The Weyerhaeuser Co. is putting in action a number of steps to reduce its U.S. defined benefit pension liabilities while maintaining the plan’s current funded status.
First, the Seattle-based timberland company will offer select plan members the opportunity to take an immediate lump-sum distribution, which will be paid from plan assets during the fourth quarter of 2018.
Following the distributions, the organization plans to purchase a group annuity, transferring a portion of its U.S. pension assets and liabilities to an insurance company. This transaction, which will be funded with plan assets, is expected to close in 2019.
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In a press release, Weyerhaeuser said it expects the lump-sum payments and group annuity transaction will reduce the pension liabilities of its U.S. plan by about 30 per cent, and will also reduce the number of plan participants and beneficiaries by about 50 per cent.
To maintain the plan’s current funded status, the company also intends to contribute about US$300 million to its U.S. pension plan during the third quarter of 2018. Additionally, the plan assets will be transitioned to an allocation that will more closely match the plan’s liability profile going forward, the release noted.
“We are committed to maintaining financially secure pension benefits for our pension plan participants,” said Doyle R. Simons, president and chief executive officer of Weyerhaeuser. “These actions will position us to better manage future pension plan costs while maintaining continued benefits security. Additionally, we will benefit from favourable tax treatment on our pension contribution.”
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