J.C. Penney Co., Plano, Texas, announced Friday it is purchasing a group annuity contract from Prudential Insurance Co. of America to transfer some pension fund liabilities.
The company said in a news release it expects the transfer of retirees' and beneficiaries' liabilities to close in December and “its final size is subject to the condition that the plan remains overfunded at closing.” The company added “if market conditions warrant, closing may be extended to 2016.”
As of Dec. 31, J.C. Penney's primary pension fund had $5.5 billion in assets, and a projected benefit obligation of $5.3 billion, for a funding ratio of 104%, according to its most recent 10-K filing.
Company spokesman Joey Thomas said in an e-mail that Prudential would assume the obligations of about 43,000 retirees and beneficiaries. He would not provide further information.
Additionally, the company announced that about 12,000 retirees and beneficiaries accepted a lump-sum payout that was offered to 31,000. Additionally, 1,900 of 8,000 terminated vested participants who have yet to retire accepted their offer.
The offer expired Sept. 18, and the company expects the lump sums to go out in November. It was the second lump-sum offer window provided by the company, which previously made an offer in fall 2012 to about 35,000 former vested employees who had not retired as of that date. About 25,000 of those participants accepted.
Company spokesman Joey Thomas did not immediately respond to requests for further information.
