Since the first quarter of 2024, 10 plan sponsors (along with named and independent fiduciaries) have been sued in 13 putative class actions challenging pension risk transfers (PRTs), which are transfers to insurance companies of a portion or all of a defined benefit pension plan’s liabilities through the purchase of a group annuity contract. Generally, plaintiffs bring breach of fiduciary duty claims, including allegations that the insurer selected by the plan sponsor or independent fiduciary was not the “safest available annuity” provider, and prohibited transaction claims.
However, these cases have not taken off like other types of retirement plan litigation, and plaintiffs have significantly slowed their efforts to challenge PRTs. Notwithstanding that 2025 brought significant activity in the PRT market, only one of the 13 class actions described above was filed during 2025. It could be that plaintiffs’ firms are waiting to see whether the initial claims are successful, at least in getting past motions to dismiss, and so far, the answer is trending more “no” than “yes”. Most courts addressing defendants’ motions to dismiss have held that plaintiffs lack standing under Article III of the Constitution, and/or failed to state a claim for fiduciary breach or prohibited transactions. Defendants pulled further ahead after the District Court for the Southern District of New York’s sweeping dismissal of the plaintiffs’ claims in Dempsy et al. v. Verizon et al. on January 8, 2026. Meanwhile, on January 9, 2026, the Department of Labor (DOL) filed an amicus brief in the Fourth Circuit in Konya v. Lockheed Martin Corp. strongly endorsing the argument that plaintiffs do not have Constitutional standing to bring their claims.
Background
The PRTs challenged in the 13 cases filed to date each transferred liabilities of between approximately $1.5 and $9.0 billion and covering between approximately 8,000 and 96,000 participants. Motions to dismiss have been filed in all cases except one (as of the date of this writing, a motion to dismiss is expected to be filed in the remaining case within days). While the arguments in each of the defendants’ motions to dismiss vary, and we do not discuss all of them here, there are a number of common threads.
First, defendants generally argue that the plaintiffs lack constitutional standing to bring the claims. Constitutional standing requires, among other things, an injury in fact that is “concrete and particularized” and “actual or imminent”. Defendants argue that no plaintiff is receiving any benefit less than what he or she is entitled to under the terms of the plan, and any allegation that plaintiffs have been harmed by the PRT is entirely speculative, not based on any concrete or imminent threat of harm.
Second, defendants generally argue that the plaintiffs fail to state a claim for breach of fiduciary duty. With respect to the breach of fiduciary duty claims, defendants argue that the decision to pursue a PRT is a settlor, and not fiduciary, decision. Additionally, defendants argue that the decision was not made by the normal plan fiduciaries (in the case where an independent fiduciary was used) and, in any event, the plaintiffs failed to allege any deficiencies in the fiduciary process. With respect to breach of loyalty claims, defendants argue that plaintiffs failed to allege the applicable fiduciary improperly benefited from or had any non-speculative interest in the service provider being selected (whether it be the independent fiduciary or the annuity provider). Additionally, defendants argue that any harm is not the result of a fiduciary action, but the settlor decision to pursue a PRT or, alternatively, the action of the independent fiduciary’s selection of the annuity provider.
Finally, defendants argue that plaintiffs fail to state a claim that defendants engaged in a prohibited transaction with the annuity provider because the insurer is not providing services to the plan and therefore is not a party in interest for the purpose of ERISA’s prohibited transaction rules. Additionally, defendants argue that the insurer was not a party-in-interest prior to the specific PRT transaction. In the alternative, defendants initially also sought dismissal based on plaintiff’s failures to include specific allegations that defendants had failed to satisfy what would have been the applicable prohibited transaction exemption, however post-Cunningham v. Cornell (which held that plaintiffs need only allege that a prohibited transaction occurred, not that no prohibited transaction exemption applies) those arguments are unlikely to succeed at the motion to dismiss stage.
District Court decision in Verizon
On January 8, 2026, the District Court for the Southern District of New York in Verizon dismissed plaintiffs’ claims for lack of constitutional standing. The court held that plaintiffs failed to allege a substantial risk of imminent harm or a diminution in the value of plaintiffs’ retirement benefits, noting that plaintiffs will receive the same amounts of benefits regardless of whether they win or lose. The court also held that seeking equitable remedies, such as disgorgement of profit, does not confer standing, and injury-in-fact is still required.
