Defined Benefit Risk Transfer

On March 11, 2024, a group of plaintiffs filed a class action lawsuit (Piercy et al. v. AT&T Inc. et al.) against AT&T and State Street Global Advisors, in connection with the transfer to Athene of benefit obligations of over $8 billion for approximately 96,000 participants in the AT&T Pension Benefit Plan. State Street was an advisor on the transaction. The lawsuit represents the first major challenge to a risk transfer of defined benefit plan obligations to a “private equity-backed” insurer. It alleges that, in selecting Athene for this risk transfer, defendants breached their ERISA fiduciary duties of loyalty and prudence and, under DOL Interpretive Bulletin 95-1, their obligation to select the “safest available annuity.” Similar lawsuits focused on risk transfer have been filed against AT&T and Lockheed.

Sources:

https://www.classaction.org/media/piercy-et-al-v-atandt-inc-et-al.pdf

https://www.govinfo.gov/content/pkg/CFR-2016-title29-vol9/pdf/CFR-2016-title29-vol9-sec2509-95-1.pdf

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. The material presented was created by RPAG. Securities, investment advisory, and financial planning services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC (www.sipc.com). Supervisory Office: 16 Campus Blvd, Newtown Square, PA 19073. Cadence Financial Management, LLC is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies. ACR# 6743430 07/24