NEWARK, N.J.--(BUSINESS WIRE)--Lockheed Martin Corporation (NYSE: LMT) 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. (NYSE: PRU). Approximately 32,000 of Lockheed Martin’s retirees will receive their monthly pension benefit payments from Prudential as part of this buy-out agreement.
This buy-out agreement reflects one of the two pension transactions Lockheed Martin announced today.
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.
Peggy McDonald, a Prudential vice president who helped negotiate this agreement, said, “We are proud that Lockheed Martin chose Prudential to secure the pension benefits for some of its retirees. Lockheed Martin is trusting its pension promises to a company with deep experience in managing retirement benefits, and Prudential is committed to providing these retirees with a seamless transition.”
Scott Kaplan, the head of pension risk transfer at Prudential, said, “Prudential has long demonstrated its capabilities in innovative ways to help companies like Lockheed Martin better focus on their core operations and reduce risks.”
Since 1923, Prudential has offered pension solutions to companies and organizations. Prudential currently makes more than $10 billion in pension payments to more than 1 million retirees and their beneficiaries annually. Prudential is the global leader in pension risk transfer solutions. This agreement with Lockheed Martin follows several other prominent transactions, including those with General Motors, Verizon, Motorola, Bristol-Myers Squibb, The Hartford, Kimberly-Clark, International Paper, Raytheon and J.C. Penney.
About Prudential Retirement
Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and non-qualified deferred compensation record keeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services. With more than 85 years of retirement experience, Prudential Retirement helps meet the needs of 4.4 million participants and annuitants. Prudential Retirement has $446.5 billion in retirement account values as of Sept. 30, 2018. Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, Connecticut, or its affiliates.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with more than $1 trillion in assets under management as of Sept. 30, 2018, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. For more information, please visit news.prudential.com.
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