While the Verizon court held the plaintiffs lack standing, the court also addressed plaintiffs’ fiduciary breach and prohibited transaction claims, holding that plaintiffs failed to state any such claims. With respect to the fiduciary breach claims, the court held that the breach of the duty of prudence claims fail because plaintiffs did not allege facts sufficient to infer a deficient process or that a reasonable fiduciary would have selected another insurer. Relatedly, the court observed that because DOL Interpretive Bulletin 95-1 does not require the fiduciary to select “the safest possible annuity provider” but instead provides a set of factors that it explicitly notes may result in multiple safe annuity providers, plaintiffs must plausibly allege that no reasonable fiduciary would have selected the insurer, which they did not do in this case. As to the breach of the duty of loyalty claims, the court rejected the plaintiffs’ arguments that the fact that Verizon’s balance sheet reflected a lower pension liability as a result of the PRT constituted self-dealing, or that the fact that the independent fiduciary held a significant number of shares in both the plan sponsor and the insurer resulted in a breach of the duty of loyalty. The court held that tangentially benefiting from a transaction, or the existence of business relationships between two financial institutions, alone does not support a claim that defendants acted disloyally.
Finally, the Verizon court rejected the prohibited transaction claims, primarily holding that (1) an annuity contract is a good, and does not involve the provision of services such that the insurer is a party-in-interest based solely on the sale and purchase of the contract, (2) for the independent fiduciary to be a party-in-interest, it must have previously provided services to the plan, and (3) Verizon did not receive or use assets of the plan for the purpose of the prohibited transaction rules merely because the transaction resulted in a change on Verizon’s balance sheet.
Scorecard to Date
As described in our prior blog post reviewing the courts decisions on defendants’ motions to dismiss to date, most courts to rule on the motions to dismiss have granted dismissal. The existence of constitutional standing continues to be a key issue in these cases. Below is a chart summarizing the cases in which courts (including magistrate judges) have issued decisions (or recommendations) on defendants’ motions to dismiss, with a particular focus on the issue of standing.
| Case | Decision on Motion(s) to Dismiss | Grounds |
| Konya v. Lockheed Martin (D. Md.) | Denied * At the Fourth Circuit on interlocutory appeal | Court held plaintiffs have standing due to the alleged increased default risk and diminished present value. |
| Camire v. Alcoa (D.D.C.) | Granted | Court held plaintiffs lack standing because they have received all benefits to which they are entitled under the plan, and allegations of comparative increase in risk were not accompanied by allegation of substantial probability of default or other imminent harm. |
| Piercy v. AT&T (D. Mass.) | Granted | Court held plaintiffs have standing due to the allegedly riskier annuities purchased through the PRT. Court dismissed fiduciary breach and prohibited transaction claims because plaintiffs did not allege that a prudent fiduciary “could not have” selected the same insurer, and independent fiduciary and insurer were not “parties in interest.” |
| Doherty v. Bristol‑Myers Squibb (S.D.N.Y.) | Denied * Petition for interlocutory appeal with the Second Circuit | Court held plaintiffs have standing because of the allegations that they are at substantial risk of not receiving their benefits due to the allegedly risky annuity provider, and loss of ERISA’s protections following the annuity purchase. |
| Bueno v. General Electric (N.D.N.Y.) | Granted | Court held plaintiffs lack standing because there are no allegations that plaintiffs have not received their full benefits, and loss of PBGC coverage is not a harm caused by any fiduciary action. |
| Schoen v. ATI, Inc. (W.D. PA.) | Report and Recommendation recommending granting motion to dismiss | The magistrate judge recommends granting motions to dismiss for lack of standing, noting that plaintiffs do not dispute they are receiving all their benefits, and there are no allegations that the insurer is at a high risk of failure. |
| Dempsey v Verizon Communications, Inc., (S.D.N.Y.) | Granted | Court held plaintiffs lack standing because there is no allegation of a substantial risk of future harm, and plaintiffs will get the same benefit regardless of whether they win or lose; seeking equitable remedies does not confer standing. |
DOL amicus in Lockheed
In keeping with its stated commitment to increase participation in amicus filings and combat frivolous ERISA litigation, DOL weighed in on standing in favor of the defendants in an amicus brief in the Fourth Circuit, which granted interlocutory appeal in Konya v. Lockheed Martin. In the amicus submission, DOL argues that plaintiffs lack standing because they have no actual or “certainly impending” threatened injury, as required by the Supreme Court in Thole v. U.S. Bank N.A. DOL stated that dicta in Thole has been taken out of context and weaponized to attempt to manufacture standing where there is no actual or immediate injury. DOL rejected the argument that loss of PBGC protection, which is the result of every PRT, is a harm that can confer standing.
