Prudential Retirement, a business unit of Prudential Financial, Inc., has completed the firm’s fourth and final pension de-risking transaction with Boise, Idaho-based wood products manufacturer and building materials distributor Boise Cascade Company.
Prior to this final transaction, Boise Cascade had transferred US pension plan assets to Prudential in three phases of $152 million in April 2018, $125 million in August 2018, and $20 million in September 2019.
Peggy McDonald, Senior Vice President and Actuary at Prudential Retirement’s Investment & Pension Solutions, commented on the deal.
“The final transaction in our three-year engagement with Boise Cascade is significant because it represents the first time a plan sponsor has been able to guarantee the cost of a plan termination early in the lengthy termination process by transferring all of the risks to an insurer,” she said
“Terminating a pension plan is risky business and, up until now, plan sponsors haven’t been able to calculate the actual cost of unwinding a plan until the end of the termination process, which can take a year or more,” McDonald continued.
“This approach provided Boise Cascade with cost certainty early in the process by securing a buy-in contract under which Prudential assumes the lump sum election rate risk.”
Alex Hyten, who on June 2 was named head of Structured Settlements for Prudential Retirement, led the transaction.
“The long-term partnership between Boise Cascade and Prudential has allowed Boise to successfully wind down their plan in a manner and a time frame that was beneficial to them,” Hyten said.
“We are happy to develop solutions that help clients, like Boise Cascade, achieve their pension de-risking goals and secure those promises with a financially strong and experienced company like Prudential.”
Wayne Rancourt, Executive Vice President, Chief Financial Officer and Treasurer at Boise Cascade Company, further stated: “Boise Cascade has been fortunate to partner with a market-leading firm like Prudential on our multi-year de-risking journey.”
“When we began thinking about transferring our legacy pension obligations, we knew Prudential would be able to provide great service and financial protection to our plan participants,” Rancourt remarked.
“Their willingness to help structure this last buy-in transaction has allowed us to eliminate the future funding uncertainties and focus on running our core businesses. We couldn’t be happier with the result.”
