The Supplemental Pension Benefit Plan
for Certain Employees of
Aetna Services, Inc.
TABLE OF CONTENTS
I. DEFINITIONS AND CONSTRUCTION.................. 3
II. BENEFITS...................................... 8
III. MANAGEMENT OF THE PLAN........................ 12
IV. AMENDMENT AND TERMINATION..................... 14
V. ADOPTION BY AFFILIATE......................... 15
VI. MISCELLANEOUS................................. 16
A. LIST OF PHYSICIAN GROUPS
B. LIST OF HIGHLY LEVERAGED EMPLOYEES
C. LIST OF PARTICIPATING COMPANIES
Aetna Inc. (the 'Company') hereby amends and restates,
as its plan and its obligation, The Supplemental Pension
Benefit Plan for Certain Employees of Aetna Services, Inc.,
formerly Aetna Life and Casualty Company, (the 'Employer')
established by the Employer effective August 30, 1984. This
Plan is intended to provide benefits which supplement the
benefits provided under The Retirement Plan for Employees of
Aetna Life and Casualty Company (the 'Retirement Plan'): (1)
benefits in excess of those permitted to be provided after
application of one or more limits applicable to the
Retirement Plan under the Internal Revenue Code of 1986 (the
'Code'); (2) benefits attributable to certain elements of the
employee's compensation not taken into account in determining
the employee's pension under the Retirement Plan; and (3)
benefits provided at the direction of the Board of Directors
of the Company or the Board of Directors of Employer. That
portion of the Plan that provides benefits that are
attributable solely to the benefits that would be provided
under the Retirement Plan but for the application of the
limitations of Section 415 of the Code shall be treated as a
separate plan which is an excess benefit plan within the
meaning of Section 3(36) of the Employee Retirement Income
Security Act of 1974, as amended. This instrument sets forth
provisions which constitute the Plan as amended and restated
effective July 1, 1996.
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DEFINITIONS AND CONSTRUCTION
1.1 'Affiliate' means any entity which, with the
Company, constitutes a group of trades or businesses under
common control, a controlled group of corporations, an
affiliated service group, or a group of corporations
otherwise required to be aggregated, as provided in Sections
414(b), (c), (m), and (o) of the Code, respectively.
1.2 'Beneficiary' means the person or persons
designated from time to time in writing by a Participant as a
beneficiary under the Retirement Plan.
1.3 'Board' means the Board of Directors of the
1.4 'Code' means the Internal Revenue Code of 1986, as
1.5 'Company' means Aetna Inc. or any successor by
merger, consolidation, purchase or otherwise.
1.6 'Earnings' shall be as defined in the Retirement
Plan, except without regard to the cap imposed therein
pursuant to Section 401(a)(17) of the Code, and provided
(a) With respect to any awards made to a
Participant under the Company's Management Incentive Plan,
the following shall apply:
(1) an award paid in cash and not deferred by
the Participant shall be included in Earnings when paid; and
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(2) an award deferred by the Participant
shall never be included in Earnings (either when earned or
when paid), unless the Participant's Earnings for the year in
which the award was earned, without regard to such award,
exceed the limit established by Section 401(a)(17) of the
Code, in which case the award shall be allocated to the
Participant's Earnings over the twelve month performance year
prior to the earliest date on which the award would have been
payable if the Participant had so elected; and
(b) With respect to Highly Leveraged Employees, the
following adjustment shall be made:
(1) For the period July 1, 1996 through June 30,
1997, the Earnings of any Participant taken into account
under the Plan shall not exceed $400,000;
(2) For the period July 1, 1997 through December
31, 1997, the Earnings of any Participant taken into account
under the Plan shall not exceed an amount equal to the limit
on compensation imposed on qualified plans by Section
401(a)(17) of the Code for 1997;
(3) For 1998 and subsequent Plan Years, the
Earnings of any Participant taken into account under the Plan
shall not exceed an amount equal to twice the limit on
compensation imposed on qualified plans by Section 401(a)(17)
of the Code for that Plan Year.
Earnings shall be determined as if no elective
salary reduction had been made pursuant to Sections 125 and
401(k) of the Code.
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1.7 'Effective Date' means the effective date of this
amended and restated Plan, July 1, 1996.
