Duluth technology company NCR is trying to reduce the drag of a pension program that is underfunded by $1.3 billion, in part by offering former employees the chance to take the money they're owed in lump-sum payments.
The move — combined with an influx of $500 million from the company to the fund — is expected to reduce NCR's pension deficit by $800 million.
NCR expects about 70 percent of 23,000 eligible former employees to accept the voluntary payment, which is available for former workers who are not yet drawing from their pensions.
Bill Nuti — NCR's chairman, president and CEO — told analysts in a conference call Tuesday that the company is working on eliminating "legacy issues" such as the pension trouble.
"This is a massive step for NCR in the right direction," he said.
Nuti said the move will free up money for acquisitions and provide financial flexibility. In the call, Wedbush Securities analyst Gil Luria called the move a "very thoughtful approach" to the pension shortfall.
NCR stopped adding employees to its pension plan in January 2007. This is the company's second move to tackle the pension shortfall. The first started in 2010 when NCR switched its pension assets from a mix of stocks and fixed-income holdings to only fixed income. That saved NCR more than $200 million and should be completed by the end of the year.
Additional steps are expected, Nuti said.
About the Author
