Lockheed to offload $1.8 billion in pension risks to Prudential

[turbinetree]

Source: Reuters

BUSINESS NEWS JANUARY 29, 2019 / 12:50 PM / UPDATED 7 MINUTES AGO

(Reuters) - Lockheed Martin Corp, the Pentagon’s top weapons supplier, said on Tuesday it would transfer $1.8 billion in pension obligations to U.S. life insurer Prudential Financial Inc to reduce the risk and costs of pensions.

Prudential will assume responsibility for pension benefits of around 32,000 former Lockheed employees as part of the agreement.

U.S. companies such as Accenture, General Motors, Verizon and Kimberly-Clark have been offloading their pension obligations to insurance companies to cut down on costs and reduce the liabilities of their pensions.

The move benefits insurers, which have been buying corporate pension plans at a record clip since they can make more money from selling companies an annuity to cover the cost of the pension plans and then invest the proceeds in bonds and other securities.

Read more: https://www.reuters.com/article/us-lockheed-pensions-prudential-finl/lockheed-to-offload-1-8-billion-in-pension-risks-to-prudential-idUSKCN1PN2D2?il=0

[Hekate]

1. How is that even legal

[turbinetree]

2. They just did it with Boeing going to Met Life for pensioners

now what if the insurance mergers with another firm, they don't have to honor the agreement, and then to top it all off pensioners like myself don't get a pay raise from these bonds that is held basically hostage by wall street, they can sink anyone if they want to, looked at what happened in the housing market a lot of these insurance companies and banks where tied to that 2008 mess and those bonds .....................and the tax payers bailed them out................and people are still homeless from that BS

Reminds me of the promise made to the coal miners, there will always be health care for you...................and it takes an act of congress to keep it....................

[A HERETIC I AM]

5. I think you may be laboring under a misapprehension

You have made several statements that I am at a loss to understand;

now what if the insurance mergers with another firm, they don't have to honor the agreement,

How do you figure? The firm they made the agreement with is Prudential Insurance. Why wouldn't any potential buyer of Prudential honor an annuity contract? If that sort of thing happened it would be a litigation nightmare. I don't think that is a concern however. Prudential has been around a long time.

and then to top it all off pensioners like myself don't get a pay raise from these bonds that is held basically hostage by wall street,

Sorry, but this sentence really doesn't make any sense. The article states "Bonds and other securities". If the original company Pension plan included COLA increases, why do you think it wouldn't now? And what do you mean by saying the bonds are "held hostage by Wall Street"? By what mechanism?

they can sink anyone if they want to, looked at what happened in the housing market a lot of these insurance companies and banks where tied to that 2008 mess and those bonds

How do you think Lockheed, or any other firm that has a pension fund, for that matter, manages those funds? Seriously, what is it you think they do? Just sock away stacks of hundred dollar bills in a vault and dole them out to retirees?

All pension funds are invested in the market, and hold bonds, stocks, futures contracts, currency contracts, international assets etc. If you were to actually look at the list of assets held in a large pension fund, you would realize that they invest the money rather substantially.

Here is the CALPERS investment portfolio from 2016/2017. The CALPERS pension plan covers 1.6 million California public employees and has over $300 billion in assets. While this portfolio does have mortgage bonds, it also has Bonds from The Philippines and all over the world, along with stocks and various other asset classes.


And by they way, not every bond is a mortgage bond, not by any stretch of the imagination. The bonds that were manipulated by certain firms and repackaged and then defaulted back in 2008/2009 are one segment of the overall bond market.

and the tax payers bailed them out.

. To a degree, yes, but with very few exceptions, the vast majority of money given to financial firms by the Treasury was PAID BACK WITH INTEREST. This ongoing MYTH that the Federal Government just backed up dumptrucks full of cash to the back door of troubled banks and said "Here ya go!" is utter nonsense. That's not how it happened.

and people are still homeless from that BS

Yes, I'm sure many are, but that had absolutely nothing to do with anything related to what this OP is about. Nothing.

[TeamPooka]

3. Yes, turn people's pensions into a product like you did their mortgages in the 2000s

whats the worst that could happen?

[Wellstone ruled]

4. This goes back to the Reagan

Administration .

[trof]

6. $5 will get you $10 the pensions wind up with PBGC.

Pension Benefit Guaranty Corporation.
That's the gummint.
That's what happened to my pension when TWA went bankrupt the year after I retired.
They have a maximum monthly payout, regardless of what your company 'guarantee' was.
Guess what? It's quite a bit lower.
Surprise surprise.