In a further effort to cut costs, US handset-maker Motorola is to suspend company-matching contributions to its 401(k) employee pension plan in the US and will freeze many pay increases next year. In addition, the company’s co-chief executives Greg Brown and Sanjay Jha will voluntarily take a 25 percent decrease in base salary in 2009. In a statement, Motorola said that it will permanently freeze its US pension plans from March 1, 2009 in order to “better align with industry norms,” and would temporarily suspend contributions to the 401(k) plan from January 1, 2009, though employees may still contribute to the scheme after this date. The company said it intends to continue to provide funding to meet its pension obligations to present and future retirees.

The beleaguered handset vendor, which is facing a shrinking market share and the effects of the global economic slowdown, said the changes to its pensions and benefits programmes would lead to cost savings in addition to the US$800 million previously announced in October this year. “The sustained downturn in the global economy requires that we take these difficult but necessary steps,” said Greg Brown and Sanjay Jha in a statement. The company has also been forced recently to postpone the planned spin-off of its mobile handset unit due to the global financial downturn.