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The Hartford Transfers Pension Liabilities to Annuity

Yesterday, Hartford Financial Services Group Inc. announced that it will purchase a group annuity contract from Prudential Financial,  transferring $1.6 billion of its $5.65 billion in U.S. pension liabilities. According to a recent Pensions & Investments article, the transfer will be effective Friday.

Hartford’s 8-K filing with the Securities and Exchange Commission states that the benefits of 38% of Hartford’s U.S. pension plan participants, or about 16,000 former employees, will be moved due to the deal. As part of this transfer, Hartford will contribute approximately $300 million to the pension fund by the end of the year.

As of December 31 of last year, Hartford’s U.S. defined benefit plan had $4.68 billion in assets, with an 82.8 percent funding ratio.

“We are pleased that this transaction preserves these pension benefits while reducing the company’s long-term pension obligations,” said Marty Gervasi, The Hartford’s chief human resources officer. “We are grateful for the contributions The Hartford’s former employees have made to the company, and the provider selected is a highly-rated, experienced retirement benefits provider in the industry.”

No action is requried from the plan’s participants being transferred to Prudential. They can expect initial notice from The Hartford by the end of July and detailed information from Prudential in mid-October. Benefits from The Hartford’s pension plan will continue as usual until Novemer 1. At that point, payment and andministration will transition to Prudential.

The Hartford announcement was the latest in a chain of pension buyouts by corporate plans. On May 23, Sears Holdings Inc., Hoffman Estates, Ill. transferred nearly $515 million in U.S. defined benefit plan liabilities in a group annuity purchase from MetLife. Then on June 23, Accenture PLC, Dublin, announced the purchase of group annuity contracts from American International Group and Massachusetts Mutual Life Insurance. About $1 billion in U.S. defined benefit plan obligations were settled in the deal.

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