International Paper Continues Its Pension De-risking

In early October, 2017 International Paper continued its pension de-risking, transferring approximately $1.3 Billion in pension liabilities to Prudential Insurance Company of America through the purchase of a group annuity contract.  This purchase impacted 45,000 retirees and beneficiaries.  This followed on the heels of an offering of a lump sum buyout in 2016 to 47,000 former employees who had yet to retire.  The Consumer Finance Protection Board has published a guide to help those considering accepting a lump-sum payout.

New York Times transfers $225 million in pension liabilities

On October 24, 2017 Pension & Investments reported that the New York Times Co. would purchase group annuity contracts from Massachusetts Mutual life Insurance Company to divest itself of $225 Million in pension liabilities under two of its defined benefits plans. This transfer reportedly affects 3,800 retirees and/or their beneficiaries. MassMutual is scheduled to take over the payments to retirees on January 1, 2018.

Pension De-Risking State Legislative Update

With interest rates low and the corporate desire to reduce liabilities high, pension de-risking transfers continue at a rapid pace.  While Verizon was one of the first, since 2012 many companies including GM, J.C. Penney, United Technologies, PPG Industries and Lincoln Electric have de-risked by transferring their pension liabilities to an insurance company.  These pension de-risking transfers have impacted hundreds of thousands of retirees nationwide.

Since retirees in de-risking transactions lose all of the uniform protections intended by Congress under ERISA, including the PBGC back-stop, the enactment of legislation at the state level to replace what was lost is essential.

In 2015, Connecticut became the first state to pass legislation protecting retirees in pension de-risking transfers by restoring creditor protections to retirees whose pensions were replaced by group annuities issued by insurance companies. In 2016, legislation that would have provided additional critical protections stalled despite an insurance committee vote of 17-2 in favor of this legislation. In January of 2017, ProtectSeniors.org headed back to the drawing board and worked with Senator Carlo Leone to introduce a new bill.  Senator Leone introduced Proposed Bill 493 and a public hearing was held on February 16th. The Joint Committee on Insurance and Real Estate voted 16-5 in favor of Proposed Bill 493.  On March 10, 2017 the bill was filed with the Legislative Commissioner’s Office – the next stop will be the Senate floor.

In New York, legislation introduced in 2015/2016 stalled in New York’s politically charged insurance committee. Dedicated members of ProtectSeniors.org are working to move things along in New York.

In Massachusetts, House Bill 476, introduced by Representative James Arciero would provide creditor protections, limitations of subsequent transfers, and financial disclosures to retirees impacted by pension de-risking transfers. The bill has been referred to the Joint Committee on Financial Services.  

And finally, in Pennsylvania, House Bill 324 providing creditor protections to retirees was introduced by Representative Warren Kampf.  This bill was referred to the Judiciary Committee on February 3, 2017.

A version of this post appeared in the ProtectSeniors.org recent newsletter.

Favorable Vote for Connecticut Pension De-Risking Bill

In January of 2017, ProtectSeniors.org  worked with Senator Carlo Leone to introduce a new bill providing expanded protections for retirees affected by pension de-risking transfers.  In January, 2017 Senator Leone introduced Proposed Bill 493 and a public hearing was held on February 16th. The Joint Committee on Insurance and Real Estate voted 16-5 in favor of Proposed Bill 493 and on March 10, 2017 the bill was filed with the Legislative Commissioner’s Office – the next stop will be the Senate floor.

Public Hearing on Connecticut De-Risking Bill

Edward Stone, as special counsel to ProtectSeniors.org provided testimony at a Public Hearing in Hartford, Connecticut on February 16, 2017 in support of Proposed Bill No. 493 “AN ACT CONCERNING THE PURCHASE OF AN ANNUITY TO FUND PENSION AND RETIREMENT BENEFITS”.  Jack Cohen, Chairman of the Association of Bell-Tel Retirees, Inc. and Bill Jones, Co-founder and Chairman of ProtectSeniors.org also submitted written testimony in support of Senate Bill No. 493.  This bill, sponsored by Senator Carlo Leone (D-27) will provide additional protects to retirees by requiring reasonable restrictions on subsequent transfers and annual financial disclosures to retirees. Senator Leone also submitted a written statement in support of Senate Bill 493. In 2015 ground breaking legislation was passed in Connecticut providing protections to retirees in pension de-risking transfers when the Connecticut legislature unanimously passed H.B. 6772 providing creditor protections to retirees in pension de-risking transfers.  On July 2, 2015 Governor Dannel P. Malloy (D) signed Public Act 15-167 into law  restoring creditor protections to Connecticut retirees impacted by  pension de-risking transfers. Without this legislation, creditors were able to garnish annuity payments designed for retirement.

