Motorola Solutions to Reduce Pension Plan Liability by $4.2 Billion While Preserving Benefits
September 25, 2014
Actions will reduce pension funding volatility; Prudential to provide same benefits to retirees
SCHAUMBURG, Ill. and NEWARK, N.J. – Sept. 25, 2014 – Motorola Solutions, Inc. (NYSE:MSI) today announced that it has reached an agreement with The Prudential Insurance Company of America, a Prudential Financial, Inc. company (NYSE:PRU), 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.
Motorola Solutions Investor Conference Call
Investors are invited to listen to a live webcast of the Motorola Solutions conference call discussing the announcement. The conference call will be held at 11 a.m. Eastern Daylight Time today. To listen to the call, visit www.motorolasolutions.com/investor. Additional information regarding the transaction also will be made available on the company’s website.
Statements in this press release and from Motorola Solutions and Prudential management about the expected timing, completion and effects of the closing of the purchase of the group annuity contract from Prudential and the payment of lump-sum distributions to certain pension plan participants, and all other statements made in this press release that are not historical facts, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “plan,” “intend,” “anticipate,” or “believe,” or the negative of those words or other comparable words. These forward-looking statements are based on current expectations and assumptions, are not guarantees of future events or results, and are subject to various risks and uncertainties, including uncertainties inherent in regulatory reviews, market conditions and general and international economic conditions, and other factors that could affect the timing or the ability of the parties to close the transactions referenced in this press release. Forward-looking statements included in this press release or made by management are made as of the date they are made only, and Motorola Solutions undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. A detailed description of other risks, uncertainties and other factors affecting Motorola Solutions are included in its news releases and filings with the SEC, including but not limited to the factors under the heading “Risk Factors” in its Form 10-K for the year-ended Dec. 31, 2013 and quarterly reports on Form 10-Q for the quarters ended March 29, 2014 and June 28, 2014.
About Motorola Solutions
Motorola Solutions is a leading provider of mission-critical communication solutions and services for enterprise and government customers. Through leading-edge innovation and communications technology, it is a global leader that enables its customers to be their best in the moments that matter. Motorola Solutions trades on the New York Stock Exchange under the ticker “MSI.” To learn more, visit www.motorolasolutions.com. For ongoing news, please visit our newsroom or subscribe to our news feed.
Prudential Retirement delivers retirement plan solutions for public, private, and non-profit organizations. Services include defined contribution, defined benefit and non-qualified deferred compensation record keeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services. With over 85 years of retirement experience, Prudential Retirement helps meet the needs of over 4 million participants and annuitants. Prudential Retirement has $330.5 billion in retirement account values as of June 30, 2014.
Prudential Financial, Inc. (NYSE:PRU), a financial services leader with more than $1.1 trillion of assets under management as of June 30, 2014, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com.
Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, Conn., or its affiliates. Insurance products are issued by The Prudential Insurance Company of America (PICA), Newark, N.J., a Prudential Financial company solely responsible for its financial condition and contractual obligations.