Navigating Pension Risk Transfer Challenges and Claims: Recent Cases, Article III Standing, Fiduciary Standards, and More

A slew of cases involving claims against pension risk transfer transactions have been developing over the past year. Plaintiffs claim that plan fiduciaries breached their fiduciary duties to plan participants by electing to transfer pension liabilities to an annuity provider alleging that such transactions were not the safest or in the best interest of the plan. ERISA counsel must recognize the impact of recent cases on pension risk transfer transactions and ensure compliance with ERISA.

In a defined benefit pension plan, participants are eligible to receive a fixed payment of benefits upon retirement based on a formula set out in the plan documents. While plan participants have rights to the accrued value of the benefits, the plan sponsor bears all investment risks and must cover any losses. As a result, plan sponsors may engage in pension risk transfer transactions.

A pension risk transfer involves the purchase of an annuity contract from an insurer to manage liability and investment risk. The insurer then becomes obligated to pay the benefits to plan participants under the same terms as stated in the pension plan. These transactions are considered to be a transfer of assets from the plan to the insurers.

Recently, cases have been filed where plaintiffs allege that the plan sponsor and fiduciaries caused them harm by removing their benefits from an ERISA plan. However, two district court opinions have reached opposite conclusions on Article III standing to challenge pension risk transfers, adding a level of confusion regarding such claims.

Listen as our panel discusses the anatomy of de-risking transactions, Article III standing and key issues, fiduciary standards under ERISA when selecting an annuity provider, litigation risks, and managing claims.

I. Anatomy of pension risk transfer transactions

II. Fiduciary standards under ERISA

III. Recent cases

IV. Minimizing litigation risk and claims

The panel will discuss these and other key issues:

• What are the key considerations in structuring de-risking transactions?
• What are the key components of plaintiffs' arguments in recent class actions regarding pension risk transfer transactions?
• What are the fiduciary duties under ERISA?
• What are the key issues raised regarding Article III standing?
• How can you minimize litigation risk and claims?