(Reuters) - J.C. Penney Co Inc said Prudential Insurance Co of America will take over administration and benefit payments to 43,000 retirees as part of a plan that will reduce its $5 billion U.S. pension obligation by up to 35 percent.
The department store operator said about 12,000 retirees and surviving beneficiaries of the company’s qualified pension plan had elected to receive lump-sum payments.
In addition, about 1,900 former employees who have deferred vested benefits elected to receive lump-sums.
The payments, to be made in November, will result in a non-cash pension settlement charge, with the amount to be determined after the close of the transactions.
“Although the plan has been fully funded since 2009, owing to successful execution of the company’s asset de-risking strategy, market conditions were favorable to reduce the obligation now,” the company said.
Reporting by Sruthi Ramakrishnan in Bengaluru, Editing by Ted Kerr