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Newsmakers

Alcoa De-Risks $290 Million in Pension Obligations

Company also makes $100 million pension contribution.

By Michael Katz

Aluminum producer Alcoa has signed a group annuity contract to transfer $290 million in obligations and related assets of its defined benefit pension plans for US retirees and beneficiaries. The company also has made a discretionary contribution of $100 million to those plans.

Both the annuitization and the discretionary payment are intended to reduce the risk associated with the volatility of its pension obligations. As part of the annuity contract, the $290 million in obligations and related assets will be transferred later in August to Athene Annuity and Life Company.

Athene will assume benefit payments for approximately 10,500 participants, which will begin in October. Participants will not see any change in the amount of their benefits. Through its subsidiaries, Athene has more than 800,000 policyholders and $114.8 billion in assets as of June 30. It has an A rating from A.M. Best, and an A- from Standard and Poor’s Global Ratings, and Fitch Ratings.

Alcoa also said it is notifying certain US salaried retirees that it will no longer provide retiree life insurance as of Sept. 1. As part of this change, Alcoa will make a one-time transition payment to the affected retirees totaling approximately $25 million.

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As of June 30, Alcoa’s net liability for pension and other post-employment benefits was $2.7 billion, down from $3.5 billion at the end of 2017. Alcoa said the annuity transfer, pension contribution, and elimination of retiree life insurance will further reduce the company’s net pension and OPEB liability by approximately $175 million.

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Home > News > Risk > Canada’s Top Public Pension Returns 1.8% in Fiscal First Quarter
Risk

Canada’s Top Public Pension Returns 1.8% in Fiscal First Quarter

Plan now stands at $278.9 billion.

By Chris Butera

Canada’s largest public pension plan reported a 1.8% return in the first quarter of its new fiscal year.

Mark Machin, CEO of the Canada Pension Plan Investment Board (CPPIB), which has C$366.6 billion ($278.9 billion) in assets, said the fund had a strong performance from private equity, which represents 20.9% of the portfolio.

“While performance was solid across our investment departments, our private assets did particularly well. Global equity markets maintained positive performance this quarter, contributing to Fund growth,” Machin said in a statement.

The pension plan gained C$10.5 billion during the period ended June 30, and following its fiscal 2018 results, announced in May, it has achieved annual five- and 10-year returns of 12.3% and 8%, respectively.

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“While we focus on strong average returns stretching well beyond five and 10 years, solid performance today cushions the Fund for an inevitable future market downturn,” said Machin.

The remainder of the Canada investment board’s portfolio allocation was 37.7% public equity, 22.1% government fixed income, and 23.3% real assets, with the rest split among asset classes such as cash. Holdings in cash and absolute-return strategies were negative because of derivative-based net financing and repurchase agreements in tandem with the current net position of absolute-return strategies.

CPPIB does not define individual asset class returns by quarter.

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