Baxter announces amendments to pension plan
In a regulatory filing, Baxter said that on January 1, the Administrative Committee of the Compensation Committee of the Board of Directors approved an amendment to reorganize the Baxter International Inc. and Subsidiaries Pension Plan. Specifically, effective January 1, 2018, the amendment spun off the assets and liabilities of the U.S. Pension Plan attributable to current Company employees to a new Company plan. The assets and liabilities under the U.S. Pension Plan attributable to retired and former Company employees under the U.S. Pension Plan remained with that plan, after giving effect to the spin-off. The Active Plan, the Inactive Plan and the Baxter International Inc. and Subsidiaries Supplemental Pension Plan were further amended on January 5, 2018 to cease the accruals of additional benefits thereunder effective December 31, 2022. As a result, years of additional service earned and eligible compensation received after December 31, 2022 will not be included in the determination of the benefits payable under the Active Plan, the Inactive Plan or the Supplemental Pension Plan. There are no anticipated changes to the benefits eligible to be earned under any plan until January 1, 2023. The Inactive Plan and the Supplemental Pension Plan were further amended on January 5, 2018 to provide transition benefits for a limited number of former Company employees who are accruing disability pension benefits on January 5, 2018 and will not yet be 65 years of age on December 31, 2022. Those individuals will be credited with the service through age 65 that they would have received had the Freeze not occurred for purposes of determining their pension benefits. The Company's obligations under the U.S. Pension Plan and the Supplemental Pension Plan represented approximately 40% of the Company's long-term financial obligations (excluding the fair value of net assets already contributed to the plans) as of September 30, 2017 and constituted the Company's largest financial obligation as of that date. After giving effect to contributions of $115 million to the U.S. Pension Plan in the fourth quarter of 2017 and the Freeze, the Company expects that the U.S. Pension Plan was nearly fully funded as of December 31, 2017. The Company has decided to make these changes, consistent with actions previously taken by many Company peers, in the interest of minimizing the financial impact of changes in the value of the Company's pension investments. Estimated impacts of these actions will be included in the Company's 2018 financial guidance, to be provided on the Company's fourth quarter 2017 earnings call on February 1, 2018.