Updated with correction.
The Federal Housing Finance Agency announced on Friday it has directed Fannie Mae and Freddie Mac to terminate their defined benefit pension plans.
“Terminating the defined benefit retirement plans eliminates risk to Fannie Mae and Freddie Mac and helps to conserve their assets on behalf of taxpayers, one of our main priorities as conservator,” said Edward J. DeMarco, FHFA acting director, in a statement. “Employees will be able to elect a pension annuity or roll over their benefits into another retirement vehicle such as an IRA or 401(k).”
According to 8-K filings with the Securities and Exchange Commission on Friday, the firms will terminate plans effective Dec. 31.
The Federal Home Loan Mortgage Corp., also known as Freddie Mac, will terminate its defined benefit pension plan along with the pension component of the supplemental executive retirement plan, on Dec. 31. Both plans were closed to new hires on Dec. 31, 2011, according to Freddie Mac's most recent 10-K filings.
The Federal National Mortgage Association, also known as Fannie Mae, will terminate its four defined benefit pension plans, also on Dec. 31. The Executive Pension Plan was frozen Dec. 31, 2009, while the other three plans were frozen on June 30. All plans were closed on Dec. 31, 2007.
FHFA spokeswoman Corinne Russell referred questions to Fannie Mae and Freddie Mac. Fannie Mae spokesman Pete Bakel and Freddie Mac spokesman Andrew Wilson did not respond to inquiries by press time.
Fannie Mae's plans and Freddie Mac's each have about $1 billion in assets, according to recent Form 5500 filings.