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New Proposed Pension De-Risking Bill in Connecticut

Connecticut State Senator Carlo Leone (D – 27) has introduced Proposed Bill No. 493 “AN ACT CONCERNING THE PURCHASE OF AN ANNUITY TO FUND PENSION AND RETIREMENT BENEFITS”. This proposed bill requires an insurance company to provide certain annual disclosures to employees and retirees impacted by pension de-risking transfers involving the purchase of a group annuity contract to fund retirement benefits and would limit subsequent transfers of those annuity contracts. Edward Stone Law will be working with ProtectSeniors.org to educate legislators and retirees about the benefits of this important legislation. For more information please visit our website at www.edwardstonelaw.com or call (203) 504-8425.

United Technologies Corp. Announces Pension De-risking

The pension de-risking trend continues. Farmington, Connecticut based United Technologies Corp. (UTC) will transfer $775 million of its outstanding pension benefit obligations under two of its retirement plans to The Prudential Insurance Company of America.  HartfordBusiness.com, a publication of The Hartford Business Journal quoted Robin Diamonte, UTC’s chief investment officer as saying “This transaction is an important part of United Technologies’ long-term strategy to reduce future pension risk and expense”.  UTC also offered certain retirees an option to take a one-time lump sum distribution. UTC expects approximately 10,000 retirees to accept the lump sum distribution. By year end, UTC will have reduced its pension obligations by approximately $995 million.

Thanks to the efforts of ProtectSeniors.org and Edward Stone Law, special counsel to the retiree advocacy group, UTC’s Connecticut based retirees do not have to worry that their annuity payments will be subject to creditors’ claims.   ProtectSeniors.org and Edward Stone Law worked tirelessly with Connecticut legislators to enact Public Act 15-167 which went into effect on October 1, 2015 provides creditor protections to retirees impacted by pension de-risking transfers.  The ground breaking Connecticut law is the result of bipartisan legislation sponsored by Rep. Robert Megna (D-97), Rep. Livvy R. Foren (R-149), Louis P. Esposito, Jr. (D-116) and Sen. Henri Martin (R-31).  Connecticut was the first state in the nation to pass legislation protecting retirees in pension de-risking transfers.

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PPG Industries Enters the Pension De-risking Arena

PPG Industries, a Fortune 200 global manufacturer of paints, coatings and optical products has entered into agreements with Metropolitan Life Insurance Company and Massachusetts Mutual Life Insurance Company to provide annuity benefits to 13,400 retirees removed from PPG’s defined benefit pension plans.  In what appear to be  annuity “lift-out’s” PPG has purchased group annuity contracts from MetLife and MassMutual to cover pension obligations of approximately $1.6 billion.  These pension de-risking transfers involve both salaried and non-union hourly employees. Annuity “lift-out’s” occur when a defined benefit plan sponsor amends its defined benefit plan (a “settlor” or administrative decision, not a fiduciary decision), does not terminate the defined benefit plan, but rather moves selected employees or retirees out of the defined benefit plan. De-risked plan participants become “certificate holders” under a group annuity contract they do not own.  These retirees lose all of the uniform benefits intended by Congress under ERISA and become subject to non-uniform state laws.  We expect to see many similar pension de-risking transactions in 2016. One of our clients, ProtectSeniors.org is actively working to protect retirees’ rights in pension de-risking transactions.  For more information, please contact us at (203) 504-8425 or eddie@edwardstonelaw.com.

Public Hearing on pension derisking legislation in Connecticut

On Thursday, March 3, 2016 the Insurance and Real Estate Committee of the Connecticut General Assembly will hold a public hearing on proposed legislation regarding protections for retirees in pension derisking transfers.  The hearing will be held at 1:00 p.m. in the Legislative Office Building at 300 Capitol Avenue, Hartford, CT 06106.  The full text of the proposed bill, Raised H.B. No. 5445 can be found here.  This proposed bill provides much needed disclosures to employees and retirees and limits subsequent transfers of such annuity contracts to highly rated insurance providers.

Additional Pension Derisking Legislation Pending in Connecticut!

ProtectSeniors.org has done it again!  Raised Bill No. 5455 entitled “An Act Concerning the Purchase of An Annuity to Fund Pension Benefits” has been introduced in the Connecticut legislature.  The proposed legislation requires disclosures to retirees impacted by pension derisking transfers and limits subsequent transfers of the annuity contract to “an entity that maintains a rating equivalent to an A or better from two or more nationally recognized rating agencies.”  This proposed legislation will enhance the ground-breaking legislation passed by Connecticut last year under Public Act 15-167 which went into effect on October 1, 2015, providing creditor protections to retirees in pension derisking transfers.