Alcatel-Lucent Retirement Income Plan Lucent Pension Program Summary Plan Description December 1, 2010 Alcatel-Lucent Retirement Income Plan – Lucent Pension Program Disclaimer This is a summary of the benefits available to eligible occupational employees under the Lucent Pension Program (LPP) provisions of the Alcatel-Lucent Retirement Income Plan (Pension Plan). The LPP was created as a spinoff from the Lucent Technologies Inc. Pension Plan (LTPP), effective December 1, 2010. To the extent that this SPD refers to dates, events, agreements, elections or designations before December 1, 2010, such dates, events, agreements, elections or designations shall be recognized as if the LPP were in existence at the applicable time. Benefits for eligible occupational employees who terminated employment prior to December 1, 2010, are governed by the terms of the LTPP in effect as of their termination of employment. Occupational employees who are not represented by the Communications Workers of America or the International Brotherhood of Electrical Workers and who retire on or after December 1, 2010 will be transferred from the Lucent Technologies Inc. Retirement Plan (LTRP) to the LPP. Benefits for eligible occupational employees who terminated employment on or after December 1, 2010, are governed by the terms of the LTRP in effect as of their termination of employment. This summary is provided for informational purposes only and is intended to comply with Department of Labor requirements for Summary Plan Descriptions (“SPDs”). More detailed information about the LPP is provided in the official Pension Plan document, a copy of which can be obtained by writing to the Pension Plan Administrator (see “Important Contacts” and “Other Important Information”). If there is any conflict between the information in this SPD and the Pension Plan document, the Pension Plan document will govern. Pension Plan May Be Amended or Terminated The Company expects to continue the Pension Plan but reserves the right to amend or terminate the Pension Plan, in whole or in part, at any time by the resolution of the Board of Directors or its properly authorized designee, subject to the terms of applicable collective bargaining agreements. Questions regarding your benefits should be addressed as indicated in this SPD (see “Important Contacts”). Because of the many detailed provisions of the Pension Plan, no one other than the personnel or entities identified in this SPD (see “Important Contacts”) is authorized to advise you as to your benefits. Neither the Company nor the Pension Plan can be bound by statements made by unauthorized personnel or entities. In the event of a conflict between any verbal information provided to you by an authorized resource and information in the official Pension Plan documents, the Pension Plan documents will govern. Alcatel-Lucent Retirement Income Plan – Lucent Pension Program Alcatel-Lucent Retirement Income Plan Lucent Pension Program DISCLAIMER...........................................................................INSIDE FRONT COVER INTRODUCTION................................................................................................ 1 THE PENSION PLAN — HIGHLIGHTS........................................................................ 2 PARTICIPATING IN THE PENSION PLAN................................................................... 4 WHEN PARTICIPATION BEGAN...................................................................................4 COST...........................................................................................................4 ELIGIBILITY FOR PENSION BENEFITS...................................................................... 5 SERVICE PENSION...............................................................................................5 DEFERRED VESTED PENSION.....................................................................................6 DISABILITY PENSION.............................................................................................7 PENSION BENEFITS PAYABLE FOLLOWING YOUR DEATH.............................................. 8 IF YOU DIE WHILE ACTIVELY EMPLOYED.........................................................................8 IF YOU DIE AFTER LEAVING THE COMPANY BUT BEFORE BEGINNING YOUR SERVICE PENSION OR DISABILITY PENSION........................................................................................................9 IF YOU DIE AFTER LEAVING THE COMPANY BUT BEFORE BEGINNING YOUR DEFERRED VESTED PENSION.........10 IF YOU DIE AFTER YOUR SERVICE PENSION OR DISABILITY PENSION STARTS....................................10 IF YOU DIE AFTER YOUR DEFERRED VESTED PENSION STARTS..................................................11 SICKNESS DEATH BENEFITS................................................................................12 AMOUNT OF SICKNESS DEATH BENEFITS .......................................................................12 PAYMENT OF SICKNESS DEATH BENEFITS.......................................................................13 HOW PENSION BENEFITS ARE PAID.......................................................................14 SERVICE PENSION