Motorola Solutions moves $4.2 billion in pensions to Prudential

Motorola Solutions Inc., the maker of two-way radios and other communications equipment, is transferring $4.2 billion in pension obligations to Prudential Financial Inc. to remove risk from its balance sheet.

Prudential, the No. 2 U.S. life insurer, will assume responsiblity for future annuity payments to about 30,000 Motorola Solutions retirees, the Schaumburg-based manufacturer said today in a statement. Motorola Solutions plans to contribute $1.1 billion in cash to its U.S. pension plans this year, the firm said.

Persistently low interest rates have pressured employers with pension obligations because it's harder for them to generate returns on funds set aside for the liabilities. General Motors Co. and Verizon Communications Inc. are among companies that have opted to buy such annuity contracts from Newark, New Jersey-based Prudential.

"We have substantially reduced the funding volatility associated with our pension plans while protecting benefits for retirees," Chief Financial Officer Gino Bonanotte said in the statement. "Our retirees' benefits are not changing, just who provides them."

Motorola Solutions will purchase a group annuity contract from Prudential under which the insurer will pay and administer future retiree benefits, according to the statement. Prudential is expected to assume reponsiblity for the payments in early 2015.

In August, Motorola Solutions sold $1.4 billion of bonds in its biggest issue in almost seven years to help fund pension contributions and refinance debt.

Motorola Solutions fell 0.3 percent to $61.60 at 10 a.m. in New York and has dropped 8.7 percent this year. Prudential declined 0.9 percent to $90.62.