IBM said it would take a one-time pretax charge of $5.9 billion in the third quarter as a result of an agreement with two life insurers.
About 100,000 participants and their beneficiaries will benefit from the transfer of $16 billion in pension obligations from two companies. The company said Tuesday in a regulatory filing that the annuities were funded by the assets of the pension plan.
There is a pension risk transfer. IBM bought annuities from the insurance companies and made them responsible for paying the pension obligations. In the last few years, insurers have been looking for ways to accumulate assets for investment. The deals are popular because employers are looking to get rid of long term obligations.
IBM said it has taken actions over the last several years to reduce the risk profile of its worldwide retirement-related plans.
The charge won't affect IBM's operating profit or free cash flow in the third quarter or full year.
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