Summary
Motorola Solutions, Inc. (MSI) filed an 8-K on December 3, 2014, to report on significant actions taken regarding its pension plan. The company announced the closure of a purchase from The Prudential Insurance Company of America (PICA) for a group annuity contract. This contract transfers the responsibility of paying and administering certain future pension payments to approximately 30,000 former employees to PICA. This transaction involved the transfer of approximately $3.2 billion in plan assets to PICA. Additionally, MSI established a new pension plan and offered lump-sum distributions, capped at $1.0 billion, to eligible former employees who had not yet started receiving benefits. Due to exceeding the cap, lump-sum payments will be disbursed sequentially starting with the smallest amounts until the $1.0 billion limit is met. The company expects to account for these combined transactions as a settlement of approximately $4.3 billion in pension obligations.
Key Highlights
- 1Motorola Solutions purchased a group annuity contract from Prudential Insurance Company of America (PICA) to transfer pension obligations for ~30,000 retirees.
- 2The transaction involved the transfer of approximately $3.2 billion in Motorola Solutions Pension Plan assets to PICA.
- 3A new pension plan was established by the company.
- 4Eligible former employees were offered lump-sum distributions, capped at a total of $1.0 billion.
- 5Due to exceeding the lump-sum offer cap, distributions will be prioritized from smallest to largest amounts.
- 6The company anticipates accounting for these transactions as a settlement of approximately $4.3 billion in pension obligations.