A specific amount is contributed to a retirement fund. Each employee has an account balance in the fund and typically can select from several investment choices. In some cases, a company will contribute a percentage of workers earnings, in other cases the employer will match an employee’s contribution (this requires that an employee contribute in order to realize any benefit from the employer). In other situations, an employer is the plan sponsor but the employee makes all contributions. The principle is a series of payments determined by the retirement plan formula, which are paid at specific intervals, in our case monthly for the pensioner’s lifetime.

Retiree is provided a specific annuity for life based on the retirement plan formula. For us, the terms of this are negotiated and described in Article 26 of our Contract. The Retirement Benefit Plan of American Airlines, Inc. for Flight Attendants is a Defined Benefit Plan and is paid for completely by American Airlines. The SPD (Summary Plan Description) is available on JETNET.

Any age prior to age 65 that a Flight Attendant can elect to retire and begin receiving retirement benefits. The minimum age to begin collecting any benefits is 55. Our Contract allows early retirement with pension at age 55 with 15 years of credited service or at age 60 with 10 years of credited service. If you leave before age 60 with less than 15 YCS your pension annuity would be permanently reduced if you elected to commence it prior to 65. Health and travel benefits are based upon age and Company Seniority – the earliest age is 55 with 10 years of Company Seniority.

The average earnings used in determining your pension benefit. This is computed using the eligible annual earnings for the highest 48 consecutive months out of the last 120 months worked prior to the freeze date of 10/31/2012.

*Reflects a hard freeze date of 11/1/12

The combined number of years credited from work at AA and other carriers that were absorbed through acquisitions and mergers (Reno Air, Air Cal and TWA). It is used to determine ELIGIBILITY ONLY (not value) for pension benefits. Our plan allows us to continue to accrue retirement eligibility service, but NOT years of credited service since the pension freeze.

There are six measures of service that are used for various purposes in your employment. The three “seniorities” are described below; the other three are Years of Credited Service, Retirement Eligibility Service and Vesting.

• Company Seniority (benefits) – Starts out as date of hire but is adjusted for certain specified absences from active status.
• Classification Seniority (pay) – Begins accruing when placed on line as Flight Attendant and determines pay step as Flight Attendant.
• Occupational Seniority (bidding) – Based upon length of service as a Flight Attendant. This is bidding seniority and is updated annually in June. It is also referred to as “Union Seniority.”

Time accrued towards determining if you have a “right” to a pension benefit. Vesting credit begins on date of hire. One year is earned for each calendar year that you are paid 386 hours. There are no proportionate accruals, so if you aren’t paid at least 386 hours in a year you receive no credit. Five years are necessary to be fully vested and to be eligible to receive a pension benefit. Once you are fully vested, you are entitled to your pension benefit and cannot lose it regardless of when you leave the Company. If you stay with the Company until age 65, you are fully vested at age 65 regardless of your years of vesting.

This is a measure used to determine the amount of your retirement benefit. It is also used to determine the earliest age at which you can commence your pension. Accrual and entry into the Plan begin after completion of one year of service with American Airlines if you are paid at least 386 hours in that year. If not, accrual and entry into the Plan begin on January 1 after any calendar year in which you were paid 386 hours. After Plan entry, a Flight Attendant earns one year of credited service for each calendar year in which s/he is paid 734 or more hours of service.

Pay for less than 734 hours in a calendar year will result in a partial accrual for that year. Currently, the Company notifies you of your accrued YCS through your annual pension statement on JETNET.

*Reflects a hard freeze date of 11/1/12