Benefits Handbook

The monthly retirement benefit payable to the employee is defined by a plan using a formula written in the plan document. Benefits in a defined benefit plan are usually accrued (and received) as monthly benefits, commencing at normal retirement age for a participant's lifetime. A participant is periodically credited with an accrual related to monthly or annual pay.

The Plan's benefit formula through December 31, 2016, the date benefit accruals were discontinued under the Plan, is described in "How the Marsh & McLennan Companies Retirement Plan Works."

The level of contribution is defined by a plan using a formula written in the plan document. The participant's benefit at any time is the value of his/her separate account. The value of the account may increase or decrease with investment performance. A common type of defined contribution plan is a 401(k) plan.

Generally, a plan pays a monthly benefit to the participant for his or her lifetime. (This type of payment is also called an annuity.) Most plans offer a variety of payment options, such as a contingent annuity that provides lifetime income for both the participant and a designated survivor.

The payment options available under the Plan are described in "How Benefits are Paid."

Generally, the participant receives the accumulated value in the account as a lump sum payment.

Defined benefit plans provide that no benefits are payable to terminated participants until a time allowed by the plan. The latest that this date can be under the law is age 65, generally referred to as the Normal Retirement Age or Normal Commencement Age. However, a plan can specify an earlier date on which participants can elect to commence their benefit payments, for example age 55. This is generally referred to as the Early Retirement Age or Early Commencement Age.

If a participant with an accrued benefit in excess of $1,000 terminates employment before the earliest date specified in the plan that benefits are payable, the participant must wait until he or she has reached that date, (i.e., either the plan's Early Retirement Age, if any, or its Normal Retirement Age).

The Plan's rules concerning the timing of benefit payments when a participant terminates before being eligible to commence benefit payments are described in "When Benefits Commence."

Defined benefit plans provide that benefits are immediately payable to participants if they terminate employment after attaining the plan's Normal Retirement Age or Normal Commencement Age (usually age 65). However, plans may also provide that benefits are immediately payable to participants upon termination of employment at an earlier age, for example age 55. This is generally referred to as the Early Retirement Age or Early Commencement Age. When a participant terminates on or after attaining the plan's Early Retirement Age and elects to commence benefit payments at any time prior to the plan's Normal Retirement Age, the amount of the monthly benefit is usually reduced to reflect the longer period over which benefits are expected to be paid.

The Plan's rules for a participant who terminates employment at Early Commencement Age are described in "Early Commencement: If You Commence Before Age 65."

Most defined benefit plans establish Normal Retirement Age or Normal Commencement Age as age 65. Benefits are payable immediately once Normal Retirement Age is reached and the participant has terminated employment.

The Plan's rules for a participant who terminates employment at Normal Commencement Age are described in "Normal Commencement: If You Commence Once You Attain Age 65."

Plans may require retirement benefits to begin by April 1 following the calendar year in which the employee reaches age 70-1/2, even if the participant has not yet terminated employment.

The Plan's rules regarding commencement of benefits once you attain age 70-1/2 are described in "Deferred Commencement: If You Commence After Age 65."

The normal form of payment is the form of payment, i.e., single life annuity, joint & survivor annuity, etc., that a plan will pay to the participant absent an election by the participant to receive an optional form of payment available under the plan. The normal form is generally dependent upon whether the participant has a federally recognized spouse when benefits commence. Typically, if a participant does not have a federally recognized spouse when benefits commence, the normal form of payment is a single life annuity. However, if the participant does have a federally recognized spouse, the normal form is a joint & survivor annuity with an annuity continuation of not less than 50% to the participant's surviving spouse.

The normal form of payment under the Plan is described in "Normal Form of Payment."

This form of payment provides monthly income payments until the retiree (the person receiving the benefit) dies. The name comes from the fact that payments are based on the life of a single person, the retiree only.

The single life annuity available under the Plan is described in "Single Life Annuity."

Also referred to as a Contingent Annuity

This form of payment covers two people (two joint annuitants) and pays monthly benefits until the last of the two dies. Because payments are made over the course of two lives, the amount of the payment is generally less than what one annuitant (i.e., the retiree alone) would receive under a single life annuity. In a defined benefit plan, a J&S annuity typically provides full income payments as long as the retiree lives. But if the retiree dies and the joint annuitant (usually the retiree's spouse) is still living, a percentage of the full amount will be paid to the joint annuitant for the rest of his or her life. Plans usually provide for an annuity continuation of 50%, 75%, or 100% of the amount originally payable to the retiree. Sometimes other percentages, such as 66-2/3% are provided. The 50% J&S annuity is the default form of payment for a participant with a federally recognized spouse. A J&S annuity is also referred to as a contingent annuity.

The contingent annuities available under the Plan are described in "Contingent Annuity."

Also referred to as a 50% contingent Annuity

Internal Revenue Service (IRS) regulations require that married participants receive their benefit in the form of a qualified joint and survivor annuity (QJSA) unless the participant and spouse consent to an optional form of payment. A QJSA is a payment form that pays a benefit for the life of the retiree, and in the event of the retiree's death, continues payments to the surviving spouse for his or her life in a reduced amount. The amount payable to the surviving spouse cannot be less than 50% of the amount that was payable to the retiree. Plans must offer a 75% joint and survivor annuity as an alternative to the 50% QJSA. This form of payment is also referred to as a 50% contingent annuity.

The contingent annuities available under the Plan are described in "Contingent Annuity."

A period certain annuity is a single life annuity that also provides a certain minimum number of monthly payments, whether or not the retiree is still living. For example, a five-year period certain annuity would pay benefits for a minimum of five years. If the retiree dies within five years of commencing payment, payments will continue to be paid to the retiree's beneficiary for the remainder of the five-year period. If the retiree lives longer than five years after commencing payment, payments continue for the retiree's life but they stop when he/she dies.

The period certain annuities available under the Plan are described in "Period Certain."

This form of payment is available at early commencement, before attaining age 62. It is intended to provide an early retiree with a level amount of monthly income for his/her lifetime by taking into consideration the retiree's anticipated Social Security benefit when it is first available upon attaining age 62. A larger amount is paid from the retiree's Early Commencement Date (e.g., age 55) until the retiree reaches the age when Social Security benefits are first available (age 62). At that point, a smaller amount of monthly benefit is paid. Under this form of payment (depending on the value of the plan benefit as compared to Social Security), it is mathematically possible that the amount payable from the plan upon attaining age 62 will decline to zero.

The Social Security level income option available under the Plan is described in "Social Security Level Income."

A lump sum benefit is a payment form that is paid all at once to the participant. Defined benefit plans typically cash out benefits valued at $1,000 or less in a lump sum, without either the participant's or the participant's spouse's consent. Plans may offer lump sum payments as an optional form of payment.

The Plan's rules regarding lump sum payments are described in "Lump Sum."