Federal Judge Allows Bristol-Myers Pension Risk Transfer Lawsuit to Proceed

A federal judge has allowed a pension risk transfer (PRT) lawsuit against Bristol-Myers Squibb Co. to proceed, finding that former employees provided sufficient evidence of substantial risk to their retirement benefits. The case centers on Bristol-Myers Squibb’s 2019 transfer of $2.6 billion in pension obligations to Athene Annuity and Life Co., a private insurer. The plaintiffs, former employees, allege violations of fiduciary duties under the Employee Retirement Income Security Act (ERISA), arguing that the transfer exposed retirees to the risk of insurer default and prioritized corporate surplus over pension security.

U.S. District Judge Margaret M. Garnett rejected the defense's claim that there was no recognizable injury, ruling that the complaint plausibly alleged a significant risk due to Athene's financial profile, which includes thin capital reserves and connections to Apollo Global Management. This ruling sustains the core claims alleging breaches of ERISA fiduciary duties of loyalty and prudence despite the dismissal of some other counts.

The lawsuit implicates Bristol-Myers Squibb’s pension and management committees and investment advisor State Street Global Advisors, alleging potential conflicts of interest and imprudent decision-making in selecting Athene as the annuity provider. Industry groups have sought dismissal of this and similar lawsuits, reflecting ongoing legal scrutiny over PRT transactions involving Athene.

Notably, courts in similar PRT disputes involving Athene, such as cases related to General Electric and Alcoa Corp., have dismissed claims due to plaintiffs’ lack of standing or insufficient evidence that benefits were diminished by the risk transfer. Athene has publicly characterized these legal actions as unfounded.

The Bristol-Myers case highlights growing regulatory and litigation challenges in the PRT market, emphasizing fiduciary compliance, transparency, and risk assessment when transferring pension liabilities to private insurers. The outcome may influence how companies and advisors structure future pension risk transfers and manage associated fiduciary exposures.

Legal representation in the Bristol-Myers case includes prominent firms for both plaintiffs and defendants, underscoring the high stakes for pension plan sponsors, insurers, and advisors in ERISA fiduciary duty litigation. This case remains a key precedent for evaluating ERISA compliance and risk management practices in pension risk transfer arrangements.