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Pension Risk Transfer

Weyerhaeuser plans lump sum in Q4, annuity purchase in 2019 to reduce pension liabilities

Weyerhaeuser Co., Seattle, plans to purchase a group annuity contract from an insurance company in 2019 to transfer U.S. pension plan liabilities, a company spokesman confirmed.

The timberland company will do so following an offer of a lump sum to about 20,000 former employees vested in the plan who have yet to retire and will make distributions to those who select the offer in the fourth quarter. Weyerhaeuser will then purchase a group annuity contract to transfer the liabilities of current retirees or their beneficiaries to an insurance company, a transaction it expects to close in 2019. The company also said it plans to contribute an additional $300 million to the plan in the third quarter. The company did not make a contribution to the U.S. plan in 2017 and originally announced in its most recent 10-K filing that it did not plan to make one in 2018.

The news release said it expects to reduce its U.S. pension plan liabilities by 30% and the number of participants by 50% following both moves. Currently, the pension fund has about 70,000 overall participants, the spokesman said.

As of Dec. 31, Weyerhaeuser's U.S. and Canadian pension plan assets totaled $5.514 billion, while projected benefit obligations totaled $6.795 billion, for a funding ratio of 81.1%, according to the 10-K filing. The company did not separate assets by region.