Lockheed Martin transfers $1.8 billion in pension obligations to Prudential Retirement
Lockheed Martin Corporation has transferred approximately $1.8 billion of its pension obligations by purchasing a group annuity contract from The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. Approximately 32,000 of Lockheed Martin’s retirees will receive their monthly pension benefit payments from Prudential as part of this buy-out agreement.
With pension funding at relatively high levels, pension risk transfer agreements such as this represent a major trend among companies with defined benefit plans. Such agreements enable these companies to reduce the risks, costs and liabilities of their pensions. Rising funding levels have been driven in part by rising asset prices and interest rates. With stronger funding ratios, companies are in a better position to consider a transaction to reduce pension liabilities and manage the costs and risks from market volatility and longevity increases.