Filed at 2:20 p.m. ET

DETROIT (Reuters) - Nissan Motor Co. Ltd. (7201.T) is dropping company-sponsored health-care coverage for its retired manufacturing employees in the United States and will instead pay them an annual stipend.

Also, people hired at Nissan North America after January 1 will not receive a company pension when they retire, but will be offered a plan similar to the 401(k) investment strategy.

The changes are part of an effort to remain competitive in the automotive industry, Nissan said on Monday.

``To assure a secure future for all and to support Nissan's ability to remain competitive, the company is changing the medical plan benefit for retirees over the age of 65,'' the company said in a statement.

Starting next year, Nissan will pay retirees an annual stipend of $2,500 to supplement Medicare coverage and for any out-of-pocket medical expenses, Nissan spokeswoman Julie Lawless said.

Spouses of retirees are also eligible to receive the stipend, which will rise 3 percent each year, Lawless said.

Nissan is solving in advance a problem that troubles General Motors Corp. (GM.N) and Ford Motor Co. (F.N) The two largest U.S. automakers are saddled with mounting ``legacy costs'' from health-care and pension plans. GM has said that health care for its U.S. workers and retirees adds about $1,500 to the cost of each vehicle, while Ford estimates the cost to be around $1,200.

About 12,200 salaried and hourly employees at Nissan's manufacturing division in the United States will be affected by the change. Employees at company headquarters in California are not affected.

Nissan said it has about 500 retirees and expects the number to grow to 3,500 by 2015.