Verizon, SSGA Join List of Fiduciaries Hit By PRT Suits

Three Verizon Communications Inc. retirees are suing their former employer, along with fiduciary State Street Global Advisors, for transferring pension plan liabilities to two allegedly “risky” insurance companies.

The retirees filed the pension risk transfer complaint on December 30, 2024, in U.S. District Court for the Southern District of New York, alleging that Verizon and SSGA violated their fiduciary duties when they chose to transfer $5.9 billion in pension liabilities to group annuity contracts with Prudential Financial Inc. and Reinsurance Group of America Inc. The transactions, which closed in March 2024, transferred the payment of benefits for 56,000 retirees.

Dempsey et al. v. Verizon Communications Inc. et al. claims that Verizon and SSGA chose the “cheapest available” annuities, as opposed to the “safest available,” which is the standard set by the Department of Labor’s Interpretive Bulletin 95-1. The plaintiffs are being represented by Edward Stone Law P.C., which also has filed other PRT-related lawsuits, including one against SSGA and Bristol-Myers Squibb Co.

“The combination of unique risks posed by the Verizon/[Prudential]/RGA transaction is contrary to the best interests of the impacted Verizon retirees, and has resulted in less secure pension benefits for those retirees,” the plaintiffs allege in the complaint. “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 (‘PBGC’). 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.”

Continuing Trend

The lawsuit is the most recent in a spate of filings over the past year targeting the choice of annuity provider as jeopardizing the retirement savings of participants in employer-sponsored defined benefit plans.

Many of those lawsuits targeted PRT transactions done with Athene Annuity Life & Co., including those by General Electric Co., AT&T Inc. and Lockheed Martin. Athene has not been named as a defendant in those cases and has shot back against claims, calling them “baseless” and driven by “attorneys who are attempting to enrich themselves.”

Neither Prudential nor RGA were named as defendants in the Verizon lawsuit, and neither immediately responded to requests for comment.

The plaintiffs also allege that State Street, which was hired by Verizon as an independent fiduciary, “directly profited” from the PRT transaction through common stock holdings in Verizon, Prudential and RGA.

“State Street failed to act solely in the interests of the Plan Participants as required under ERISA,” the complaint alleges. “Rather, State Street’s own financial interests were improperly served by off-loading Verizon liabilities to [Prudential] and RGA, and by helping Verizon obtain the cheapest available annuity provider, as opposed to the ‘safest available’ annuity provider as required by ERISA.”SSGA did not immediately respond to a request for comment.

Verizon issued a statement that: “The lawsuit is completely without merit. Verizon will defend the matter vigorously.”

Dominic DeMatties, a partner in Thompson Hine LLP, which represents plan sponsors, did not comment directly on the Verizon lawsuit. But he did note via email that the decision as to whether to transfer pension assets and liabilities to insurance companies is made by the plan sponsor “in its settlor capacity,” which means the decision is not subject to fiduciary duties under the Employee Retirement Income Security Act and should not be treated as such. Only the selection of the insurance company or companies from which to purchase the contracts is subject to ERISA.