Participants of the SIEMENS ENTERPRISE COMMUNICATIONS, INC. PENSION PLAN

Transcription

1 To: Participants of the SIEMENS ENTERPRISE COMMUNICATIONS, INC. PENSION PLAN From: Siemens Enterprise Communications, Inc. Date: October 31, 2009 Re: Significant Reduction in the Rate of Future Benefit Accrual in the Siemens Enterprise Communications, Inc. Pension Plan This notice is to inform you that an amendment to the Siemens Enterprise Communications, Inc. Pension Plan (the "Plan") was adopted by the Board of Directors of Siemens Enterprise Communications, Inc. on September 29, 2009 and effective on December 31, The purpose of this amendment was to freeze the plan and your projected annual benefit as of December 31, 2009, so that you will no longer accrue any benefits after December 31, In no event will any benefits that have already been accrued by you under the Plan as of December 31, 2009 be reduced or eliminated. Previously, the Plan provided a different projected annual benefit depending upon whether you were a "cash balance" member or a "final average pay" member. Cash Balance Members: If you were subject to the cash balance benefit formula under the Siemens Pension Plan as of December 31, 2008, you are considered a "Cash Balance Participant" under the Plan. Being a Cash Balance Participant, the Company set up an account balance for you. Your balance under the cash balance formula is equal to your account balance under the Siemens Pension Plan as of December 31, 2008, plus any and all amounts that the Company credited to your balance each month. There are two types of credits that are credited to your account each month: a pay credit and an interest credit. The monthly pay credits that were added to your cash balance account was equal to the compensation you received for services for that month multiplied by the applicable percentage from the following chart: Completed Years of Employment S200 S300 <5 2.00% 3.00% 5< % 3.75% 10< % 4.50% 15< % 6.00% 20< % 7.50% 25< % 9.00% % 11.25%

2 Your years of employment were determined as of the end of the month for which the pay credit was being credited. Your contribution level (S200 or S300) was determined by your pay credit level under the Siemens Pension Plan as of December 31, The interest credit, calculated as of the first day of each month, was credited as a pro rata portion of the annual rate of interest on 30-year Treasury securities as of the immediately preceding August with a minimum annual rate is 4.06%. As a result of the amendment, the Plan has frozen all future benefit accruals to each cash balance member's account as of December 31, 2009 such that no pay credits will be contributed to your cash balance account after December 31, However, your cash balance account will continue to be credited with interest credits to the extent provided by law. Final Average Pay Members For final average pay members, your benefit under the Plan prior to the amendment was based on your employment service and your average final compensation on the date of benefit determination (usually your retirement). The Plan provided a projected annual benefit of (i) 1.125% of the first $12,000 of your average final compensation, plus (ii) 1.5% of your average final compensation in excess of $12,000, multiplied by the number of years and completed months of benefit service you have been employed by the Company including any years of service prior to January 1, 2009 as calculated under the Siemens Pension Plan, plus, if applicable (iii) any grandfathered benefit (see Appendix A for more information). Your "average final compensation" is determined by calculating the average of the four consecutive plan years which produced your highest average annual compensation out of the last ten full plan years preceding a distribution event (including any years of service prior to January 1, 2009 as calculated under the Siemens Pension Plan). As a result of the amendment, the Plan has frozen all future benefit accruals beginning January 1, Your projected annual benefit will be based only upon your years of service and compensation through December 31, Any compensation you earn beginning on and after January 1, 2010 will not be used to calculate your average final compensation. In addition, any years of service in which you are employed by the Company beginning on January 1, 2010 will also not be used to calculate your benefit under the Plan. However, your years of service will still be counted after December 31, 2009 and used to determine vesting under the Plan and to determine your eligibility for early retirement. This amendment is effective December 31, Attached as Appendix B is a copy of the revised Summary Plan Description, for your files. Please check with the Employee Resource Center ( ) for more information. 2

