Accenture PLC, Dublin, purchased group annuity contracts from American International Group and Massachusetts Mutual Life Insurance to settle about $1 billion in U.S. defined benefit plan obligations, the company said in a news release.
The annuity purchase completes the termination of the company's U.S. defined benefit plan originally announced in March 2016. The insurance carriers will split the responsibility of taking on the benefit payments for about 9,200 former U.S. employees and their beneficiaries.
The transaction closed in late May; AIG and MassMutual will assume payment responsibility in August. The company also eliminated another $600 million in pension liabilities through lump-sum payments to about 7,000 active and former U.S. employees.
Accenture has created a new U.S. defined benefit plan that consists of about $200 million in pension liabilities for the 550 active U.S. employees still eligible to accrue benefits.
As of Aug. 31, 2016, U.S. defined benefit plan assets totaled $1.8 billion, while projected benefit obligations totaled $2.03 billion, for a funding ratio of 88.7%.
