Latest pension risk transfer ruling finds for sponsor 

August 14, 2026

The latest district court ruling in the recent spate of lawsuits challenging defined benefit (DB) plan pension risk transfers (PRTs) went in favor of the plan sponsor. In Schoen v. ATI Inc., the judge dismissed the case, finding that the plaintiffs didn’t have standing because they hadn’t shown a “cognizable injury” — actual or imminent harm instead of a speculative risk. No PRT case has yet been decided on the merits, and the preliminary rulings have been inconsistent. The Department of Labor (DOL) has also waded into the fray this year, filing two amicus curiae briefs on behalf of the defendants. 

ERISA’s fiduciary standards of prudence and loyalty apply to the selection of an annuity provider when a plan sponsor decides to outsource pension risk. DOL guidance in Interpretive Bulletin (IB) 95-1 (29 CFR § 2509.95-1) says that to meet these standards the plan fiduciary “must take steps calculated to obtain the safest annuity available, unless under the circumstances it would be in the interests of participants and beneficiaries to do otherwise.” Once participants’ benefits have been annuitized, they are no longer protected by the Pension Benefit Guaranty Corp. (PBGC). State guaranty associations offer protection in the event the annuity provider fails, but typically at lower coverage levels than the PBGC.

Since March 2024, multiple lawsuits have been filed claiming that DB plan fiduciaries violated their ERISA duties by purchasing group annuity contracts from insurers that offered cost savings to the sponsors but allegedly weren’t the safest available. Plaintiffs claim the transactions injured them by increasing the risk of loss of future benefits.

The main question in the early stages of these proceedings is whether the plaintiffs have standing to sue under Article III of the US Constitution — that is, whether participants have sufficiently alleged a concrete and individualized injury to their benefits. The cases have been argued in the context of the US Supreme Court’s 2020 ruling in Thole v. US Bank NA. In that case, the plaintiffs claimed their pension benefits were put at future risk of nonpayment by the fiduciaries’ mismanagement of the plan’s investments. The Supreme Court held that DB plan participants generally lack standing when an alleged fiduciary breach hasn’t actually affected their benefits.

All participants in the PRT cases continue to receive their full monthly benefits. However, the plaintiffs claim they have been injured because their future benefits are now at a substantially higher risk of nonpayment by the chosen annuity provider and lack PBGC backing. Almost all of the PRTs involved in the lawsuits were executed with a private-equity-controlled insurance company with an offshore captive reinsurer that the plaintiffs allege is riskier than a more traditional insurer.

Rulings to date have been mixed: Four cases so far have been dismissed for lack of standing, but four other courts have found the plaintiffs do have standing.

In Schoen, the court found that, assuming the plaintiffs’ allegations are true, they failed to show anything more than “an objectively reasonable likelihood” that the annuity provider would fail — which isn’t the substantial risk of imminent harm required for Article III standing. The court said that plaintiffs are relying on “a highly attenuated chain of possibilities” and explained that, even if the annuity provider were to fail, participants would more likely than not continue to receive their full benefits.

DOL has weighed in with two amicus curiae briefs in support of the defendants in other cases that are now at the appellate level: Konya v. Lockheed Martin and Doherty v. Bristol-Myers Squibb Co. In both briefs, DOL argues that the plaintiffs have not alleged a sufficiently concrete injury and says that no annuity selected in a PRT transaction has defaulted or failed in the past 30 years. DOL also suggests that “if employers are thwarted from conducting PRTs,” they will be less likely to offer pension plans.

In the second brief, DOL addresses plaintiffs’ claim that the particular PRTs harmed participants by removing the benefits from under PBGC’s umbrella. DOL counters that Congress intended for employers to be able to engage in PRTs, and that all PRTs have this result — but that state guaranty associations’ protections replace PBGC protections.

The briefs also explain that IB 95-1 requires a prudent process when selecting an annuity provider but does not impose an “ends- or results-based test” that presupposes there is only one annuity provider that can be prudently selected. (DOL makes a similar means-over-ends argument in its recent amicus brief in a lawsuit regarding the permissible use of forfeitures in a 401(k) plan.)

In addition to DOL, several industry groups, including the US Chamber of Commerce and the ERISA Industry Committee, have filed amicus briefs making similar arguments in support of the employers.

The mixed district court decisions to date give no clear indication whether allegations of potential reduction in future benefits will be sufficient to support Article III standing. Even if the forthcoming appellate decisions in Konya and Doherty hold that plaintiffs have standing, courts will still need to rule on the merits of the claims.

• Schoen v. ATI Inc., No. 2:24-cv-01109 (W.D. Pa, July 27, 2026)
• DOL news release (DOL, July 21, 2026)
• Amicus curiae brief, Doherty v. Bristol-Myers Squibb (DOL, July 21, 2026)
• DOL news release (DOL, January 9, 2026)
• Amicus curiae brief, Konya v. Lockheed Martin (DOL, January 9, 2026)
• Thole v. US Bank NA 590 US 538 (2020)

• Pension risk transfer cases test Supreme Court's Thole decision (November 14, 2025)