By Edward Stone
In 2021 the Association of BellTel Retirees formed a strategic alliance with Retirees for Justice to further the Association’s leadership role in fighting to protect earned benefits for retirees and their families.
Thanks to the support of the Association of BellTel Retirees, Retirees for Justice has been able to communicate its core principles to key policy makers at the state and federal level.
Most recently, Retirees for Justice participated in giving testimony before the ERISA Advisory Counsel, engaged with the Department of Labor on issues pertaining to pension risk transfers (PRT) and we are actively pursuing a sponsor to support an important amendment to ERISA we drafted to better protect retirees impacted by PRT deals.
A number of Association board members contributed support to this effort and outreach is underway with members of Congress representing Connecticut, Massachusetts, New Jersey, New York and Vermont. We hope to have good news to report on this front by year end.
2022 was a record year for de-risking transactions with $52 billion in pensions transferred to insurance companies and a total of 568 transactions according to a report from AON.
So far, 2023 is looking like it could come close or surpass 2022 with approximately $22.5 billion going to insurance companies across 289 individual transactions. If that pace of pension transfer dealmaking continues, there will be more than $300 billion in liabilities in the hands of insurance companies, all of which are regulated at only the state level.
The most significant deal so far in 2023 involved AT&T kicking out 96,000 retirees from its Defined Benefit Plan in a $8.1 billion transaction with private equity backed insurer Athene. Athene, wholly owned by private equity giant Apollo Global Management, Inc., and a relative newcomer to this business, has become the number one issuer of pension group annuities since 2020.
Athene reinsures 80% of its pensions derisking contracts with its own Bermuda affiliate and Athene has one of the lowest surplus to liabilities ratios in the business. Surplus is the buffer that protects policyholders from a liquidity crisis or unexpected and excessive losses.
The industry average is 7.4%, New York Life is at 12%, the Prudential Insurance Company of America (the Verizon choice) is at 4.92%, and Athene comes in at a paltry 1.4%.
Slowly, but surely, lawmakers are becoming genuinely concerned about the systemic risk that excessive pension transfer deals might have on our overall financial system. That is exactly why we continue to push for more transparency and accountability in the pension transfer marketplace.
Pension security is becoming even more important since many Defined Benefit Plan Sponsors have gotten away with slashing or eliminating retiree life insurance benefits and increasing the cost of retiree healthcare.
That is why Retirees for Justice with support from the Association of BellTel Retirees is making a big push to change state laws to replace protections that are lost in pension risk transfer transactions, with reasonably equivalent protections under state law.
We will be reaching out with revised state initiatives early in 2024. Stay tuned!
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