Defense contractor RTX Corp. will offload $2.5 billion in pension liabilities to the Prudential Insurance Co. of America in one of the year’s largest pension risk transfers, according to an 8-K filing made public on Thursday.
The annuity buyout contract, purchased by the RTX Consolidated Pension Plan, will transfer the benefits owed to 60,000 plan retirees and other beneficiaries—approximately one-third of the plan’s total beneficiaries.
The contract was initiated on November 7 and is expected to close sometime in the fourth quarter of the year. The plan had $46.4 billion in assets as of the end of 2023, according to the company’s 2024 annual report.
“We have been on a path for a number of years to de-risk our pension plan,” said Neil Mitchill, RTX’s chief financial officer, at Baird’s Global Industrial Conference on Wednesday. He called the PRT to Prudential “a really good transaction” that would “strengthen our balance sheet a little bit further,” noting its pension plans were in a funding surplus.
RTX previously transferred nearly $1 billion in benefit obligations to Prudential in 2018, covering nearly 13,000 retirees and beneficiaries at the time.
“As referenced during Prudential’s third quarter earnings, this U.S. pension risk transfer transaction reinforces our Institutional Retirement market leadership and complements the robust international longevity risk transfer activity so far this year,” said Alexandra Hyten, Prudential’s head of institutional retirement strategies, in a statement to CIO.
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Tags: Pension Risk Transfer, Prudential