BENEFITS DIGEST

Labor is asking for suggestions about where to step into private ERISA cases. Justin Danhof, policy director of the department’s employee-benefits arm, invited an industry conference audience to identify cases where the department could weigh in through friend-of-the-court briefs or address recurring issues through guidance, and described litigation-related work on investment selection and pension risk transfers. What Danhof called abusive litigation is his characterization, and a government brief doesn’t decide a case. For sponsors and advisers, the news is a stated enforcement posture, not a new rule or ruling.

A pension plan paying out more than it takes in may have to sell investments during a downturn just to keep benefits flowing. Segal argues that relatively high interest rates make this a useful time to evaluate ways to reduce that risk. One approach builds a bond portfolio around upcoming payments so growth investments needn’t be sold at a bad time. Other options match investments to longer-term liabilities or transfer obligations to an insurer. The choice starts with the plan’s funding goals and cash needs, coordinated between its actuary and investment adviser.

Specialists from J.P. Morgan, NISA and NEPC tell PLANSPONSOR that the private-assets question for pension plans is one of sizing rather than suitability. A fully funded frozen plan needing 4% to 5% returns and a terminating plan heading toward a risk transfer have very different room for investments that cannot readily be sold, since an annuity purchase consumes liquid assets and can leave the illiquid holdings stranded. The interviews frame allocation size and timing against each plan’s liabilities and liquidity rather than treating private assets as categorically good or bad.

MetLife’s 2026 pension risk transfer poll surveyed 250 defined benefit plan sponsors with at least $100 million in assets and goals to reduce pension risk. Among those sponsors, 88 percent are considering transferring obligations to an insurer and 80 percent plan to shed their pension liabilities entirely within five years, and among the sponsors open to an insurer deal, 32 percent expect to complete one within two years. Half name interest rates as the top catalyst, and the share ranking an insurer’s financial strength as the leading selection factor jumped to 65 percent from 33 percent a year ago. October Three’s companion survey of insurers reports that full plan terminations made up 66 percent of these transactions in the first half of 2026, and that deals covering only retirees already receiving benefits made up another 28 percent. Milliman puts the competitive cost of buying annuities for retirees at 99.9 percent of the liabilities recorded for accounting purposes, the fourth straight month below 100 percent. The insurers’ chief complaint lands on sponsors. Incomplete participant data was the top obstacle to onboarding for 72 percent of carriers.

A Harris Poll of 2,000 moderate-income adults finds 80 percent of Gen X and millennial savers think the economic rules that served older workers have changed, 63 percent expect Social Security to be depleted before they can draw it, and 85 percent want guaranteed income as a core 401(k) feature. The follow-through lags, though. Eighty-six percent of those familiar with annuities find them appealing, 53 percent find them too complex, and just 3 percent expect annuities to carry them in retirement. Athene, which sells annuities, commissioned the survey.

A retrospective on six July decisions: the Ninth Circuit's refusal to compel arbitration in the Capital Group 401(k) self-dealing suit, the largely denied dismissal motion in the O'Reilly Automotive tobacco-surcharge case, Elevance's forfeiture-suit dismissal with 40 days to amend, the standing-based dismissal of the ATI and State Street pension risk transfer suit, the Dish Network target-date-fund case ordered to trial, and the D.C. Circuit's partial reversal of a $13 million withdrawal-liability judgment won by the IAM National Pension Fund.

The AT&T pension-transfer ruling puts the focus on who selected the insurer and how that decision was monitored. AT&T is out of the case because it delegated the Athene selection and knew of no red flags, while State Street stays in because it made the choice. Kent Mason of Davis & Harman calls the decision to let the case proceed at all "just wrong," arguing the court misread the Supreme Court's limits on participants' ability to sue and blessed insurer comparisons it conceded might not hold. Jordan Mamorsky of the Wagner Law Group draws the sponsor lesson, that delegating to an independent fiduciary shifts the fight to whether monitoring missed red flags. The piece also cites a litigation tracker kept by Mason's firm: 13 pension risk transfer suits filed since 2024, none in 2026, with the Labor Department now filing briefs on the sponsors' side.

Milliman's monthly index puts the estimated competitive cost of buying insurance contracts to pay retirees' pensions at 99.9 percent of the liability on the sponsor's books as of August 31, up 0.2 percentage point from July, while the average across all participating insurers eased to 102.9 percent. The gap between those two numbers is the argument for competitive bidding, which Milliman estimates saves sponsors about 3 percent. Actual pricing will depend on the plan and its retirees, and employers still need to assess the insurer carefully.

A pension risk transfer lawsuit will move forward, but not against the employer. In a pension risk transfer, a company hands its pension obligations to an insurer by buying a group annuity, and retired AT&T workers allege the independent fiduciary that ran AT&T's transaction, State Street Global Advisors, imprudently chose Athene, an insurer they say leans heavily on affiliated reinsurance. [Monday's order](https://digest.theinnerfirm.com/docs/piercy-v-att-order-2026-09-28.pdf) adopts the magistrate judge's recommendation: the prudence claim against SSGA survives dismissal, while every claim against AT&T itself stays dismissed. On standing, the court held the alleged loss of value is injury enough. Taking the complaint as true at this stage, the retirees were "directly harmed by receiving a riskier and less valuable financial product" than they were entitled to, and no one has to show the insurer is about to fail; whether Athene actually is a riskier provider is the merits fight still to come. On AT&T, terminating a plan is a business decision rather than a fiduciary one under ERISA, the selection was delegated, and there are no allegations AT&T "meddled in the selection process, ignored red flags, or failed in their monitoring obligations."

