GE Joins List of Companies Sued Over PRT Deal with Athene

Add General Electric Co. to the handful of companies sued for completing pension risk transfers with insurer Athene Annuity and Life Co. The litigation is based on the appliance maker completing a $1.7 billion pension risk transfer with Athene in December 2020. 

Law firm Schlichter Bogard LLP is once again representing the three plaintiffs in the case, who are former participants of the GE Pension Plan. The firm is also representing plaintiffs in similar cases against AT&T Inc. Lockheed Martin and Alcoa Corp.  

In Julie Bueno et al. v. General Electric Company et al., filed in the U.S. District Court for the Northern District of New York, GE is accused of failing to meet the Department of Labor standard for selecting safest available insurer when transferring pension assets and liabilities to an insurance company. In this case, the plaintiffs are challenging GE’s choosing Athene as its insurance provider for the PRT deal, claiming that Athene is a “highly risky private-equity controlled insurance company with a complex and opaque structure.” 

The transaction involved offloading 70,000 GE retirees and their beneficiaries to Athene through purchasing group annuity contracts.  

As of 2020, before the buy-out transaction, the plan covered 289,881 total participants and held nearly $59 billion in net assets available for plan benefits.  

Because GE announced a plan to operate as three separate publicly traded companies in November 2021, the plan was split into three separate plans effective January 1, 2023: GE Aerospace Pension Plan (the new name of the plan); the GE Healthcare Pension Plan; and the GE Energy Pension Plan. As of December 31, 2022, and for years prior, the plan at issue was known as the “GE Pension Plan.” 

The lawsuit alleges that by offloading GE’s pension obligations to Athene, GE caused retirees to “lose their status as ‘participants’ in the ERISA-governed plan, and therefore, become no longer entitled to ERISA’s protections for employee retirement benefits.”  

Although ERISA does not prohibit employers from transferring pension obligations to an insurance company, ERISA does require that a fiduciary obtain the “safest annuity available,” the lawsuit states.  

To remedy these “fiduciary breaches,” the plaintiffs seek the disgorgement of the sums involved in the “improper transactions” and the posting of security to assure receipt by plaintiffs and class members of their full retirement benefits, according to the lawsuit. 

An Athene spokesperson provided the following statement: “These are baseless complaints instigated by class action attorneys who are attempting to enrich themselves at the expense of retirees. Athene is a safe and secure provider of annuity benefits, with outstanding financial strength, proper reserves, excellent capitalization, and strong credit ratings. Pension group annuities provide many protections that enhance retirement security. Insurers like Athene have deep expertise in managing annuity obligations, are subject to robust regulation, and hold regulatory capital to protect policyholders.”

A GE Aerospace spokesperson declined to comment on the pending litigation.