OR DISABILITY PENSION.....................................................................14 DEFERRED VESTED PENSION...................................................................................16 PAYMENT METHODS FOR PENSION BENEFITS..........................................................20 SERVICE PENSION OR DISABILITY PENSION PAYMENT METHODS.................................................20 DEFERRED VESTED PENSION PAYMENT METHODS ..............................................................23 CALCULATING YOUR PENSION PLAN BENEFIT..........................................................25 SERVICE PENSION.............................................................................................25 Example of a Discounted Service Pension.........................................................25 DISABILITY PENSION...........................................................................................26 Termination of Disability Pension Benefits.......................................................26 DEFERRED VESTED PENSION...................................................................................27 HOW SURVIVOR ANNUITIES ARE CALCULATED FOR SERVICE PENSIONS, DISABILITY PENSIONS AND DEFERRED VESTED PENSIONS..................................................................................28 Service Pension or Disability Pension Example: Joint and 50% Survivor Annuity ...........28 Service Pension or Disability Pension Example: Joint and 75% Survivor Annuity ...........29 Service Pension or Disability Pension Example: Joint and 100% Survivor Annuity..........30 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling. Alcatel-Lucent Retirement Income Plan – Lucent Pension Program Service Pension or Disability Pension Example: 10-Year Certain Annuity....................31 Deferred Vested Pension Example: Joint and 50% Survivor Annuity..........................32 Deferred Vested Pension Example: Joint and 75% Survivor Annuity..........................33 EMPLOYMENT-RELATED EVENTS..........................................................................34 IF YOU ARE REHIRED..........................................................................................34 If You Are Rehired After You Commence Your Pension Benefit ...............................34 Return to Work for a Participating Company or a Controlled Group Company..............35 Return to Work Under the Mandatory Portability Agreement (MPA) ..........................35 Continue to Work After NRA.........................................................................36 If You Are Rehired After Receiving a Lump Sum Payment......................................36 TERMS YOU SHOULD KNOW................................................................................37 IMPORTANT CONTACTS.....................................................................................46 PENSION SERVICE CENTER (PSC)..............................................................................46 By Phone................................................................................................47 Online ...................................................................................................47 By Mail ..................................................................................................47 OTHER RESOURCES ...........................................................................................48 OTHER IMPORTANT INFORMATION.......................................................................49 CLAIM PROCEDURES...........................................................................................49 APPEAL PROCEDURES .........................................................................................51 RIGHTS OF A PLAN PARTICIPANT OR BENEFICIARY UNDER ERISA...............................................53 PRUDENT ACTIONS BY PLAN FIDUCIARIES......................................................................53 ENFORCE YOUR RIGHTS.......................................................................................54 ASSISTANCE WITH YOUR QUESTIONS..........................................................................54 PENSION PLAN DOCUMENTS...................................................................................55 PLAN TERMINATION...........................................................................................55 NON-ASSIGNMENT OF BENEFITS ...............................................................................57 TOP HEAVY RULES............................................................................................57 MAXIMUM LIMITATIONS........................................................................................57 PENSION BENEFIT GUARANTY CORPORATION..................................................................58 PAYMENTS UNDER LAW .......................................................................................59 UNCLAIMED BENEFITS.........................................................................................59 PENSION PLAN ADMINISTRATOR ...............................................................................59 PENSION PLAN