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Compliance October 24, 2025
Litigation Challenges Booming PRT Market, But Plan Sponsors Push Ahead
Despite a flurry of lawsuits challenging pension risk transfers, plan sponsors remain committed to shedding defined benefit liabilities — viewing litigation risk as another manageable cost in an otherwise hot market.
Reported by James Van Bramer
Art by Davide Comai
For the past decade, pension risk transfer transactions—in which companies offload their defined benefit plan obligations to insurers—have surged from a more niche financial strategy to a mainstream corporate priority.
Now a wave of litigation is testing whether those deals meet fiduciary standards under the Employee Retirement Income Security Act, introducing new scrutiny even as the market scales new heights. Yet for most plan sponsors, the court challenges have not dimmed enthusiasm. Instead, they’ve sharpened the focus on process—and added one more line item to the cost of doing business.
“People are now looking at the cost of litigation as one of the administrative costs of doing these transactions,” says Kent Mason, a partner in law firm Davis & Harman LLP. “There’s a decent chance you’ll get sued, but [plan sponsors] believe they’ll ultimately win.”
According to MetLife’s 2025 Pension Risk Transfer Poll, 94% of DB plan sponsors with de-risking goals still plan to completely divest their pension liabilities, while LIMRA reported $51.8 billion in single-premium PRT sales in 2024—the second-highest total ever recorded.
Together, these trends signal that defined benefit pension sponsors view litigation not as a deal-breaker, but as background noise in an otherwise resilient market.
The Litigation Landscape
As of mid-October 2025, 10 PRT lawsuits remain active across U.S. district courts, according to the PRT Litigation Status Tracker curated and provided by Davis & Harman. Most of the suits challenge the fiduciary process employers used to select insurers.
Several cases, such as Piercy v. AT&T and Camire v. Alcoa, have been dismissed on grounds that the plaintiffs lacked a legal basis to sue. Another, Doherty v. Bristol-Myers Squibb, survived motions to dismiss, with a pretrial conference scheduled for November. Three cases have been dismissed outright, one awaits a final ruling, and two are being appealed.
According to Joanne Roskey, the ERISA litigation practice lead at law firm Miller & Chevalier, while the early signs in the latest spate of litigation are favorable to plan sponsors, few of these cases have been sorted out completely. The takeaway for now is that plan sponsors should remain extremely diligent in selecting providers if they intend to complete a PRT.
“The cases are still pretty young. None have been decided on appeal yet, but lessons are already emerging—documenting a prudent process is key,” she says, adding that the courts’ focus will remain on whether fiduciaries “could have selected the provider and been prudent—that’s the test.”
The Department of Labor’s Interpretative Bulletin 95-1, a guidance document issued in 1995, described what fiduciaries operating under ERISA must consider when selecting an insurer as a pension risk transfer provider to be sure the provider is a safe one. The six criteria include the:
- Insurer’s investment portfolio;
- Size of the insurer relative to the size of the PRT contract;
- Insurer’s level of capital and surplus;
- Insurer’s other lines of business;
- Structure and guarantees of the contract; and
- Additional protection offered by state-level guaranty associations.
A 29-page DOL report issued in 2024 concluded that the department is “not prepared at this time to propose amendments to the Interpretive Bulletin,” but also indicated that the department could consider changes to the bulletin in the future.
The Market Keeps Growing
The lawsuits come at a time when the PRT market is on a historic upswing. LIMRA’s data show that 2024 sales of $51.8 billion were up 14% from the prior year, with 14 insurers each closing at least $1 billion in transactions—a record.
MetLife’s poll of 231 plan sponsors showed similar momentum. Nearly nine out of 10 plan sponsor respondents said they expect to transfer risk to an insurer within three years. The appetite is strongest among companies that have well-funded pensions and that can capitalize on favorable pricing driven by increased insurer competition and relatively higher interest rates than in recent years.
“For the past 10-plus years, we’ve seen this elevated level of activity,” says Elizabeth Walsh, MetLife’s head of U.S. pensions. “The growth may not be linear—it’s episodic—but the market’s capacity has never been higher.”
Risk, Prudence, Process
Experts agree that fiduciary prudence—not fear—is driving plan sponsor behavior.
Steve Keating, of BCG Pension Risk Consultants, points out that the litigation represents “a dozen lawsuits out of roughly 6,000 annuity placement transactions—[which means] greater than 99.5% [were] executed without any legal challenges.”
Keating says the lawsuits have “sharpened the focus on the fiduciary process,” prompting sponsors to document insurer selection more rigorously, especially as it is influenced by financial strength and reinsurance arrangements.
Those due diligence standards trace back to IB 95-1, which requires fiduciaries to obtain “the safest annuity available.”
As Mason explains, “independent fiduciaries are often brought in to help run that process,” ensuring insurers are vetted for creditworthiness, capital strength and compliance with state oversight requirements.
Decisionmaking in a Changing Environment
While legal headwinds swirl, macroeconomic conditions are creating tailwinds. Plan funded status remains high thanks to stronger equity markets and interest rate stability, which make annuity purchases more affordable.
“Funding levels right now are very high relative to historical levels,” says Kurt Southworth of October Three Consulting. “That’s one of the reasons plan sponsors move toward termination.”
Southworth adds that while some companies are cautious, waiting to see how cases like Doherty v. Bristol-Myers Squibb unfold, most recognize that “market timing rarely proves to be a winning strategy.”
In practical terms, litigation has encouraged better recordkeeping, not hesitation. As Miller & Chevalier’s Roskey puts it, “these cases, while being a nuisance, are also potentially helpful because they heighten the obligation to proceed in accordance with fiduciary requirements.”
Despite court battles, the PRT market’s fundamentals remain strong, industry insiders say. More insurers continue to enter the space and offer more competitive pricing and insurance capacity, with more than 20 now active,. Plan sponsors see the transactions as inevitable for financial and strategic reasons: simplifying balance sheets, eliminating longevity risk and freeing capital for other corporate purposes.
More than anything, Mason says, the law allows PRTs.
“The law is 100% clear: You can take away ERISA rights and PBGC protection through a pension risk transfer,” he says. “That’s explicitly permitted.”
