Getty Trust Seeks an Insurer to Run Its Pension Plan Worth $336 Million
(Bloomberg) -- The J. Paul Getty Trust is seeking an insurance company to take over responsibility for its pension plan, which has $336 million in net assets and 1,738 participants.
The Los Angeles-based nonprofit sent a letter to retirees in October telling them it would continue paying out plan benefits even as it searched for an insurer to handle payments and run the plan going forward, a legal process known as “plan termination,” according to documents seen by Bloomberg. The process began in April and is slated for completion in late spring, with advisory firm Mercer consulting on the transition.
The nonprofit, which runs the Getty Center and Getty Villa museums in the Los Angeles area, was created with funds provided by oil baron J. Paul Getty, who died in 1976 and whose personal estate largely passed to the trust in 1982. The trust calls itself the “world’s largest cultural and philanthropic institution dedicated to the visual arts.” The nonprofit’s endowment totaled $9.2 billion as of June 30, according to an audited financial statement.
“The Getty pension is fully funded, and we are confident our retirees will be well served in the future,” spokesperson Lisa Lapin said in an emailed statement.
Once the transaction is complete, plan participants will lose protections offered by the Pension Benefit Guaranty Corp., a U.S. government agency. Getty retirees have criticized the termination decision, saying the loss of such oversight would be particularly risky amid the uncertainty caused by the pandemic.
“While we disagree with your decision and feel in some ways that it is an unworthy betrayal of retirees’ years of service to the Getty, and we would like to see it reversed, we acknowledge that the Getty has the legal right to request termination of the pension plan,” a group of retirees wrote in a Nov. 1 letter to James Cuno, president and chief executive officer of the trust. “That said, we do not understand the rationale for this decision especially during the Covid-19 pandemic and at a time when our country’s political and social systems are chaotic, causing real uncertainty about the future.”
Beyond just the Getty, retiree advocates have spoken out against deals that hand insurance companies responsibility for administering pension-plan benefits because of the loss of PBGC protections and ties between insurance companies involved in the deals and private equity firms.
Despite the controversy, there were $25.7 billion in transfer sales last year through the third quarter, according to the Secure Retirement Institute. Mark Paracer, assistant research director at the institute, has said the pace of deals may have pushed 2021 past the record $36 billion set in 2012.
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