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Large pharmaceutical firm transferring pension liabilities to MetLife


In the latest corporate move to reduce pension liability risk, West Pharmaceutical Services Inc. on Thursday said it is buying a group annuity contract to provide pension benefits to about 1,750 retirees and surviving beneficiaries.

The Exton, Pennsylvania-based manufacturer of packaging components and delivery systems for injectable drugs and other health care products said it will transfer about $140 million in pension plan liabilities to MetLife Inc.

The transaction, which will occur on Nov. 1, will affect plan participants who retired before Jan. 1 and are currently receiving benefits, West Pharmaceutical said in a statement.

“West remains committed to meeting its pension obligations and the purchase of the annuity contract allows the company to fund the benefits of its approximately 1,750 retirees while reducing volatility in pension costs and funding requirements,” the company said in the statement.

At the end of 2014, West Pharmaceutical had pension plan assets of $322.3 million and $398.5 million in liabilities, according to its latest 10K statement.

West Pharmaceutical joins a growing list of employers, including Bristol-Myers Squibb Co., General Motors Co., Kimberly-Clark Corp. and Motorola Solutions Inc., who also have made big annuity purchases from insurers.

By reducing the size of their pension plans, employers reduce the impact that interest rate fluctuations and investment results can have on their pension plan contributions. In addition, with smaller pension plans, employers can reduce certain fixed costs, such as the payment of sharply rising premiums to the Pension Benefit Guaranty Corp.