Unisys Agrees to Transfer a Portion of its U.S. Pension Obligations to MassMutual, Marking Latest Step in Reducing Pension Exposure

Rhea-AI Summary

Unisys Corporation (NYSE: UIS) announced a $280 million agreement with MassMutual to purchase a group annuity contract. This will transfer pension obligations related to certain retirees, resulting in a one-time, non-cash pre-tax settlement charge of approximately $150 million. This action follows a $276 million lump-sum cash-out offer to former U.S. associates. The company aims to reduce global pension liabilities by $1 billion by Q1 2021, affecting about 11,600 retirees with unchanged monthly benefits.

Positive

• Agreement to purchase a $280 million group annuity contract to reduce pension obligations.
• Targeting a $1 billion reduction in global pension liabilities by Q1 2021.
• Positive step towards decreasing volatility and costs associated with pension plans.

Negative

• Expected one-time, non-cash pre-tax settlement charge of $150 million.

BLUE BELL, Pa., Jan. 11, 2021 /PRNewswire/ -- Unisys Corporation (NYSE: UIS) today announced it has entered into an agreement with Massachusetts Mutual Life Insurance Company (MassMutual) to purchase a group annuity contract for approximately $280 million through which it will transfer projected benefit obligations valued slightly less than this amount related to certain retirees under the company's U.S. pension plans to MassMutual.

As discussed in its third-quarter earnings call on October 27, Unisys anticipates that this action will result in a one-time, non-cash, pre-tax settlement charge of approximately $150 million. Since the purchase will be made by the pension trust, there will be no impact on the company's cash position.

The action follows the company's December 20 announcement of a lump-sum cash-out offer that resulted in payments of approximately $276 million to certain eligible former U.S. associates.   

"Purchasing this annuity contract represents the latest step in our plan to reduce global pension liabilities by approximately $1 billion by the end of the first quarter of 2021," said Unisys Chief Financial Officer Mike Thomson. "We look forward to additional progress toward this goal of reducing volatility and costs in the coming months."

As part of the transfer, the insurance company will assume responsibility for pension benefits for approximately 11,600 retirees and beneficiaries with monthly benefits lower than certain thresholds. There will be no changes to the gross amount, timing, or form of the monthly pension payments.

About Unisys
Unisys is a global IT services company that delivers successful outcomes for the most demanding businesses and governments. Unisys offerings include digital workplace services, cloud and infrastructure services and software operating environments for high-intensity enterprise computing. Unisys integrates security into all of its solutions. For more information on how Unisys delivers for its clients across the government, financial services and commercial markets, visit www.unisys.com.

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Forward-Looking Statements
Any statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements rely on assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Additional discussion of factors that could affect Unisys future results is contained in our periodic filings with the Securities and Exchange Commission.

RELEASE NO.: 0111/9809

Unisys and other Unisys products and services mentioned herein, as well as their respective logos, are trademarks or registered trademarks of Unisys Corporation. Any other brand or product referenced herein is acknowledged to be a trademark or registered trademark of its respective holder.

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SOURCE Unisys Corporation

FAQ

What is the significance of Unisys's agreement with MassMutual?

Unisys's agreement with MassMutual is significant as it allows the company to transfer approximately $280 million in pension obligations, marking a major step in reducing its pension liabilities.

How much is Unisys planning to reduce its pension liabilities?

Unisys plans to reduce its global pension liabilities by approximately $1 billion by the end of the first quarter of 2021.

What will be the financial impact of the MassMutual agreement on Unisys?

The financial impact includes a one-time, non-cash pre-tax settlement charge of approximately $150 million.

How many retirees are affected by Unisys's pension transfer to MassMutual?

Approximately 11,600 retirees and beneficiaries are affected by the pension transfer to MassMutual.

What was the recent lump-sum cash-out offer made by Unisys?

Unisys made a lump-sum cash-out offer resulting in payments of approximately $276 million to eligible former U.S. associates.