Weyerhaeuser, State Street Sued in PRT Lawsuit

Law firm Schlichter Bogard LLP has filed another lawsuit targeting a large employer for conducting a pension risk transfer with Athene Annuity and Life Co., arguing that the insurance provider is “risky” and has an opaque business structure.

InManeman et al. v. Weyerhaeuser Co. et al.,former employees of the Weyerhaeuser Co.—one of the world’s largest timberland companies, based in Seattle—accused the firm, as well as its annuity committee and independent fiduciary State Street Global Advisors Trust Co., of breaching its fiduciary duties under the Employee Retirement Income Security Act by not selecting the “safest annuity available” following the company’s January 2019 PRT deal with Athene.

The lawsuit was filed on December 12 in the U.S. District Court for the Western District of Washington at Seattle.

In 2019, Weyerhaeuser entered into an agreement to transfer $1.5 billion of its pension obligations to Athene, impacting about 28,500 U.S.-based retirees and their beneficiaries. According to the lawsuit, this transfer affected more than 52% of plan participants.

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As of December 31, 2018, the pension plan covered approximately 54,659 total participants and beneficiaries and held approximately $4.1 billion in assets. Athene began making pension payments to Weyerhaeuser retirees on May 1, 2019.

As with many of Schlichter’s lawsuits, the plaintiffs accused Athene of being a “highly risky private equity-controlled insurance company with a complex and opaque structure.” The lawsuit also accuses Athene of issuing annuities that generate higher expected returns and profits for Athene and its affiliates by investing in lower-quality, higher-risk assets instead of the traditional mix of quality assets to support future benefit obligations.

“Because the market devalues annuities when accounting for such risk, it is likely that Weyerhaeuser saved a substantial amount of money from selecting Athene instead of an annuity from a traditional life insurer,” the lawsuit alleges. “In transferring plaintiffs’ pension benefits to Athene, [Weyerhaeuser] put the future retirement benefits owed to Weyerhaeuser retirees and their beneficiaries at substantial risk of default.”

In addition, the complaint claims Weyerhaeuser failed to prudently discharge its fiduciary duties in monitoring State Street. While the company hired State Street as an independent fiduciary to select Athene, Weyerhaeuser maintained full responsibility because it appointed fiduciaries to monitor State Street to ensure that it carried out its fiduciary obligations, the lawsuit alleges.

State Street did not immediately respond to a request for comment.

In 2024 alone, Schlichter Bogard has represented plaintiffs in filing complaints againstGeneral Electric Co.,AT&T Inc., Lockheed Martin andAlcoa Corp., each claiming that the employers and their independent fiduciaries failed to pick the safest annuity provider available for the PRT deals when choosing Athene.

A spokesperson from Athene stated, “These complaints are entirely baseless attempts by class action attorneys to enrich themselves at the expense of retirees. Every pension group annuity participant whose benefits have been guaranteed by Athene has received and will receive their promised benefits in full. In each pension group annuity transaction for which Athene has been selected, there has been a robust review process carried out by a fiduciary and their independent advisers who are experts at assessing insurer safety. Athene operates from a position of outstanding financial strength and is a safe and secure provider of annuity benefits. We are properly reserved, and have excellent capitalization and strong credit ratings, with a recent rating upgrade to A+ by AM Best.”

Separately, the ERISA Industry Committee, an industry association that represents the employee benefits interests of large employers, last month filed an amicus brief supporting General Electric’s motion to dismiss the case involving its PRT with Athene. In its brief, ERIC argued that the plaintiffs did not identify an instance in which Athene has paid any annuity recipients under any plan less than they would have received under their ERISA-governed pension plan. ERIC also filed a brief supporting AT&T’s motion to dismiss a case involving a PRT with Athene.

To “remedy the fiduciary breaches” they allege in the Weyerhaeuser suit, the former employees are seeking the disgorgement of the sums involved with the “improper” transactions, the posting of security to assure receipt by plaintiffs and class members of their “full retirement benefits and the monetary value of the reduced market value of Athene’s annuities relative to the value of an ERISA-compliant annuity.”

The plaintiffs also requested a jury trial and, alternatively, an advisory jury.

A spokesperson at Weyerhaeuser said, “We can’t comment on specifics of pending litigation, but we don’t believe these cases have any merit and intend to defend vigorously.”

Weyerhaeuser’s legal representatives were not identified in the legal filing.

Tags: Athene Annuity & Life Company, Litigation, Pension Risk Transfer, State Street Global Advisors, Weyerhaeuser

Approximately 58% of pension funds in the U.S.—including public, corporate and multi-employer plans—reported that their funded status increased in 2024, according to a survey of pension fund professionals commissioned by Ortec Finance.

Approximately 30% of plans reported that their funding status is unchanged, while 12% said their funding status decreased this year.

While funded status is generally increasing, more than two-thirds (68%) of respondents said they will or are likely to increase contributions this year. According to Ortec Finance, of the 68% who said they are planning an increase in contributions, 10% said they will definitely increase contributions, 58% said it is likely they will do so and 22% said it might happen this year.

“When it comes to the long-term health of a pension fund, an improved funded status in one year may not carry over to the long run health of the fund,” said Richard Boyce, Ortec Finance’s managing director for North America, in a statement. “Keeping the door open to increased contributions to sustain the relative value of assets over liabilities is reasonable. There are issues to consider in order to maintain this improvement in their funded status, particularly during periods of volatility, which is why it’s important to keep clear and detailed oversight of both the assets and liabilities of a fund,” Boyce continues.

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Research firm PureProfile surveyed 50 pension fund executives across U.S. public, corporate and Taft-Hartley plans representing $670.4 billion in assets. Ortec and PureProfile conducted the survey in November.

The funded status of corporate pension plans continues to exceed 100%, with many corporate plans in a funding surplus. This has led to an increase in plan sponsors—like Nokia, UPS and Kodak—terminating or outsourcing their plans’ operations, including investments, or sending the liabilities to an insurance company.

Public plans, while seeing an increase in funded status, are more generally underfunded than their corporate defined benefit plan counterparts.

According to Milliman’s Public Pension Funding Index for November, U.S. public defined benefit plans saw their funded status decrease to 81.2% at the end of October, from 82.8% in September. According to Milliman, which also tracks the funded status of corporate plans, the funded status of these plans increased to 103.5% at the end of November, up from 103.2% at the end of October.