Ryder latest firm to offer lump-sum cash conversion from annuity

Ryder System Inc. is offering to about 11,000 former employees the opportunity to convert their monthly annuity benefit to a cash lump-sum benefit.

In a filing Wednesday with the U.S. Securities & Exchange Commission, Ryder, a Miami-based truck rental and leasing company, said the action is intended to “reduce the size and potential future volatility of its U.S. pension plan obligations.”

At the end of 2013, Ryder's pension plans were underfunded by $300 million, with $1.8 billion in assets and $2.1 billion in liabilities.

Dozens of employers in the last few years have made similar offers. 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 the pension plan, employers can reduce certain fixed costs, such as the payment of sharply rising premiums to the Pension Benefit Guaranty Corp.