October 7, 2016

UTC reducing pension obligations by $1.77B

HBJ File Photo
HBJ File Photo
UTC is taking steps to reduce its pension obligations.

United Technologies Corp. (UTC) is acting to reduce the overall size of its pension obligations by approximately $1.77 billion.

In one step, the Farmington-based aerospace company said it will transfer approximately $775 million of its outstanding pension benefit obligations under the UTC Employee Retirement Plan and the UTC Represented Employee Retirement Plan to The Prudential Insurance Company of America (PRU). The transaction is expected to close on Oct. 12.

Prudential will administer the retirement benefits owed to approximately 36,000 UTC retirees and surviving beneficiaries who currently receive a benefit of $300 per month or less from the plans. Monthly payments to retirees will not be reduced.

"This transaction is an important part of United Technologies' long-term strategy to reduce future pension risk and expense," said Robin Diamonte, UTC's chief investment officer.

Second, UTC has implemented a program offering certain former U.S. employees or beneficiaries with a vested pension benefit an option to take a one-time lump sum distribution rather than future monthly pension payments.

Once the program is complete, UTC expects approximately 10,000 participants to take the lump-sum offer. Payments will be paid from the retirement plans during late 2016. This action is expected to reduce United Technologies' pension benefit obligations by approximately $995 million by year-end 2016.

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