JCPenney Offloads $2.8 Billion in Pension Liabilities

JCPenney has finished a transfer of pension possibility to annuities service provider Athene Holdings that assures the bankrupt retailer’s retired staff will proceed to get their rewards.

Underneath the terms of the offer, JCPenney transferred $two.eight billion in pension obligations for approximately 30,000 individuals in its pension strategy to Athene, which agreed to supply annuity rewards to these individuals.

The offer completes the termination of JCPenney’s strategy as it prepares to arise from Chapter 11 personal bankruptcy.

“Rather than experience reward reductions amid the company’s restructuring action, the retirees lined by this transaction can be assured they will get the similar pension reward, on the similar plan, as what they at present get, or predicted to get in the long term,” Sean Brennan, EVP of pension possibility transfer and stream reinsurance at Athene, stated in a information release.

As Reuters reviews, Apollo Worldwide Administration, the personal equity firm that controls Athene, “is trying to find to revenue by earning a greater return on investing the [JCPenney] pension property than its payouts to the retirees will be.”

JC Penney filed for personal bankruptcy in May well 2020 soon after the COVID-19 pandemic forced it to briefly near its then virtually 850 retailers. The Pension Profit Warranty Company took obligation for the pension strategy in November but also authorized the retailer to check out choices that would keep away from cuts to retiree rewards.

According to November PBGC estimates, the strategy was ninety two{ae9868201ea352e02dded42c9f03788806ac4deebecf3e725332939dc9b357ad} funded with $3.3 billion in property and $3.six billion in reward liabilities. The company’s most the latest 10-K submitting in January 2020 suggests that the strategy experienced $3.5 billion in property and $3.two billion in liabilities and was one hundred twenty{ae9868201ea352e02dded42c9f03788806ac4deebecf3e725332939dc9b357ad} funded.

Athene’s wholly-owned subsidiaries Athene Annuity and Lifetime Business and Athene Annuity & Lifetime Assurance Business of New York have each individual dedicated to issuing a group annuity deal to JCPenney and unique annuity certificates to qualified individuals.

“We required to uncover a greater remedy for our pension strategy individuals than [a] distressed termination,” stated Steve Whaley, chair of the JCPenney’s Profit Plan Financial commitment Committee.

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