NY Federal Judge Dismisses GE Pension Risk Transfer Lawsuit

A New York federal judge dismissed a pension risk transfer (PRT) lawsuit filed by former General Electric employees challenging the company's decision to transfer $1.7 billion in pension obligations to Athene Annuity Life Co. The plaintiffs alleged that the transfer violated the Employee Retirement Income Security Act (ERISA) and diminished their benefits, but the court found no evidence of economic injury or reduced benefits. This ruling reinforces the legality of PRT deals under ERISA, where companies outsource pension liabilities to insurers as a risk management strategy.

The lawsuit claimed fiduciary duty breaches by GE and its plan administrators, but the judge rejected these allegations, noting no wrongful benefits were received by those facilitating the transaction. This decision offers important clarity and support for insurers and employers engaged in multi-billion-dollar PRT transactions, which are becoming more common as companies seek to reduce pension risks and balance sheet liabilities.

Industry stakeholders including the ERISA Industry Committee (ERIC) submitted amicus briefs supporting the transfer's legality, emphasizing that annuities often provide more secure alternatives to employer-managed pension plans. In contrast, the Pension Rights Center raised concerns about the risks associated with moving retirees into an annuity structure. The court's comprehensive ruling addressed these claims and dismissed the lawsuit for lack of subject-matter jurisdiction.

This outcome signals judicial reluctance to entertain lawsuits challenging PRT arrangements absent clear evidence of harm or breach of fiduciary duty. As the pension risk transfer market continues to expand, this decision may discourage similar legal challenges and provide greater regulatory and market confidence for companies and insurers deploying such strategies. Athene, a prominent annuity provider, views the ruling as a validation of their role in the PRT space.

Overall, the dismissal underscores the complex regulatory environment governing pension plan de-risking and affirms the legal pathways companies can pursue to transfer pension liabilities. It also highlights evolving judicial perspectives on pension benefit protections and fiduciary accountability in the context of corporate pension liability management.