(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.
Prudential said its retirement business holds more than $445 billion in retirement account values as of Sept. 30. It makes more than $10 billion in pension payments to more than 1 million retirees annually.
Reporting By Aparajita Saxena in Bengaluru; Editing by Maju Samuel