JCPenney Offloads $2.8 Billion in Pension Liabilities
JCPenney has completed a transfer of pension danger to annuities service provider Athene Holdings that ensures the bankrupt retailer’s retired staff members will keep on to acquire their advantages.
Beneath the conditions of the offer, JCPenney transferred $two.8 billion in pension obligations for roughly thirty,000 contributors in its pension prepare to Athene, which agreed to offer annuity advantages to those people contributors.
The offer completes the termination of JCPenney’s prepare as it prepares to arise from Chapter 11 individual bankruptcy.
“Rather than facial area benefit reductions amid the company’s restructuring activity, the retirees coated by this transaction can be self-assured they will acquire the exact pension benefit, on the exact schedule, as what they at this time acquire, or anticipated to acquire in the long term,” Sean Brennan, EVP of pension danger transfer and movement reinsurance at Athene, mentioned in a news release.
As Reuters reports, Apollo Worldwide Administration, the personal equity business that controls Athene, “is searching for to earnings by earning a increased return on investing the [JCPenney] pension assets than its payouts to the retirees will be.”
JC Penney filed for individual bankruptcy in May well 2020 immediately after the COVID-19 pandemic pressured it to briefly close its then just about 850 suppliers. The Pension Benefit Warranty Company took responsibility for the pension prepare in November but also allowed the retailer to examine solutions that would prevent cuts to retiree advantages.
In accordance to November PBGC estimates, the prepare was ninety two% funded with $3.3 billion in assets and $3.6 billion in benefit liabilities. The company’s most modern 10-K submitting in January 2020 signifies that the prepare had $3.5 billion in assets and $3.two billion in liabilities and was 120% funded.
Athene’s wholly-owned subsidiaries Athene Annuity and Lifestyle Firm and Athene Annuity & Lifestyle Assurance Firm of New York have every dedicated to issuing a group annuity deal to JCPenney and particular person annuity certificates to qualified contributors.
“We wished to locate a better option for our pension prepare contributors than [a] distressed termination,” mentioned Steve Whaley, chair of the JCPenney’s Benefit Plan Financial commitment Committee.