Kimberly-Clark Corp., Dallas, announced Monday it has purchased group annuity contracts from Massachusetts Mutual Life Insurance Co. and Prudential Insurance Co. of America to transfer defined benefit plan benefits of about 21,000 U.S. retirees.
The company also announced it will make a contribution of between $400 million and $475 million to the U.S. pension fund as part of this transaction. When the transaction is complete, the company said its projected benefit obligation will be reduced by about $2.5 billion.
Prudential will begin making benefit payments June 1 as the annuity administrator, while overall liabilities will be split between MassMutual and Prudential, said a Kimberly-Clark news release.
State Street Global Advisors was the independent fiduciary representing the retirees, while Deutsche Bank and Towers Watson served as strategic advisers for Kimberly-Clark.
In its 10-K filing Feb. 18, the company had not split its U.S. and non-U.S. defined benefit plan assets and reported $5.914 billion in assets and $6.86 billion in projected benefit obligations as of Dec. 31 for a funding ratio of 86.2%.
Officials at Kimberly-Clark did not respond to requests for further information, and SSgA spokeswoman Alicia Curran Sweeney did not return phone calls by press time. Towers Watson declined to comment.