Allstate says it expects to post a 2013 fourth-quarter settlement charge of between $100 million and $125 million as a result of a remeasurement of its pension obligations.
“In conjunction with announced changes to employee pension-benefit plans, the company's third-quarter reports included a settlement charge of $49 million, after-tax, and indicated that the fourth quarter might include an additional settlement charge of a comparable or greater amount,” the company says in a statement.
Allstate notes the charges are connected to lump-sum payments to retiring employees, and says, “The value of lump sums paid to employees electing retirement in 2013 is elevated due to historically low interest rates. Voluntary retirement activity during the fourth quarter was almost five times the typical level.”
Starting in 2014, Allstate says all employees will earn future pension benefits under a new cash balance formula, which it says provides more equitable future benefits to employees.
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