There’s a big change in the works for Kodak’s pension plan.
Basically, Kodak is preparing to potentially terminate its U.S. pension plan, which will give it a big cash infusion, and the company said this move would also help preserve and protect retirement benefits of the current retirees. There are about 35,000 participants in the Kodak pension plan, according to the Wall Street Journal.
George Conboy, Chairman of Brighton Securities, said that Kodak has done so well with the investments it made in the pension fund that they have a big surplus in it, which totals more than a half-billion dollars.
“By terminating and handing the liability to an insurance company, the pensioners know that a large insurance company will be guaranteeing all future payments and Kodak can step away from that obligation,” Conboy said.
As the Wall Street Journal points out with this change, Kodak retirees would receive an annuity from an insurance company. According to the Journal, Kodak expects to put a new retirement plan in place for current employees if it terminates the pension. It hasn’t been determined yet what form that will take.
And in its statement, Kodak says the proposed changes around the pension fund and the resulting cash gain will help it pay down debt and invest in strategic initiatives.
The company said that "This transformational opportunity would significantly strengthen our balance sheet and position the company for continued growth."
