Washington – The ERISA Industry Committee (ERIC) joined coalition allies in filing an amicus brief with the U.S. Court of Appeals for the Second Circuit in Doherty v. Bristol-Myers Squibb Co (BMS). The brief urges the court to overturn a lower court ruling that allowed a lawsuit to continue against BMS’s decision to transfer pension obligations to an insurer through an annuity purchase, known as a “pension risk transfer.”
In a pension risk transfer, a company designates an insurer to deliver the plan’s benefits. Retirees keep receiving the exact same benefit, on the same schedule, for life; only the payer changes. The retirees who sued have received every payment owed to them, on time and in full.
“These retirees have been paid exactly what they were promised, exactly when they were promised it. ERISA expressly allows employers to terminate their plan, so long as they engage an insurance company to continue to provide the benefits that were promised. And in selecting an insurer, ERISA judges fiduciaries by the process they followed, not by second-guessing which insurer they or a court might later call the ‘safest.’ If this ruling stands, every pension risk transfer in the country becomes fair game for a lawsuit,” said Doug Hinson, Executive Director of the ERIC Legal Center.
The brief argues that ERISA requires plan fiduciaries to follow a prudent process when selecting the insurance carrier to take over the plan’s payments. It also argues the plaintiffs don’t have the right to sue in the first place, because they haven’t suffered any actual harm. The brief warns that letting this ruling stand would discourage employers from offering pensions to their employees.