JCPenney has concluded a transfer of pension chance to annuities supplier Athene Holdings that assures the bankrupt retailer’s retired employees will go on to receive their added benefits.
Less than the terms of the offer, JCPenney transferred $2.8 billion in pension obligations for around 30,000 participants in its pension program to Athene, which agreed to present annuity added benefits to these participants.
The offer completes the termination of JCPenney’s program as it prepares to emerge from Chapter 11 personal bankruptcy.
“Rather than encounter gain reductions amid the company’s restructuring exercise, the retirees lined by this transaction can be confident they will receive the same pension gain, on the same timetable, as what they at the moment receive, or expected to receive in the long run,” Sean Brennan, EVP of pension chance transfer and flow reinsurance at Athene, said in a information release.
As Reuters reviews, Apollo World wide Administration, the private equity business that controls Athene, “is searching for to profit by earning a greater return on investing the [JCPenney] pension property than its payouts to the retirees will be.”
JC Penney submitted for personal bankruptcy in May 2020 after the COVID-19 pandemic forced it to briefly near its then practically 850 stores. The Pension Gain Warranty Company took accountability for the pension program in November but also authorized the retailer to check out solutions that would stay clear of cuts to retiree added benefits.
According to November PBGC estimates, the program was 92{312eb768b2a7ccb699e02fa64aff7eccd2b9f51f6a579147b7ed58dbcded82a2} funded with $3.3 billion in property and $3.six billion in gain liabilities. The company’s most current 10-K filing in January 2020 indicates that the program experienced $3.five billion in property and $3.2 billion in liabilities and was 120{312eb768b2a7ccb699e02fa64aff7eccd2b9f51f6a579147b7ed58dbcded82a2} funded.
Athene’s wholly-owned subsidiaries Athene Annuity and Everyday living Organization and Athene Annuity & Everyday living Assurance Organization of New York have each committed to issuing a group annuity contract to JCPenney and particular person annuity certificates to suitable participants.
“We preferred to uncover a improved remedy for our pension program participants than [a] distressed termination,” said Steve Whaley, chair of the JCPenney’s Gain Program Expense Committee.