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Qualified Defined Benefit Pension Plan
The Aflac Incorporated Defined Benefit Pension Plan
(“Plan”) is a funded tax-qualified retirement program
that covers all eligible U.S.-based employees. Benefits
under the Plan are calculated in accordance with the
following formula: 1% of average final monthly
compensation multiplied by years of credited service
(not in excess of 25 years), plus .5% of average final
monthly compensation multiplied by the number of
years of credited service in excess of 25 years. For
purposes of the Plan, final average monthly
compensation is deemed to be the participant’s highest
average compensation during any five consecutive
years of service within the 10 consecutive plan years of
service
immediately
preceding
retirement.
Compensation means salary and non-equity incentive
plan compensation. Participants are eligible to receive
full retirement benefits upon attaining a retirement age
of 65. A participant also becomes eligible for full
retirement benefits when the participant’s years of
credited service plus attained age equals or exceeds
80. Participants with at least 15 years of credited
service are eligible to receive reduced retirement
benefits upon reaching an early retirement age of 55.
Effective October 1, 2013, the U.S. tax-qualified plan
was frozen to new employees hired on or after October
1, 2013 and to employees rehired on or after October 1,
2013. During the fourth quarter of 2013, active
participants in the U.S. defined benefit plan were given
the option to exit the benefit plan and receive a non-
elective 401(k) matching contribution.
The benefits payable under the Plan are not subject to
adjustment for Social Security benefits or other offsets.
The benefits are paid monthly over the life of the
participant, with joint and survivor options available at
actuarially reduced rates. The maximum annual
retirement benefit was limited, in accordance with IRC
Section 415, to $210,000 for 2015. The maximum
annual compensation that may be taken into account in
the calculation of retirement benefits was limited, in
accordance with IRC Section 401(a)(17), to $265,000
for 2015. These limitation amounts for future years will
be indexed for cost-of-living adjustments.
Supplemental Executive Retirement Plan
The Company’s Supplemental Executive Retirement
Plan (“SERP”) is an unfunded and unsecured obligation
of the Company and is not a tax-qualified plan. The
SERP provides retirement benefits to certain officers of
the Company in addition to those provided by the
qualified Plan. Messrs. Cloninger and Paul S. Amos II
participate in the Company’s SERP. Participation in the
SERP is limited to certain key employees of the
Company as periodically designated by the
Compensation Committee. To be eligible for benefits
under the SERP, participants generally must be
employed with the Company or a subsidiary at age 55.
To be eligible to receive benefits under the SERP,
participants who began participating in the SERP after
August 11, 1992, also must complete at least 15 years
of employment with the Company or a subsidiary and
participate in the SERP for at least five years. Effective
January 1, 2015, the SERP was frozen to new
participants.
The SERP includes a four-tiered benefit formula that
provides for a benefit based on final compensation
earned (base salary and non-equity incentive plan
compensation earned for a calendar year). The annual
benefit is based on the final compensation earned:
40% upon retirement between the ages of 55 and 59, a
50% benefit upon retirement between the ages of 60
and 64, and a 60% benefit upon retirement for ages 65
and over. A reduced 30% benefit is available to
participants with at least 15 years of service who
terminate employment prior to age 55.
Benefits are generally payable in the form of an annuity
for the life of the participant. The participant may elect
to receive reduced benefits during his or her lifetime. In
that case, after his or her death, any surviving spouse
will receive a benefit equal to 50% of the amount paid to
the participant. The benefit formula computes benefits
using the average annual compensation for the three
consecutive calendar years out of the final 10
consecutive calendar years of employment that yield
the highest average. Benefits under the SERP are
subject to offset for amounts paid under the qualified
Plan.
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