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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS.....................................................................................................................................................................................22. EMPLOYEE BENEFITS..............................................................................................................................................................................................Pension Plans..............................................................................................................................................................................................We offer various defined benefit plans to eligible employees based on years of service.The U.S. AIG Retirement Plan (the qualified plan) is a noncontributory defined benefit plan, which is subject to theprovisions of ERISA. U.S. salaried employees who are employed by a participating company and completed12 months of continuous service are eligible to participate in the plan. Effective April 1, 2012, the qualified plan wasconverted to a cash balance formula comprised of pay credits based on six percent of a plan participant’s annualcompensation (subject to IRS limitations) and annual interest credits. In addition, employees can take their vestedbenefits when they leave AIG as a lump sum or an annuity option after completing at least three years of service.However, employees satisfying certain age and service requirements (i.e. grandfathered employees) remain coveredunder the old plan formula, which is based upon a percentage of final average compensation multiplied by years ofcredited service, up to 44 years. Grandfathered employees will receive the higher of the benefits under the cashbalance or final average pay formula at retirement. Non-U.S. defined benefit plans are generally either based on theemployee’s years of credited service and compensation in the years preceding retirement or on points accumulatedbased on the employee’s job grade and other factors during each year of service.We also sponsor several non-qualified unfunded defined benefit plans for certain employees, including keyexecutives, designed to supplement pension benefits provided by the qualified plan. These include the AIGNon-Qualified Retirement Income Plan (AIG NQRIP) formerly known as AIG Excess Retirement Income Plan, whichprovides a benefit equal to the reduction in benefits payable to certain employees under the qualified plan as a resultof federal tax limitations on compensation and benefits payable, and the Supplemental Executive Retirement Plan(Supplemental), which provides additional retirement benefits to designated executives. Under the Supplemental plan,an annual benefit accrues at a percentage of final average pay multiplied by each year of credited service, notgreater than 60 percent of final average pay, reduced by any benefits from the current and any predecessorretirement plans (including the AIG NQRIP Plan), Social Security, and any benefits accrued under a Companysponsored foreign deferred compensation plan. As of December 2012, we are no longer subject to the SpecialMaster for TARP Executive Compensation; therefore, the suspension of future benefit accruals in the non-qualifiedretirement plans for our Top 100 most highly compensated employees is lifted.Postretirement Plans..............................................................................................................................................................................................We also provide postretirement medical care and life insurance benefits in the U.S. and in certain non-U.S. countries.Eligibility in the various plans is generally based upon completion of a specified period of eligible service andattaining a specified age. Overseas, benefits vary by geographic location.U.S. postretirement medical and life insurance benefits are based upon the employee attaining the age of 55 andhaving a minimum of ten years of service. Eligible employees who have medical coverage can enroll in retireemedical without having to elect immediate retirement pension benefits. Medical benefits are contributory, while the lifeinsurance benefits are generally non-contributory. Retiree medical contributions vary from requiring no cost forpre-1989 retirees to requiring actual premium payments reduced by certain subsidies for post-1993 retirees. Thesecontributions are subject to adjustment annually. Other cost sharing features of the medical plan include deductibles,coinsurance and Medicare coordination. Effective April 1, 2012, the retiree medical employer subsidy for the AIGPostretirement plan was eliminated for employees who were not grandfathered. Additionally, new employees hiredafter December 31, 2012 are not eligible for retiree life insurance.The following table presents the funded status of the plans, reconciled to the amount reported in theConsolidated Balance Sheet. The measurement date for most of the Non-U.S. defined benefit pension and..................................................................................................................................................................................................................................320 AIG 2012 Form 10-K