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 user 2003-09-17 at 3:55:00 pm Views: 180
  • #4150
    Avaya to freeze U.S. salaried pension accruals

    Communications Equipment Maker Avaya Inc. reported that it will freeze accruals in its pension plan for U.S. salaried employees as part of its efforts to cut costs.

    The Basking Ridge, New Jersey-based company, a provider of voice and data networks for corporations as well as government and academic organizations, said starting at year-end it will freeze accruals in its defined benefit pension plan for about 8,300 salaried U.S. workers.

    Those employees will be eligible to participate in an improved 401(k) plan.

    Avaya said the action is part of its previously announced plan to save $25 million to $30 million a quarter starting in fiscal year 2004, which begins in October. It did not say how much of that is covered by the pension-plan decision, but said most of the savings will come from job cuts.

    “The decision to change the pension plan was not made lightly,” Avaya Chairman and Chief Executive Don Peterson said in a statement. “We sought to further strengthen Avaya’s financial position while continuing to provide an attractive overall pay package for employees.”

    Avaya said the combination of the pension plan change and a $105 million contribution to the plan it announced this week will, over time, reduce its future benefit obligation and help improve the funded status of the pension plan. It will still contribute money to the pension plan as needed in the future.

    In July, Avaya, spun off from Lucent Technologies Inc. in the fall of 2000, posted a small fiscal third- quarter profit of $8 million and said information technology spending by corporate customers was strengthening. It also said it would cut 400 to 500 jobs, or up to 2.8 percent of its global work force, to further reduce costs.

    The decision does not affect current retirees or the company’s 5,200 union employees, whose pension is covered by collective bargaining agreements.

    Beginning Jan. 1, 2004, U.S. salaried employees can participate in an improved 401(k) plan, in which Avaya will match up to 6 percent of an employee’s salary and bonus. Under the current 401(k) plan, Avaya contributes up to 3 percent of an employee’s salary and bonus