As class-action lawsuits increase over pension risk transfers, IBM has announced that it entered into a $6 billion pension risk transfer agreement with Prudential Insurance Company, completed on September 11. The deal comes after the technology firm, once a leader in the shift from defined-benefit plans to defined-contribution plans in the 1980s, switched to a "hybrid pension" plan in 2023.
Under the terms of the transaction, IBM has purchased a single premium group annuity contract that transfers to Prudential $6 billion of defined-benefit obligations from the company's Personal Pension Plan. The insurer will assume responsibility for making retirement benefit payments to approximately 32,000 retirees and beneficiaries.
"Under the group annuity contract, Prudential has made an irrevocable commitment, and will be solely responsible, to pay the pension benefits of each transferred participant that are due on and after January 1, 2025," according to the SEC filing.
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