Lincoln Electric Co., Cleveland, announced Wednesday it would settle $425 million in outstanding U.S. pension obligations by purchasing a group annuity contract from Principal Financial Group for about 1,900 U.S retirees and beneficiaries who retired on or before June 1, 2015, and are now receiving benefit payments.
“Lincoln Electric has contributed $375 million to its pension plans over the last 10 years, and its U.S. pension plans are fully funded,” said a company news release, adding “the purchase of this group annuity contract allows the company to secure pension benefits for its approximate 1,900 retirees, reduce volatility in pension costs and funding requirements, while maintaining a fully funded plan for the remaining retiree obligations.”
Once finalized, the deal is expected to reduce Lincoln Electric’s roughly $900 million in outstanding U.S. pension obligations by about 47%. Principal will pay future pension benefits starting Nov. 1.
The deal does not require a cash contribution by Lincoln Electric.
A Lincoln Electric spokeswoman said in an e-mail the company’s U.S. Retirement Annuity Program had approximately $900 million in defined benefit assets and a funding ratio of 106%.