Prudential Closes $1 Billion PRT Deal With PSEG

The utility company is looking for greater financial predictability and approved the partial annuitization of their pension plan.

Prudential announced today that they have closed a deal to transfer almost $1 billion in pension liabilities from PSEG, a utilities provider, for about 2,000 participants. The retirees had been employed by PSEG Power and Other, a segment of PSEG. Prudential will assume responsibility for payments beginning in 2023. 

The agreements is a “retiree only lift-out”, meaning that the plan is not terminated and only liabilities tied to these retirees are being annuitized, according to a spokesperson for Prudential.

The deal comes during a year that is being predicted as potentially record-breaking for PRT transactions, according to analysis last week by LIMRA. Sales already set a record in the second quarter at $16.2 billion in transactions, a 31% increase from 2022, according to the industry association.  

A statement from PSEG explained that this current “lift-out” is part of a general business strategy that is designed to “further increase the predictability of financial results.” PSEG also recently sold off wind farm assets as part of this strategy to reduce “large project risk.” 

“Protecting future benefits for our retirees is something we take very seriously, and an independent fiduciary was retained for their expertise and process to select a financially strong and leading group annuity provider,” Sheila Rostiac, senior vice president and chief HR officer at PSEG, said in a statement. “We are working with Prudential to ensure a seamless transition for retirees.” 

The SECURE 2.0 Act of 2022 requires the Department of Labor to report to Congress its recommended changes to Interpretative Bulletin 95-1 by the end of 2023. IB 95-1 is an interpretative document that describes the criteria pension fiduciaries must use when selecting an annuity provider. 

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