Bristol-Myers Squibb Co., New York, on Tuesday said it would settle $1.4 billion in pension obligations by purchasing a group annuity contract from Prudential Insurance Co. of America for about 8,000 retirees and beneficiaries who started receiving monthly retirement benefit payments on or before June 1, 2014.
“The obligations associated with this transaction will require no additional cash contributions by the company,” said a company news release, adding that the company’s U.S. defined benefit plan “is in a strong financial position.”
Company spokesman Ken Dominski, in an interview Tuesday, declined to comment on the DB plan’s funded status. At year-end 2013, the plan was 102.4% funded, according to Pensions & Investments data.
Mr. Dominski said the company’s U.S. DB plan has about 35,000 participants, including the 8,000 who will be affected by the group annuity transaction with Prudential. He said the total U.S. DB plan assets are $5 billion.
The transfer to Prudential is expected to take place in December.
The deal with Prudential “better manages the ongoing variations in cost associated with its maintenance, while entrusting current retirees and their beneficiaries’ pensions to a financial institution with expertise in the long-term management of retirement benefits,” the news release said.
Any U.S. employee at Bristol-Myers hired after Jan. 1, 2010, is not eligible for the defined benefit plan.
The Bristol-Myers announcement follows Motorola Solutions Inc., Schaumburg, Ill., last week announcing a $3.1 billion pension buyout, also with Prudential.