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MetLife Secures $1.9 Billion Pension Deal with Lockheed Martin

The aerospace giant will transfer liabilities to the insurer, roughly 20,000 retirees and current workers.

By Sarah Min

Lockheed Martin will shed roughly $1.9 billion in liabilities after MetLife takes on pension benefit payments for roughly 20,000 retirees and current employees under the defense contractor.

The aerospace company in December purchased a group annuity contract from Metropolitan Tower Life Insurance, a subsidiary of the insurance giant. The transaction, announced Tuesday, will not cut the amount of pension benefits for the Lockheed Martin’s affected retirees.

The transfer constitutes 14% of Lockheed’s $13.2 billion in pension liabilities as of year-end 2019, according to the company’s filings.

The agreement will allow the company to “focus on its core mission and mitigate financial risk associated with market volatility,” while ensuring a “seamless transition” for retirees, said Ken Possenriede, executive vice president and chief financial officer at Lockheed Martin, in a statement.

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This is not the first pension transfer for Lockheed, which last January moved $2.6 billion in pension liabilities that covered a total of 41,000 workers to Prudential Insurance and Athene.

It’s also part of a broader movement of US employers paying insurers to take on pension liabilities, as plan expenses grow, and more companies move towards 401(k) plans. Roughly one-third of defined benefit sponsors plan to offload their liabilities sometime in the next five years, MetLife said in a study.

Last year, MetLife secured a $6 billion pension deal with FedEx, which was the largest U.S. pension transfer in years. In 2012, telecommunications giant Verizon transferred $7.5 billion in liabilities to Prudential.

Earlier this month, MetLife agreed to pay a $10 million fine to the Securities and Exchange Commission for pension accounting violations. Lockheed, thanks to the military buildup under the Trump Administration, had an earnings surge of 23% last year, to $6.2 billion.

Related Stories:

MetLife to Pay SEC $10 Million Fine Over Pension Accounting Violations

FedEx Sending $6 Billion in Pension Liabilities to MetLife

Lockheed Martin Makes Two Big Pension Risk Transfers in Q4

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Home > News > Asset Management Culture > Ohio Pension Plan Would Disclose Manager Fees, Livestream Meetings Under New Legislation
Asset Management Culture

Ohio Pension Plan Would Disclose Manager Fees, Livestream Meetings Under New Legislation

In transparency move, proposed bill would also create a new legislative panel to review pension system fees and employee salaries.

By Steffan Navedo-Perez

The Ohio Public Employees’ Retirement System (OPERS) would be under strict transparency-related regulation if several bills currently being written see the light of day.

Under the bills being drafted by state representatives Brigid Kelly and Diane Grendell, OPERS would be required to disclose a certain amount of fee information related to its alternative investments, broadcast their board meetings publicly, cap advisory fees, and limit pay increases to top pension fund employees.

The bills would also create a new legislative panel dedicated to reviewing pension system fees and employee salaries.

“I started a couple months ago, because there are a lot of people in the state of Ohio who have been promised pension and retirement benefits as a result of service to this state,” Kelly said in an interview with Cleveland.com. “We think there should be transparency for those folks, and accountability for the people who run the funds.”

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The bills come on the tail of OPERS decision to slash health care benefits for its beneficiaries to rescue the OPERS Health Care Fund. Had the changes not been enacted, the fund was at risk of becoming insolvent in 11 years. Because of the board’s action, the health care fund’s solvency was extended to 18.75 years.

“This is for people who have worked very hard for the state, at least many of them have, and to see constantly their benefits be dwindled away, while people are getting their golden parachutes,” Kelly told  Cleveland.com.

Fees related to alternative investments have been under scrutiny across the country. A new law passed by Maryland last summer will force its state retirement system to reveal the true amount it pays outside managers in fees.

Presidential candidate Elizabeth Warren is a huge critic of private equity firms and introduced legislation last year that would institute a number of new regulations – including publicizing private equity firms’ fees and returns, and being held accountable for their portfolio companies’ illegal activities.

A study by an Oxford professor concluded that Pennsylvania’s two largest public pension plans had underreported billions in fees shelled out to private investors.

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Mispricing Fees ‘Can Be Fatal’ for Asset Managers’ Business

UK Pensions Making ‘Fat Living’ Off of Hidden Fees

New Maryland Law Requires State Pension to Reveal All Fees

 

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