MetLife, MassMutual Split $1.6B Pension Buyout

Paint company PPG will transfer a portion of its pension liabilities to the two insurance companies.

MetLife and MassMutual have agreed to take over pension obligations worth $1.6 billion for paint company PPG, the firms announced Tuesday.

The two insurers will evenly split the liabilities, which are tied to plan participants who began receiving retirement benefits on or before April 1. MassMutual will act as lead administrator.

“MetLife is pleased to be working with PPG to remove the risks and liabilities associated with its pension plans,” said Wayne Daniel, senior vice president of US pensions at MetLife, which currently oversees $38 billion in transferred pension liabilities.

PPG will retain the liabilities for participants who had not yet begun receiving benefits as of April. NISA Investment Advisors warned last fall that partial buyouts of this nature will result in pension plans that are smaller, but more volatile, as younger participants carry more risk.

“While the size of the liability will decrease after a transaction, the risk reduction may be underwhelming,” a NISA white paper released in November said.

The transaction is expected to close later this year.

Related: NISA: Partial Buyouts are ‘Expensive, Underwhelming’ & Legal & General Seals Second US Pension Buyout