The ERISA Industry Committee (ERIC) last week filed an amicus brief urging a court to dismiss a case that questions a company’s fiduciary duties when handling routine transactions.
ERIC, along with a coalition of organizations including the American Benefits Council and the Committee on Investment of Employee Benefit Assets Inc., filed the brief in the U.S. District Court for the Western District of Washington for the case of Maneman v. Weyerhaeuser Company.
The case, filed by Schlichter Bogard LLP on behalf of plaintiffs, challenges a pension risk transfer (PRT) between Weyerhaeuser and insurance provider Athene from 2019. Former employees of Weyerhaeuser accuse the company, along with independent fiduciary State Street Global Advisors Trust Co., of breaching its fiduciary duties by improperly transferring pension funds and not selecting the “safest annuity available.”
As part of the transaction, Weyerhaeuser transferred $1.5 billion in pension liabilities from its defined benefit (DB) plan to purchase annuity contracts from Athene. The transaction would make Athene responsible for paying out benefits under the same schedule as the DB plan.
According to the lawsuit, the transfer impacted over 52% of plan participants and 28,500 U.S.-based retirees and their beneficiaries.
By moving the plan to an annuity provider, plaintiffs say their benefits are at risk as they are no longer covered by the same protections offered under ERISA plans. Plaintiffs also accuse Athene of being a “highly risky private equity-controlled insurance company,” who operates under a “complex and opaque structure.”
The amicus brief notes that PRTs are allowed under ERISA and any “harm” that is experienced are “natural consequences of every pension risk transfer, regardless of which insurer is involved.” Ultimately, the brief concludes that plaintiffs failed to show any injury as a result of the transaction.
The case is part of a growing wave of class action litigation suits targeting plan sponsors for routine pension risk transactions. ERIC and its coalition of allies argue that future pension risk transfer transactions could be threatened with similar allegations if the case is not dismissed.
“The Plaintiffs’ bar is throwing spaghetti at the wall with these pension risk transfer lawsuits, hoping something sticks,” said Andy Banducci, senior vice president for Retirement and Compensation Policy at ERIC. “If meritless claims move forward, plaintiffs’ firms get a payday while employers, employees, and the retirement system are left with both a hefty bill and fewer resources in retirement plans. The court has an opportunity to put an end to this by dismissing the case and sending a clear message that these actions won’t be tolerated.”