NCR Corp. on Wednesday said it is buying a group annuity to provide pension benefits to about 4,500 retirees and their beneficiaries.
In the latest corporate move to reduce pension liability risks, the Duluth, Georgia-based technology company will transfer about $160 million in pension plan obligations to Des Moines, Iowa-based Principal Life Insurance Co.
The agreement covers about 4,500 plan participants who started receiving their benefits prior to Jan. 1, 1994.
“This group annuity contract purchase is part of our pension transformation and is consistent with our overall strategy to address our legacy issues,” NCR Treasurer John Boudreau said in a statement.
The annuity purchase is the third move NCR has made in recent years to reduce the size of its pension plan, an approach commonly known as de-risking.
In June, NCR gave about 20,000 pension plan participants receiving benefits the opportunity to convert their monthly annuity to a lump-sum benefit. The offer was made to former employees or beneficiaries who began receiving pension benefits between Jan. 1, 1994, and April 1, 2014.
Prior to that, in 2012, NCR gave 23,000 former employees who were eligible for but not yet receiving monthly pension payments the opportunity to convert their future annuity to a lump-sum benefit.
Those lump sum offers followed earlier NCR moves to reduce the size of its pension plan. The company closed off its plan to new employees in 2004 and completely froze the plan in 2007 while beefing up its 401(k) plan match.
At the end of 2013, NCR's U.S. pension plan was just over 91% funded, with $2.931 billion in liabilities and $2.683 billion in assets.
Boeing Co. is offering an option of a lump-sum payout or an annuity to 40,000 former employees who have not yet retired, the first time the Chicago-based company has offered such choices from its existing defined benefit plans.