This excerpt taken from the MO DEF 14A filed Mar 23, 2007.
Kraft Foods Global, Inc. Retirement Plan
All eligible full-time and part-time U.S. employees of Kraft and its subsidiaries, including executive officers, are covered automatically in a funded non-contributory, tax-qualified defined benefit plan the Kraft Foods Global, Inc. Retirement Plan, which we refer to as the Kraft Retirement Plan. Benefits under the Kraft Retirement Plan are payable upon retirement in the form of an annuity or, if the employee was hired prior to 2004, a lump sum. The formula used to calculate a benefit is equal to the following:
Final average pay is defined as the greater of:
For this purpose, a participants compensation includes salary and annual incentive compensation. Normal retirement under the Kraft Retirement Plan is defined as age 65 with five years of vesting service, at which point participants are eligible to receive an unreduced benefit. Participants with five years of vesting service may elect to receive benefits after attaining age 55 and before age 65, but the amount is reduced since benefits are paid over a longer period of time. The reduction depends on how old the participant is at termination and the number of years of vesting service the participant earned. Employees who terminate employment before age 55 may commence payment of their pensions after attaining age 55, with a reduction in the annual amount payable at a rate of 6% per year multiplied by the number of years by which age as of benefit commencement is less than 65. A participant hired before 2004, who terminates employment at or after age 55 and who has at least 10 years of vesting service will have his pension reduced by 3% for each year that age at benefit commencement is less than 62, except that the incremental reduction factor between ages 56 and 55 is 2%. Mr. Szymanczyk is currently eligible for early retirement.