Today, J.C. Penney announced that it would continue its pension de-risking efforts by purchasing a group annuity contract from The Prudential Insurance Company of America. While exact numbers of retirees affected and the terms of the agreement have yet to be released, it appears that this pension de-risking transfer is an annuity “lift-out” and the company’s defined benefit plan will not be terminated but the number of participants in the plan will be reduced by 25-35%. The annuity purchase is expected to close in December 2015. Last month J.C. Penney offered lump-sum payments to retirees and the company reported that approximately 12,000 retirees elected to receive these lump-sum payments.
As we predicted, more companies are seeking to enter into pension de-risking annuity transfers and the need for state legislation protecting retirees is even more important. Connecticut’s ground-breaking legislation, Public Law 15-167, An Act Extending Creditor Protection to Amounts Payable to a Participant of or Beneficiary Under an Annuity Purchased to Fund Employee or Retiree Retirement Benefits, went into effect yesterday.