Originally Published by Prudential.
Raytheon will reduce its pension obligations by $923 million by purchasing a group annuity contract from The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. The agreement transfers the responsibility for paying certain pension benefits to approximately 13,000 U.S. retirees, as well as their beneficiaries, from Raytheon’s previously discontinued operations.
The decision to transfer a portion of Raytheon’s pension obligations to Prudential highlights a growing trend among U.S. companies. Corporations that offer defined benefit pension plans are increasingly looking to move some of their obligations due to the increasing risks and costs of maintaining large plans.
Peggy McDonald, the senior vice president who led negotiations for Prudential, said, “Prudential is proud to have been chosen to provide retirement security for this group of Raytheon’s retirees and their beneficiaries. We are committed to providing them with a seamless transition.”
As a result of the transfer, Prudential will be responsible for making continuing payments to the affected retirees and their beneficiaries, in accordance with the group annuity contract.
Scott Kaplan, Prudential’s head of Pension Risk Transfer, said, “Prudential is a unique player in the pension risk transfer market, a market that it helped create. Our pension and actuarial expertise, along with our investment capabilities and deep financial resources, help our clients reduce pension risks while allowing them to focus on their core businesses.”
Since 1923, Prudential has offered pension solutions to companies and organizations. In 2017, Prudential made more than $11 billion in pension payments to more than 1.3 million retirees and their beneficiaries. Prudential is the global leader in pension risk transfer solutions.