Lockheed to offload $1.8 billion in pension risks to Prudential
Source: Reuters
BUSINESS NEWS JANUARY 29, 2019 / 12:50 PM / UPDATED 7 MINUTES AGO
(Reuters) - Lockheed Martin Corp, the Pentagons top weapons supplier, said on Tuesday it would transfer $1.8 billion in pension obligations to U.S. life insurer Prudential Financial Inc to reduce the risk and costs of pensions.
Prudential will assume responsibility for pension benefits of around 32,000 former Lockheed employees as part of the agreement.
U.S. companies such as Accenture, General Motors, Verizon and Kimberly-Clark have been offloading their pension obligations to insurance companies to cut down on costs and reduce the liabilities of their pensions.
The move benefits insurers, which have been buying corporate pension plans at a record clip since they can make more money from selling companies an annuity to cover the cost of the pension plans and then invest the proceeds in bonds and other securities.
Read more: https://www.reuters.com/article/us-lockheed-pensions-prudential-finl/lockheed-to-offload-1-8-billion-in-pension-risks-to-prudential-idUSKCN1PN2D2?il=0
Hekate
(90,827 posts)turbinetree
(24,720 posts)now what if the insurance mergers with another firm, they don't have to honor the agreement, and then to top it all off pensioners like myself don't get a pay raise from these bonds that is held basically hostage by wall street, they can sink anyone if they want to, looked at what happened in the housing market a lot of these insurance companies and banks where tied to that 2008 mess and those bonds .....................and the tax payers bailed them out................and people are still homeless from that BS
Reminds me of the promise made to the coal miners, there will always be health care for you...................and it takes an act of congress to keep it....................
A HERETIC I AM
(24,379 posts)You have made several statements that I am at a loss to understand;
How do you figure? The firm they made the agreement with is Prudential Insurance. Why wouldn't any potential buyer of Prudential honor an annuity contract? If that sort of thing happened it would be a litigation nightmare. I don't think that is a concern however. Prudential has been around a long time.
Sorry, but this sentence really doesn't make any sense. The article states "Bonds and other securities". If the original company Pension plan included COLA increases, why do you think it wouldn't now? And what do you mean by saying the bonds are "held hostage by Wall Street"? By what mechanism?
How do you think Lockheed, or any other firm that has a pension fund, for that matter, manages those funds? Seriously, what is it you think they do? Just sock away stacks of hundred dollar bills in a vault and dole them out to retirees?
All pension funds are invested in the market, and hold bonds, stocks, futures contracts, currency contracts, international assets etc. If you were to actually look at the list of assets held in a large pension fund, you would realize that they invest the money rather substantially.
Here is the CALPERS investment portfolio from 2016/2017. The CALPERS pension plan covers 1.6 million California public employees and has over $300 billion in assets. While this portfolio does have mortgage bonds, it also has Bonds from The Philippines and all over the world, along with stocks and various other asset classes.
And by they way, not every bond is a mortgage bond, not by any stretch of the imagination. The bonds that were manipulated by certain firms and repackaged and then defaulted back in 2008/2009 are one segment of the overall bond market.
Yes, I'm sure many are, but that had absolutely nothing to do with anything related to what this OP is about. Nothing.
TeamPooka
(24,256 posts)whats the worst that could happen?
Wellstone ruled
(34,661 posts)Administration .
trof
(54,256 posts)Pension Benefit Guaranty Corporation.
That's the gummint.
That's what happened to my pension when TWA went bankrupt the year after I retired.
They have a maximum monthly payout, regardless of what your company 'guarantee' was.
Guess what? It's quite a bit lower.
Surprise surprise.