Kimberly-Clark has reached an agreement to transfer the pension obligations of about 21,000 of its U.S. retirees to two insurers.
The move will cut the company’s pension obligations by about US$2.5 billion.
Starting June 1, Prudential will begin making benefit payments to the affected retirees along with providing administrative services. Retirees will receive the same monthly benefit they were receiving from Kimberly-Clark. While Prudential will be the annuity administrator for the benefit payments, each retiree’s benefit will be split evenly between Prudential and MassMutual.
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“The group annuity contracts from Prudential and MassMutual, both highly rated insurance companies and experts in this field, provide excellent benefit security for our retirees, while further reducing non-core financial risk for Kimberly-Clark,” says chief financial officer Mark Buthman.
Kimberly-Clark expects to make a US$400-million to US$475-million contribution to its U.S. pension plan to support this transaction.
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