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Lockheed Martin completes two pension risk transfer agreements

30th January 2019 - Author: Luke Gallin

Lockheed Martin Corporation, a global security and aerospace firm, has announced its involvement in two new pension risk transfer agreements, including a $1.8 billion buy-out with a subsidiary of Prudential Financial, Inc.

Longevity imageThe buy-out agreement sees Lockheed Martin transfer roughly $1.8 billion of its pension obligations via the purchase of a group annuity contract from The Prudential Insurance Company of America. Under the agreement, approximately 32,000 of Lockheed Martin’s retirees will receive monthly pension obligations payments from Prudential.

Peggy McDonald, a Prudential Vice President who helped negotiate this deal, said: “We are proud that Lockheed Martin chose Prudential to secure the pension benefits for some of its retirees. Lockheed Martin is trusting its pension promises to a company with deep experience in managing retirement benefits, and Prudential is committed to providing these retirees with a seamless transition.”

Head of Pension Risk Transfer at Prudential, Scott Kaplan, added: “Prudential has long demonstrated its capabilities in innovative ways to help companies like Lockheed Martin better focus on their core operations and reduce risks.”

The second deal announced by Lockheed Martin today is with retirement services company, Athene Holding Ltd. Under this $800 million pension risk transfer agreement, Athene Annuity and Life Company, a subsidiary of Athene Holdings, has committed to issuing a group annuity contract covering the aggregate obligations of approximately 9,000 retirees under one of Lockheed Martin’s pension plans.

With this agreement, Lockheed Martin will remain responsible for overall plan distribution.

Athene President, Bill Wheeler, said: “We are pleased to have been selected as a trusted partner by Lockheed Martin to help reduce the company’s pension risk through this transaction. As structured, this type of transaction offers plan sponsors a strategic solution – the ability to de-risk now, while providing the flexibility to convert to a buy-out structure later – all while helping to mitigate risk against potential future market conditions.

“As a leader in pension risk transfers, Athene is committed to solutions that help plan sponsors meet their pension obligations and provide income security for their retirees. We understand how vital income security is to the millions of Americans in the United States close to and in retirement. That’s why Athene is focused on innovative, flexible solutions for plan sponsors and their participants to help them prepare for the future.”

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