reduced in the same way as for regular early retirement, except the amount of the reduction will never be more than 25%. If your retirement benefit is calculated under the Minimum Formula, no reduction applies for early commencement of retirement benefits. These reductions are based on your age at benefit commencement and are set forth in the table below. If You Commence At: You Will Receive This Percentage of Your Unreduced Age-65 Retirement Benefit: Age Basic Formula Minimum Formula % 100.0% You will receive a supplemental retirement benefit of $ each month for pension payments you receive before you reach age 62. However, your supplemental retirement benefit is prorated if you transfer to the Bendix Salaried Formula, and: You receive Vesting Service for period of service with any employer other than the Company or an affiliate; or You transferred from another plan; or You transferred as the result of an acquisition and your Credited Service under this Bendix Salaried Formula does not include service earned under the acquired plan. The proration is determined by multiplying your supplemental retirement benefit by this ratio: Credited Service under this Bendix Salaried Formula and the prior plan divided by total Vesting Service 17

19 Example: Assume Chris retires at age 55 with 30 years of Credited Service. Also assume Chris Final Average Compensation is $4, per month and Chris estimated age-62 Social Security retirement benefit is $ per month. Here is how Chris 80-point early retirement monthly benefit is determined under each formula: Under the Basic Formula: Benefit Payable [(2.0% x $4, x 25] x 75%* $1, to Age 62 plus [(0.5% x $4, x 5] x 75%* $1, Benefit Payable $1, [(2.0% x $950.00) x 25] $1, After Age 62 *Early commencement reduction factor from the table above. Under the Minimum Formula: Benefit Payable {[(0.75% x $4,200.00) + $8.00] x 30} $1, to Age 62 plus (Supplemental Benefit) $1, Benefit Payable {[(0.75% x $4,200.00) + $8.00] x 30} $1, After Age 62 No early commencement reduction applies to monthly pension payments under the 80-point early retirement Minimum Formula. Since the pre-age 62 portion of the Basic Formula provides a higher benefit than the preage 62 Minimum Formula benefit, Chris would receive $1, per month until he reaches age 62. After age 62, the Minimum Formula provides a higher benefit than the Basic Formula, so Chris would receive $1, per month. C. Retirement After Your Normal Retirement Age If you continue to work past your Normal Retirement Age, you will continue to earn Vesting and Credited Service until your Termination of Service, as long as you continue to satisfy the eligibility requirements of the Bendix Salaried Formula. Your monthly retirement benefit will be based on the same formulas that are used to calculate your normal retirement benefit. You can begin receiving retirement benefits as of the first day of any month after your Termination of Service (subject to the rules below if you are age 70½ or older), as long as you timely apply for benefits. If you are still working at age 70½, your benefit payments will not commence until after your retirement date. When you eventually retire, your normal retirement benefit will be actuarially adjusted to take into account the delay in payment from age 70½ to your actual retirement date. 18

20 Keep in mind that if you are no longer working for the Company and its affiliates, you must begin receiving your retirement benefit by April 1 of the year following the year in which you reach age 70½. If your retirement benefits are not being paid ( suspended ) because you work beyond your Normal Retirement Date, you ll receive a suspension of retirement benefits notice during the first calendar month in which pension payments are withheld. This notice will include the following information: General description of why pension payments were suspended; General description of the Plan provisions relating to the suspension; Copy of the Plan provisions; Statement regarding applicable Department of Labor regulations; and Statement that you may request a review of the suspension. D. Disability Retirement Benefit If you satisfy the Disabled definition that applies to a medical absence that first occurs on or after January 1, 2007, you continue to earn Credited Service and Vesting Service toward your retirement benefits under this Bendix Salaried Formula until your Termination of Service. If you satisfy the Disabled definition that applies to a medical absence that first occurred before January 1, 2007, you continue to earn Credited Service and Vesting Service toward your retirement benefits under this Bendix Salaried Formula until the earliest of the date you recover or refuse to submit proof of your continuing disability and your LTD payments end, are eligible for a pension and elect to retire, reach age 65 (with special provisions if you become Disabled after age 60), or die. You can begin receiving a monthly retirement benefit based upon your benefit as of the date your LTD payments end if you meet the minimum requirements for early or normal retirement. If you elect to retire while receiving LTD payments, your pension payments may offset your LTD payments. Please consult your LTD Plan for information on how your pension payments impact your LTD benefits. If you are married and die while receiving LTD Plan benefits but before you elect to retire, your Spouse will receive retirement benefits as described in Section 6 - Survivor Benefits. E. Deferred Vested Pension Not every employee will spend his or her entire career with the Company and its affiliates. If you have a Termination of Service before you meet the eligibility requirements for early or normal retirement benefits, you will still be eligible to receive a pension benefit if you are vested when your employment ends. You are vested when you have at least five years of Vesting Service. 19

