Summary by Moomoo AI
On September 5, 2024, IBM Corp entered into a commitment agreement with State Street Global Advisors Trust Company, acting as the independent fiduciary of the IBM Personal Pension Plan, to purchase a group annuity contract from The Prudential Insurance Company of America. This contract, which closed on September 11, 2024, transfers approximately $6 billion of the Plan's defined benefit pension obligations for certain benefits paid prior to 2016. The agreement affects around 32,000 Plan participants and beneficiaries, ensuring that Prudential will be responsible for their pension payments starting January 1, 2025. The transaction, funded by the Plan's assets, requires no cash contribution from IBM and will not alter the benefits for the transferred participants. However, IBM anticipates a one-time non-cash pre-tax pension settlement charge of about $2.7 billion ($2.0 billion net of tax) in Q3 of 2024, which was not previously accounted for in the GAAP forward-looking information. This charge is expected to have no impact on IBM's operating profit or free cash flow for the third quarter or the full year of 2024.
