monthly pension payments for current retirees in the US to insurance
The annuity purchase is expected to reduce AkzoNobel's US pension
obligations by approximately $655 million, or 65 percent, of the total
US pension plan. In recognition of the premium payable to MetLife, and
in order to maintain its pre-transaction funded status, AkzoNobel has
paid a contribution to the pension plan of $170 million.
"Part of our strategy is to de-risk pension liabilities over time,"
explained AkzoNobel CFO Keith Nichols. "This transaction will improve
the company's financial health by reducing the risk of a significant
unexpected business expense due to the volatile nature of maintaining a
defined benefit pension. At the same time, this allows AkzoNobel to
focus on its core businesses and serving its customers."
The annuity purchase will cover around 9,400 US retirees and
beneficiaries who retired prior to October 2013. The payment
administration for the pension benefits is expected to transfer to
MetLife by the end of Q1 2014.
During Q4 2012 and Q3 2013, AkzoNobel offered eligible former US
employees a lump sum payment option as a replacement for a future
pension benefit under the pension plan. More than 5,700 former
employees elected for the lump sum payment - which already reduced the
total pension obligation by $180 million.
After the lump sum payment and annuity purchase, AkzoNobel's US pension
obligations will have reduced by $835 million to approximately $355
AkzoNobel is a leading global paints and coatings company and a major
producer of specialty chemicals. We supply industries and consumers
worldwide with innovative products and are passionate about developing
sustainable answers for our customers. Our portfolio includes
well-known brands such as Dulux, Sikkens, International and Eka.
Headquartered in Amsterdam, the Netherlands, we are consistently ranked
as one of the leaders in the area of sustainability. With operations in
more than 80 countries, our 50,000 people around the world are
committed to delivering leading products and technologies to meet the
growing demands of our fast-changing world.