1.8 'Eligible Employee' means, for any Plan Year, an
individual who is actively employed by the Employer or a
Participating Company and an Eligible Employee under the
Retirement Plan, and: (1) whose benefit under the Retirement
Plan is limited by the application of Section 401(a)(17) or
415 of the Code, (2) who earns or has earned awards under the
Employer's Management Incentive Plan or plans of similar
nature providing for performance bonuses to employees at mid-
level management and above which are not taken into account
in determining the Employee's pension under the Retirement
Plan and which are included in the definition of Earnings in
this Plan, or (3) who has entered into an agreement with the
Employer or a Participating Company that is ratified by the
Employer prior to July 19, 1996 or by the Company thereafter
and that provides for an award to the Employee of additional
years of service, compensation or other amounts for the
purpose of determining a pension benefit but which is not
taken into account in determining that benefit under the
Retirement Plan. Notwithstanding the foregoing, no employee
of a Physician Group shall be an Eligible Employee.
1.9 'Employer' means Aetna Services, Inc., formerly
Aetna Life and Casualty Company.
1.10 'ERISA' means the Employee Retirement Income
Security Act of 1974, as amended.
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1.11 'Excess Benefit Plan' means an excess benefit plan
within the meaning of Section 3(36) of ERISA.
1.12 'Highly Leveraged Employees' means employees whose
compensation is highly leveraged by virtue of the material
emphasis by the Employer or a Participating Company, as the
case may be, on variable or incentive pay, and who fall
within one of the following groups: (a) Aeltus Investment
Management investment and sales employees; (b) Portfolio
Management Group investment employees (excluding real estate
employees whose incentive targets are based on a company-wide
bonus plan); (c) Aetna Retirement Services sales management
and sales employees. Appendix B contains a non-exclusive
list of Highly Leveraged Employees, but although it is the
intention of the Company to update Appendix B from time to
time, the failure to list an employee designated as a Highly
Leveraged Employee will not prevent the inclusion of such
employee as a Highly Leveraged Employee.
1.13 'Participant' means an Eligible Employee or former
1.14 'Participating Company' means any Affiliate which
either (a) is listed in Appendix C on the Effective Date, or
(b) after the Effective Date, adopts the Plan in accordance
with the provisions of Article V hereof. If the Plan is only
adopted by a Participating Company with regard to certain
divisions, only those divisions shall be deemed the
Participating Company and the other divisions of such
Participating Company shall not be deemed to be Participating
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Companies hereunder. Notwithstanding the foregoing, no
Physician Group shall be eligible to become a Participating
Company. On the date that a Participating Company ceases to
be an Affiliate, it shall also cease to be a Participating
1.15 'Physician Group' means any Affiliate, other than
Aetna Physician Management Corporation ('APMC'), which
employs primarily licensed physicians, physician assistants
or nurse practitioners, including but not limited to those
entities set forth in Appendix A.
1.16 'Plan' means the Aetna Inc. Supplemental Pension
Benefit Plan, as set forth herein and as amended from time to
time. To the extent that Supplemental Benefits are provided
to Participants solely as a result of the application of the
limitations of Section 415 of the Code in the determination
of such Participants' benefits under the Retirement Plan, the
Plan shall be an Excess Benefit Plan which shall be a
separate plan hereunder but shall be included in the
definition of 'Plan.'
1.17 'Plan Year' means the calendar year.
1.18 'Retirement Plan' means The Retirement Plan for
Employees of Aetna Life and Casualty Company.
1.19 'Supplemental Benefit' means the benefit provided
under this Plan.
1.20 Construction. The masculine gender, where
appearing in the Plan, shall be deemed to include the
feminine gender, unless the context clearly indicates to the
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contrary. Where appropriate, words used in the singular
include the plural and words used in the plural include the
singular. The words 'hereof,' 'herein,' 'hereunder' and
other similar compounds of the word 'here' shall mean and
refer to this entire Plan, not to any particular provision or
Section. Capitalized terms used herein and not defined above
shall have the meanings set forth in the Retirement Plan.
2.1 Payment of Benefits. At the same time and in the
same manner as any monthly pension benefit is paid from the
Retirement Plan to or on behalf of a Participant, a
Supplemental Benefit in an amount determined in accordance
with Section 2.2 shall be paid from this Plan to the
Participant or the Participant's Beneficiary, as applicable.
