Timken Company to Purchase Group Annuity from The Prudential Insurance Company of America for Retiree Pension Benefits

By a News Reporter-Staff News Editor at Insurance Weekly News -- The Timken Company (NYSE: TKR; www.timken.com) announced that it has entered into an agreement to purchase a group annuity from The Prudential Insurance Company of America (NYSE: PRU) to pay future pension benefits for approximately 5,000 U.S. Timken retirees. In April, Prudential will begin paying benefits to certain retirees and surviving beneficiaries currently receiving payments from The Timken Company's U.S. retirement plan.

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The annuity purchase will have no impact on the monthly pension benefits Timken retirees and surviving beneficiaries receive today. The group annuity contract includes an irrevocable commitment by Prudential to make annuity payments to affected retirees covered under the contract. Timken is notifying by mail those individuals who are affected by the forthcoming change.

Timken has always been committed to meet its pension obligations responsibly and with care. Over the past decade, the company has contributed nearly $2 billion to its global pension plans, and its U.S. plans are now fully funded. This stewardship allows the company to take advantage of the favorable funded status in an effort to reduce risk and protect participant pension benefits going forward.

State Street Global Advisors served as independent fiduciary in the insurance company selection process. State Street's sole responsibility was to represent the interests of plan participants and beneficiaries. Following a rigorous evaluation, State Street selected Prudential, a highly rated company in the insurance industry and a leader in managing retirement assets and financial risk.

When finalized, this annuity purchase will reduce The Timken Company's gross pension liability by about $600 million. The purchase will be funded by existing plan assets and requires no cash contribution from the company, although the company will incur a non-cash pension settlement charge of approximately $220 million in the first quarter. The balance of the Timken U.S. plans are expected to remain fully funded after the annuity purchase.

Keywords for this news article include: The Timken Company.

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