SPX Corp., Charlotte, N.C., entered into an annuity buyout contract with Massachusetts Mutual Life Insurance Co., confirmed Ryan Taylor, director of investor relations.
SPX also plans to offer a lump-sum option to 7,500 vested former employees. The annuity buyout will cover about 16,000 retirees. The two actions combined are expected to shift about $800 million in pension obligations off SPX’s balance sheet, Mr. Taylor said. About $625 million will be transferred to MassMutual, he added.
MassMutual is expected to take over pension payments in April. Lump-sum offers are expected in the first quarter, according to a news release from the company. The pension fund has about $1.2 billion in assets and is more than fully funded, Mr. Taylor said. SPX made a $250 million voluntary contribution in the first quarter this year to put the plan in position to pursue an annuity buyout.
The transaction is not expected to require any additional funding, Mr. Taylor said.
Towers Watson served as primary adviser on the transaction.
Jason Richards, senior consultant in the retirement risk management group at Towers Watson, said insurers have been “very aggressive” in pricing and administrative capabilities as they try to get a slice of a growing business area.
