Motorola Solutions to Reduce Pension Plan Liability by $4.2B While Preserving Benefits

Motorola Solutions, Inc.

today announced that it has reached an agreement with The Prudential Insurance Company of America, a Prudential Financial, Inc. company

, under which Prudential will assume responsibility for the monthly pension benefits for retirees. Motorola Solutions also will offer eligible U.S. pension plan participants the opportunity to apply for lump-sum pension payments. In total, these actions are expected to reduce Motorola Solutions' ongoing U.S. pension obligation by $4.2 billion. The company plans to contribute $1.1 billion in cash to its U.S. pension plans in 2014. “We have substantially reduced the funding volatility associated with our pension plans while protecting benefits for retirees,” said Gino Bonanotte, Motorola Solutions chief financial officer. “Our retirees' benefits are not changing, just who provides them.” In the third-largest transaction of its kind, the Motorola Solutions Pension Plan intends to purchase a group annuity contract from Prudential under which Prudential will pay and administer future benefits to the approximately 30,000 retirees who currently receive payments. The transaction is expected to be completed in 2014, with Prudential assuming responsibility for making the benefit payments beginning in early 2015. Prudential is entrusted with managing the pension benefits of 1.6 million participants at more than 5,700 companies. In addition, approximately 32,000 pension plan participants will be able to apply to receive a lump-sum payment of their accrued, vested pension benefit. To be eligible, participants must have left the company before June 30, 2014, and accrued a pension benefit but have not yet started receiving benefit payments. Participants must apply for the opportunity during the application period of Oct. 2, 2014 to Nov. 7, 2014. Total lump-sum payments will be capped at $1 billion, with the smallest amounts qualifying first. “We are pleased to be selected to help Motorola Solutions continue to deliver on its pension obligations to retirees while also reducing risk and volatility for the company,” said Phil Waldeck, senior vice president and head of Pensions and Structured Solutions for Prudential Retirement. “Guaranteeing benefits has been a part of Prudential's core business for more than 85 years. We look forward to welcoming these retirees to Prudential and providing them with retirement income security.” There are no changes for active employees who participate in the plan. Motorola offered the pension plans to U.S. employees hired before Jan. 1, 2005, with no additional benefits accrued for participants as of March 1, 2009. Affected pension participants will receive detailed mailings regarding these changes in the following days, with call centers opening next week. For more information, pension plan participants not yet receiving payments can call (866) 656-8918 starting Sept. 29, 2014. Retirees currently receiving pension payments can call (866) 697-0181 starting Oct. 2, 2014.