Verizon Communications Inc. is facing a lawsuit by retirees alleging the organization breached its fiduciary duties and engaged in prohibited transactions when it completed a US$5.9 billion pension risk transfer to Prudential Insurance Co. of America nearly a year ago, according to a report by Investment News.
The proposed class action lawsuit, filed in December in the Southern District of New York, also named State Street Global Advisors Trust Co., the independent fiduciary in the annuity-selection-process, as a defendant. According to the report, the PRT, which was completed in March 2024, comprised $5.9 billion in liabilities for 56,000 retirees and beneficiaries. It noted such group annuity contracts are covered by individual state regulations, rather than being insured by the Pension Benefit Guaranty Corporation and covered by the Employee Retirement Income Security Act, which governs employee benefits plans in the U.S.
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In the filing, the plaintiffs also alleged State Street acted in its own interest, as it has common stock holdings in Verizon, Prudential and RGA, noted the report.
“The Verizon retirees have now been transformed into certificate holders under risky group annuities that are no longer regulated by ERISA or insured by the Pension Benefit Guaranty Corporation,” the complaint read. “As a consequence, impacted retirees are quite rightly fearful and concerned about their futures, the fate of their retirements and the financial well-being of their beneficiaries.”
Through the lawsuit, the plaintiffs are seeking to have the annuities guaranteed through the purchase of reinsurance and to have the contracts placed inside of Verizon’s plan as an asset.
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