Court Dismisses Lawsuit Challenging GE's $1.7B Pension Risk Transfer to Athene

A federal judge dismissed a lawsuit filed by former General Electric employees that challenged the company's $1.7 billion pension risk transfer to Athene Annuity Life Co. The plaintiffs alleged violations of the Employee Retirement Income Security Act (ERISA), asserting that Athene was not the safest annuity provider and that the transfer diminished their promised benefits. However, the court ruled that the plaintiffs lacked standing under federal law because they failed to demonstrate a concrete legal injury. The ruling noted that the plaintiffs continue to receive all their due payments and did not show any imminent risk of nonpayment.

The decision emphasized that defined benefit plan beneficiaries hold rights to vested benefits, not to the plan's assets, and loss of ERISA protections in a pension risk transfer is not considered a legal injury since such transfers are permissible under ERISA. This dismissal aligns with prior judgments on similar pension risk transfer cases, which consistently found no reduction in payments after such transfers.

The ERISA Industry Committee filed an amicus brief supporting annuities as a lawful and often secure alternative to employer-run pension plans. Conversely, the Pension Rights Center argued the plaintiffs face genuine risks in being moved to annuity structures. The case was dismissed without prejudice, leaving opportunity for refiling if plaintiffs can substantiate concrete injury.

This ruling underlines judicial deference to pension risk transfers as a compliant method for employers to manage pension liabilities, typically ensuring retirees continue to receive their vested benefits. It also reflects ongoing legal debates on plan fiduciary responsibilities and regulatory interpretations of ERISA protections amid the rise in pension risk transfers.

Legal and insurance industry observers anticipate that such decisions may reduce litigation risks for insurers and companies engaging in pension risk transfers. The case represents the judicial perspective on balancing plan termination mechanisms with protection of retiree benefits within the current regulatory framework.