Cases & Deals

Motorola Solutions de-risks pension plan by $4.3 billion

Client(s) Motorola Solutions, Inc.

Jones Day advised Motorola Solutions, Inc. in major pension de-risking actions that reduced Motorola's pension plan liabilities by $4.3 billion, halving its liabilities. The majority of the de-risking was accomplished through the purchase of an irrevocable group annuity contract, which was the third largest issued in the United States. Following the spin-off of non-retirees into a new plan and the standard termination of the Motorola Solutions Pension Plan, the Motorola Solutions Pension Plan purchased an irrevocable group annuity contract and transferred approximately $3.1 billion of Motorola balance sheet liabilities attributable to outstanding pension obligations to The Prudential Insurance Company of America. Prudential then became responsible for providing retirement benefits to approximately 30,000 Motorola retirees. On a parallel path, the ongoing Motorola pension plan offered lump sum distributions to participants who left the company, but had not yet started receiving pension benefit payments. These distributions accounted for the remainder of the de-risking.

These transactions continue Jones Day's role as the go-to law firm for companies seeking to engage in large, novel pension de-risking initiatives, including the use of forward purchase agreements and in-kind funding of irrevocable annuity contracts. Jones Day's sophistication in this area was particularly demonstrated in the Motorola pension de-risking transaction by the alacrity with which it was able to help its client structure and negotiate the deal, which one media outlet characterized as "light speed." Jones Day previously advised General Motors and Verizon in similar transactions, and has now advised the pension plan sponsors in all three of the largest pension de-risking transactions in U.S. history.