WASHINGTON – The U.S. Department of Labor today filed an amicus brief seeking to clarify the proper constraints and liberties that apply when a business decides to derisk by transferring its pension plan liabilities to an annuity provider.
Filed as part of an ongoing effort to stop regulation by litigation, the brief in Konya v. Lockheed Martin, No. 25-2061, reiterates the appropriate standards for derisking transactions known as pension risk transfers.
Today’s amicus brief marks the department’s first public position on pension risk transfer since a wave of class action litigation began in 2024. In the brief, the department said fiduciaries enjoy deference a long as they engage in the pension risk transfer process in a way that demonstrates prudence and loyalty. The department also explained that plaintiffs in the case misapplied retirement law and three decades of departmental guidance by claiming Lockheed breached its fiduciary obligations under the Employee Retirement Income Security Act through their pension risk transfer transactions.
“The Department acted today to protect the voluntary employee benefit system as Congress intended,” said Deputy Secretary of Labor Keith Sonderling. “ERISA expressly provides an off-ramp for employers making the business decision to annuitize their defined benefit obligations. The ability to engage in PRTs is necessary to ensure that employers will continue to offer quality retirement benefits to American employees in the first place.”
“Our amicus brief reinforces ERISA as law of process in which plan fiduciaries have discretion and flexibility to make informed judgment calls,” said Assistant Secretary of Labor for Employee Benefits Security Daniel Aronowitz. “ERISA does not allow hindsight second-guessing or Monday-morning quarterbacking of discretionary fiduciary decisions.”
In its amicus brief, the department stated that “when left unencumbered, PRTs benefit employers and participants/beneficiaries alike, which is why ERISA provides for them (and the Secretary supports business’ right to engage in them). When PRT decisions are forced through the crucible of federal-court litigation, however, those upsides are (at best) obstructed or (at worst) obliterated … if employers are thwarted from conducting PRTs because of the ever-present specter of litigation, the delicately calibrated balance Congress established between federal and state regulatory prerogatives will deteriorate.”
The brief explains the plaintiffs lack Article III standing to sue, because they have received all the benefits they are owed and there is no evidence whatsoever of impending default. The department also made clear that the decision to enter a pension risk transfer is a settlor function reserved for the plan sponsor. As a result, it does not implicate fiduciary duties under ERISA, which are only triggered when the plan sponsor chooses an annuity provider.
The brief also clears up the plaintiff bar’s misinterpretation of longstanding departmental guidance spelling out the process plan sponsors can use to select an annuity.
Read the department’s amicus brief in Konya v. Lockheed Martin.