Agreement marks second action within last 30 days to reduce pension plan volatility and cost while securing retiree pension benefits with highly-rated insurance company
Jan 11, 2021 - Unisys Corporation (NYSE: UIS) today announced it has entered into an agreement with Massachusetts Mutual Life Insurance Company (MassMutual) to purchase a group annuity contract for approximately $280 million through which it will transfer projected benefit obligations valued slightly less than this amount related to certain retirees under the company's U.S. pension plans to MassMutual.
As discussed in its third-quarter earnings call on October 27, Unisys anticipates that this action will result in a one-time, non-cash, pre-tax settlement charge of approximately $150 million. Since the purchase will be made by the pension trust, there will be no impact on the company's cash position.
The action follows the company's December 20 announcement of a lump-sum cash-out offer that resulted in payments of approximately $276 million to certain eligible former U.S. associates.
"Purchasing this annuity contract represents the latest step in our plan to reduce global pension liabilities by approximately $1 billion by the end of the first quarter of 2021," said Unisys Chief Financial Officer Mike Thomson. "We look forward to additional progress toward this goal of reducing volatility and costs in the coming months."
As part of the transfer, the insurance company will assume responsibility for pension benefits for approximately 11,600 retirees and beneficiaries with monthly benefits lower than certain thresholds. There will be no changes to the gross amount, timing, or form of the monthly pension payments.