NCR Corp., the maker of point-of-sale technologies and ATM machines, will transfer about $160 million in pension liabilities after purchasing a single-premium group annuity contract from The Principal Life Insurance Co., according to a filing with the SEC.
The contract affects 4,500 former NCR employees who began drawing benefits from the company plan before Jan. 1, 1994.
The move is in line with the Georgia-based company's pension transformation strategy, according to a statement from John Boudreau, NCR's treasurer.
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Because existing plan assets were used to purchase the annuity, no additional plan funding was required. The deal is not expected to materially affect the company's plan funding status, which was 91.5 percent at the end of 2013.
The Principal will start making payments to affected retired workers in April of 2015. Payments will be equal to existing benefits, and the annuity also guarantees survivor benefits.
A note to employees on NCR's website said health care premiums will no longer be deducted from pension checks.
The same note said the company "has been working for several years to minimize the impact of its pension liability on financial results, while meeting the company's existing obligations to plan participants."
NCR began transitioning from its defined benefit plan in 2004, when the company closed it to new participants and froze benefits for all employees under age 40 in the plan.
In December of 2006, the plan was frozen for the remainder of NCR's employees. At that time, the company announced an increase in its match to the 401(k) plan, to 100 percent of the first 4 percent deferred, and 50 percent of the next 2 percent deferred. Previously, the plan only matched 3.75 percent of contributions.
This June, the company offered about 20,000 former employees who began drawing benefits between January of 1994 and April of 2014 a lump-sum pension buyout. A similar offer was first made in 2012.
Last year, NCR shifted all of its UK defined benefits, valued at $1 billion, in an annuity purchase affecting 5,400 current and retired workers.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