21 Generally, your deferred vested benefit is determined the same way as your normal retirement benefit, based on your: Credited Service projected to what would have been your Normal Retirement Date; and Estimated Social Security benefit using earnings projected to what would have been your Normal Retirement Date. This amount is then multiplied by a ratio: Credited Service at Termination of Service divided by Credited Service as if you continued to participate in the Bendix Salaried Formula until your Normal Retirement Date Pension payments may begin on the first day of the month after your Termination of Service, reach your early retirement age and timely apply for benefits. If you elect to receive benefits before your Normal Retirement Date, your monthly pension payments will be reduced to reflect the longer payment period. Keep in mind that you are not eligible for the Medicare rebate described earlier in this summary. The reduction factor used to calculate your deferred vested pension benefit will depend on your age when you begin receiving benefits. If you have a Termination of Service after you reach age 50, but before you reach your Normal Retirement Date, and your benefits are calculated under the Basic Formula, your monthly pension payments are reduced by 1/6 of 1% for each of the first 60 months pension payments are made before your Normal Retirement Date, and 1/3 of 1% for each such month that exceeds 60. Otherwise, pension payments are reduced by 6/10 of 1% for each of the first 60 months pension payments are made before the first day of the month next following your Normal Retirement Age, 1/2 of 1% for each such month that exceeds 60, and 1/6 of 1% for each such month that exceeds

22 If You Begin Receiving Payments At Age: If You Terminate After Age 50 and Your Benefit Is Calculated under the Basic Formula You Will Receive this Percentage of Your Unreduced Vested Benefit If You Terminate at or Before Age 50 OR After Age 50 and Your Benefit Is Calculated under the Minimum Formula % 92.8% Example: If Chris is vested, leaves the Company at age 51 with 12 years of Vesting Service and has a normal retirement benefit of $ a month under the Basic Formula, Chris will receive a monthly benefit of: $ if vested benefits begin at age 63 ($ x 96.0%) $ if vested benefits begin at age 59 ($ x 86.0%) $ if vested benefits begin at the earliest date benefits are payable to Chris - age 55 ($ x 70.0%) F. If You Are Re-Employed After Benefits Commence If you are re-employed by the Company or an affiliate before your Normal Retirement Date and you were already receiving your pension benefits: Your pension benefits will be stopped while you are working; Upon your subsequent Termination of Service, your pension benefit will be redetermined as if you first retired based on your pension accruals before and after your absence; and Subject to the rules for electing to receive a pension payment, you will be entitled to review your prior payment election. 21

