JCPenney Offloads $2.8 Billion in Pension Liabilities

JCPenney has concluded a transfer of pension risk to annuities company Athene Holdings that assures the bankrupt retailer’s retired staff members will carry on to get their rewards.

Less than the conditions of the offer, JCPenney transferred $2.8 billion in pension obligations for about 30,000 members in its pension prepare to Athene, which agreed to deliver annuity rewards to those people members.

The offer completes the termination of JCPenney’s prepare as it prepares to emerge from Chapter 11 individual bankruptcy.

“Rather than encounter advantage reductions amid the company’s restructuring exercise, the retirees protected by this transaction can be self-assured they will get the similar pension advantage, on the similar schedule, as what they at this time get, or envisioned to get in the long run,” Sean Brennan, EVP of pension risk transfer and stream reinsurance at Athene, claimed in a news launch.

As Reuters reports, Apollo Worldwide Administration, the personal equity organization that controls Athene, “is seeking to income by earning a increased return on investing the [JCPenney] pension property than its payouts to the retirees will be.”

JC Penney filed for individual bankruptcy in May 2020 right after the COVID-19 pandemic forced it to quickly shut its then virtually 850 suppliers. The Pension Gain Warranty Company took responsibility for the pension prepare in November but also authorized the retailer to check out choices that would stay away from cuts to retiree rewards.

In accordance to November PBGC estimates, the prepare was ninety two% funded with $3.3 billion in property and $3.six billion in advantage liabilities. The company’s most latest ten-K submitting in January 2020 suggests that the prepare experienced $3.5 billion in property and $3.2 billion in liabilities and was one hundred twenty% funded.

Athene’s wholly-owned subsidiaries Athene Annuity and Life Business and Athene Annuity & Life Assurance Business of New York have every single dedicated to issuing a group annuity agreement to JCPenney and particular person annuity certificates to suitable members.

“We preferred to come across a improved resolution for our pension prepare members than [a] distressed termination,” claimed Steve Whaley, chair of the JCPenney’s Gain Plan Expense Committee.

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