Unisys Corp, yesterday announced that it will freeze its pension plan at the end of the year and instead offer a new defined contribution retirement package to its employees, following similar moves in past months by GM, IBM, and HP. The company said the decision will save $700m over the next decade.
The change won’t affect the benefits of Unisys retirees and employees currently drawing pensions or those who are currently accruing pension benefits. But the decision does mean that pension contributions will be over at the end of 2006, at which point the pension plan will be closed to new entrants.
In its place, Unisys will begin offering 100% matching retirement savings contributions for up to 6% of employees’ pay, up from the current 50% match on up to 4% of pay.
The switch will give Unisys a one-time gain of about $45m for Q1 2006, and lower its 2006 annual pension costs to $168m from $181m last year.
Last year Unisys announced plans to chop 10% its workforce of about 36,000 and divest $500m worth of non-core assets. On top of those cost reductions, the company this week announced its had completed the sale of 99% of its shares in its Japanese hardware and software distributor, Nihon Unisys Ltd. The sale will give Unisys a $145m Q1 gain, which it will use to get the job cuts rolling.