DOL slams pension risk transfer lawsuit as ‘opportunistic’ litigation

The Department of Labor is urging a federal appeals court to dismiss a lawsuit challenging a pension risk transfer completed by Bristol Myers Squibb, arguing the case threatens a retirement planning tool that works “swimmingly.”

In its amicus brief filed this week in the U.S. Court of Appeals for the Second Circuit, the DOL said a successful PRT lawsuit could discourage employers from offering defined benefit pension plans.

PRTs are expressly permitted under the Employee Retirement Income Security Act and have a decades-long record of protecting retirees while allowing employers to reduce financial risk, government attorneys argued.

The lawsuit – Charles Doherty and Michael J. Noel v. Bristol-Myers Squibb – alleges that Bristol-Myers, along with its independent fiduciary State Street Global Advisors Trust Co., did not choose the safest insurer available when it entered into a $2 billion PRT deal with Athene Annuity Life Co. Plaintiffs called the insurer “highly risky.”

The brief supports Bristol Myers’s appeal of a district court decision allowing participants’ claims to proceed. Along with the DOL, a broad coalition consisting of business groups, private insurers, and state attorneys general filed amicus briefs this week backing Bristol-Myers.

Athene issued a statement on the briefs: “These amicus briefs underscore what we have consistently maintained: these suits targeting the PRT industry are completely without merit, and driven by predatory trial lawyers looking for a payday at the expense of retirees.”

PRT ‘changes nothing’

“A pension risk transfer changes nothing material” for participants and beneficiaries, the DOL argued, saying retirees remain entitled to the same pension benefits regardless of whether payments come from their former employer or an insurance company.

Under a pension risk transfer, an employer purchases a group annuity from an insurer, transferring pension assets and liabilities to the insurance company. The employer removes the obligations from its balance sheet while the insurer assumes responsibility for making future benefit payments.

The Labor Department said the transactions have been highly successful.

“Over the last three decades, no annuity selected in a PRT transaction has defaulted or failed,” the brief states. By contrast, participants who remained in employer-sponsored pension plans lost at least $8.5 billion over the same period because some plans became underfunded and benefits exceeded the Pension Benefit Guaranty Corp.’s guarantee limits.

The department argued that Bristol Myers, a biopharmaceutical company, made a legitimate business decision to transfer pension obligations to an insurer that specializes in managing annuities rather than continuing to administer retirement benefits itself.

The filing also criticized what it called “opportunistic plaintiffs’ lawyers” for challenging pension risk transfers that Congress specifically authorized under ERISA.

According to the department, allowing such lawsuits to proceed could undermine the balance Congress established between federal pension law and state insurance regulation, since insurance companies that issue group annuities are primarily regulated by state insurance departments.

PRT merits debated

The Labor Department further argued that increased litigation could discourage employers from offering defined benefit pension plans altogether.

“If employers cannot conduct PRTs, they are far less likely to offer pension plans to their employees in the first place,” the brief states.

The case centers on whether participants have standing to challenge the pension risk transfer.

In her September 2025 decision, District Judge Margaret M. Garnett denied motions to dismiss filed by Bristol-Myers and State Street.

“Plaintiffs have shown an injury necessary … at this stage of the case because they have sufficiently alleged that the Athene transaction created a substantial risk that employees will not receive their benefits,” Garnett wrote.

The DOL argued that the district court misapplied the U.S. Supreme Court’s 2020 decision in Thole v. U.S. Bank, which held that defined benefit plan participants generally must demonstrate a concrete injury to establish standing.

The brief contends that Thole requires plaintiffs to show a threatened injury that is “certainly impending,” rather than relying on speculative future harm.

The Labor Department said the district court incorrectly concluded that Thole did not control the case and urged the appeals court to reverse that ruling.

The case is one of several lawsuits challenging pension risk transfer transactions in recent years, as plaintiffs have argued employers breached their fiduciary duties by selecting insurers they contend pose greater long-term financial risks. Employers and insurers have maintained that the transactions comply with ERISA and are subject to extensive state insurance regulation.

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