Eastman Kodak Co. has announced plans to disband its internal team responsible for managing the firm’s $4 billion pension investments. Sources familiar with the matter reveal that the former titan of the photography industry is transitioning the oversight of its pension program to NEPC, a Boston-based investment consulting firm.
Transition to NEPC Oversight
The decision to outsource pension investment management comes amid Kodak’s shift towards manufacturing advanced materials and chemicals, diversifying its business focus. The move reflects a strategic realignment within the company, aiming to streamline operations and optimize resource allocation.
Overfunded Pension System
According to insiders, the driving force behind this transition is Kodak’s overfunded pension system. The pension’s surplus has experienced remarkable growth, ballooning from just over $100 million in 2019 to approximately $1.2 billion by the end of 2022. This substantial surplus, exceeding half of Kodak’s assets, underscores the need for a revised approach to pension fund management.
The surge in the pension’s surplus can be attributed to the impact of rising interest rates. As interest rates climbed, the present value of Kodak’s future pension liabilities decreased, benefiting the more than 37,000 participants enrolled in the long-standing program. As of the latest disclosure in 2022, the pension plans boasted assets totaling around $4.2 billion.
Leadership and Oversight
Leading the pension team at Kodak is Chief Investment Officer Thomas Mucha, who oversees assets exceeding $7 billion supporting current and former employees’ retirement. Mucha’s leadership has been pivotal in navigating Kodak’s pension investments through dynamic market conditions.
Response from Involved Parties
When approached for comments, a representative from NEPC refrained from providing specific details, citing client confidentiality. Similarly, Eastman Kodak has not issued an immediate response to inquiries regarding the outsourcing of pension investment management.
In conclusion, Kodak’s decision to entrust NEPC with the management of its pension investments underscores the company’s commitment to optimizing financial operations and capitalizing on opportunities for sustained growth and stability in the evolving business landscape.
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