IDENTIFICATION................................................................................60 APPENDICES ..................................................................................................61 APPENDIX A: DEFERRED VESTED PENSION EARLY PAYMENT PERCENTAGES.....................................61 APPENDIX B: FORMER AFFILIATES.............................................................................62 APPENDIX C: SPECIAL RULES AND AGREEMENT AND YOUR PENSION............................................63 If You Had Bell System Service Before January 1, 1984.........................................63 Summary of the Mandatory Portability Agreement (MPA) .....................................63 Service Recognition Under Certain Corporate Transactions ...................................66 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling. Introduction INTRODUCTION Here is your summary of the key features of the Lucent Pension Program (LPP) of the Alcatel-Lucent Retirement Income Plan (Pension Plan). Certain words and phrases have a specific meaning under the Pension Plan. These terms are capitalized whenever they appear to let you know that they are defined in the Section labeled “Terms You Should Know”. The Pension Plan is an important part of your financial security. It can provide a source of continuing income during your retirement years, and it may provide survivor benefits to your eligible Lawful Spouse or other named beneficiary in certain specified instances. The Pension Plan is provided at no cost to you. The LPP covers participants who transferred from the Lucent Technologies Inc. Pension Plan (LTPP) or the Lucent Technologies Inc. Retirement Plan (LTRP). Your pension benefit upon termination of employment was calculated under the terms of the LTPP or the LTRP in effect at that time and was transferred to the LPP portion of this Pension Plan. If you were receiving monthly payments from the LTPP when your pension benefit was transferred on December 1, 2010, the payments continued uninterrupted from this Pension Plan. This SPD will assist you with understanding survivor benefits that may be payable upon your death, as well as providing Important Contacts and Other Important Information. If you have not yet commenced payment of your pension benefit, the transfer will not affect the amount of your pension benefit or the distribution options available to you. This SPD will assist you with understanding how pension benefits are paid, the payment methods available, survivor benefits that may be payable upon your death, and how to calculate your benefit for early commencement or survivor annuities. In addition, this SPD provides Important Contacts and Other Important Information. Page 1 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling. The Pension Plan - Highlights THE PENSION PLAN — HIGHLIGHTS Here is a summary of the key features of the Lucent Pension Program (LPP) of the Pension Plan. Lucent Pension Program Summary Feature Participation You became a Participant in the Pension Plan effective December 1, 2010 (the day the LPP was created as a spinoff from the Lucent Technologies Inc. Pension Plan (LTPP)) if on November 30, 2010 you were a participant in the LTPP and if upon termination of employment you were not represented by the Communications Workers of America or the International Brotherhood of Electrical Workers. In addition, you became a Participant in the Pension Plan effective on the day following your termination of employment if you terminated employment from the Lucent Technologies Inc. Retirement Plan (LTRP) on or after December 1, 2010 and were eligible for a Service Pension or Disability Pension, and if upon termination of employment you were not represented by the Communications Workers of America or the International Brotherhood of Electrical Workers. If you are eligible, you may also be covered by the sickness death benefit provisions of the Pension Plan. Cost Alcatel-Lucent USA Inc. pays the entire cost of the Pension Plan. There is no cost to you. Vesting “Vesting” refers to earning a nonforfeitable right to your Pension Plan benefit. Generally, you are Vested after you complete five years of Vesting Service. You also are Vested under the Pension Plan if your benefit under the LTPP became fully Vested by reason of a transfer of excess pension assets. If you were transferred from the LTPP to this Pension Plan on December 1, 2010, all of your Vesting Service under the LTPP is treated as Vesting Service under the Pension Plan. If you were transferred from the LTRP to this Pension Plan on or after December 1, 2010, all of your Vesting Service under the LTRP is treated as Vesting Service under the Pension Plan. Page 2 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling. The Pension Plan - Highlights Pension Plan The Pension Plan provides three kinds of pensions to Participants: Benefits • A Service Pension if you left a Controlled Group Company after meeting certain minimum age and Net Credited Service (NCS) requirements, • A Disability Pension if you are unable to work due to disability and completed at least 15 years of NCS, and • A Deferred Vested Pension, if you left a Controlled Group Company after you become Vested