SCHAUMBURG, Ill. -- Members of Motorola Employees Credit Union are probably not too surprised to hear that Motorola Inc. has made the decision to permanently freeze its U.S. defined benefit pension plans.
John Fiore, president/CEO of the $650 million CU, said there is a general understanding that economic conditions have affected the mobile technology giant's bottom line. So far, members have not expressed any concerns.
Motorola recently announced that as part of an overall cost reduction program, effective March 9, it will permanently freeze its U.S. pension plans, preserving vested benefits accrued by employees and retirees but eliminating future benefit accruals. The company said it still intends to continue providing funding to meet its pension obligations to present and future retirees.
"Most companies do not even have a defined benefits plan," Fiore said. "Motorola is probably one of the last to truly have [one] and they kept it going for as long as they possibly could. But it's a pretty expensive endeavor."
In a move to further cut costs, Motorola said as of Jan. 1, it will also temporarily suspend all company matching contributions to its 401(k) plans. Fiore said he is optimistic that Motorola will return to matching when the company is in a better financial position.
Of the CU's 40,000 members, half are active Motorola employees, Fiore said, adding the other half is retirees, people who have left the company or were laid off.