DOL's Stance on Lockheed Martin Pension Dispute Raises Concerns

Several industry groups and former Department of Labor (DOL) officials have raised concerns about the DOL's stance in a significant legal dispute involving Lockheed Martin. The case, Konya v. Lockheed Martin Corp., centers around a pension risk transfer (PRT), with the DOL endorsing Lockheed Martin's claim that plaintiffs lack standing since they continue to receive their payments after the pension obligations were transferred to an annuity provider.

Concerns Over Fiduciary Standards

Former Employee Benefits Security Administration leaders, Phyllis Borzi and Ali Khawar, have expressed their worries through an amicus brief to the U.S. 4th Circuit Court of Appeals. They argue that the DOL's interpretation could weaken the fiduciary standards mandated by the Employee Retirement Income Security Act (ERISA), potentially reducing judicial oversight of fiduciary actions. Key organizations like AARP, Pension Rights Center, and the National Retiree Legislative Network have also filed briefs supporting the plaintiffs, emphasizing the increased risk of nonpayment posed by the $9.2 billion PRT transactions with Athene Annuity and Life Co.

Implications for Pension Risk Management

The U.S. 4th Circuit Court may influence federal court approaches to pension risk transfers—where employers shift pension obligations to third-party annuity providers. This could set a precedent for regulatory compliance requirements in similar litigation. Initially, a U.S. District Court in Maryland dismissed Lockheed Martin's motion to dismiss; however, the interlocutory appeal on the standing issue remains under review. Legal representation for Borzi and Khawar is being provided by Brown, Goldstein & Levy LLP, highlighting the importance of fiduciary responsibility and oversight in managing claims and risk management in pension transfers.