Another Company Offering Lump-Sums to De-Risk Pension

August 2, 2012 ( – NCR Corporation has announced the next phase of its pension strategy to materially reduce the size of its pension liability.

The company will make a contribution to its U.S. pension plan and offer a voluntary lump-sum payment option to certain former employees who are deferred vested participants of the U.S. pension plan who have not yet started monthly payments of their pension benefit. The planned contributions will be financed through capital market borrowings.  

The company expects to improve its underfunded position by an estimated $800 million.  

This is the second phase of NCR’s pension strategy. In April 2010, the company announced the first phase of its strategy to substantially reduce future volatility in its U.S. pension plan through a rebalancing of its asset allocation to a portfolio of entirely fixed income assets by the end of 2012.

The total liability associated with the U.S. deferred vested participants is approximately 33% of the U.S. pension liability. In the coming weeks, NCR will contact approximately 23,000 eligible deferred vested participants with personalized information about the voluntary lump-sum offer, which includes the following choices: 

  • One-time lump-sum payment rolled over to an individual retirement account (IRA) or another employer's qualified plan (if permitted by that plan); 
  • One-time lump-sum payment rolled over to the NCR Savings Plan (for NCR Savings Plan participants only); 
  • One-time lump-sum payment in cash payable in December 2012; 
  • Monthly annuity payment (single life or joint and survivor) commencing in December 2012; and 
  • Remain in the U.S. pension plan as a deferred vested participant. 
NCR is following in the footsteps of auto giants GM (see “GM Transfers Some Pension Risk”) and Ford (see “Ford Offers Lump-Sums to De-Risk Pension”) in offering lump-sums in an effort to de-risk pensions.