Former associates of AT&T Inc. have filed a lawsuit regarding a risky $8.05 billion pension risk transfer to Athene Annuity and Life Company in May 2023. They allege this move put the financial stability of 96,000 participants at risk and breached AT&T’s fiduciary duty.
The lawsuit argues that AT&T and its independent fiduciary, State Street Global Advisors Trust Co., profited unfairly from the transfer. The claim is that the assets transferred were undervalued, allowing AT&T and State Street to reap significant profits, while the plan participants were not given enough information to fully understand the implications.
Moreover, plaintiffs raised concerns over AT&T’s choice of insurer, Athene, referred to as a risky selection by a 2022 audit. This choice has increased anxieties among claimants about the security of their assets, despite AT&T’s intent to proceed with Athene as their insurer.
The claimants are advocating for stricter standards for pension risk transfers. They suggest that factors like a provider’s investment portfolio, size relative to the annuity contract, and the presence of state government guaranty associations, among others, should be considered for safety. They argue that these criteria will enhance the longevity of pension schemes and reduce bankruptcy risk.
Plaintiffs accused AT&T and State Street of favoring Athene over other reputable providers known for financial stability. They allege actions taken by AT&T and State Street led to significant financial losses and contravened the principles of the Employee Retirement Income Security Act (ERISA). They have called for an investigation and legal action against both entities to protect retirees’ rights.
AT&T has vehemently denied these allegations, noting their preparedness to fight the accusations in court. However, plaintiffs demand AT&T reinstate extracted health insurance benefits and provide financial compensation equaling the profits made from the pension risk transfer. The case continues with an impending court date yet to be released.
