A second lawsuit was filed last week by former pension plan participants against AT&T and its independent fiduciary, State Street Global Advisors Trust Co., challenging the risk involved in an $8.05 billion pension risk transfer with Athene Annuity and Life Co. in May 2023.
The case was filed just a few days after four other former participants, represented by law firm Libby Hoopes Brooks & Mulvey PC, sued the telecom company because of the same agreement. The PRT involved AT&T offloading 96,000 of its plan participants to Athene. The lawsuit accused Athene of being a “risky new insurance company” dependent on its Bermuda-based subsidiary and with an asset base “far riskier than AT&T’s.”
Three additional former participants of the AT&T Pension Benefit Plan—Catherine Schloss, Patricia Tate-Jackson and Darlene Wilson, represented by attorney Jerome Schlichter of Schlichter Bogard LLP—filed a complaint against AT&T and State Street, similarly accusing the companies of violating their ERISA obligation to obtain the “safest annuity available.”
The retirees claim that in selecting Athene, AT&T and State Street “favored their own interests over those of the plan participants,” arguing that Athene structured its annuities to generate higher expected returns at a cost to retirees and their beneficiaries.
As did the prior lawsuit, the retirees’ complaint cites a 2022 analysis from NISA Investment Advisors that ranked Athene as a “questionable candidate” as an annuity provider due to credit risk.
“By transferring [the retirees’] pension benefits to Athene, [AT&T and State Street] put retirees’ and their beneficiaries’ future retirement benefits at substantial risk of default—a risk for which they were not compensated, and which devalued their pensions,” the complaint states.
The retirees are seeking to obtain relief for AT&T’s ERISA violations, including “disgorgement of the sums involved in the improper transactions” to ensure the participants of their full retirement benefits.
A spokesperson for AT&T told CIO sister publication PLANSPONSOR, “We deny the allegations, and we will defend ourselves in court.”
Related Stories:
AT&T Sued Over 2023 Pension Annuitization With Athene
Verizon Announces $5.9B Pension Transfer
Pension Risk Transfers: What to Watch Out For
Tags: AT&T, Athene Annuity and Life, ERISA, Litigation, NISA Investment Advisors, Pension Risk Transfer