(Reuters) - United Technologies Corp (NYSE:UTX), maker of Pratt & Whitney engines, said on Thursday it would cut the overall size of its pension liabilities by about $1.77 billion in 2016.
The company, which also makes Otis elevators, said it expected to incur a one-time pre-tax pension settlement charge of $400 million to $530 million in the fourth quarter.
United Technologies had future pension and post-retirement benefit obligations of $5.71 billion as of June 30.
The company said in a statement it would transfer management of its pension plans for about 36,000 retirees to a third-party as well as offer lump sum buyouts instead of monthly pension payments to an estimated 10,000 retirees.
The company will transfer about $775 million of its outstanding pension benefit obligations to the Prudential (LON:PRU) Insurance Company of America, United Technologies said.
Prudential will administer retirement benefits for United Technologies retirees and surviving beneficiaries who currently receive a benefit of $300 per month or less from the plans.
The transfer to Prudential is expected to close on Oct. 12, according to the statement.
United Technologies will also offer retirees a one-time lump sum payment instead of future monthly payments, which it estimated would reduce pension benefit obligations by about $995 million by end of 2016.