Tags: Motorola | pension | retirement | insurance

Motorola Solutions Cuts Pension Burden by $4.2 Billion

Thursday, 25 Sep 2014 11:28 AM

Motorola Solutions Inc. will reduce its pension obligations by $4.2 billion as it transfers risks to Prudential Financial Inc. and offers some employees lump-sum payments.

Prudential, the No. 2 U.S. life insurer, will assume responsibility for future pension payments to about 30,000 Motorola Solutions retirees, the Schaumburg, Illinois-based maker of two-way radios and other communications equipment said today in a statement. Motorola Solutions plans to contribute $1.1 billion in cash to its U.S. pension plans this year, the firm said.

Employers with pension obligations are under pressure as persistently low interest rates make generating returns on money set aside for liabilities more difficult. General Motors Co. and Verizon Communications Inc. are among companies that have opted to buy annuity contracts from Newark, New Jersey-based Prudential.

“We have substantially reduced the funding volatility associated with our pension plans while protecting benefits for retirees,” Chief Financial Officer Gino Bonanotte said in the statement. “Our retirees’ benefits are not changing, just who provides them.”

Motorola Solutions will purchase a $3.1 billion group annuity contract from Prudential under which the insurer will pay and administer retiree pensions, according to the statement. Prudential is expected to assume responsibility for the payments in early 2015.

In August, Motorola Solutions sold $1.4 billion of bonds in its biggest issue in almost seven years to help fund pension contributions and refinance debt.

Motorola Solutions fell 0.3 percent to $61.60 at 10 a.m. in New York and has dropped 8.7 percent this year. Prudential declined 0.9 percent to $90.62.

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Motorola Solutions Inc. will reduce its pension obligations by $4.2 billion as it transfers risks to Prudential Financial Inc. and offers some employees lump-sum payments.
Motorola, pension, retirement, insurance
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2014-28-25
Thursday, 25 Sep 2014 11:28 AM
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