Sonoco Products Co., Hartsville, S.C., is making a voluntary contribution of $200 million to its U.S. defined benefit plans, the packaging company disclosed in a news release Tuesday.
The contribution will bring the funding ratio of the pension plans to about 100%, according to the news release. The plans were closed to new hires at the end of 2003 and benefit accruals were frozen at the end of 2018.
The company originally said in its 10-K filing in February that it planned to contribute a total of $31 million to its U.S., U.K. and Canadian defined benefit plans and retiree health and life insurance plans in 2019. It contributed $25 million to its pension plans in 2018 and $94 million in 2017. The 10-K filing did not break out assets by region.
"This is another significant step in our actions to derisk our U.S. pension plans. By making the voluntary contributions, along with the plan's investment council action to increase the allocation of pension assets to fixed-income investments, we are taking advantage of our strong financial position to limit the impact of future market volatility to our free cash flow. This activity further supports Sonoco's strategic initiatives of profitable growth and simplification," said Julie Albrecht, senior vice president and chief financial officer, in the news release. "These actions will not reduce any retirement benefits provided to the approximately 12,000 participants of Sonoco's U.S. defined benefit pension plans."
As of Dec. 31, all defined benefit plan assets totaled $1.319 billion, while projected benefit obligations totaled $1.684 billion, for a funding ratio of 78.3%, down from 81.3% a year earlier, according to the 10-K filing. The discount rate as of that date was 4.24%, up from 3.59% a year earlier.
As of Dec. 31, the actual allocation of the U.S. pension plans was 48.3% equities, 38.4% fixed income and 13.3% alternatives.