The Supplemental Benefit shall be paid only at the same time
and in the same manner as a Participant's benefit is paid
under the Retirement Plan. To the extent that the payment of
a Participant's benefit under the Retirement Plan is
suspended pursuant to the provisions of the Retirement Plan,
Supplemental Benefits shall be suspended as well.
2.2 Amount of Benefits.
(a) The amount of any monthly Supplemental Benefit shall
equal the difference between:
(1) the benefit that would have been paid from the
Retirement Plan during that month (after application of the
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cost-of-living adjustment under the Retirement Plan) to or on
behalf of the Participant if:
(A) Sections 401(a)(17) and 415 of the Code
did not apply to the calculation,
(B) Earnings as defined herein were used in the
(C) any awards of additional years of
service, compensation or other amounts that were made to the
Participant for the purpose of determining a pension benefit
were taken into account, provided, however, that any such
award must be made in a written contract or plan between the
Participant and the Participant's employer and ratified by
the Employer prior to July 19, 1996 or by the Company
(2) the benefit that is paid from the Retirement
Plan during that month (after application of the cost-of-
living adjustment under the Retirement Plan) to or on behalf
of the Participant.
(b) The amount of any Supplemental Benefit payable to a
Participant under the portion of the Plan that is an Excess
Benefit Plan shall be determined taking into account any
actuarial adjustments to the limits applicable under Section
415 of the Code and the terms of the Retirement Plan on the
basis of the form and time of payment of the Participant's
benefit under the Retirement Plan.
2.3 Payment of FICA and Other Taxes.
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(a) If, under applicable law and regulations, FICA and
other taxes are required to be withheld by the Employer or
the applicable Participating Company with respect to a
Supplemental Benefit earned by a Participant during any
period that Supplemental Benefits are not currently being
paid to the Participant, then the compensation otherwise
currently payable to a Participant from an Employer during
such period shall be reduced by an amount equal to such FICA
and other taxes. To the extent that the compensation
currently payable to a Participant during any such period is
insufficient to permit an amount equal to the FICA and other
taxes required to be withheld by the Employer during that
period to be withheld from such current compensation, the
Participant shall be notified by the Company and shall
provide the Company with a check in an amount equal to the
difference between the amount of FICA and other taxes
required to be withheld on behalf of the Participant during
the period and the amount the Employer was otherwise able to
withhold during the period.
(b) If, under applicable law and regulations, FICA and
other taxes are required to be withheld by the Employer for
any period with respect to a Supplemental Benefit earned by
the Participant during any period that Supplemental Benefits
are currently being paid to the Participant, then the
Supplemental Benefit otherwise currently payable to a
Participant during such period shall be reduced by an amount
equal to such FICA and other taxes.
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2.4 Excess Benefit Plan. All Supplemental Benefits
payable solely by reason of the application of the
limitations of Section 415 of the Code to a Participant's
benefit under the Retirement Plan shall be provided from the
separate plan created herein that is an Excess Benefit Plan.
2.5 Unfunded Nature of Benefit. No assets shall be
segregated or earmarked with respect to any Participant and
no Participant or Beneficiary shall have any right to assign,
transfer, pledge or hypothecate an interest or any portion
thereof in any benefit payable hereunder. The Plan shall not
constitute a trust or a funded arrangement of any sort and
shall be merely for the purpose of recording an unsecured
contractual obligation of each obligated party; provided,
however, that the Employer and the Company reserve the right
to meet the obligations created under the Plan through one or
more trusts or other agreements.
2.6 Reduction of Benefit. If a Participant breaches an
obligation to the Company, the Employer or a Participating
Company with respect to the payment of a specific sum of
money, the Company, the Employer or the applicable
Participating Company may reduce any benefits payable to such
Participant under this Plan, in the manner of setoff or
otherwise, to the extent of such obligation and any costs
incurred with respect thereto.
In addition, the Company, the Employer and the
Participating Companies do not waive any rights to reduce
benefits, including but not limited to setoff rights, which
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such entities may have under applicable law or a prior
written agreement between all or any of them and an Employee,
all of which rights are enforceable independent of the terms
of this Plan.
