IBM transfers $16 billion in pension obligation to Prudential, MetLife

International Business Machines Corp.
IBM,
-2.61%
said late Tuesday it will book a charge of about $5.9 billion in the third quarter to offload pension risk. The Armonk, NY-based tech company said in a Securities and Exchange Commission filing it is transferring about $16 billion of pension obligations, for benefits that began to be paid before 2016, through group annuity contracts to Prudential Financial Inc.
PRU,
-3.98%
and MetLife Inc.
MET,
-2.99%
The contracts cover 100,000 IBM participants and beneficiaries. Net of tax, the charge for the transfer will be $4.4 billion, IBM said, and will not affect the company’s adjusted profit or free cash flow. Shares of IBM were little changed after hours, following a 2.6% decline in the regular session to close at $127.25.