DD » Topics » Pension Plan Benefits

These excerpts taken from the DD DEF 14A filed Mar 20, 2008.
Pension Plan Benefits
 
The NEOs participate in the DuPont Pension and Retirement Plan (the “Pension Plan”), a tax-qualified defined benefit pension plan, which covers substantially all U.S. parent company employees, except those hired and rehired after December 31, 2006. The Pension Plan provides employees with a lifetime retirement income based on years of service and the employees’ final average pay. The normal form of benefit for married individuals is a 50% qualified joint and survivor annuity. The normal form of benefit for unmarried individuals
is a single life annuity, which is actuarially equivalent to the normal form for married individuals. Normal retirement age under the Pension Plan is generally age 65 and benefits are vested after five years of service. Under the provisions of the Pension Plan, employees are eligible for unreduced pensions when they meet one of the following conditions:
 
•   Age 65 with at least 15 years of service, or
•   Age 58 with age plus service equal to or greater than 85, or
•   Permanent incapacity to perform his/her duties with at least 15 years of service.
 
An employee who is not eligible for retirement with an unreduced pension is eligible for retirement with a reduced pension if he/she is age 50 with at least 15 years of service. His/her pension is reduced by the greater of five percent for every year that his/her age plus service is less than 85 or five percent for every year that his/her age is less than 58. In no event will the reduction exceed 50%. With the exception of Mr. Goodmanson, each NEO is currently eligible for either an unreduced or reduced pension.
 
With respect to service through December 31, 2007, the primary pension formula that applies to the NEOs provides a monthly retirement benefit equal to:
 
                         
[   1.5% of Average
Monthly Compensation
  ×   Years of Service   ]     50% of primary Social
Security Benefits attributable
to service with the Company
 
Average Monthly Compensation is based on the employee’s three highest-paid years or if greater, the 36 consecutive highest-paid months. Compensation for a given month includes regular compensation plus one-twelfth of an individual’s variable compensation for the relevant year. Other bonuses are not included in the calculation of Average Monthly Compensation. Effective January 1, 2008, the pension formula was changed. Refer to page 27 of this Proxy Statement for a discussion of that and other retirement plan changes.
 
If benefits provided under the Pension Plan exceed the applicable IRC compensation or benefit limits, the excess benefit is paid under the Pension Restoration Plan (“PRP”), an unfunded nonqualified plan. Effective January 1, 2007, the form of benefit under the PRP for participants not already in pay status is a lump sum. The mortality tables and interest rates used to determine lump sum payments are the Applicable Mortality Table and the Applicable Interest Rate prescribed by the Secretary of the Treasury as required by IRC Section 417(e)(3).
 
The Company does not grant any extra years of credited service to the NEOs.
 
Key actuarial assumptions for the present value of accumulated benefit calculation can be found in Note 21 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. All other assumptions are consistent with those used in the Employee Benefits note disclosure, except that a retirement age at which the NEO may retire with an unreduced benefit under the Pension Plan is assumed in compliance with applicable Securities and Exchange Commission regulations. The valuation method used for determining the present value of the accumulated benefit is the traditional unit credit cost method.
 
The table below represents the present value of accumulated benefits for the NEOs under the Company’s two pension plans — the Pension Plan and the PRP, based on service through December 31, 2007.
 
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Table of Contents

Pension Plan
Benefits



 



The NEOs participate in the DuPont Pension and Retirement Plan
(the “Pension Plan”), a tax-qualified defined benefit
pension plan, which covers substantially all U.S. parent
company employees, except those hired and rehired after
December 31, 2006. The Pension Plan provides employees with
a lifetime retirement income based on years of service and the
employees’ final average pay. The normal form of benefit
for married individuals is a 50% qualified joint and survivor
annuity. The normal form of benefit for unmarried individuals

is a single life annuity, which is actuarially equivalent to the
normal form for married individuals. Normal retirement age under
the Pension Plan is generally age 65 and benefits are
vested after five years of service. Under the provisions of the
Pension Plan, employees are eligible for unreduced pensions when
they meet one of the following conditions:


 
































•  
Age 65 with at least 15 years of service, or
•  
Age 58 with age plus service equal to or greater than
85, or
•  
Permanent incapacity to perform his/her duties with at least
15 years of service.


 



An employee who is not eligible for retirement with an unreduced
pension is eligible for retirement with a reduced pension if
he/she is
age 50 with at least 15 years of service. His/her
pension is reduced by the greater of five percent for every year
that his/her
age plus service is less than 85 or five percent for every
year that
his/her age
is less than 58. In no event will the reduction exceed 50%. With
the exception of Mr. Goodmanson, each NEO is currently
eligible for either an unreduced or reduced pension.


 



With respect to service through December 31, 2007, the
primary pension formula that applies to the NEOs provides a
monthly retirement benefit equal to:


 



































                         

[


 

1.5% of Average

Monthly Compensation

 

×

 

Years of Service

 

]


 



 

50% of primary Social

Security Benefits attributable

to service with the Company






 



Average Monthly Compensation is based on the employee’s
three highest-paid years or if greater, the 36 consecutive
highest-paid months. Compensation for a given month includes
regular compensation plus one-twelfth of an individual’s
variable compensation for the relevant year. Other bonuses are
not included in the calculation of Average Monthly
Compensation. Effective January 1, 2008, the pension
formula was changed. Refer to page 27 of this Proxy
Statement for a discussion of that and other retirement plan
changes.


 



If benefits provided under the Pension Plan exceed the
applicable IRC compensation or benefit limits, the excess
benefit is paid under the Pension Restoration Plan
(“PRP”), an unfunded nonqualified plan. Effective
January 1, 2007, the form of benefit under the PRP for
participants not already in pay status is a lump sum. The
mortality tables and interest rates used to determine lump sum
payments are the Applicable Mortality Table and the Applicable
Interest Rate prescribed by the Secretary of the Treasury as
required by IRC Section 417(e)(3).


 



The Company does not grant any extra years of credited service
to the NEOs.


 



Key actuarial assumptions for the present value of accumulated
benefit calculation can be found in Note 21 to the
consolidated financial statements in the Company’s Annual
Report on
Form 10-K
for the year ended December 31, 2007. All other assumptions
are consistent with those used in the Employee Benefits note
disclosure, except that a retirement age at which the NEO may
retire with an unreduced benefit under the Pension Plan is
assumed in compliance with applicable Securities and Exchange
Commission regulations. The valuation method used for
determining the present value of the accumulated benefit is the
traditional unit credit cost method.


 



The table below represents the present value of accumulated
benefits for the NEOs under the Company’s two pension
plans — the Pension Plan and the PRP, based on service
through December 31, 2007.

 



41





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EXCERPTS ON THIS PAGE:

DEF 14A (2 sections)
Mar 20, 2008
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