Bristol-Myers Squibb Transfers $3.8 Billion

In early December, 2018 the pharmaceutical giant, Bristol-Myers Squibb, announced that it was transferring $3.8 Billion of its pension obligations to Athene Annuity and Life Company, offering lump sums to certain plan participants, and terminating its US pension plan. This transfer, with an effective date of August, 2019 affects over 18,000 employees.  State Street Global Advisors acted as the pension plan’s fiduciary consultant. Athene, founded in 2009, is a relatively new entrant in the pension de-risking arena.  According to a press release, Athene closed six pension risk transfer transactions in 2018, totaling more than $1.8 Billion.

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Thinking of taking a pension advance?

Are you a retiree thinking of taking an advance on your pension payments?  If so, perhaps you should re-think that idea.

This is an industry replete with fraud and there are a lot of unscrupulous companies out there looking to advance some funds to you at a very high rate.  Just a few months ago, the Consumer Financial Protection Bureau filed a lawsuit in federal court in California against Scott Kohn, Future Income Payments, LLC, and a variety of related entities including:  FIP, LLC; BuySellAnnuity Inc.; Cash Flow Investment Partners LLC; Pension Advance LLC; Cash Flow Investment Partners East LLC; Cash Flow Investment Partners MidEast LLC; Lumpsum Pension Advance Atlantic LLC; Lumpsum Pension Advance Southeast LLC; Lumpsum Settlement West LLC; PAS California, LLC; PAS Great Lakes, LLC; PAS Northeast LLC; PAS Southwest LLC; Pension Advance Carolinas LLC; Pension Advance Midwest LLC; and Pension Loans South LLC.

The lawsuit alleges that these companies violated federal law by “representing to consumers that their pension-advance products were not loans, were not subject to interest rates, and were comparable in cost to, or cheaper than, credit card debt .”  These “pension advances” sold to retirees were actually subject to interest rates that were substantially higher than credit card interest rates.

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Ball Corporation Transfers $176 million in Pension Liabilities

On November 1, 2018 the Ball Corporation of Broomfield, Colorado purchased a group annuity contract from an unnamed insurance company to transfer around $176 million in pension liabilities. The packing company, founded in 1880 and famous for its early production of glass jars, did not divulge the name of the insurance company or the number of retirees affected by the transfer. This is the second transfer of pension liabilities for Ball Corporation in two years. In 2017 they purchased a group annuity contract from Prudential that affected 11,000 retirees and transferred $220 million in pension liabilities. For more information on the risks associated with pension de-risking contact Edward Stone at eddie@edwardstonelaw.com.

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Materion Corp. Transfers $111 million in U.S. Pension Liability

Mayfield Heights, Ohio material products and tech company, Materion Corporation, made a group annuity purchase on November 6, 2018 to transfer about $111 million of their U.S. pension liabilities. The transfer to Mutual of American Life Insurance Company will affect roughly 1,150 retirees and represents 43.4% of Materion’s $256 million in pension liabilities. Materion expects to fund the purchase using existing plan assets without any further cash contribution and will eliminate approximately 43% of their U.S. pension liability beginning in January of 2019. For more information on the risks associated with pension de-risking contact Edward Stone at eddie@edwardstonelaw.com.

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Tennessee Paper Giant Transfers over $1 billion in Pension Liabilities

International Paper Co., purchased a group annuity contract from Prudential Insurance Company on October 1, 2018 to transfer about $1.6 billion in U.S. pension liabilities. Some 23,000 retirees, all of whom receive less than $1,000 in benefits each month, will be affected by the transfer. This is the third transfer of pension liabilities in three years for the company that employs approximately 52,000 people worldwide in more than 24 countries. Back in 2014, International Paper announced that it would freeze future benefit accruals as of December 31, 2018.  International Paper’s U.S. pension plans total more than $11 billion in assets, with projected benefit obligations of $12.895 billion.   As reported in Pensions & Investments, International Paper sees more pension derisking it its future.

