PPG transfers obligations for retiree pensions to insurers

June 28--PPG -- Industries Inc. is transferring pension obligations for 13,400 retirees to two insurance companies as the Downtown-based paint producer looks to eliminate its responsibility for $1.6 billion in estimated future payouts.

The company said Massachusetts Mutual Life Insurance Co. and Metropolitan Life Insurance Co. agreed to take over pension benefit payments for PPG's nonunion retirees. Union retirees will remain in PPG's pension plan, the company said.

Under the agreement, which is known as a pension risk transfer, PPG will contribute $175 million to fully fund pensions for nonunion retirees and record $500 million to $600 million in after-tax charges to cover the cost of purchasing annuity contracts from Mass Mutual and Met Life.

"The agreement will transfer the payment administration and obligations to these high-rated insurance companies with a long history of efficiently providing group annuity benefits," PPG said in a written statement.

The transfer won't affect PPG retirees' pension payments or reduce the value of their benefits, company spokesman Mark Silvey wrote in an email.

"PPG's pension plans are in a strong financial position," Silvey said. "This action is consistent with PPG's goals to protect the interests of the participants while also better predicting and managing pension risks and costs, including cash funding requirements."

In transferring its pension risks, PPG joins other large corporations that are looking for ways to reduce or eliminate their future pension obligations. Verizon Communications, General Motors and Motorola Communications have made pension risk transfers in recent years.

Other companies have ended pension benefits for new hires and moved them to defined-contribution programs such as a 401(k) plan. For instance, specialty steel producer Allegheny Technologies Inc. made that change for union workers under a three-year contract ratified by the United Steelworkers union this year.

Alex Nixon is a Tribune-Review staff writer. Reach him at 412-320-7928 or [email protected].

___

(c)2016 The Pittsburgh Tribune-Review (Greensburg, Pa.)

Visit The Pittsburgh Tribune-Review (Greensburg, Pa.) at www.triblive.com

Distributed by Tribune Content Agency, LLC.