Motorola Solutions Inc., Schaumburg, Ill., entered into a pension buyout agreement with Prudential Insurance Co. of America and will offer lump-sum payouts to terminated vested employees to reduce $4.2 billion in pension obligations, said Robert O'Keef, corporate vice president and treasurer at Motorola Solutions.
The buyout will total about $3.1 billion and cover about 30,000 Motorola Solutions retirees.
This is the third-largest U.S. pension buyout to date, after General Motors Co. and Verizon Communications Inc., Mr. O'Keef said.
“Something that really got this across the finish line internally here and I think it's resonating here, but really got this across the board,” Mr. O'Keef said, “is looking at our core mission (and that) is critical communication. It's not managing assets and liabilities. Prudential's core business is. That's where this activity belongs.”
“Prudential is equipped to manage these risks. We're not,” Mr. O'Keef added. “That's what got this across the finish line with our team.”
The lump-sum offer, meanwhile, will go out to about 32,000 terminated vested participants who have yet to retire and those people represent about $1.1 billion in obligations. The lump-sum offer window begins Oct. 1 and ends Nov. 7. Payments to participants who select the lump sum will go out on Dec. 19, Mr. O'Keef said.
Motorola also said it intends to contribute $1.1 billion to improve the funded status of its pension plans, which Mr. O'Keef said have about $8.4 billion in obligations now.
As of Dec. 31, the company reported $6.071 billion in U.S. defined benefit plan assets and $7.317 billion in projected benefit obligations, for a funding ratio of 83%, according to its most recent 10-K filing.