VANCOUVER (miningweekly.com) – US-based aluminium producer Alcoa has signed agreements with three insurers to transfer about $555-million in Canadian pension obligations and related assets of its defined benefit pension plans in Canada.
The Pittsburgh, Pennsylvania-based company advised that it expects to book a noncash settlement charge of about $175-million during the second quarter as a result of the transactions.
The move is expected to strengthen Alcoa’s balance sheet and reduce its risk to volatility from its pension plan obligations.
The transfer of obligations to Sun Life Financial, Desjardins Financial Security Life Assurance Company and Industrial Alliance Insurance and Financial Services affects about 2 100 retirees or beneficiaries and will be completed later this month, the company said in a statement on Tuesday. The insurers will start making benefit payments to the affected plan participants by July and Alcoa said the timing and amounts of retirees’ current monthly benefit payments will not change.
As part of the contracts, Alcoa will contribute about $95-million in mid-April 2018 to facilitate the annuity transaction.
Earlier in January, Alcoa announced a freeze of US and Canadian salaried defined benefit pension plans, effective January 1, 2021.
The transactions are part of the company’s ongoing strategic priorities to reduce complexity, increase shareholder returns and strengthen the balance sheet.