Administration December 17, 2014

NCR Transfers Some Pension Risk to Principal

NCR Corporation announced an annuity purchase to secure certain pension plan participants' benefits.

 

Reported by

NCR Corporation has entered into an agreement with Principal Life Insurance Company, in accordance with the selection made by the fiduciary of its U.S. qualified pension plan, under which NCR purchased a single premium group annuity contract from The Principal. The contract secures approximately $160 million of benefits for about 4,500 former employees or their related beneficiaries who commenced monthly pension benefits under the plan before January 1, 1994.

“This group annuity contract purchase is part of our pension transformation and is consistent with our overall strategy to address our legacy issues,” says John Boudreau, NCR treasurer. “Since this contract was purchased with existing plan assets, no additional funding of the plan was required for this purchase.  The plan’s funded status is expected to remain materially unchanged as a result of this group annuity contract purchase.”

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The group annuity contract does not affect active employees, former employees who have not commenced monthly benefits under the plan, or former employees or their beneficiaries who commenced monthly benefits under the plan on or after January 1, 1994. It provides the same rights to future payments, such as survivor benefits, that are currently provided under the terms of the plan.

    NCR said additional details will be provided to affected participants and beneficiaries in March 2015.

    Noel Couch

    Data and Research December 17, 2014

    Little Change in Retirement Assets in Q3

    ICI’s latest quarterly assessment shows retirement assets account for 36% of all household financial assets in the United States.
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    Total U.S. retirement assets were $24.2 trillion as of September 30, 2014, about unchanged from the end of June, according to the Investment Company Institute’s (ICI) Q3 Retirement Update.

    Defined contribution (DC) plan assets rose 0.7% in the third quarter to $6.6 trillion. As of September 30, $4.5 trillion was held in 401(k) plans, $928 billion in 403(b) plans, $258 billion in 457 plans, and $409 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).  Mutual funds managed $3.7 trillion, or 55%, of assets held in DC plans at the end of September.               

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    Government defined benefit (DB) plans—including federal, state, and local government plans—held $5.1 trillion in assets as of the end of September, a 0.9% decrease from the end of June. Private-sector DB plans held $3.2 trillion in assets, and annuity reserves outside of retirement accounts accounted for another $2.0 trillion.

    ICI data suggests unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans. As of the end of the third quarter, unfunded liabilities were 2% of private-sector DB plan entitlements, 26% of state and local government DB plan entitlements, and 57% of federal DB plan entitlements. ICI explains that entitlements include both retirement assets and the unfunded liabilities of DB plans.

    IRAs held $7.3 trillion in assets at the end of the third quarter, about unchanged from the end of the second quarter. Forty-eight percent of IRA assets, or $3.5 trillion, was invested in mutual funds.

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