The Prudential Insurance Company of America has agreed a buy-in with the defined benefit pension of department store JC Penney.
The de-risking transaction is expected to reduce the company’s $5 billion pension liabilities by 25% to 35%, JC Penney said in a statement.
Peggy McDonald, senior vice president and actuary at Prudential who led the deal, said the “innovative contract and flexible sizing structure” meant the remainder of the pension maintained its overfunded status.
There was also no need for a cash injection from the plan sponsor, JC Penney said, and it did not predict being required to make further large payments into the rest of the plan “for the foreseeable future”.
Ed Record, chief financial officer at JC Penney, said the buy-in aided the group’s objective of “de-risking the plan while improving the company’s long-term risk profile.”
The deal is expected to be completed in December. It follows another major transaction announced yesterday, which involved a $1.1 billion bulk annuity contract for electronics firm Philips’ US pension fund. Philips split the contract between Prudential, OneAmerica, and Legal & General America.
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