Judge tosses a pension risk transfer lawsuit filed by ex-AT&T employees

A Massachusetts judge accepted a recommendation Friday to dismiss a consolidated pension risk transfer complaint filed against AT&T Inc. and State Street Global Advisors last year.

The dismissal is based on the complaint’s failure to state a claim for breach of fiduciary duty.

The consolidated case dates to March 2024 and two class action complaints filed against AT&T and State Street in the U.S. District Court for the District of Massachusetts. Plaintiffs alleged that AT&T’s selection of Athene Annuity and Life. Co. to take over retirement plan’s liabilities in an $8.05 billion pension risk transfer endangered AT&T’s 96,000 retirees. They further claimed that State Street, AT&T’s independent fiduciary, stood to benefit.

In February, District Judge Nathanial Gorton referred the case to Magistrate Judge Paul Levenson for a report and recommendation.

Citing a Supreme Court precedent, "[t]he Magistrate Judge found that plaintiffs must show that 'a prudent fiduciary in the defendant's position could not have concluded that' Athene was a suitable annuity provider," Gorton wrote.

Levenson cited Thole v. US Bank, which found no standing for defined benefit plan participants for a breach of fiduciary duty because the breach did not cause participants to lose any benefits.

'Entirely without merit'

The decision is dated to Sept. 30, but was filed with the court on Friday. It is the third significant PRT decision handed down in the past two weeks, with PRT supporters winning two and losing one.

"The District Judge adopting the report and recommendation and dismissing all claims challenging AT&T’s pension risk transfer affirms what we have said along: the claims asserted in these PRT industry cases are frivolous, entirely without merit, and driven by predatory trial lawyers looking for a payday at the expense of retirees," Athene said through a spokesperson.

In the lawsuits, ex-AT&T employees stressed their reliance on the company retirement plan.

"Although AT&T is worth more than $100 billion, and is the world’s fourth-largest telecommunications company, the company decided to fatten its wallet by dispensing over $8 billion of pension benefits to [Athene]," the lawsuit says, "a private-equity-controlled insurance company that is dependent on its Bermuda-based subsidiary and which has an asset base far riskier than AT&T’s and traditional annuity providers."

The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most private-sector retirement and health plans. Plaintiffs and the Pension Rights Center claim that ERISA requires plan sponsors to select "the safest possible annuity" when making pension risk transfer deals.

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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.