MANAGEMENT OF THE PLAN
3.1 Administrator. The Employer shall be the
Administrator with the sole responsibility for the
administration of the Plan. The Administrator may delegate
to any person or entity any powers or duties of the
Administrator under the Plan. To the extent of any such
delegation, the delegatee shall become responsible for
administration of the Plan, and references to the
Administrator shall apply instead to the delegatee. Any
action by the Employer assigning any of its responsibilities
as Administrator to specific persons who are all directors,
officers, or employees of the Employer, the Company, or the
Participating Companies shall not constitute delegation of
the Administrator's responsibilities but rather shall be
treated as the manner in which the Employer has determined
internally to discharge such responsibility. The
Administrator shall not be a fiduciary (within the meaning of
Section 3(21) of ERISA) with respect to the portion of the
Plan that is an Excess Benefit Plan.
3.2 Powers and Duties of the Administrator. The
Administrator shall have such duties and powers as may be
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necessary to discharge its duties hereunder, including, but
not by way of limitation, the following:
(a) to construe and interpret the Plan, decide all
questions of eligibility, determine the status and rights of
Participants, and determine the amount, manner and time of
payment of any benefits hereunder;
(b) to receive from the Participating Companies
and from Participants such information as shall be necessary
for the proper administration of the Plan;
(c) to furnish the Participating Companies, upon
request, such annual reports with respect to the
administration of the Plan as are reasonable and appropriate;
(d) to appoint or employ individuals to assist in
the administration of the Plan and any other agents it deems
advisable, including legal and actuarial counsel;
(e) to defend and initiate any lawsuit on behalf
of the Plan or the Eligible Employees if the Administrator deems
it reasonably necessary to protect the Plan or the Participants.
If there shall arise any misunderstanding or ambiguity
concerning the meaning of any of the provisions of the Plan
arising out of the administration thereof, the Administrator
shall have the sole right to construe such provisions.
Subject to the limitations of the Plan and applicable law,
the Administrator may make such rules and regulations as it
deems necessary or proper for the administration of the Plan
and the transaction of business thereunder.
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The decisions of the Administrator with respect to any
matter it is empowered to act on shall be made by it in its
sole discretion based on the Plan documents and shall be
final, conclusive and binding on all persons.
AMENDMENT AND TERMINATION
4.1 Amendment. The Company reserves the right to amend
this Plan from time to time in any respect, including without
limitation a prospective reduction in accrual of benefits.
See Section 4.4 regarding prohibition of retroactive
reduction of benefits accrued under this Plan.
4.2 Action by Company. Any amendments to this Plan by
the Company shall be made in writing and executed by the
Senior Vice President, Aetna Human Resources or other Company
officer holding such position, or by the President or Chief
Executive Officer of the Company. Neither the consent of any
Employee nor that of any payee is required for any amendment
to the Plan.
4.3 Termination by Company. The Plan may be terminated
in whole or in part by the Company at any time. The Plan as
a whole shall be terminated only pursuant to a resolution of
the Board of Directors of the Company. The Plan may be
terminated in part in the same manner as is prescribed for
the adoption of amendments. Neither the consent of any
Employee nor that of any payee is required for any
termination of the Plan. The termination of participation by
a Participating Company shall not relieve the Participating
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Company of its liabilities under this Plan, including but not
limited to those liabilities imposed under Section 6.2 hereof.
4.4 Effect of Amendment or Termination by Company. Any
amendment or termination of this Plan by the Company shall be
effective prospectively and shall not serve to retroactively
reduce any right to a benefit accrued under this Plan up to
the date of such amendment or termination.
ADOPTION BY AFFILIATE
5.1 Adoption by Affiliate. Any Affiliate, other than a
Physician Group, may, with the consent of the Company, become
a Participating Company under the Plan by a resolution of the
Board of Directors of the Affiliate under which:
(a) The Affiliate shall agree to be bound by all
the provisions of the Plan in the manner set forth herein and
any amendments hereto; and
(b) The Affiliate shall agree to pay its share of
expenses of the Plan as they may be determined by the Company
from time to time.
5.2 Termination by a Participating Company. Any
Participating Company may at any time elect to terminate its
participation under the Plan with respect to all or any group
of the Participating Company's Employees. Notwithstanding
the provisions of Article IV, a Participating Company shall
terminate its participation under the Plan by resolution of
the Board of Directors of the Participating Company.
