This excerpt taken from the AVY DEF 14A filed Mar 12, 2009.
The Company provides qualified retirement benefits for employees who are eligible participants under the Avery Pension Plan, the successor plan to the Retirement Plan for Employees of Avery Dennison Corporation and the Avery Associate Retirement Plan, which merged on November 30, 2008. Benefits under the Avery Pension Plan are based on compensation and are calculated separately for each year of applicable service using the formula 1.25% times compensation up to the breakpoint (currently $53,953, which is the average of the Social Security wage bases for the preceding 35 years) plus 1.75% times compensation in excess of the breakpoint. The results of
the calculation for each year of service are added together to determine the annual single life annuity benefit under the Avery Pension Plan for an employee at normal retirement (age 65). The benefit is not subject to reductions for Social Security payments.
Eligible participants may earn benefits under the Avery Pension Plan during their career with the Company. The Avery Pension Plan is a floor offset plan that coordinates the amount of retirement benefit payable to an eligible participant with the SHARE Plan. The total benefit payable to an eligible participant equals the greater of the value of the participants benefit from the Avery Pension Plan or the value of the participants account in the SHARE Plan (SHARE Account). The Avery Pension Plan generally pays benefits in the form of a lifetime annuity benefit, while the SHARE Plan generally pays benefits in the form of a lump-sum distribution. The amount paid from each plan depends on the election of each eligible participant. Upon termination of employment, each eligible participant may either elect to take a lump-sum distribution of his SHARE Account and have any remaining benefit paid from the Avery Pension Plan, or to transfer a portion of his SHARE Account into the Avery Pension Plan in order to receive a larger annuity benefit. The present value calculations shown above have been completed based on the assumption that each eligible NEO will elect to transfer his SHARE Account into the Avery Pension Plan upon his retirement in order to receive his total benefit as a lifetime annuity under the Avery Pension Plan.
Eligible participants, who retire after reaching age 55, may elect to commence their benefits before reaching age 65. Benefits are payable without reduction after participants reach age 62. Prior to age 62, the plans require a 15% reduction in participants benefits for commencement at age 61, and an additional 5% reduction for each year participants elect to receive their benefit before reaching age 61 (but not earlier than age 55).
Eligible participants may elect to receive their benefits in one of several different payment forms. All forms of payment available under the plan are payable in monthly payments over the lifetime of the participant and/or a designated beneficiary. The amount of monthly benefit each eligible participant will receive from each of the forms of payment is adjusted based on the plans definition of actuarial equivalence.
Compensation covered by the Avery Pension Plan includes both salary and bonus amounts.
Amounts payable under the Avery Pension Plan may be limited in accordance with certain Code provisions, as applied to plan years beginning on or after December 1, 1994. The annual amount of compensation used to determine annual benefit accruals under the Avery Pension Plan limited to the first $230,000 of covered compensation as of December 31, 2008, and the annual pension benefit payable in 2008 under qualified retirement plans is limited to $185,000.