Philips North America has entered into an agreement with Principal Financial Group and Metropolitan Tower Life Insurance, a subsidiary of MetLife, to transfer approximately $1.2 billion of its pension plan obligations.
The agreement, which was signed in the fourth quarter of 2020, provides guaranteed retirement income solutions for approximately 11,000 retirees, beneficiaries and deferred participants in the Philips North America Pension Plan.
Principal will have financial responsibility for a portion of these monthly benefits and will settle such obligations directly with MetLife.
Principal will have sole responsibility for the approximately 2,000 deferred participants.
The combination of Principal and MetLife’s respective financial strength, retirement expertise and administrative leadership allows Philips to promote long-term security and confidence for its approximately 11,000 retirees, beneficiaries and deferred participants.
The transaction will not change the amount of monthly pension benefits received by the Philips’ pension plan participants and participants will continue to receive a single payment each month.
MetLife will act as the lead administrator for the monthly benefits for approximately 9,000 retirees and their beneficiaries in the Philips North America Pension Plan.
Graham Cox, executive vice president and head of Retirement & Income Solutions at MetLife said: “MetLife is pleased Philips entrusted us, along with Principal, to provide guaranteed lifetime income to the company’s retirement participants.
“Our expertise at managing longevity and market risk gives pension plan sponsors confidence that their retirees will be well protected, while also allowing Philips to focus on its core business.”
Joe McCarty, vice president, Retirement and Income Solutions at Principal added: “We applaud Philips for selecting an approach that promotes financial security for their participants.
“As a leader in the pension risk transfer market, we look forward to bringing our technology and capabilities to the table, including benefit administration services, to serve the complex needs of participants and help them embark on retirement with confidence.”