DOL also makes clear that Interpretive Bulletin 95-1 (95-1), which lays out 6 factors that fiduciaries should consider when selecting an annuity provider, provides guidance on a loyal and prudent fiduciary process, and is not intended to require the selection of any one insurer. On the contrary, DOL states that there may be multiple annuity providers that a loyal and prudent fiduciary may select following a prudent process.
DOL cautioned that finding for plaintiffs in these cases would threaten to wreak havoc on the defined benefit pension plan system. Without an off-ramp through a PRT, DOL says that sponsors may not be willing to adopt pension plans at all.
Courts, including the Fourth Circuit hearing the Lockheed Martin appeal, are not required to adopt DOL’s position here – that is especially true following the Supreme Court’s decision in Loper Bright v. Raimondo. That said, DOL’s explanation of how 95-1 should be interpreted could be persuasive given that it is DOL’s own regulation.
Practical Takeaways for Plan Sponsors and Fiduciaries
While there continues to be interesting key legal issues raised by decisions in these cases, such as a split on the issue of constitutional standing, what is required to successfully plead fiduciary breach claims, and whether a preexisting relationship is required to confer party-in-interest status, each as discussed in our previous post, there are several practical implications and takeaways for plan sponsors and fiduciaries that are further emphasized by the Verizon decision and DOL amicus brief.
- Keep settlor and fiduciary decisions separate. Each court, as well as DOL, has affirmed that the decision to do a PRT is a settlor decision that is not subject to ERISA’s fiduciary duties. However, the selection of the annuity provider is a fiduciary action. Therefore, it continues to be important to maintain clear boundaries, reflected in documentation, between activities undertaken while wearing a “settlor hat” and those undertaken while wearing a “fiduciary hat”.
- Clearly document authority of an independent fiduciary. If plan fiduciaries choose to hire an independent fiduciary to select the annuity provider, carefully describe the delegation of authority to the independent fiduciary. Consider making clear that the plan sponsor or other fiduciary has no right to “veto” the independent fiduciary’s selection of the insurer, as such a veto right could result in the plan sponsor or other fiduciary retaining fiduciary duty with respect to the annuity selection.
- Consider pre-existing relationships and, possibly, another independent fiduciary. When selecting an independent fiduciary (if using one) or an annuity provider, consider any pre-existing relationships or interests between or among the plan, the sponsor, and the other party, and, if appropriate, document why such relationship is not a concern. Additionally, if engaging in multiple PRTs, it may be useful to use a different independent fiduciary from the independent fiduciary used in the past. To support a prohibited transaction claim, many courts require the existence of a pre-existing relationship with a plan service provider. If a plan fiduciary selects an independent fiduciary with which it has had no current or prior service provider relationship, that could provide an additional defense to prohibited transaction claims that does not rely on the application of a prohibited transaction exemption.
- There is not one single safest available annuity provider. In our experience, plan fiduciaries (with the assistance of an independent expert) and independent fiduciaries conclude that there is more than one annuity provider that constitutes the “safest available annuity” provider under the factors and standards set forth within 95-1. DOL confirmed this position in its amicus filing in Lockheed Martin. The Verizon court also adopted this view.
- Document the fiduciary process. It cannot be emphasized enough that ERISA’s fiduciary duties require a particular process, not a particular outcome. This is highlighted in both the Verizon decision and DOL’s amicus brief. However, a process that is undocumented is, for all intents and purposes, a process that did not happen. It is critically important that fiduciaries follow a loyal and prudent process leading to the decisions regarding selection of the service providers that will assist with the PRT process as well as selection of the insurer(s) as part of the process and for that process and the reasons for those decisions to be clearly and well documented, including as applicable to insurer selection the factors relevant to the selection decision in a manner that satisfies 95-1.
We will continue to monitor developments in these cases. If you have any questions, please contact the author or your Thompson Hine attorney.