Two Lumen Technologies Inc. retirees have filed a lawsuit against the company, independent fiduciary State Street Global Advisors and others alleging a breach of fiduciary duties related to Lumen’s pension buyout transaction with an Athene Holdings subsidiary.
The lawsuit, filed Sept. 4 in U.S. District Court in Denver, alleges Lumen Technologies, CenturyLink Investment Management Co. and the employee benefits committee violated their fiduciary duties under the Employee Retirement Income Security Act of 1974 by purchasing group annuity contracts from an Athene Holdings subsidiary in 2021.
The contract transferred the benefit-paying responsibility of about 22,600 retirees and beneficiaries in Lumen’s Combined Pension Plan to the insurer.
The name of the insurer was not disclosed by the company at the time, and the court filing says the contract was signed with either Athene Annuity and Life Co. or Athene Annuity & Life Assurance Co. of New York.
The lawsuit alleges the defendants breached their fiduciary duties by not selecting “the safest possible annuity available,” according to the court filing. 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 to purchase the “safest annuity available.”
Private equity giant Apollo Global Management owns Athene, and the suit alleges that connection makes the insurance company less safe.
Athene Holdings is not a defendant in the lawsuit. A spokesperson for that firm said in a statement: “This complaint is an entirely baseless attempt by class action attorneys to enrich themselves at the expense of retirees.”
“Every pension group annuity participant whose benefits have been guaranteed by Athene has received and will receive their promised benefits in full,” the statement said. “In each pension group annuity transaction for which Athene has been selected, there has been a robust review process carried out by a fiduciary and their independent advisers who are experts at assessing insurer safety.”
The spokesperson said Athene is "properly reserved" and has “excellent capitalization and strong credit ratings, with a recent rating upgrade to A+ by AM Best.”
Lumen Technologies is the sixth company this year to be sued for alleged violations of ERISA related to pension risk transfer transactions completed with Athene.
The others are Bristol-Myers Squibb Co., General Electric Co., Alcoa Corp., Lockheed Martin and AT&T.
Other defendants in this new lawsuit are Lumen Technologies’ employee benefits committee, its in-house manager CenturyLink, and Kathleen Lutito, the company’s former president and chief investment officer who retired earlier this year.
As of Dec. 31, the Combined Pension Plan had $4.5 billion in assets, according to Lumen Technologies’ most recent 10-K filing with the SEC.
