United Tech to cut pension liabilities by $1.77 billion
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(Reuters) - United Technologies Corp, maker of Pratt & Whitney engines, said on Thursday it would cut the overall size of its pension liabilities by about $1.77 billion in 2016.
The company, which also makes Otis elevators, said it expected to incur a one-time pre-tax pension settlement charge of $400 million to $530 million in the fourth quarter.
United Technologies had future pension and post-retirement benefit obligations of $5.71 billion as of June 30.
The company said in a statement it would transfer management of its pension plans for about 36,000 retirees to a third-party as well as offer lump sum buyouts instead of monthly pension payments to an estimated 10,000 retirees.
The company will transfer about $775 million of its outstanding pension benefit obligations to the Prudential Insurance Company of America, United Technologies said.
Prudential will administer retirement benefits for United Technologies retirees and surviving beneficiaries who currently receive a benefit of $300 per month or less from the plans.
The transfer to Prudential is expected to close on Oct. 12, according to the statement.
United Technologies will also offer retirees a one-time lump sum payment instead of future monthly payments, which it estimated would reduce pension benefit obligations by about $995 million by end of 2016.
(Reporting by Rachit Vats in Bengaluru; Editing by Richard Chang)
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