August was a quiet net positive for the 100 largest corporate pension plans: [Milliman's index](https://www.milliman.com/en/insight/pension-funding-index-august-2026) puts the aggregate funded ratio at 112.2 percent at month-end, up from 112.1 percent in July, with the funded surplus growing $3 billion as a 0.92 percent investment return outweighed a small decline in discount rates. For plans weighing termination or risk transfer, the arithmetic keeps cooperating.

The update counts twelve pension risk transfer suits filed in 2024, one in 2025, and none so far in 2026: thirteen cases consolidated into ten, six dismissed, three surviving motions to dismiss, one of those only by a magistrate judge's recommendation not yet adopted, and one awaiting a ruling. Its two new developments cut in opposite directions. In Dow v. Lumen Technologies, the District of Colorado dismissed on September 1 for lack of standing, applying Thole v. U.S. Bank the way most courts have: participants who have received every promised dollar cannot show actual or imminent harm from the Athene annuity swap. In Piercy v. AT&T, a Massachusetts magistrate judge recommended on August 31 allowing the amended complaint to proceed against the independent fiduciary that selected Athene, writing that the standing analysis in Thole “has little direct bearing on PRT cases.” Related standing questions are now before appellate courts in the Lockheed Martin and Bristol-Myers Squibb cases, where the Department of Labor and a state coalition have filed in support of the sponsors.

Corporate pension surpluses keep compounding: the funded ratio for the Milliman 100 plans inched up to 112.2 percent as of August 31, a $141 billion surplus, as a 0.92 percent investment return outran a two-basis-point dip in the discount rate to 6.00 percent. The baseline projection now has the ratio at 112.5 percent by year end and 113.5 percent by the end of 2027. That is the backdrop for why pension risk transfer and surplus questions keep landing on sponsor agendas.

The court dismissed retirees' challenge to Lumen's 2021 transfer of $1.4 billion in pension obligations covering 22,600 participants to Athene, holding under Thole that participants whose fixed benefits keep arriving allege no Article III injury. Allegations that Athene is riskier than traditional insurers showed at most that it is more likely to fail than other providers, not that default is certainly impending, and four years of uninterrupted payments undercut any imminence. The opinion catalogs the district court split on pension risk transfer standing and notes no controlling authority anywhere. Dismissal was without prejudice, with an amicus brief from ERIC, the American Benefits Council, and CIEBA accepted along the way.

The Pension Benefit Guaranty Corporation has relaunched its opinion letter program, giving employers, plan sponsors, unions, and practitioners a channel to ask the agency's Office of the General Counsel how Title IV of ERISA applies to specific situations. Requests may be submitted anonymously through counsel, opinions bind only the requester, and the program excludes matters in litigation, coverage determinations, and issues pending in rulemaking. The agency's first opinion letter since 2002 issued in June, finding that annuity buyouts of frozen plan participants do not trigger section 4043 reporting.

A Massachusetts federal magistrate judge has recommended dismissal of the pension risk transfer suit against AT&T for a second time, finding the transfer was a settlor decision and that AT&T validly delegated annuity provider selection to State Street. One claim survives the recommendation, that State Street did not act with the required independence.

Estimated competitive retiree buyout cost, as a percentage of accounting liability, increased by 10 basis points from 99.6% to 99.7% during July.

Mercer's GRIST desk tallies the pension risk transfer docket after Schoen v. ATI: four district courts have now dismissed PRT challenges for lack of standing while four have let them proceed, with the DOL filing amicus briefs on the sponsor side and noting that no annuity selected in a risk transfer has defaulted in thirty years. The Konya and Doherty appeals are positioned to resolve the split.

A Pennsylvania federal court dismissed a class action challenging ATI's $1.5 billion pension risk transfer to Athene, holding under Thole that retirees whose monthly benefits remain unchanged lack standing, and that the alleged risk of future harm was too speculative. The decision deepens the district-court split over Athene-related de-risking suits, with standing rejected in Schoen, Camire, and Bueno but sustained in Konya and Doherty, both now on interlocutory appeal to the Fourth and Second Circuits. Nixon Peabody's ERISA litigation team advises sponsors to document annuity-provider selection under the DOL's six-factor guidance before closing, since no court has yet reached the fiduciary merits on a developed record.

On June 15, 2026, the Pension Benefit Guaranty Corporation (“PBGC”) issued an opinion addressing whether an annuity buyout that reduces active headcount by 20% or more would trigger a reportable event.

Another federal judge has dismissed a suit by plaintiffs backed by Schlichter Bogard LLC alleging that their pensions were put at risk via a transfer of those obligations to a PE-backed insurance company.

Prohibited Transaction Exemption (PTE) 2014-06 provided an exemption for AT&T to contribute approximately $9.21 billion of employer securities (the Preferred Interests) and other assets to the AT&T Pension Benefit Plan (the Plan).

Like several other pro-employer pension risk transfer rulings, the judge said the plaintiffs lack standing to sue as they continued to receive promised benefits.

Defense and aerospace company ATI won dismissal of a proposed class action alleging it put retirees' benefits at risk by transferring approximately $1.5 billion of pension obligations to a private equity-backed insurance company, with a Pennsylvania federal court ruling Monday that the ex-workers hadn't sufficiently pleaded their claims.

The Labor Department filed an amicus brief with a federal appellate court addressing the standards for offloading defined benefit plan liabilities through pension risk transfers. The filing gives sponsors a first official read on how DOL views the safest available annuity analysis in the current PRT litigation wave.

The deadline to adopt a restated pre-approved 403(b) plan is rapidly approaching. Here's what employers need to know.

The deal, if approved by a federal district court in California, would require updates to future pension calculations.

Background Under ERISA section 4043, defined benefit plan administrators must notify PBGC when certain “reportable events” occur. One of those events is a reduction in the active participant headcount.