The recent ruling by Judge Margaret Garnett in the Southern District of New York marks a watershed moment for retirees challenging the safety and legality of Pension Risk Transfers (“PRTs”). In Doherty v. Bristol-Myers Squibb Co., No. 24-cv-06628 (S.D.N.Y. Sept. 29, 2025), the court refused to dismiss key claims against Bristol-Myers, its pension fiduciaries, and State Street Global Advisors for their role in transferring $2.6 billion in retiree pension obligations to Athene, a Bermuda-linked annuity insurer owned by Apollo Global Management. While the ruling does not resolve the case, it allows retirees’ central allegations to move forward: that their benefits were placed at “substantial risk” by offloading them to Athene, and that the transaction stripped them of longstanding ERISA protections and federal backstops. For thousands of pensioners, this is a significant victory—the first step in holding corporate sponsors and their advisers accountable for shifting obligations into opaque, private-equity-controlled insurance structures.

Substantial Risk of Default (p. 9 of Opinion)

At the heart of Judge Garnett’s decision is the finding that plaintiffs plausibly alleged a “substantial risk” that Athene could default on its obligations. The court credited detailed allegations that Athene operates as one of the so-called “new risk-taking insurers,” with portfolios concentrated in illiquid, volatile assets such as private credit and structured products. Unlike traditional insurers with conservative surplus levels, Athene ranked near the very bottom of U.S. carriers in surplus-to-risk ratios. Even more troubling, 80% of Athene’s liabilities were reinsured through Bermuda affiliates owned by Apollo itself. Such affiliated reinsurance lacks the arm’s-length pricing discipline of the open market and, because Bermuda requires less capital than U.S. regulators, magnifies counterparty risk. The court highlighted parallels between Athene and other recently failed insurers that collapsed under similar capital structures. For retirees, this means their lifetime benefits now hinge on the solvency of a highly leveraged private-equity-controlled insurer—rather than on a Fortune 500 plan sponsor or the Pension Benefit Guaranty Corporation (PBGC). (See Doherty v. Bristol-Myers Squibb Co., No. 24-cv-06628, slip op. at 9–12 (S.D.N.Y. Sept. 29, 2025)).

Reduction of Protections and Guarantees (p. 13 of Opinion)

Equally important, Judge Garnett recognized that the Athene transaction diminished retiree protections. Once Bristol-Myers terminated its plan through annuitization, retirees lost both ERISA fiduciary protections and PBGC insurance coverage. In their place, they now rely solely on state guaranty associations, which cap coverage at levels far below the obligations owed. This substitution is no small matter. The PBGC is a federal entity backed by Congress. State guaranty associations, by contrast, are fragmented nonprofits with weak funding and uneven benefit caps. For retirees with larger pensions, the coverage gap could be devastating in the event of insurer insolvency. (See Doherty v. Bristol-Myers Squibb Co., slip op. at 13–15).

As argued in prior analyses, including *Annuities Are Prohibited Transactions via ChatGPT* (June 13, 2025)[1] and *State Guarantee Associations Behind Annuities Are a Joke* (June 24, 2025)[2], this shift from federal to state protection materially reduces security for beneficiaries. This legal recognition—that annuitization materially reduces participant protections—will resonate in every ongoing and future PRT case.

Disappointment on “Party in Interest” (p. 24 of Opinion)

The one setback in the ruling was the court’s conclusion that Athene was not a “party in interest” under ERISA because it merely sold a product, rather than serving as a fiduciary. While this shields Athene from certain prohibited transaction claims, it leaves Apollo and its insurance subsidiaries effectively “too big to jail.” This is particularly galling given Apollo’s history. Its founder and long-time CEO, Leon Black, paid Jeffrey Epstein $170 million for so-called “tax advice.” Apollo has since expanded its control over retirement assets by acquiring insurers such as Athene, exploiting regulatory arbitrage to chase yield with retirees’ money. The decision reflects an unfortunate judicial blind spot: acknowledging the risks of private-equity-backed annuities while refusing to hold the insurers themselves to ERISA’s highest fiduciary standards. (See Doherty, slip op. at 24).

State Street’s Role and the Missing “Downgrade” Clause

A central claim against State Street remains: that as adviser to Bristol-Myers, it failed to negotiate appropriate safeguards. Most notably, State Street did not require Athene to maintain a “downgrade provision” to protect retirees if the insurer’s creditworthiness deteriorated. Such provisions, common in sophisticated reinsurance and corporate bond agreements, could have forced Bristol-Myers to step back in or provide collateral if Athene’s ratings slipped. By ignoring this safeguard, State Street effectively placed retirees at the mercy of Apollo’s investment decisions. As argued in *Weak Standards Make Annuities Prohibited Transactions in ERISA Plans* (Sept. 15, 2025)[3], fiduciaries cannot simply chase the lowest-cost annuity contract—they must prudently evaluate long-term risks and negotiate protections like downgrade provisions.

Broader Implications: ERISA, Annuities, and Private Equity

This decision arrives amid growing scrutiny of PRTs, as more corporations unload pension obligations onto insurers. As argued in *Pension Risk Transfer Annuities Should Be Prohibited* (Dec. 17, 2024)[4], these transactions invert ERISA’s core principle: fiduciaries are supposed to safeguard benefits, not gamble them in search of surplus recapture. The Bristol-Myers case exemplifies the pattern: employer motivation to capture surplus assets; consultant motivation to maintain ties with insurers and private equity sponsors; insurer motivation to collect premiums to invest in higher-yielding, higher-risk private credit. Meanwhile, retirees lose federal protections and are left hoping their annuity provider weathers the next financial downturn. (See Doherty, slip op. at 17–19).

Conclusion: A Step Forward, But More Work Ahead

The court’s refusal to dismiss most claims is a big win for retirees. For the first time, a federal court has recognized that transferring pensions to a private-equity-backed insurer like Athene creates a “substantial risk” of default and strips away critical protections. Still, the fight is far from over. By excusing Athene as a mere “product seller,” the ruling underscores how ERISA’s framework lags behind the realities of today’s financial engineering. Unless courts, Congress, or the Department of Labor impose stricter standards, employers and consultants will continue to use PRTs to offload liabilities, enrich themselves, and expose retirees to unacceptable risks. For retirees and their advocates, the Bristol-Myers case is both a warning and an opportunity. It warns that the private-equity insurance model is fundamentally unstable. And it offers an opportunity to establish new legal precedent: that fiduciaries must negotiate meaningful protections, such as downgrade clauses, and that regulators must revisit whether annuitization itself is consistent with ERISA’s promise of prudence and loyalty.

Footnotes

[1] Commonsense401kProject, “Annuities Are Prohibited Transactions via ChatGPT,” June 13, 2025.

[2] Commonsense401kProject, “State Guarantee Associations Behind Annuities Are a Joke,” June 24, 2025.

[3] Commonsense401kProject, “Weak Standards Make Annuities Prohibited Transactions in ERISA Plans,” Sept. 15, 2025.

[4] Commonsense401kProject, “Pension Risk Transfer Annuities Should Be Prohibited,” Dec. 17, 2024.

[5] Doherty v. Bristol-Myers Squibb Co., No. 24-cv-06628 (S.D.N.Y. Sept. 29, 2025).