A Bristol-Myers Squibb Co. retiree has filed a lawsuit against the pharmaceutical company and its independent fiduciary State Street Global Advisors, alleging a violation of fiduciary duties related to two 2019 pension buyout transactions.
The lawsuit, filed Sept. 3 in U.S. District Court in New York, alleges Bristol-Myers Squibb and SSGA violated their fiduciary duties under the Employee Retirement Income Security Act of 1974 by purchasing group annuity contracts from two Athene Holdings subsidiaries in 2019. The contracts transferred $2.6 billion in U.S. pension plan liabilities and the responsibility of paying benefits to just over 24,000 participants.
Bristol-Myers Squibb is the fifth company this year to be sued for alleged violations of ERISA relating to pension risk transfer transactions completed with Athene.
The others are General Electric Co., Alcoa Corp., Lockheed Martin and AT&T.
This new lawsuit claims the drug company “decided to fatten its wallet by placing its retirees’ futures in the hands of a risky new insurance company,” according to the filing.
The plaintiff claims that the transaction did not meet the requirements of Interpretive Bulletin 95-1, the U.S. Department of Labor’s Employee Benefits Security Administration guidance related to the fiduciary standards of pension risk transfer transactions that requires plan sponsors purchase the “safest annuity available.”
The lawsuit alleges that Athene’s product does not represent the safest annuity available as a “risk-taking insurer” owned by private equity firm Apollo Global Management, and by engaging in the transactions with the firm, Bristol-Myers Squibb and SSGA have violated their ERISA fiduciary duties.
Athene Holdings is not a defendant in the lawsuit. A spokesperson for that firm said in a statement: “This is a frivolous complaint instigated by class action attorneys who are aiming to line their pockets at the expense of retirees. Athene, which AM Best recently upgraded to A+, is a safe and secure provider of annuity benefits, with outstanding financial strength, proper reserves, excellent capitalization, and strong credit ratings. Every Athene pension group annuity transaction has followed rigorous review by fiduciaries and their independent experts tasked with examining insurer safety. Every pension group annuity participant has received and will receive every promised benefit."
In December 2018, Bristol-Myers Squibb announced its plan for a full termination of its U.S. pension plan.
The following year, after distributing of $1.3 billion in assets via lump sums to participants who elected that option, the company purchased two group annuity contracts totaling $2.4 billion and $200 million, respectively, from Athene Annuity and Life Co. and Athene Annuity & Life Assurance Co. to complete the termination of the plan.
The company said in the December 2018 news release announcing the planned termination that its participants were 18,000 former employees who had yet to retire at the time, 4,800 active employees, and 1,400 retirees and their beneficiaries in the plan.
Spokespeople for Bristol-Myers Squibb and SSGA could not be immediately reached for comment.
