(Bloomberg) — J.C. Penney Co. reached a deal with about 12,000 retirees and beneficiaries to accept a lump-sum payment and settle pension obligations, helping reduce the amount that the department-store chain will have to pay by as much as 35 percent.
The company won’t need to make any cash contribution, and Prudential Financial Inc. will settle a “substantial” amount of pension benefit obligations, J.C. Penney said in a statement Friday. It has $5 billion in U.S. pension obligations.
The 113-year-old retailer is part of a growing list of companies rethinking their pension plans. Kraft Heinz Co., the food giant created out of a merger this year, said last month that it was trying to shift some retirees away from pension plans under a voluntary program. Former Kraft employees who have a future estimated benefit value of under $2,500 a month at age 65, and have not started receiving the money, can receive an immediate lump-sum payment, the company said.