Philips to Transfer U.K. Defined-Benefit Pension Plan to Insurer

By Maarten van Tartwijk

AMSTERDAM--Royal Philips NV (PHIA.AE) said Thursday it reached a deal to transfer its defined-benefit pension plan in the U.K. to a pension buyout specialist, a move that will result in a charge hundreds of million euros in the fourth quarter.

The Dutch electronics group said the trustees of its U.K. pension fund reached a deal to buy a group annuity contract from the U.K.'s Pension Insurance Corp., in a deal that will transfer GBP2.6 billion ($4 billion) in defined-benefit obligations to the insurer.

Philips said it expects to make a final contribution to the pension plan of around GBP225 million as part of the deal, resulting in a pretax charge of around EUR314 million ($341 million) in the fourth quarter.

Philips said the transaction will reduce its total defined-benefit obligations by EUR3.9 billion to around EUR4.5 billion, as it seeks to shift away from offering relatively expensive guaranteed retirement benefits. Last month, the Dutch company reached a similar deal in the U.S. by transferring its defined-pension obligations for around 17,000 former employees to three insurance companies.

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November 05, 2015 03:35 ET (08:35 GMT)

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