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Pension Funds

DowDuPont completes annuity buyout for non-qualified Dow Chemical pension plan

DowDuPont Inc., Midland, Mich., purchased a group annuity contract from an insurance company to transfer $410 million of pension plan liabilities of the former Dow Chemical, said Rachelle Schikorra, spokeswoman, in an email.

The company, which effective Sept. 1 was the result of the merger of Midland, Mich.-based Dow Chemical and E.I. du Pont de Nemours & Co., Wilmington, Del., purchased the annuity because the "provisions of a U.S. non-qualified pension plan for Dow require the payment of plan obligations to certain participants upon a change in control of the company," said a 10-Q filing with the Securities and Exchange Commission on Monday.

The plan is Dow Chemical's Executives' Supplemental Retirement Plan, Ms. Schikorra said.

According to the filing, "Certain participants can elect to receive a lump-sum payment or direct Dow to purchase an annuity on their behalf."

The company purchased the annuity for "plan participants who will receive a lump-sum distribution of their plan benefits as a result of the plan's change in control provision and who elect to direct Dow to purchase an annuity on their behalf using the after-tax proceeds of the lump sum," the filing said. Ms. Schikorra said the company is not disclosing the name of the insurance company.

Dow expects to make about $900 million in payments, the filing said, and Ms. Schikorra said about 2,500 individuals are affected.

"This includes ESRP participants who are active employees, former employees with a deferred vested benefit and retirees currently receiving payments," she said.As of Dec. 31, Dow Chemical's global defined benefit plan assets totaled $21.1 billion, while projected benefit obligations were $30.28 billion, for a funding ratio of 70%, according to Dow's most recent 10-K filing with the SEC.