(Reuters) – IBM (IBM) said on Wednesday it expects a pre-tax charge of nearly $2.7 billion in the third quarter related to a transaction that will transfer a portion of its pension liabilities to a unit of Prudential Financial.
Under the agreement, nearly $6 billion of IBM’s pension liabilities will be transferred to Prudential Insurance Company of America.
A defined benefit pension plan guarantees a specific benefit to employees upon retirement, which is fully funded by the employer, without the employee having to make any contribution.
IBM said the one-time non-cash charge will not impact adjusted operating profit or free cash flow in the third quarter or full year 2024.
Under the agreement, Prudential will assume full responsibility for paying pension benefits to nearly 32,000 participants enrolled in IBM’s plan beginning next year.
(Reporting by Juby Babu in Mexico City and Harshita Mary Varghese in Bengaluru; Editing by Alan Barona)
