Accenture (ACN) said that it has completed the termination of its U.S. Pension Plan, which was previously announced in March 2016, by entering into agreements with American General Life Insurance Company or AGL - a subsidiary of American International Group Inc. (AIG) - and Massachusetts Mutual Life Insurance Co. or MassMutual.
Under these agreements, the Plan has transferred pension assets to AGL and MassMutual to settle about $1.0 billion of outstanding pension obligations.
The Plan's termination removed a total of $1.6 billion of pension obligations: about $600 million through lump-sum payments to approximately 7,000 active and former U.S. employees who elected to receive such payments, and $1.0 billion through the purchase of annuities from insurance companies.
Accenture purchased group annuity contracts from AGL and MassMutual, which are each responsible for assuming a portion of the obligation to make future annuity payments to approximately 9,200 active and former U.S. Accenture employees and their beneficiaries. The transaction closed in late May and the insurers will assume payment responsibility in August 2017.
Accenture has created a new, fully funded, defined benefit plan with approximately $200 million of pension obligations with substantially the same terms as the Plan for approximately 550 active U.S. employees who remain eligible to accrue benefits.
Together, these related actions have enabled Accenture to decrease its overall pension obligations by approximately $1.6 billion, reducing future risk and administrative costs, while entrusting participants' benefits to highly rated financial institutions with core expertise in the long-term management of retirement benefits.
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