Unisys ( UIS) will end its traditional pension plans for its U.S. employees at the end this year in an effort to reduce costs, the company said Wednesday. At the same time, Unisys will boost its matching contributions to the defined-contribution retirement savings plan starting Jan. 1, 2007. The change will help save the company $700 million over the next decade, on the basis of current interest rates and actuarial assumptions, Unisys said. Unisys will increase its stock-based matching contribution to 100% of the first 6% of eligible pay that employees contribute, up from the current arrangement of matching 50% of the first 4% of eligible pay supplied by participants. The Blue Bell, Pa., information technology company will record a pretax gain of around $45 million in the first quarter as a result of the retirement-plan change. Unisys also expects pension costs to drop to $168 million this year from $181 million in 2005. The move won't affect retirement benefits that employees have already earned as of Dec. 31, 2006, as long as they are vested when their employment ends. "We think these changes have struck the appropriate balance between controlling our pension costs and continuing to help our employees prepare for retirement," Unisys CEO Joseph McGrath said in a statement. Earlier this week, Unisys announced it would
cut its workforce by 10% , a move that would affect 3,600 employees and yield about $250 million in annualized cost savings by the end of 2007. The company also will record a pretax gain of $145 million in the first quarter after selling 99% of its shares in Nihon Unisys Ltd. of Japan. Shares of Unisys were unchanged at $6.98 in recent trading.