Summary
Motorola Solutions, Inc. (MSI) announced significant actions related to its pension plans on September 22, 2014. The company entered into an agreement to purchase a group annuity contract from The Prudential Insurance Company of America (PICA). This contract will transfer the obligation of paying benefits to approximately 30,000 retirees to PICA, effectively settling a substantial portion of MSI's pension liabilities. The company also plans to contribute $1.1 billion to improve the funded status of its pension plans and expects to account for these transactions as a settlement of approximately $4.2 billion in pension obligations.
Key Highlights
- 1Motorola Solutions is entering into a definitive agreement to transfer pension obligations to PICA via a group annuity contract.
- 2Approximately 30,000 retirees' future annuity payments will be assumed by PICA.
- 3MSI intends to contribute $1.1 billion to enhance the funded status of its pension plans.
- 4The company expects these transactions to result in the settlement of roughly $4.2 billion in pension obligations under GAAP.
- 5A new pension plan is being established with terms similar to the existing one, and the original plan is expected to be terminated.
- 6The transaction is subject to customary closing conditions, including regulatory review by the Pension Benefit Guaranty Corporation.
- 7MSI is offering lump-sum distributions, up to a total of $1.0 billion, to certain former employees who have not yet started receiving pension benefits.