“They all have Athene taking over their former pension obligations, and Athene is owned by a private equity firm with an in-house reinsurer based offshore, rather than a traditional life insurance company that is not owned by an offshore private equity firm," said Schlichter.

In the Lockheed Martin case, Konya et al. v. Lockheed Martin, former employees in the company’s retirement plan, alleged that Lockheed retained Athene as the annuity provider in violation of their “fiduciary responsibilities … [because] Athene was not the safest available option.”

The lawsuit is related to a transfer in 2021 of $4.9 billion of Lockheed Martin’s pension liabilities, covering 18,000 pension plan retirees and beneficiaries, and a transfer in 2022 of $4.3 billion of pension liabilities, covering 13,600 pension plan retirees and beneficiaries.

In a motion to dismiss, Lockheed argued that the plaintiffs could not point to any imminent injury that they have suffered as a result of the PRTs. However, Judge Brendan Hurson said that the plaintiffs pointed to the collapse of Executive Life Insurance Co. in the early 1990s, which shows the “very real possibility” that Athene’s allegedly high-risk insurance practices pose an imminent harm to retirees.

In the Alcoa lawsuit, Camire et al. v. Alcoa USA Corp., plaintiffs sued the firm and Fiduciary Counselors for “breach of fiduciary duties and other violations” of ERISA.

The suit alleged that “through four separate transactions completed between 2018 and 2022, Defendants offloaded over $2 billion of Alcoa’s pension obligations, which affected over 28,000 Alcoa retirees and their beneficiaries.” In addition, Athene is “a private equity-controlled insurance company with a highly risky offshore structure,” according to the suit, “rather than selecting the safest possible annuity to ensure the continued financial security for Alcoa retirees and their beneficiaries.”

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However, District Judge Loren Alikhan found that the plaintiffs’ monthly annuity payments have not been affected by the PRT transactions with Athene, and they did not suffer actual harm. Plaintiffs failed to “show that the transfer of their contractual rights concretely harmed them in some way,” she stated.

A spokesperson for Athene has offered a response to these lawsuit allegations: “As we have consistently maintained, these are frivolous claims without merit, driven by predatory trial lawyers targeting the pension risk transfer industry as a whole. We believe that the court in Alcoa got it right – that the plaintiffs’ claims have no merit.

"A judge in a separate decision repeatedly called into question whether the plaintiffs would ultimately succeed on their claims. Independent insurance experts recognize the facts: Athene is a safe and secure annuity provider with a fortress balance sheet with $31 billion of regulatory capital and strong credit ratings.”

As the retirement industry evolves from guaranteed lifetime pension plans to 401(k)s, PRTs have become the linchpin connecting the past, present and future of retirement benefits. These PRTs allow firms to offload the burdensome administration of allocating pension plans.

However, as private equity firms ramp up their pursuit of PRT deals, the number of related lawsuits has surged. In 2023, there were a record 773 PRTs, which is expected to grow. Increasingly, private equity firms are seeking to purchase stakes in annuity assets to gain access to a permanent capital stream.