On September 8, The Prudential Insurance Company of America (No. 10 on the Fair360, formerly DiversityInc Top 50 Companies for Diversity list) completed a pension risk transfer agreement with the WestRock Company, a provider of paper and packaging solutions in consumer and corrugated markets.
Under the terms of the agreement, WestRock will transfer $2.5 billion in pension liabilities to Prudential, reducing its overall U.S. pension obligations by 40 percent. The transfer will cover approximately 35,000 retirees and their beneficiaries.
“Managing pension risk continues to be at the top of the list of many companies’ challenges, and this latest transaction reaffirms U.S. companies’ appetite for pension risk transfer solutions,” says Peggy McDonald, senior vice president in Prudential Retirement’s Investments and Pension Solutions business. “We are pleased WestRock chose Prudential to deliver on its pension promises to their retirees. Our insurance, pension, actuarial expertise, investment capabilities and financial strength uniquely position us to execute large transactions such as this one.”
The monthly retirement benefit payments currently received by retirees and their beneficiaries in the plan will not change. Plan participants not included in the transaction will stay in the plan, which will remain overfunded to ensure benefit payments to future retirees and beneficiaries.
“WestRock is committed to the long-term financial health of the Plan and has taken steps to protect all participants of the U.S. pension plan,” said Ward Dickson, WestRock’s chief financial officer.”This transaction represents a further step towards managing future pension cost and risk, benefiting participants remaining in the Plan while entrusting certain retirees’ and their beneficiaries’ pensions to a financially strong and secure institution with expertise in the long-term management of retirement benefits.”
The WestRock pension buyout follows previous large transactions Prudential has executed in recent years including, Kimberly-Clark, Philips, JCPenney, Motorola, Bristol-Myers Squibb and Timken.
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