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6.1 Exclusive Benefit. The Plan is maintained for the
exclusive benefit of Participants.
6.2 Source of Payment. All benefits under the Plan
shall be paid exclusively by the Employer or the applicable
Participating Company from its general assets, provided that
the Company shall be liable for all benefits under the Plan.
6.3 Rights of Employees. Nothing contained herein
shall be deemed to give any Employee the right to be retained
in the service of the Employer or the applicable
Participating Company or to interfere with the right of the
Employer or the applicable Participating Company to discharge
such Employee at any time, nor shall it be deemed to give the
Employer or the applicable Participating Company the right to
require the Employee to remain in its service, nor shall it
interfere with the right of the Employer or the applicable
Participating Company to terminate service at any time.
6.4 Headings. The headings of the Plan are inserted
for convenience of reference only and shall have no effect
upon the meaning of the provisions hereof.
6.5 Severability. If any provision of this Plan is
held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision, and
this Plan shall be construed and enforced as if such
provision were omitted.
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6.6 Alienation of Benefits. Except as otherwise provided by
law, and consistent with Section 2.5 hereof, no benefit under this
Plan may be voluntarily or involuntarily assigned or alienated.
6.7 Lost Distributees. Any benefit payable hereunder shall
be deemed forfeited if the distributee to whom payment is due
cannot be located, provided that such benefit shall be reinstated
if a claim is made by the distributee for the forfeited benefit
within two years of the date the forfeited benefit was originally
payable pursuant to the provisions of Article II.
6.8 Governing Law. This Plan shall be construed according
to the laws of the State of Connecticut to the extent not pre-
empted by Federal law.
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IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officer this 22nd day of August,
By:/s/ Mary A. Champlin
Mary Ann Champlin
Senior Vice President
Aetna Human Resources
/s/ Michele G. Kostin
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LIST OF PHYSICIAN GROUPS
Airport Managed Care, Inc.
Gateway Medical Group I, Inc.
Gateway Women's Health Center, A Medical Group, Inc.
Gateway Medical Group XI, Inc.
Concord Medical Group, Inc.
Gateway Medical Group IV, Inc.
Gateway Orthopedic Medical Group, Inc.
GMG-LAX Medical Group, Inc.
Rancho Medical Group, Incorporated
Las Posas Family Practice Medical Group, A Professional
Ventura Private Practice Group, Inc.
Lombard Medical Group, Inc.
Santa Clarita Medical Group, Inc.
a/k/a Henry Mayo Newhall Family Medical Center
North Texas Dental Care Associates, P.A.
Ohio Primary Care Associates, P.A., Inc.
Pennsylvania Primary Care Associates, P.C.
Mid Atlantic Primary Care Associates, P.C.
North Carolina Primary Care Associates, P.C.
New Jersey Primary Care Associates, Inc.
Wheaton Clinic, S.C.
Chicago Medical Associates, S.C.
Atlanta Primary Care Associates
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North Texas Primary Care
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LIST OF HIGHLY LEVERAGED EMPLOYEES
Aeltus Investment Management
John Kim Len Carlson
Peter Canoni Jean Wong-Boehm
Kevin Means Tom DiBella
Neil Kochen Steve Huber
Ken Bragdon Geoff Brod
Drew Lawten David Canuel
Scott Fox Hugh Whelan
Portfolio Management Group
Aetna Retirement Services
[It is recognized that this Listing is incomplete]
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LIST OF PARTICIPATING COMPANIES
A. B. C.
Schedule of Participating Identification
Companies Number of End
Aetna Services, Inc.** 06-0843808 12/31
The Aetna Casualty and 06-6033504 12/31
Aetna Life Insurance
Company 06-6033492 12/31
The Standard Fire 06-6033509 12/31
Aetna Life Insurance and
Annuity Company 71-0294708 12/31
International, 87-0300539 12/31
*Coverage ceased effective April 2, 1996. Travelers/Aetna
Property Casualty Corporation ('TAPCO') has assumed liabilities
of, and agreed to make all payments to, employees of this
**Formerly Aetna Life and Casualty Company.
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