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(Bloomberg) — Worldwide Enterprise Machines Corp. stated it might report a $5.9 billion one-time pretax cost within the third quarter because of an settlement to dump pension obligations to 2 life insurers.
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IBM and its pension plan administrator stated the acquisition of annuities from Prudential Monetary Inc. and MetLife Inc. will switch about $16 billion in pension obligations that cowl about 100,000 individuals and their beneficiaries. The annuities have been funded straight by the belongings of the pension plan and required no money or asset contributions from IBM, the corporate stated Tuesday in a regulatory submitting.
The settlement is named a pension danger switch. IBM, by shopping for annuities from the insurance coverage firms, makes Prudential and MetLife answerable for paying the pension obligations. Insurers have been looking for out pension-transfer agreements lately as a solution to accrue belongings for funding. The recognition of the offers can also be pushed by employers that need to offload the long-term obligations.
IBM, in a weblog publish, stated it has “taken actions over the past a number of years to cut back the chance profile of its worldwide retirement-related plans, whereas on the identical time growing the funded standing of the plans.”
IBM stated the cost is not going to have an effect on its third-quarter or full-year working revenue or free money movement.
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