CHARLOTTE, N.C., Nov. 13, 2013 /PRNewswire/ -- SPX Corporation (NYSE:SPW) today announced that it has agreed to transfer its obligations for monthly pension payments for current retirees under the SPX US Pension Plan (the "Plan") to Massachusetts Mutual Life Insurance Company and it also intends to offer a voluntary lump sum payment option to most former SPX employees who are entitled to a future pension benefit from the Plan.
These two actions, when completed, are expected to reduce SPX's U.S. qualified pension obligations by approximately $800 million, or 75%.
Approximately 16,000 retirees will begin receiving their pension payments from Massachusetts Mutual Life Insurance Company, which will take over the monthly pension payments in April 2014. Additionally, the company intends to offer about 7,500 eligible former employees a voluntary single lump sum payment option in lieu of a future pension benefit under the Plan during a designated election period in the first quarter of 2014. Affected Plan participants will soon begin to receive further details about these actions.
"We appreciate the contributions our retirees and former employees have made to the company and we believe these actions will provide continued security and increased flexibility in managing their benefits," said Jeremy Smeltser, Vice President and Chief Financial Officer.Smeltser continued, "From a company perspective, the $250 million voluntary pension contribution we made to the Plan in the first quarter of this year, and the current economic environment, have put us in position to take these actions, which are not expected to require any additional funding. These actions are both consistent with our strategy to reduce volatility in pension costs and funding requirements and are expected to strengthen our balance sheet and improve our financial flexibility." In conjunction with these actions, the company also intends to change to mark-to-market accounting for pension and post retiree medical plans. Under this approach, the company will be required to revise prior period financial results to reflect the impact of the change to mark-to-market accounting.