Nortel Networks Corp., Brampton, Ontario, will freeze its North American pension plan and move employees into several existing defined contribution plans on Jan. 1, 2008, confirmed spokesman Jay Barta.
The company's overall pension, post-employment and post-retirement benefit liabilities totaled US$2.4 billion as of March 31, according to the company's quarterly report; specific figures for each were not immediately available. The company's defined benefit plan had US$878 million in assets as of March 31, 2005 and the defined contribution plans had roughly US$2 billion as of the same date, according to the Money Market Directory.
Nortel will contribute 2% of eligible pay to the defined contribution plans and offer a 50% match on employee contributions of up to 6%, according to a news release. Mr. Barta could not provide any information about the structure of the current plans.
Nortel estimates the move will save US$100 million in annual pension expense.
The company contributed US$91 million to the pension plan in the first quarter and expects to contribute an additional US$273 million by Dec. 31.