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Packaging company Rock-Tenn Co. is offering to about 9,000 former employees who are eligible for but not yet receiving monthly pension benefits the opportunity to convert their future annuity to a lump-sum benefit.
“This offer provides certain eligible former employees who are not currently receiving a monthly benefit the opportunity to receive a lump sum payment and have more control over managing their retirement money,” Ward Dickson, Rock-Tenn executive vice president and chief financial officer, said in a statement Friday.
Norcross, Georgia-based Rock-Tenn said affected participants have until Aug. 5 to make a decision. The company said it does not expect to have to make additional contributions to its pension plans as result of the offer.
In 2013, the company's pension plans were significantly underfunded, with more than $3.5 billion in assets and $4.5 billion in liabilities.
When pension plan participants take lump-sum benefits and are no longer covered by the plan, their former employers do not have to worry about how interest rate fluctuations and investment results could affect how much they will have to contribute to their pension plans to fund future annuity payments.
In addition, when participants take lump sums and move out of a pension plan, employers can reduce certain fixed costs, such as the payment of sharply rising premiums to the Pension Benefit Guaranty Corp.
Vishay Intertechnology Inc. is offering about 2,200 former employees who are eligible for but not yet receiving monthly pension benefits the opportunity to convert their future annuity to a lump-sum benefit.