3M To Transfer Around $2.5 Bln U.S. Pension Payment Obligations; Sees Charge In Q2

(RTTNews) - 3M Co. (MMM) announced Thursday that it has purchased a group annuity contract and will transfer a portion of its U.S. pension payment obligations to Metropolitan Tower Life Insurance Co., called as Met Tower Life. The U.S. pension payment obligations come under the 3M Employee Retirement Income Plan or ERIP.

As part of the deal, 3M sees an estimated non-cash pre-tax non-operating pension settlement charge of between $0.8 and $0.9 billion in the quarter ending June 30.

Under the contract, 3M will transfer around $2.5 billion of its defined benefit pension obligations and related plan assets for around 23,000 U.S. retirees and beneficiaries to Met Tower Life.

This represents approximately 60% of ERIP retiree participants. The company noted that the contract was purchased using assets from 3M's ERIP trust and no additional funding contribution was required as part of the deal.

On October 1 this year, Met Tower Life will begin paying and administering the retirement benefits of the retirees and beneficiaries included in this annuity transfer. The change will not affect the amount of individuals' monthly benefit payments, and the decision does not impact current employees.

The company plans to notify retirees and beneficiaries who are included in this annuity transfer this month.

In pre-market activity on the NYSE, 3M shares were gaining around 1.02 percent to trade at $102.24.