Government and Employers Align in ERISA Pension Risk Transfer Litigation

The federal government, through the solicitor general and the U.S. Department of Labor (DOL), is increasingly supporting employers in ERISA-related litigation, particularly in cases involving pension risk transfers (PRTs). The ongoing case of Konya v. Lockheed Martin Corp. before the U.S. 4th Circuit Court of Appeals challenges the legality of a PRT transaction. A favorable ruling for Lockheed Martin could significantly influence the growing PRT market, especially given the record rise in single-premium buy-in sales for pension liabilities, which reached $4.3 billion in Q3 according to LIMRA. The Department of Labor has requested additional time to consider filing an amicus brief in support of Lockheed Martin, signaling a potential alignment with employers by emphasizing its authority in enforcing ERISA and maintaining regulatory uniformity across states. Several states, including Iowa and Texas, submitted amicus briefs defending state insurance regulation over PRT transactions, arguing that these transfers are secure and overseen by well-established regulatory frameworks without documented losses to pensioners. Major employer advocacy groups have also backed Lockheed Martin, warning that speculative litigation threatens lawful pension management without showing evidence of participant harm. The legal dispute centers on the issue of standing—whether retirees can sue when their benefits remain unchanged post-PRT. Past rulings and briefs suggest retirees may lack standing, but ongoing discovery in lower courts keeps the case active. Retiree groups express concern about diminished federal protections once pensions transfer to insurer-backed annuities, noting that state guaranty limits offer weaker financial safeguards compared to ERISA’s guarantees. This divergence highlights ongoing tension between regulatory interpretations and retiree security perceptions in the evolving pension risk transfer marketplace.