The Hartford said it will transfer $1.6 billion of its pension liabilities to Prudential Financial, affecting current and future benefits for about 16,000 former employees.

Plans call for having the company’s pension plan purchase a group annuity plan to accomplish the transfer, which amounts to 29 percent of The Hartford’s $5.6 billion in U.S. qualified pension plan liabilities.

The affected employees amount to about 38 percent of The Hartford’s U.S. pension plan participants being shifted to Prudential as of June 30. The Hartford said the transaction won’t involve making any changes to anyone’s pension benefits.

Marty Gervasi, The Hartford’s chief human resources officer, said it was important that former employees had their pension benefits preserved even as the insurer reduced its long-term pension obligations.

“We are grateful for the contributions The Hartford’s former employees have made to the company, and the provider selected is a highly-rated, experienced retirement benefits provider in the industry,” Gervasi said in prepared remarks.

Reducing The Hartford’s benefit obligations will incur some costs. The insurer said it will recognize a $485 million, after-tax pension settlement charge to net income in the 2017 second quarter. As well, there will be a reduction to stockholder’s equity of about $140 million, or $0.37 per diluted share. Based on March 31, 2017 shares outstanding.

Additionally, The Hartford plans to contribute about $300 million by the end of 2017 to its pension plan, in order to maintain its pre-transaction-funded status.

Former employees being transferred to Prudential will receive initial notice from The Hartford by the end of July, and more details from Prudential by mid-October. Plans call for participants to continue to receive their benefits from The Hartford’s pension plan until Nov. 1, 2017, after which the transfer to Prudential takes place.

In 2014, The Hartford made an earlier attempt to reduce its retirement obligations by offering voluntary lump-sum payments to about 13,500 workers who left the company but hadn’t yet begun receiving pension payments. By accepting the payments, those former employees gave up their pensions.

Source: The Hartford