UTX » Topics » Pension Benefits

This excerpt taken from the UTX DEF 14A filed Feb 22, 2008.

Pension Benefits

 

Name

  

Plan Name

   Number of Years
Credited Service (#)
   Present Value of
Accumulated
Benefit ($) (1)

G. David

   UTC Employee Retirement Plan    33    $937,642
   UTC Pension Preservation Plan    33    $32,504,158

G. Hayes

   UTC Employee Retirement Plan    18    $239,672
   UTC Pension Preservation Plan    18    $639,502

J. Geisler

   UTC Employee Retirement Plan    15    $143,151
   UTC Pension Preservation Plan    15    $363,880

L. Chênevert

   UTC Employee Retirement Plan    11    $245,621
   UTC Pension Preservation Plan(2)    15    $2,752,841

A. Bousbib

   UTC Employee Retirement Plan    11    $144,907
   UTC Pension Preservation Plan    11    $1,035,130

G. Darnis

   UTC Employee Retirement Plan    24    $316,042
   UTC Pension Preservation Plan    24    $1,806,162

 

(1)   Calculation of present value reflects FASB Statement No. 87 pension expense assumptions described in Note 10, Employee Benefit Plans, to the Consolidated Financial Statements in Exhibit 13 to UTC’s 2007 Annual Report on Form 10-K.

 

(2)   For Mr. Chênevert, this plan provides a pension benefit under the formula applicable to U.S. salaried employees, based on his UTC service from date of hire, offset by benefits payable separately under the Pratt & Whitney Canada pension plan.

 

Retirement benefits are provided through defined benefit retirement plans that provide an annual benefit payment equal to 2% of earnings for each year of service up to a maximum of 20 years, plus 1% of earnings for each year thereafter, minus 1.5% of Social Security benefits for each year of service up to a maximum of 50%. Earnings recognized under this formula consist of base salary and bonus averaged over the highest five consecutive-year period. The formula does not recognize long-term incentive compensation. Normal retirement age is 65; unreduced retirement benefits are available at age 62 for retirements with at least ten years of service (only Mr. David qualifies for unreduced retirement benefits as of fiscal year-end). Early retirement benefits are available at age 55 with at least ten years of service, reduced by .2% for each month between the early retirement date and age 62. Vesting requires five years of service. There are no supplementary service recognition or benefit enhancement provisions. Benefits for Messrs. David, Darnis, and Hayes include amounts accrued under different formulas of Otis, Carrier, and Sundstrand predecessor plans that have since been merged into UTC retirement plans.

 

The UTC Employee Retirement Plan is a tax-qualified plan subject to Internal Revenue Code provisions that, as of fiscal year-end, limit recognized annual compensation to $225,000 and the annual retirement benefit to $180,000. This Plan does not offer a lump sum distribution option. The Pension Preservation Plan (the “PPP”) is an unfunded, non-tax qualified retirement plan utilizing the same benefit formula, compensation recognition, retirement eligibility and vesting provisions as the tax-qualified UTC Employee Retirement Plan. The PPP restores the benefits not provided under the qualified plan due to the Internal Revenue Code limitations previously described. Because amounts payable under the PPP are unfunded and unsecured, a lump sum distribution option is available. Unlike distributions from qualified plans, a PPP lump sum distribution is immediately fully taxable as ordinary income. To approximate actuarial equivalence to a pension annuity in light of the disparate tax treatment, the lump sum calculation uses a discount rate equal to the Lehman Brothers Municipal Bond Index averaged over five years.

 

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Table of Contents
This excerpt taken from the UTX DEF 14A filed Feb 23, 2007.

Pension Benefits.

 

Name


  

Plan Name


  

Number of Years

Credited Service (#)


   Present Value of
Accumulated
Benefit ($) (1)


G. David

   UTC Employee Retirement Plan    32    $971,296
     UTC Preservation Pension Plan         $24,185,209

G. Hayes

   UTC Employee Retirement Plan    17    $241,212
     UTC Preservation Pension Plan         $391,049

J. Geisler

   UTC Employee Retirement Plan    14    $147,485
     UTC Preservation Pension Plan         $230,850

L. Chênevert

   UTC Employee Retirement Plan    10    $179,319
     UTC Preservation Pension Plan (2)    14    $1,331,441

A. Bousbib

   UTC Employee Retirement Plan    10    $141,231
     UTC Preservation Pension Plan         $721,355

G. Darnis

   UTC Employee Retirement Plan    23    $321,899
     UTC Preservation Pension Plan         $1,387,401

(1)   Calculation of present value reflects FASB Statement No. 87 pension expense assumptions described in Note 10, Employee Benefit Plans, to the Consolidated Financial Statements in Exhibit 13 to UTC’s 2006 Annual Report on Form 10-K.

 

(2)   For Mr. Chênevert, this plan provides a pension benefit under the formula applicable to all U.S. and Canadian salaried employees and based on his UTC service from date of hire, offset by benefits payable separately under the UTC and Pratt & Whitney Canada pension plans.

 

Retirement benefits are provided through defined benefit retirement plans that provide an annual benefit payment equal to 2% of earnings for each year of service up to a maximum of 20 years, plus 1% of earnings for each year thereafter, minus 1.5% of Social Security benefits for each year of service up to a maximum of 50%. Earnings recognized under this formula consist of base salary and bonus averaged over the highest five consecutive-year period. The formula does not recognize long-term incentive compensation. Normal retirement age is 65; unreduced retirement benefits are available at age 62 for retirements with at least ten years of service (only Mr. David qualifies for unreduced retirement benefits as of fiscal year-end). Early retirement benefits are available at age 55 with at least ten years of service, reduced by .2% for each month between the early retirement date and age 62. Vesting requires five years of service. There are no supplementary service recognition or benefit enhancement provisions. Benefits for Messrs. David, Darnis, and Hayes include amounts accrued under different formulas of Otis, Carrier, and Sundstrand predecessor plans that have since been merged into UTC retirement plans.

 

The UTC Employee Retirement Plan is a tax-qualified plan subject to Internal Revenue Code provisions that, as of fiscal year-end, limit recognized annual compensation to $220,000 and the annual retirement benefit to $175,000. This Plan does not offer a lump sum distribution option. The Pension Preservation Plan (the “PPP”) is an unfunded, non-tax qualified retirement plan utilizing the same benefit formula, compensation recognition, retirement eligibility and vesting provisions as the tax-qualified UTC Retirement Plan. This Plan restores the benefits not provided under the qualified plan due to the Internal Revenue Code limitations previously described. Because amounts payable under the PPP are unfunded and unsecured, a lump sum distribution option is available. Unlike tax-advantaged distributions from qualified plans, a PPP lump sum distribution is fully taxable as ordinary income. To approximate actuarial equivalence to a pension annuity in light of the disparate tax treatment, the lump sum calculation uses a discount rate equal to the Lehman Brothers Municipal Bond Index averaged over five years (3.8% as of December 31, 2006).

 

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