NORTH AMERICA - Nortel Networks will be making changes to its pension plan that will result in an annual reduction of US$100m in pension costs, as of 1 January 2008.
This was announced in the company’s action plan which was aimed at reducing cost and generating new business initiatives. Nortel declared it should achieve a targeted operating margin expansion in excess of $1.5bn in 2008.
The reduction of $100m a year should take affect in 2008 and result in savings of more than $400m in cash by 2012, the company announced. This will also reduce the unfunded pension liability deficit by around $400m.
Nortel also announced those employees still defined benefits schemes will be transferred to defined contribution schemes. Thr DC programmes will also have a new formula which will amount to employer contributions being equal to 2% of the employees’ eligible earnings.
The company will also provide a 50% match on employee contributions of up to 6% of eligible earnings, for a total maximum of 5% employer contribution.
“We are redesigning our pension plan to reduce the overall cost of the programme while still ensuring we offer a competitive pension plan and overall benefits programme in alignment with industry-benchmarked companies,” said Dennis Carey, Nortel executive vice president of corporate operations.
These announcements were made following a $167m loss registered earlier this month.
Mike Zafirovski, formerly of Motorola, took over as Nortel’s president and CEO last October and had promised to turn the company around.
By Angele Spiteri Paris
The HSBC Bank UK Pension Scheme is to invest £250m in renewable energy infrastructure, such as solar plants and wind farms, with Greencoat Capital.
With Brexit talks breaking down late on Sunday night in Brussels over the Irish border, investors may be wondering how to best navigate the next few weeks and months. Our assessment is that a number of UK assets have already priced in a significant chance...
Pension freedoms could generate as much as £1.9bn a year in tax revenue for the next 10 years, according to research by the Pensions Policy Institute (PPI).
The Pension Protection Fund (PPF) has conceded it does not have "all the data we need to calculate" the impact of last month's ruling that some benefits may be unlawful.