Kimberly-Clark Corp. will pour up to $475 million to its U.S. pension plan to purchase annuity contracts for about 21,000 retirees.
The Dallas-based company’s pension transfer is being done with the Prudential Insurance Co. of America and Massachusetts Mutual Life Insurance Co. The insurers will take over payment responsibility for the retirement pension benefits Kimberly-Clark owes to the retirees.
While retirees will receive the same total benefit that they were receiving from Kimberly-Clark, half will come from Prudential and half from MassMutual.
State Street Global Advisors, which was the appointed independent fiduciary representing affected retirees’ interests, determined that having the transaction split between the two insurers was the safest available annuity structure to provide retiree benefits.
Also read: Lawmakers urge clearer rules for de-risking
Thus, each insurer will issue annuities that will provide 50 percent of the total monthly benefits received by retirees. Prudential will be the administrator for the annuity payments distributed to each retiree, and the payments from the insurers will begin on June 1.