Nip Impressions logo
Fri, Mar 29, 2024 07:06
Visitor
Home
Click here for Pulp & Paper Radio International
Subscription Central
Must reads for pulp and paper industry professionals
Search
My Profile
Login
Logout
Management Side
Kimberly-Clark will transfer $2.5B in pension payments

IRVING, Texas (From the Dallas Business Journal) -- Transferring responsibility for its pension benefit payments will save Kimberly-Clark Corp. around $2.5 billion without hurting the company's financial outlook, the Irving-based company said Monday.

Kimberly-Clark said it will transfer the responsibility for its U.S. employees' pension payments to Prudential Insurance Co. of America and Massachusetts Mutual Life Insurance Co. In 2014, Kimberly-Clark's benefit obligation totaled roughly $7 billion and plan assets stood around $6 billion.

The move will affect around 21,000 retirees. Starting June 1 they will receive the same benefit payment amounts from Prudential. Each retiree's benefit is split between Prudential and MassMutual to ensure benefit security.

"The group annuity contracts from Prudential and MassMutual, both highly rated insurance companies and experts in this field, provide excellent benefit security for our retirees, while further reducing non-core financial risk for Kimberly-Clark," CFO Mark Buthman said in a statement.

"As a result of the transaction announced today, impacted retirees will receive the same monthly benefit they were receiving from Kimberly-Clark," KC told the Dallas Business Journal in an email statement. "We believe the group annuity contracts will provide excellent benefit security for our retirees, while further reducing non-core financial risk for Kimberly-Clark."

To support the transfer, Kimberly-Clark said it plans to make a $400 million to $475 million contribution to its U.S. pension plan. It also expects to incur a second quarter charge of $800 million related to the deal, the Wall Street Journal reported.

Kimberly-Clark is not the first company to modify its pension obligations. Selling obligations or offering lump sum pension amounts offer companies relief as retirees are living longer and insurance premiums are rising.

In a two-pronged approach, General Motors offered to replace monthly payments with one lump sum for 44,000 of its retirees. The company also purchased a $2.51 billion group annuity for 76,000 others, including those who declined the lump sum plan.

The $2.5 billion in savings may help buoy the company's financials after Kimberly-Clark reported net income of $1.52 billion for full year 2014. That's down 29 percent from $2.14 billion in 2013, primarily due to currency fluctuations in Venezuela.


Printer-friendly format

 




Related Articles:


Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: