DuPont retiree fixed pension converted to a Prudential annuity
Delaware Business Daily
Many DuPont retirees are receiving letters announcing a conversion of the retirement plan to an annuity – an insurance product. The plan will be administered by insurance giant Prudential.
Annuities pay out a fixed amount each month, like the Corteva-DuPont pension. Prudential administers the payments program. Payments begin at the year-end.
The change had been widely expected after Corteva ended up with DuPont's retirement obligations after the merger and spinoff of Dow and DuPont. The main goal was the formation of Corteva, which combined the agribusiness operations of Dow and DuPont.
Following shareholder unhappiness with Corteva's performance, its board brought in a new CEO, a former Canadian fertilizer company executive, who launched a cost-cutting program that will reduce the company's headcount and an array of businesses in seed production, crop protection, and related areas. Corteva also moved its headquarters from Chestnut Run, just outside Wilmington, ton Indianapolis.
Like many long-time companies that have cut their headcount DuPont had an underfunded pension plan but added funds to shore it up. DuPont had ended a fixed pension plan more than a decade ago for newer employees and uses a 401(k) plan that matches employee contributions.
The end of the fixed pension in much of corporate America has been blamed for a retirement savings gap, since employees can choose not to participate in 401(ks) or can make minimal contributions. Companies, in some cases, have cut back on the percentage of salary they match.
The rationale for saddling Corteva with pension obligations was the potential for the company to grow faster than DuPont, which has been paring down operations and now describes itself as a materials company. Corteva shareholders see it different and viewed the obligation as a drag on the company