23 If you are re-employed by the Company or an affiliate after your Normal Retirement Date and you were receiving your pension benefits in an annuity form, those benefits will be suspended while you are working only if you're compensated for 40 or more Hours of Service per month. Otherwise, your pension benefits continue to be paid during your period of reemployment. If your pension benefits are stopped due to a period of re-employment, you'll receive a "suspension of benefits" notice during the first calendar month in which pension payments are withheld. This notice will provide a: General description of why pension payments are suspended; General description of the Plan provisions relating to the suspension; Copy of the Plan provisions; Statement regarding applicable Department of Labor regulations; and Statement that a review of the suspension may be requested. When you retire again, your pension benefits will be recomputed taking into account your Vesting and Credited Service during all periods of employment. Your recomputed pension benefit will not be reduced for any payments you received before your payments were suspended. If you are re-employed after your Normal Retirement Date, your prior payment election will be followed and you will not be entitled to choose a new payment option. If you are re-employed by the Company or an affiliate after you have received a lump sum of your entire Plan benefit, you shall: Immediately commence participation in the Plan as of your rehire date if you are an Eligible Employee (but not necessarily in the Bendix Salaried Formula); and Have all Vesting Service restored (but not Credited Service or Compensation paid prior to your rehire date). 22

24 Section 5 How Benefits Are Paid The Bendix Salaried Formula offers several pension payment methods. You choose the method that best suits your needs. Your normal form of pension payment depends on your marital status when pension payments begin. If you prefer, you can elect one of the optional forms of payment. You must do so within the time period specified in Applying for Benefits. A. Lump Sum Payments to Plan Participants If the Actuarial Value of your vested benefit is $1,000 or less (before the date payment starts), you automatically will be paid your pension benefit in a lump sum. If the Actuarial Value of your vested benefit is between $1,000 and $5,000 and you do not timely respond to benefit commencement paperwork that is sent to you, the Plan Administrator will transfer the lump sum value to an Individual Retirement Account (IRA) that is set up in your name. You can elect to keep the funds in this IRA, take a distribution, or transfer them to another IRA in your name. The determination of whether the Actuarial Value of your Plan benefit is $5,000 or less is made in the year in which your Termination of Service or death occurs. For these purposes, the Plan Administrator may redetermine the Actuarial Value in any subsequent year if payment has not yet begun. If the Actuarial Value of your vested benefit is more than $5,000 but does not exceed $10,000, you will have the option of taking the benefit in a single lump sum (as long as spousal approval is provided where required) or of choosing an optional form of payment. If you receive a single lump sum payment from the Plan, such payment will fully satisfy all benefits due from the Plan. If the Actuarial Value of your benefit is more than $10,000, the lump sum option is not available. You will have a choice of pension payment options. If you are re-employed by the Company or an affiliate after you have received a lump sum of your entire Plan benefit, you shall: Immediately commence participation in the Plan as of your rehire date if you are an Eligible Employee (but not necessarily the Bendix Salaried Formula); and Have all Vesting Service restored (but not Credited Service or Compensation paid prior to your rehire date). B. Lump Sum Payments to the Surviving Spouse of a Participant If you die before your benefit commences, your surviving Spouse may be eligible for a lump sum payment from the Plan. If the Actuarial Value of the surviving Spouse s benefit is $5,000 or less when you die, the benefit will automatically be distributed shortly after your death is reported. Your surviving Spouse must report your death by calling One Stop Your Employee Services Access Line at and selecting option 5 for Retirement and Pension Benefits. 23