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Devon Energy Derisks with Group Annuity Purchase

Headquartered in Oklahoma City, Devon Energy Corporation is a Fortune 500 company and among the largest U.S. based independent producers of natural gas and oil. Earlier this month, the company disclosed its purchase of a group annuity contract to transfer around $190 million in pension liabilities to an unnamed insurance company. The transfer represents roughly 15% of their total pension liability. Devon Energy has pension assets totaling $1.035 billion with projected obligations of $1.279 billion, for a funding ration of 80.9%. It is unknown how many retirees will be affected by this pension derisking transfer. For more information on the risks associated with pension derisking contact Edward Stone at eddie@edwardstonelaw.com.

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Archer Daniels Midland Sheds $500 million in Pension Liabilities

The Archer Daniels Midland Company is an American global food processing and commodities trading corporation, headquartered in Chicago, Illinois. On November 2, 2018 they transferred about $500 million in payments for 3,800 retirees to Prudential Insurance Co. of America. This is the first such transfer for the company whose pension plan assets total $2.448 billion, with projected benefit obligations of $3.109 billion and a funding ratio of 78.7%.

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AK Steel Corp. Transfers Millions in Pension Liabilities

On October 26, 2018, AK Steel Corporation of West Chester, Ohio, purchased a group annuity contract from Massachusetts Mutual Life Insurance Company in a move that will affect about 5,400 retirees. The transaction will transfer some $280 million in pension liabilities. This is the third such de-risking transaction for AK Steel; the company purchased two other group annuity contracts from an unnamed insurance company in 2016 to transfer $210 million in pension liabilities. As of December 31, the company’s pension plan assets totaled $2.322 billion, while estimated benefit obligations totaled $2.808 billion, for a funding ratio of 82.7%. For more information on the risks associated with pension de-risking contact Edward Stone at eddie@edwardstonelaw.com.

As of Dec. 31, AK Steel’s pension plan assets totaled $2.322 billion, while projected benefit obligations totaled $2.808 billion, for a funding ratio of 82.7%.

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Edward Stone – Cheddar.com Interview Sears Bankruptcy

Attorney Eddie Stone, Edward Stone Law founder and special counsel to ProtectSeniors.org was interviewed by Cheddar TV on October 19, 2018 regarding the Sears Chapter 11 bankruptcy filing and its impact on the Sears pension plans.  The Sears pension plans are underfunded to the tune of $1.5 billion, and if the Sears bankruptcy moves from reorganization to liquidation, the pension obligations will be taken over by the PBGC (Pension Benefit Guaranty Corporation).  Ironically, the former CEO of Sears, Eddie Lampert, blames the company’s financial woes on its pension obligations.  Click here to view the entire interview.

Cheddar TV is the leading post-cable news, media, and entertainment company broadcasting live from various locations, including the floor of the New  York Stock Exchange.

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Sears Bankruptcy Will Impact Retirees

Sears formally filed for bankruptcy protection on Monday, October 15, 2018 in the Southern District of New York, after being unable to repay $134 million in loans.  According to media reports, Sears plans to close about 142 of its 700 stores by year end.  But the Sears bankruptcy filing could do more than just leave hundreds of mall locations without anchors.  If the Sears reorganization plan turns into a liquidation, the Sears pensioners, who number between 90,000 – 100,000, will feel the consequences.  Sears had pension liabilities of $4 billion in 2017 and its pension plans were reported to be underfunded by about $1.5 billion.  Sears was one of the many companies to jump on the pension de-risking bandwagon in 2017, when they transferred $515 million in pension liabilities to MetLife. MetLife is now responsible for paying future pension benefits to about 51,000 Sears retirees.  Speaking to MarketWatch on the risks facing retirees,  Edward Stone said: “If pensions are turned over to the Pension Benefit Guaranty Corp., a U.S. government agency whose mission is to protect retirement incomes, many pensioners will likely see their benefits reduced.” Click here for the full article on MarketWatch.com.  For more information on the risks associated with pension de-risking contact Edward Stone at eddie@edwardstonelaw.com.

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