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Huntington Ingalls to ship $508 million to pension plans in 2018

Huntington Ingalls Industries Inc., Newport News, Va., expects to contribute $508 million to its qualified defined benefit plans in 2018, the parent of Newport News Shipbuilding said Thursday in its 10-K filing with the Securities and Exchange Commission.

All of the contribution will be discretionary, the company said.

In 2017, the company contributed $294 million to its qualified plans, and another $7 million to non-qualified plans, according to its 10-K.

In the third quarter of 2017, a new collective bargaining agreement required amending one defined benefit plan, which increased the liability by $76 million.

Dwayne Blake, vice president of investor relations, said in an interview that $200 million of the $508 million contribution in 2018 is a result of the Tax Cuts and Jobs Act of 2017. "That is a pretty common practice among defense companies," he said. The company is also giving employees a one-time $500 bonus because of the tax cuts.

In 2009, non-collectively bargained defined benefit pension benefit accruals were frozen and replaced with a cash balance plan, according to the 10-K.

Huntington Ingalls has six defined benefit plans and six defined contribution plans. Its pension assets were $5.84 billion as of Dec. 31 and its liabilities were $6.78 billion, for a funding ratio of 86.1%, up from 81.2% a year earlier.

The target assets allocation ranges are 15% to 37% U.S. equities, 10% to 28% international equities, 25% to 50% fixed income and 10% to 25% alternative investments. Among alternative investments, the company has $279 million in real estate, $16 million in private partnerships and $281 million in hedge funds.

The discount rate for the pension plans was 3.82% in 2017, down from 4.47% in 2016.