PPG Industries, the Pittsburgh-based coatings, specialty materials, and glass products manufacturer, in April 2016 announced that they will begin buying group annuity contracts in order to provide pension benefits to 13,000+ retirees and survivors in the U.S.A.

PPG joins such large corporations as Kimberly-Clark Corp., Verizon, and General Motors, who have adopted this de-risking process in order to reduce premium payments to the Pension Benefit Guaranty Corp (PBGC). PBGC premiums are based on the number of participants a company has on its pension rolls, while plan sponsors are additionally liable for a “variable-rate premium” if their plans are underfunded. By purchasing group annuities, PPG and others have shifted these pension plan liabilities to insurers, which has the benefit of keeping companies shielded from higher-than-expected contributions that are triggered by lower investment returns, declining interest rates, or a boost in the value of plan liabilities.

The move was undertaken in an attempt to reduce pension liability risks, and PPG has earmarked $1.6 billion in pension plan obligations for salaried and non-union retirees and their survivors who began receiving benefits in April, 2016. These obligations will be transferred to MassMutual (Massachusetts Mutual Life) and MetLife. All other participants will remain under the company’s current pension plans. PPG had $5.35 billion in liabilities and $4.63 billion in assets in its pension plans as of the end of 2016 according to its 10-K report.