3 APPENDIX A Grandfathered Benefits From Prior Plans 1. Siemens Transmission Systems, Inc. (STS): Members of the Plan who met the following requirements are eligible for benefits under the STS Plan: the member (i) was a participant in the Siemens Transmission Systems, Inc. Pension Plan at any time prior to October 1, 1988; (ii) became an employee as defined under the Siemens Pension Plan on October 1, 1988; and (iii) became a member under the Siemens Pension Plan as of October 1, Final Average Pay Benefit: The accrued benefit for an STS final average pay member was equal to a monthly benefit, calculated as a single life annuity commencing on the member s normal retirement date, equal to the greater of (1) and (2), where: (1) is the sum of (a) and (b), where (a) is 1.35% of the member's average final compensation Benefit Service through October 1, 1988, and (b) is the SEN Basic Formula using Benefit Service post October 1, (2) is the SEN Basic Formula using Total Benefit Service. 2. IBM Retirement Plan. Members of the Plan who met the following requirements are eligible for benefits under the IBM Retirement Plan (IBM Plan): the member (i) was a participant in the IBM Plan on September 29, 1989; (ii) became an employee as defined under the Siemens Pension Plan on September 30, 1989; (iii) had benefits under the IBM Plan (and associated assets) which were transferred to the Siemens Pension Plan and subsequently to this Plan; and (iv) became a member of the Siemens Pension Plan as of September 30, Final Average Pay Benefit: single life annuity commencing on the member s normal retirement date, equal to the greater of (1), (2), (3) and (4), where: (1) is the SEN Basic Formula using total Benefit Service. (2) is 1.5% of average compensation as determined under the IBM Retirement Plan for calendar years 1977 through 1986 times total Benefit Service (IBM 1986 Enhancement Formula). (3) is 1.5% of average compensation (as determined under the IBM Retirement Plan for years 1977 through 1986 for periods prior to September 30, 1989) times Benefit Service. 3

4 (4) is the sum of (a) and (b), where (a) (b) is the IBM Retirement Plan formula using Benefit Service as of September 30, 1989; and is the SEN Basic Formula, using SEN Benefit Service after September 30, Stromberg-Carlson Retirement Plans. Members of the Plan who met the following requirements are eligible for benefits under the Stromberg-Carlson Retirement Plans: the member (i) was a participant in the Retirement Plan for Salaried Employees of Stromberg- Carlson Corporation or the Retirement Plan for Hourly Employees of Stromberg-Carlson Corporation on December 13, 1990; (ii) became an employee of an employing company on December 14, 1990; (iii) whose benefits under said plans (and associated assets) were transferred to the Siemens Pension Plan and subsequently transferred to this Plan; and (iv) became a member of the Siemens Pension Plan as of December 14, Final Average Pay Benefit: single life annuity commencing on the member s normal retirement date, equal to the sum of (1) and (2), where: (1) is the Annual Stromberg-Carlson frozen benefit as of December 13, 1990; and (2) is the SEN Basic Formula using Benefit Service after December 13, ROLM Retirement Plan. Members of the Plan who met the following requirements are eligible for benefits under the ROLM Retirement Plan: the member (i) was a participant in the ROLM Retirement Plan on April 30, 1993, and (ii) who became a member of the Siemens Pension Plan as of May 1, Additionally, a member could be considered a "grandfathered" ROLM Retirement Plan member if: the Member (x) was a participant in the IBM ROLM Retirement Plan on September 29, 1989; (y) was a participant in the ROLM Retirement Plan on April 30, 1993; and (z) was actively working at the ROLM Company on April 1, Final Average Pay Benefit -- Non Grandfathered Members: single life annuity commencing on the member s normal retirement date, equal to the sum of (1) and (2): (1) ROLM frozen benefit as of April 30, 1993 (disregarding nonqualified plan benefits) (2) SEN Basic Formula using Benefit Service after April 30,

5 Final Average Pay Benefit - Grandfathered Members: single life annuity commencing on the member s normal retirement date, equal to the greater of (1), (2) and (3): (1) SEN Basic Formula using total Benefit Service. (2) ROLM Frozen Accrued Benefit as of April 30, 1993 (disregarding any nonqualified benefits). (3) 1.5% final 10-Year average Compensation (calculated with the 10 complete plan years prior to September 30, 1989 as defined in the IBM Retirement Plan in effect on September 29, 1989 times total Benefit Service). 5

6 SUMMARY PLAN DESCRIPTION 6