International Business Machines Corp. is entering a US$16 billion pension risk transfer.

The annuity transaction will see 40 per cent of IBM’s defined benefit pension plan’s liabilities transferred. The Prudential Insurance Co. of America and Metropolitan Life Insurance Co. will each insure half of the payments for 100,000 IBM plan participants and beneficiaries. Prudential will act as the lead administrator, assuming its responsibilities at the beginning of 2023.

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This is the second largest pension annuity purchase in U.S. history, according to a press release, which noted Prudential previously participated in a 10-figure annuity transfer when it acted as the administrator in a US$29 billion transaction with General Motors Co. in 2012.

The Canada annuities market has yet to see a 10-figure purchase, though the number of nine-figure transactions has increased in recent years. The IBM’s one-off transaction is more than twice the volume of the annual Canadian pension risk transfer market, which saw total sales of $7.7 billion in 2021, according to Eckler Ltd.

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