Pension Plan Participants Sue Lockheed Martin Over Alleged Transfer of Plan Liabilities to ‘Risky’ Insurance Co.

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A proposed class action lawsuit alleges Lockheed Martin Corporation has “sacrificed” the retirement security of pension plan participants and their beneficiaries by transferring pension liabilities to an insurance company with a “highly risky” offshore structure. 

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According to the 33-page case, Lockheed Martin has violated the federal Employee Retirement Income Security Act (ERISA), which requires plan sponsors to select the “safest annuity available” to pay pension benefits to retirees and beneficiaries.

More specifically, the lawsuit claims the Maryland-based aerospace company “egregiously” breached its fiduciary duties under ERISA by offloading over $9 billion in pension obligations to Athene Annuity and Life Company and Athene Annuity & Life Assurance Company of New York, which allegedly invest in “far riskier assets” than several traditional annuity providers.

“This risk is compounded by numerous factors, including Athene’s reinsurance of annuities with offshore affiliates,” the filing expands. “In a market with no shortage of stable and established annuity providers, no prudent and loyal fiduciary would have offloaded billions of participants’ retirement savings to Athene under the circumstances then prevailing.”

The defendant first announced in August 2021 that Athene would begin paying benefits to approximately 18,000 participants and beneficiaries of the Lockheed Martin Corporation Salaried Employee Retirement Program and the Lockheed Martin Aerospace Hourly Pension Plan, the complaint notes. Then, in June 2022, Lockheed Martin announced a second transfer of pension obligations to Athene for approximately 13,600 plan participants and beneficiaries, the suit relays. 

The case says these transactions transferred approximately $4.9 billion and $4.3 billion in pension liabilities, respectively. 

The lawsuit alleges that Lockheed Martin was incentivized to select Athene because it charged lower premiums than an “established and reputable insurance provider” like Prudential or New York Life would have charged.

“Putting the company’s financial interest in saving money ahead of participants’ interests in retirement security by selecting a riskier annuity provider is an egregious act of disloyalty,” the complaint scathes.

The suit goes on to argue that by transferring plan participants’ retirement assets to Athene, Lockheed Martin has caused approximately 31,000 retirees and beneficiaries to lose certain protections afforded to them under ERISA. 

The filing says that Lockheed Martin, as a sponsor of ERISA-regulated benefit plans, was required to pay certain premiums to Pension Benefit Guaranty Corporation, a federal agency that covers pensioners should their plan sponsor become insolvent. However, the complaint shares, Lockheed Martin plan participants and beneficiaries lost this protection when the defendant transferred pension obligations to an insurance company governed by state law.

The lawsuit looks to represent anyone who participated in the Lockheed Martin Corporation Salaried Employee Retirement Program or Lockheed Martin Aerospace Hourly Pensions Plan since March 13, 2018, including beneficiaries, for whom the responsibility for plan-related benefit payments has been transferred to Athene Annuity and Life Co. or Athene Annuity & Life Assurance Company of New York.

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