This excerpt taken from the TXN DEF 14A filed Mar 9, 2007.
TI Employees Pension Plan
The TI Employees Pension Plan is a qualified defined benefit pension plan. Please see page 25 under the Benefits heading of the Compensation Discussion and Analysis for a discussion of the origin of the plan. Employees who joined the U.S. payroll after November 30, 1997, are not eligible to participate in this plan.
A plan participant is eligible for normal retirement under the terms of the plan if he or she is at least 65 years of age with one year of credited service. A participant is eligible for early retirement if he is at least 55 years of age with 20 years of employment or 60 years of age with five years of employment. None of the named executive officers who participate in this plan are currently eligible for early or normal retirement.
Upon termination of employment, participants choose a lump sum payment or one of five forms of annuity. In order of largest to smallest periodic payment, the forms of annuity are: (i) single life annuity, (ii) 5-year certain and life annuity, (iii) 10-year certain and life annuity, (iv) qualified joint and 50 percent survivor annuity, and (v) qualified joint and 100 percent survivor annuity.
Generally, a participants lump sum benefit is calculated by multiplying the participants single life annuity (calculated as described below) by the appropriate lump sum factor. The lump sum factor is the greater age-based factor produced under either the GATT or PBGC lump sum tables. The GATT table is comprised of the GATT interest rate as published by the IRS for August of the preceding year and the 1994 Group Annuity Reserve mortality table. The corresponding PBGC table uses the interest rate as published by the PBGC for September of the preceding year and the 1984 Unisex Pensioners mortality table. The GATT and PBGC tables are updated annually for changes in interest rates.
Generally, the annual payment under a single life annuity is the greater of:
For purposes of these formulas:
Average credited earnings is the average of the highest five consecutive and complete calendar years of eligible earnings (salary and performance bonus).
Final average earnings is the lesser of:
Retirement age factor is a factor set by the IRS based on a participants year of birth. For years of birth 1938 through 1954, the factor is .007. For years of birth in 1955 and later, the factor is .0065. The retirement age factor is reduced if a participant retires and elects to receive his benefit prior to age 65.
Social Security Wage Base is the greatest amount of earnings on which Social Security taxes are payable each year.
Leaves of absence, including a bridge to retirement, are credited to years of service under the qualified and nonqualified pension plans. See the discussion of leaves of absence on page 40 below.
Please see Potential Payments upon Termination or Change in Control beginning on page 38 for the effect of various termination scenarios on the participants benefit.