US aerospace and defence firm AAR CORP has terminated its pension plan and transferred all its obligations to a pair of life carriers: American National Insurance Company and American National Life Insurance Company of New York.
The deal closed on August 22 and was announced when the firm made an 8K filing with the US Securities and Exchange Commission. According to the filing, the AAR Corp Retirement Plan has bought a single premium group annuity contract that transfers all the pension scheme’s obligations to the two insurers.
The deal covers 900 plan members, plus their beneficiaries, of the Illinois-based firm and will come into effect on November 1 this year, after which both insurers will take full responsibility for all aspects of the pension payments.
AAR CORP said that it expected to recognise a non-cash pre-tax pension settlement charge of roughly $25m in the first quarter of fiscal 2024. The exact figures will depend on the precise actuarial assumptions used.
The aviation firm also said it expected to have about $7m in surplus assets after the transaction was completed that it would use to fund one of its 401(k) retirement plans.
The AAR deal is the latest one in a year which experts predict will be a record for the US pension risk transfer (PRT) market.
Notable deals so far in 2023 include PSEG’s $1bn pensions “lift-out” with Prudential Financial and PPG’s PRT with Legal & General Retirement America and RGA.