AT&T, Lockheed Suits Mark First Real Test for Pension Transfers

Recent lawsuits targeting AT&T Inc. and Lockheed Martin Corp. for moving workers off their pension plans by purchasing annuity contracts could be the first real test for the multi-billion dollar pension risk transfer business.

Pension risk transfers are a popular way for employers to reduce benefit costs and manage risks. Under these transactions, workers are removed from the company retirement plan—and outside the protection of federal pension law—in exchange for annuity contracts from third-party insurers that are intended to fund their benefits.

Nearly 90% of companies plan to divest their pension plan liabilities in the future and the majority expect ...