Judge: No evidence that Athene annuities hurt retirees in PRT deals

A New York judge dismissed a pension risk transfer lawsuit filed by former employees of General Electric.

Filed in June 2024, the lawsuit challenged the company’s decision to transfer pension obligations to Athene Annuity Life Co., arguing that it was not the “safest annuity choice” in the market. Judge Glenn T. Suddaby dismissed the lawsuit for “lack of subject-matter jurisdiction.”

The ruling represents a victory for insurers and firms vying for billion-dollar PRT deals as companies look to offload hefty pension commitments. It is also a victory for Athene, a major player in that market.

"In dismissing the case, the court rejected every theory of standing as ‘without merit,’ affirming what we have said all along: these PRT industry cases are frivolous, and driven solely by predatory trial lawyers looking for a payday at the expense of retirees," an Athene spokesperson said.

Defendants Julie Bueno, Darlene Hollins, and David Bueno, filing in U.S. District Court for the Northern District of New York, alleged that General Electric Co. and related plan administrators violated the Employee Retirement Income Security Act in choosing Athene as the annuity provider for a $1.7 billion PRT deal.

The deal was announced in December 2020 and affected around 70,000 retirees receiving monthly benefits under $360, GE said.

The lawsuit is one of several filed against companies offloading their pension commitments.

'There is no suggestion'

Plaintiffs claimed that the change from an ERISA-backed plan to an Athene annuity immediately diminished the value of their benefits. But Suddaby noted that ERISA law specifically allows companies to transfer pension obligations to an annuity provider.

“[F]ar from showing a ‘classic economic injury,’ Plaintiffs fail to explain how the value of their benefits was actually diminished,” the judge wrote. “There is no suggestion that the PRT, or the transfer to Athene specifically, resulted in them being entitled to or receiving any lesser amount of benefits than they were entitled to or receiving when those benefits were administrated by [GE].”

Suddaby also rejected the plaintiffs’ claims that GE plan administrators violated their fiduciary duty. Plaintiffs cannot prove that Fiduciary Counselors, Inc., which facilitated the Athene PRT deal, received a “wrongful benefit,” the judge concluded.

The ERISA Industry Committee [ERIC] and the Pension Rights Center both filed amicus briefs in the case. The former is an industry organization that argues annuities are lawful and often provide a more secure alternative to employer-run pension plans. The PRC, on the other hand, claimed that the plaintiffs took on additional risks by being moved into an annuity structure.

“We are really pleased with the decision dismissing the complaint in Bueno v. GE," said Tom Christina, executive director of the ERIC Legal Center. "The decision is very thorough and covers all the bases. Let’s hope it signals the end of these groundless pension risk transfer cases.”

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.