Lockheed Martin offloads $4.9 billion in pension liabilities

Lockheed Martin Corp., Bethesda, Md., purchased group annuity contracts from Athene Holding Ltd. to transfer about $4.9 billion in U.S. pension plan liabilities.

The purchase completed Tuesday will transfer the benefit-paying responsibilities for about 18,000 U.S. retirees and beneficiaries to Athene's wholly owned subsidiaries Athene Annuity and Life Co. and Athene Annuity & Life Assurance Company of New York, a news release from the aerospace and defense company said Tuesday.

The Athene subsidiaries will begin paying benefits to the retirees and beneficiaries in the Lockheed Martin Corporation Salaried Employee Retirement Program and the Lockheed Martin Aerospace Hourly Pension Plan on Jan. 1. Spokesman Trent J. Perrotto said in an email the population was “selected based on a number of factors, including the size of their monthly benefits and the start date of their payments."

The contracts were purchased using assets from Lockheed Martin's master retirement trust, the news release said.

It is the largest U.S. PRT transaction since FedEx Corp., Memphis, Tenn., purchased a group annuity contract from Metropolitan Life Insurance Co. to transfer about $6 billion in U.S. pension plan obligations in 2018.

It is also the second major pension risk transfer transaction for Lockheed Martin in the past year.

In December, Lockheed Martin completed pension buyout and pension buy-in transactions totaling $2.2 billion through the purchase of two group annuity contracts from insurance companies.

The first purchase from MetLife subsidiary Metropolitan Tower Life Insurance Co. transferred $1.4 billion in U.S. pension plan liabilities related to about 13,500 U.S. retirees and beneficiaries, and a second purchase for $793 million from an undisclosed insurer covered the U.S. pension plan liabilities of about 2,500 retirees and beneficiaries. Lockheed Martin retained the benefit-paying responsibilities for the latter population, and is being reimbursed for all future benefit payments covered by the contract.

As of Dec. 31, DB plan assets totaled $38.481 billion, while projected benefit obligations totaled $51.352 billion, for a funding ratio of 74.9%, up from 72.8% a year earlier.