There is a developing trend of legal action against pension providers concerning pension transfers. Let's break down the key points:

• The Issue: Lawsuits are emerging against companies like AT&T and Lockheed Martin for transferring pension liabilities to Athene, a private equity-backed insurer.

• The Accusation: Plaintiffs allege that:

  • Athene prioritizes high-risk investments for higher returns, potentially jeopardizing retirees' benefits.

  • They charge lower fees to win contracts but may not be as financially secure as traditional insurers.

  • A significant portion of Athene's PRT liabilities are reinsured offshore, raising concerns about transparency and stability.

• The Concern: Regulators and some legal arguments focus on whether providers are giving adequate guidance on the risks involved in giving up the security of a DB pension.

• The Legal Action: We're seeing lawsuits against providers, alleging they breached their fiduciary duty by not prioritizing the safety of the pension holder's retirement income by:

  • Not properly explaining the risks of transferring out of a DB plan.

  • Choosing riskier options for transferring the pension benefits.

• The Defense: Lockheed Martin has declined to comment on pending litigation.

• The Regulation: The Department of Labor's Interpretative Bulletin 95-1 (IB 95-1) outlines criteria for selecting "safest available annuities" for PRTs. These criteria include the insurer's financial strength, investment strategy, and guarantee structures. The DOL is considering revisions to IB 95-1, which could impact future PRT practices.

Additional Points:

• The lawsuits highlight the growing scrutiny of private equity ownership in the insurance industry, particularly regarding risk management and long-term stability for policyholders.

• The legal arguments center on whether companies like AT&T and Lockheed Martin breached their fiduciary duty by prioritizing lower costs over the safety of pension benefits.

• The outcome of these lawsuits could set precedents for future PRTs and influence the DOL's final amendments to IB 95-1.

Here's what we know about the second lawsuit filed against AT&T's 2023 Pension Risk Transfer (PRT) deal with Athene:

• Focus of the Lawsuit: Similar to the first lawsuit, this one again challenges the selection of Athene as the insurer for the PRT deal.

• Plaintiffs: Three former participants of the AT&T Pension Benefit Plan – Catherine Schloss, Patricia Tate-Jackson, and Darlene Wilson – are suing AT&T and State Street Global Advisors (the plan's independent fiduciary) on behalf of themselves and potentially other affected participants.

• Accusations: The lawsuit alleges that AT&T and State Street violated their obligations under the Employee Retirement Income Security Act (ERISA) by not securing the "safest annuity available" for plan participants. They argue that Athene is a risky insurer due to:

  • Being a "risky new insurance company."

  • Dependence on a Bermuda-based subsidiary.

  • Having an asset base "far riskier than AT&T's."

• Desired Outcome: The lawsuit likely seeks to:

  • Force AT&T to revisit the PRT deal and potentially secure a different insurer.

  • Obtain compensation for any losses suffered by plan participants due to the alleged risky transfer.

Additional Points:

• This lawsuit was filed just days after another group of former participants sued AT&T over the same PRT deal.

• The selection of Athene and the potential risks associated with it seem to be the central arguments in both lawsuits.

Further Resources:

• You can find more details about the lawsuit in news articles like the one you mentioned: "2nd Suit Filed Against AT&T's 2023 PRT Deal" AI-CIO website: link to article without URL.

• To understand ERISA regulations, you can visit the Department of Labor's website: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/erisa

It's important to note that these are just allegations in a lawsuit, and the court will ultimately decide the merits of the case.