Bristol-Myers Squibb Co. is being targeted in a lawsuit over a US$2 billion pension risk transfer deal completed in 2019 with Athene Annuity and Life Co.
The class action lawsuit, filed by former employee Charles Doherty and which names independent consultant State Street Global Advisors Trust Co. as a defendant, argues the pharmaceutical company is liable for purchasing group annuity contracts from Athene that fall outside of the regulation from the Employee Retirement Income Security Act of 1974. The lawsuit didn’t name Athene as a defendant.
In December 2018, the pharmaceutical announced it would undergo a full termination of its defined benefit pension plan through a pension risk transfer deal of $2.6 billion in pension liabilities that involved about 24,000 plan members.
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“Although ERISA does not prohibit an employer from transferring pension obligations to an insurance company, ERISA requires that a fiduciary satisfy exacting fiduciary standards when selecting an annuity,” the lawsuit said.
This year, several companies including General Electric Co., Alcoa Corp, Lockheed Martin Corp. and Lumen Technologies Inc. have been the target of similar lawsuits due to pension risk transfer deals involving Athene.
“The only losers in the transaction were Bristol-Myers’ retirees, who face the danger — now and in the future — that their lifetime pensions will go unpaid while they have lost all the protections of federal law,” the lawsuit said.
The plaintiffs are also accusing Bristol-Myers of having an “acute incentive” to get the annuity deals done since 2019 offered a low interest rate environment, which is conducive to relatively high annuity prices.
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