Materion has signed an agreement to purchase a group annuity contract from Mutual of America Life Insurance Company (Mutual of America) to settle about $111m of its $256m in outstanding US pension obligations.
Under the agreement, Mutual of America will assume the obligation to pay future pension benefits starting January 1, 2019, for specified U.S. retirees, beneficiaries, and other participants who are currently in payment status and commenced payments on or before June 1, 2018.
Materion president and CEO Jugal Vijayvargiya said: “We’re pleased to partner with Mutual of America to secure pension benefits for our participants. After a competitive search process, we selected Mutual of America based on their commitment to providing quality customer service, their financial strength and rating, and ability to administer plan payments.”
Mutual of America chairman, president and CEO John R. Greed said: “Americans are living longer than ever and we recognize that they are increasingly concerned about outliving their retirement savings. With that in mind, we are pleased that Materion Corporation has placed its trust in Mutual of America to oversee the pension benefits for their approximately 1,150 US retirees, beneficiaries, and other participants. As with all of our customers, we are committed to helping these individuals as they seek a financially secure retirement.”
The purchase will be funded by existing plan assets, requires no cash contribution, and removes approximately 43% of Materion’s US pension obligation, while still maintaining funding levels well above minimum requirements for the remaining pension obligations. Materion expects to incur a non-cash, non-operating pension settlement charge of approximately $41m in the fourth quarter related to expensing unamortized actuarial losses.
The purchase of this group annuity contract allows Materion to secure pension benefits for approximately 1,150 participants in payment status and reduce volatility in pension costs and funding requirements. Materion has and will continue to be committed to meeting its pension obligations responsibly.
The annuity purchase will not impact the monthly pension benefits currently being paid to participants. The group annuity contract includes an irrevocable commitment by Mutual of America to make annuity payments to affected participants covered under the contract.
Source: Company Press Release