Sonoco to terminate U.S. defined benefit pension plan for inactive participants
Sonoco announced its Board of Directors has approved the termination of the Sonoco U.S. Pension Plan for Inactive Participantseffective September 30, 2019. This action will not reduce any retirement benefits earned by the approximately 11,000 participants in the Inactive Plan. Sonoco made a contribution earlier this year, bringing the funded level of the Inactive Plan to 97%, and the remaining funding of the Inactive Plan is expected to occur by the end of 2020. In 2020, after receiving approval from the IRS and the PBGC, and following completion of the limited lump-sum offering, the company will make an additional cash contribution in order to fully fund the Inactive Plan on a plan termination basis, followed by the purchase of annuity contracts to transfer its remaining liabilities under the Inactive Plan. These additional cash contributions are expected to range between $75M and $125M. However, the actual amount of this cash contribution requirement will depend upon the nature and timing of participant settlements, as well as prevailing market conditions. In addition, the company expects to recognize non-cash pension settlement charges totaling between $525 million and $575M upon settlement of the obligations of the Inactive Plan. The termination of the Inactive Plan will apply to participants who have separated service from Sonoco and to nonunion active employees who no longer accrue pension benefits. There is no change in the benefit earned by the approximately 11,000 impacted participants as a result of these actions, and the Company will continue to manage the Sonoco Pension Plan, comprised of approximately 600 active participants who continue to earn benefits in accordance with a flat-dollar multiplier formula.