25 However, if the Actuarial Value of the surviving Spouse s benefit is more than $5,000 but does not exceed $10,000, your surviving Spouse will have the option of taking the benefit in a single lump sum or having it paid as an annuity. If the Actuarial Value of the surviving Spouse s benefit is more than $10,000, the lump sum option is not available. In this case, your surviving Spouse will be entitled to the benefit as an annuity. C. Rollover Rules Applicable to Lump Sum Payments Any lump sum pension payment made from the Plan to you or your surviving Spouse is eligible for a direct rollover to another qualified pension plan or to an Individual Retirement Account (IRA). However, for direct rollovers, a $ minimum applies. For partial rollovers, a $ minimum applies. If you do not elect a rollover, federal tax law requires that the Plan withhold 20% of the payment as an advance estimated payment for federal income taxes. (State withholding taxes may also apply.) You will receive further information on rollovers and tax rules applicable to your payment when you elect to commence benefits. D. Normal Payment Method Your normal form of pension payment depends on your marital status when pension payments begin. If you are single, your benefits will be paid as a single-life annuity. You will receive a monthly benefit for your lifetime; no pension payments are made after your death. If you are married, your benefits will be paid as a Qualified Joint and 50% Survivor Annuity. You will receive reduced monthly benefits for your lifetime, and after your death, your Spouse will receive a benefit equal to 50% of your post-age 62 benefit for the rest of his or her life. Because these retirement benefits are payable for two lifetimes, your retirement benefits will be reduced as follows: If Your Spouse Is Younger than You... Your benefits are reduced by 11% plus 0.25% for each full year over three that your age exceeds your Spouse s (up to a maximum 16% reduction) If Your Spouse Is Older than You... Your benefits are reduced by 11% minus 0.25% for each full year over three that your Spouse s age exceeds yours (with the lowest possible reduction of 8.5%) If you are married and want to select a pension payment option other than the normal form of pension payment (the Qualified Joint and 50% Survivor Annuity), your Spouse must provide written, notarized consent to the specific pension payment option you select. E. Optional Payment Forms You may elect one of these optional pension payment forms instead of your normal form of pension payment. 24

26 Single-Life Annuity: Under this form of pension payment, you will receive a monthly benefit for as long as you live. No benefits are payable after your death. Survivor Annuity: This form of annuity pays you a reduced monthly benefit. When you die, 75% or 100% (as you select) of your post-age 62 monthly benefits will be paid to your Spouse. (Your benefits are reduced to reflect the fact that benefits are payable for two lifetimes.) This option is not available if you are single. The amount of the reduction depends on the difference between your age and your Spouse s age and the option you choose: If You Choose And Your Spouse Is this Option... Younger than You... 75% Your benefits are reduced by 15% plus 0.375% for each full year over three that your age exceeds your Spouse's (up to a maximum 22.5% reduction) 100% Your benefits are reduced by 19% plus 0.5% for each full year over three that your age exceeds your Spouse s (up to a maximum 29% reduction) And Your Spouse Is Older than You... Your benefits are reduced by 15% minus 0.375% for each full year over three that your Spouse's age exceeds yours (with the lowest possible reduction of 11.25%) Your benefits are reduced by 19% minus 0.5% for each full year over three that your Spouse s age exceeds yours (with the lowest possible reduction of 14%) 10-Year Certain & Life Annuity: This annuity provides benefits for your life with an extra guarantee. Benefits are reduced by 5% because they are guaranteed for 10 years. If you die before you have received 120 monthly pension payments, pension payments will continue to your designated beneficiary until a total of 120 monthly pension payments have been made to you and your beneficiary. If you die after the elected 10-year guarantee period, no further benefits will be paid. If pension payments are continued to your beneficiary, he or she may opt to receive the present value of the remaining payments in a lump sum. If you name more than one beneficiary, the payment method for any remaining benefit after your death must be agreed upon by all beneficiaries (for example, continuing monthly pension payments to the end of the guaranteed period or one lump-sum pension payment). If your beneficiary(ies) predecease you and you do not name another beneficiary, the present value of any remaining payments will be paid to your estate. Unless you designate otherwise, if you die, you have more than one beneficiary and a beneficiary dies before all payments have been made, the remaining beneficiaries shall receive the deceased beneficiary s future payments in proportion to their relative interests. If you die, you have one beneficiary, and that beneficiary dies before all payments have been made, the present value of the remaining payments will be paid to the beneficiary s estate. Naming a Beneficiary for a 10-Year Certain & Life Annuity When you elect a 10-year certain and life annuity, you ll be asked to name a primary and a contingent beneficiary. Your primary beneficiary is someone who will receive your 25