2014 Retirement Webinar Series - Aon

20 Pages·2014·2.26 MB·English

2014 Retirement Webinar Series
Risk. Reinsurance. Human Resources.
Perspectives From Our Clients―
Leading the Way
 Cindy Cattin, Managing Director, Investments Operations and Risk
Management, Exelon Corporation
 Akash Raj, Assistant Treasurer, Motorola Solutions
 Barb Hogg and Ari Jacobs, Aon Hewitt

Risk. Reinsurance. Human Resources. 2
Agenda
Today’s seminar highlights two very hot topics for retirement programs

Section 1 Pension Settlements
Section 2 Investment Redesign

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Pension Settlements―
Motorola Solutions
Risk. Reinsurance. Human Resources. 4
Options for Settling Pension Liabilities
Lump Sums Annuities
Actives Active Transfer
Terminated TV Lump-Sum
Vesteds Window
Retiree Lump- Retiree
Retirees
Sum Window Annuitization
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Motorola Solutions: Who We Are
 Motorola Solutions provides mission-critical
 Founded in 1928
solutions and services for public safety and
 15,000 employees in
commercial customers
58 countries
 Through leading-edge innovation and
 50,000 customers in
communications technology, Motorola Solutions
100 countries
enables its customers to be their best in the
 Headquarters:
moments that matter
Schaumburg, IL
 Communication solutions span infrastructure,
devices, services and software  Ticker symbol: MSI
2013 annual 2013 R&D
sales spend
$8.7b $1.1b
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Background: Pension Overview

Global Plans U.S. Plans

Pe nsion Benefit Obligation (PBO) $9.3b $7.3b
Pl an Assets $7.6b $6.1b

Funding Deficit ($1.6b) ($1.2b)

Funded % Status 82% 83%

Participants ~ 95,000 ~80,000

As reported 12/31/2013

Observations
 MSI pension liabilities are outsized relative to scale of business as a result of
previous divestitures and spin-offs
 Company will only have 15,000 employees following close of Enterprise sale,
while carrying global pension obligations for 95,000 participants
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U.S. Pension Actions Taken
In the past Recently
 Significant cash contributions  Large scale lump sums
 Asset/liability matching  Annuitization
 Closed plan to new participants
 Froze benefit
Rationale for current actions
 MSI subject to significant funded status volatility and risk of large unexpected
cash funding requirements if unaddressed
 Market conditions and economics are favorable to reduce obligation now
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Actions
Retirees
 Signed agreement with Prudential
 Purchasing a group annuity contract ($3.1b)
Expected reduction
 Assuming annuity obligation for 30,000
in U.S. pension
participants
obligation:

~ $4.2b
Terminated Vested

 Offered voluntary lump-sum payments offered
to 32,000 terminated vested participants Targeting close of
 Targeting $1.1b pension obligation reduction transactions by the
end of 2014

Funding
 Contributing $1.1b into the U.S. pension plan
in 2014
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Results
Pre- Post-
 Allows MSI to decrease
Transactions Transactions
pension obligation
Pension $8.4b $4.2b  Improves risk profile and
Benefit financial flexibility of the
Obligation company
(PBO)
 Provides flexibility and
Plan Assets $6.7b $3.4b security to all plan
participants
Funding Deficit ($1.7b) ($0.8b)
 Proactively take
Funded % 79% 81%
advantage of market
Status
conditions that allow us
Participants ~80,000 ~30,000 – to meet obligations and
40,000 de-risk the balance sheet
Based on pro-forma U.S. pension results as disclosed on
September 25, 2014 investor call
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