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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS.....................................................................................................................................................................................The following table presents the accumulated benefit obligations for U.S. and Non-U.S. pension benefitplans:At December 31,(in millions) 2012 2011U.S. pension benefit plans $ 4,827 $ 4,291Non-U.S. pension benefit plans $ 1,125 $ 895Defined benefit pension plan obligations in which the projected benefit obligation was in excess of therelated plan assets and the accumulated benefit obligation was in excess of the related plan assets were asfollows:PBO Exceeds Fair Value of Plan Assets ABO Exceeds Fair Value of Plan AssetsAt December 31,U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans(in millions) 2012 2011 2012 2011 2012 2011 2012 2011Projected benefit obligation $ 5,161 $ 4,438 $ 1,028 $ 956 $ 5,161 $ 4,438 $ 1,018 $ 916Accumulated benefit obligation 4,827 4,291 964 895 4,827 4,291 959 864Fair value of plan assets 3,720 3,432 485 422 3,720 3,432 478 388The following table presents the components of net periodic benefit cost recognized in income and otheramounts recognized in Accumulated other comprehensive income (loss) with respect to the defined benefitpension plans and other postretirement benefit plans:PensionPostretirementU.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans(in millions) 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010Components of net periodic benefit cost:Service cost $ 154 $ 150 $ 149 $ 53 $ 66 $ 137 $ 5 $ 8 $ 8 $ 3 $ 4 $ 8Interest cost 200 207 216 34 37 59 11 13 15 2 2 4Expected return on assets (240) (250) (259) (20) (25) (31) – – – – – –Amortization of prior service (credit) cost (33) (7) 1 (4) (4) (9) (10) (2) – – – –Amortization of net (gain) loss 118 65 57 13 15 45 – – (1) – – –Net curtailment (gain) loss – – 1 1 – (1) – – (2) (1) – –Net settlement (gain) loss – – 58 4 8 3 – – (6) – – –Other – – – – – 2 – – – – – –Net periodic benefit cost $ 199 $ 165 $ 223 $ 81 $ 97 $ 205 $ 6 $ 19 $ 14 $ 4 $ 6 $ 12Amount associated with discontinued operations $ (2) $ – $ 1 $ – $ – $ – $ – $ – $ – $ – $ – $ –Total recognized in Accumulated other comprehensive income(loss) $ (250) $ (396) $ 85 $ (36) $ 261 $ 167 $ (23) $ 56 $ (3) $ (11) $ (6) $ 16Total recognized in net periodic benefit cost and othercomprehensive income (loss) $ (447) $ (561) $ (139) $ (117) $ 164 $ (38) $ (29) $ 37 $ (17) $ (15) $ (12) $ 4The estimated net loss and prior service credit that will be amortized from Accumulated other comprehensive incomeinto net periodic benefit cost over the next fiscal year are $145 million and $37 million, respectively, for our combineddefined benefit pension plans. For the defined benefit postretirement plans, the estimated amortization fromAccumulated other comprehensive income for net loss and prior service credit that will be amortized into net periodicbenefit cost over the next fiscal year will be less than $9 million in the aggregate.The annual pension expense in 2013 for the AIG U.S. and non-U.S. defined benefit pension plans is expected to beapproximately $292 million including less than $1 million associated with ILFC. A 100 basis point increase in thediscount rate or expected long-term rate of return would decrease the 2013 expense by approximately $90 millionand $43 million, respectively, with all other items remaining the same. Conversely, a 100 basis point decrease in thediscount rate or expected long-term rate of return would increase the 2013 expense by approximately $96 million and$43 million, respectively, with all other items remaining the same...................................................................................................................................................................................................................................322 AIG 2012 Form 10-K