and you are not eligible to receive a Service or Disability Pension. Information Call the Pension Service Center (PSC) at 1-866-429-5764 for information about the About Your Pension Plan and to initiate payment of your pension benefits. You can also reach Pension Plan the PSC by regular mail as follows: Alcatel-Lucent Pension Service Center PO Box 57576 Jacksonville, FL 32241-7576 You can access the Pension Service Center website at http://alcatel-lucent.ingplans.com Page 3 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling. Participating in the Pension Plan PARTICIPATING IN THE PENSION PLAN WHEN PARTICIPATION BEGAN You became a Participant in the Pension Plan effective December 1, 2010 (the day the Lucent Pension Program (LPP) was created as a spinoff from the Lucent Technologies Inc. Pension Plan (LTPP)) if on November 30, 2010 you were a participant in the LTPP and if upon termination of employment you were not represented by the Communications Workers of America or the International Brotherhood of Electrical Workers. In addition, you became a Participant in the Pension Plan effective on the day following your termination of employment if you terminated employment from the Lucent Technologies Inc. Retirement Plan on or after December 1, 2010 and were eligible for a Service Pension or Disability Pension, and if upon termination of employment you were not represented by the Communications Workers of America or the International Brotherhood of Electrical Workers. You automatically became a Participant in the Pension Plan when you met the above requirements. You did not need to enroll. COST Alcatel-Lucent USA Inc. pays the full cost of providing your pension. There is no cost to you. Page 4 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling. Eligibility for Pension Benefits ELIGIBILITY FOR PENSION BENEFITS The Pension Plan provides three kinds of pensions: ● A Service Pension, ● A Deferred Vested Pension, or ● A Disability Pension. This section describes the types of pension you might be eligible to receive and when benefits are paid depending on how and when you terminated employment with the Company. The type of pension for which you qualify determines the amount of any reduction in your pension payments if you commence your benefits early. SERVICE PENSION You were eligible to retire with a Service Pension at any time after you met the following minimum age and Service requirements: Your Age Is At Least AND Your NCS Is At Least Any age 30 years 50 25 years 55 20 years 65 10 years You must meet both the age and Service requirements for a Service Pension. The fact that your age and Net Credited Service add up to 75 or more does not entitle you to a Service Pension. For example, if you are age 51 and have 24 years of Service, you are not eligible for a Service Pension. If You Retired After Age 55 If you terminated employment (other than because of disability) after attaining age 55 and are entitled to a Service Pension, there is no reduction for early retirement in the amount of your pension. Page 5 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling. Eligibility for Pension Benefits If You Retired Before Age 55 If you terminated employment (other than because of disability) before age 55 and are entitled to a Service Pension, and you have less than 30 years of Net Credited Service, your pension will be permanently discounted by one-half percent for each full or partial month by which your Benefit Commencement Date precedes the date that you attain age 55. This discount is equal to no more than 6% a year for each year your pension is in effect before age 55. If you have 30 years of Net Credited Service when you terminated employment, there is no reduction for early retirement in the amount of your pension. DEFERRED VESTED PENSION You are eligible for a Deferred Vested Pension if you left the Company after becoming Vested, provided you were not eligible for a Service Pension or Disability Pension. If you are among the group of Certain Other Union Employees: ● Your Deferred Vested Pension will begin as of the later of the date you attain age 65 or terminate employment, in which case, no reduction will be made to your pension because of your age at the time payments start. ● If you have at least 20 years of NCS, you may elect to receive your Deferred Vested Pension payments before age 65 as shown in the following chart. Your Deferred Vested Pension Can * If Your Net Credited Service Is Begin On or After At least 20 years Age 55 25 years or more Age 50 * If payments begin before age 65, your benefit is reduced by an actuarial factor that takes into account your age when your payments start. (See “Appendix A: Deferred Vested Pension Early Payment Percentages”.) If you are among the group of Certain BTA/LBA Employees: ● You may receive your Deferred Vested Pension starting at age 65, in which case, no reduction will be made to your pension because of your age at the time payments start. Page 6 This SPD describes the Lucent Pension Program provisions of the Alcatel-Lucent Retirement Income Plan as of December 1, 2010. More detailed information is provided in the official Pension Plan documents which are controlling.