A day after announcing a reduction in the pension benefits of his North American employees, Nortel Networks Chief Executive Officer Mike Zafirovski volunteered to cut his own pension benefits as well.

Zafirovski has volunteered to take a 29% cut to his special lifetime annual pension benefits, Nortel said in regulatory filings this week. His annual pension will change from $500,000 to $355,000.

Last week Nortel announced it was cutting about 3% of its workforce and modifying the benefits packages of its North American employees as part of sweeping cost-reduction efforts spearheaded by Zafirovski, who vowed to reform the troubled equipment vendor when he became CEO in November.

Beginning Jan. 1, 2008, Nortel’s North American employees will all adopt “defined contribution” benefits programs as opposed to “defined benefit” programs. Employees will automatically contribute 2% of their eligible earnings to the new program. Nortel will match 50% of employee contributions, up to 6%.

Nortel will also eliminate post-retirement health care benefits for any employees who are under 50 and have been with the company less than five years as of July 1, 2006.

Current retirees’ programs won’t change, Nortel said, but some U.S. retirees will see the cost-sharing formula for their medical benefits change.

Nortel expects to save the pension changes to yield $100 million in savings starting in 2008 and $400 million by 2012.