Steel producer AK Steel has purchased a group annuity contract from Massachusetts Mutual Life Insurance Company to transfer approximately $615 million of its pension obligations.
The contract permanently transfers the responsibility to pay pension benefit obligations for approximately 4,250 retirees from the company’s pension plan, according to the company’s SEC filing. AK Steel said there will be no change to the pension benefits for any plan participant, and that the transaction was funded entirely with pension plan assets. The company expects to record a non-cash pension settlement charge of approximately $25 million in the fourth quarter as a result of the transfer.
The deal brings AK Steel’s total amount of pension obligations transferred to approximately $1.1 billion in aggregate since 2016, representing nearly 20,000 retirees. The company said the changes reduce financial risks to the company and lowers administrative costs, while allowing it to continue to meet its pension commitments.