Yum! Brands the Latest Company to De-Risk Pension Plan

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Kristen Ricaurte Knebel

Oct. 12 — Add Yum! Brands Inc. to the list of companies moving their employees out of defined benefit pension plans.

The company offered certain former employees with deferred vested balances in the company’s pension plan the option to take a lump-sum payment, or an annuity payment, according to the company’s Oct. 11 Form 10-Q filing with the Securities and Exchange Commission. Those who received the offer have until Oct. 25 to take it.

Pension plan de-risking—whereby employers take actions designed to reduce or eliminate the pension plan liability on their balance sheets—has become an increasingly popular transaction in recent years. Some blame the rising premiums that must be paid to the Pension Benefit Guaranty Corporation for the moves plans are making with their defined benefit plans. Other observers cite the impending changes to the Internal Revenue Service’s mortality tables that could hike pension funding liabilities by as much as 10 percent.

Forms of de-risking include offering lump-sum payments to participants or transferring liabilities to a third-party insurer that makes benefit payments on behalf of the employer. In the past several months, United Technologies Inc., Carpenter Technology Corp., HP Inc., Briggs & Stratton Corp. and TJX Cos. have offered lump-sum payouts to current and former employees, and Scholastic Corp. announced it was closing its cash balance pension plan.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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