American International Group, Inc. (AIG) has completed a transaction with global consumer and commercial services company Rollins for the transfer of $198.3 million of US pension obligations.
Rollins distributed the pension obligations through a combination of lump sum payments to participants, payments to the Pension Benefit Guaranty Corporation (PBGC), and the purchase of a group annuity contract with AIG.
The company froze its pension plan in 2005, and since then has continued to de-risk the plan with steps to reduce the risks, costs and liabilities associated with running a defined benefit pension plan.
“Completing the pension transition creates several advantages for Rollins and its employees,” said Eddie Northen, Senior Vice President, Chief Financial Officer and Treasurer at Rollins.
“Some of the positives include managing the volatility of our assets, and eliminating both the annual contribution and daily administrative management of the plan.”
With the completion of the group annuity contract, Rollins had approximately $32 million remaining of pension assets.
The remaining pension assets were the result of the funded status of the plan, higher take rate of lump sum payment election by participants and optimal pricing of the group annuity contract.
With the remaining pension assets, Rollins has evaluated the allowable opportunities for utilization of the excess assets including funding other employee benefits and a reversion of the pension assets to the company per ERISA regulations.
