Labor & Employment Law Daily Wrap Up, DOL NEWS—Labor Department doubles down on support for pension risk transfers in new court filing, (Jul 24, 2026)

By Brandi O. Brown, J.D.

In a second amicus filing this year, the Labor Department argues that ERISA permits pension risk transfers and warns that continued litigation could discourage employers from offering defined benefit plans.

The U.S. Department of Labor is continuing its defense of employers' ability to transfer pension obligations to insurance companies, filing a second amicus brief this year arguing that federal retirement law permits businesses to use pension risk transfer transactions when they follow established fiduciary procedures.

The latest filing, submitted this week to the Second Circuit in Doherty v. Bristol-Myers Squibb, addresses a legal challenge to Bristol-Myers Squibb's selection of an annuity provider for a pension risk transfer transaction. The plaintiffs contend the company chose an insurer that was not the safest available option, allegedly breaching fiduciary duties under the Employee Retirement Income Security Act (ERISA).

The Labor Department rejects that interpretation, arguing that ERISA allows employers sponsoring defined benefit pension plans to transfer liabilities to annuity providers and that Congress intended businesses to have access to such transactions as a way to manage long-term pension obligations. It argues that pension risk transfers benefit both employers and beneficiaries when not disrupted and that litigating business decisions can hinder or eliminate benefits.

The filing marks the department's second intervention this year in litigation involving so-called pension "derisking" transactions, signaling a broader effort by agency officials to push back against a growing wave of lawsuits challenging pension risk transfers.

Standing argument. In the Bristol-Myers case, the department argued that the plaintiffs lack standing because they continue to receive all benefits owed to them and have not shown that their retirement benefits are in jeopardy. The brief also emphasizes that the decision to undertake a pension risk transfer rests with the plan sponsor and reiterates longstanding Labor Department guidance governing the fiduciary process used to select an annuity provider.

Previous amicus. The position closely mirrors arguments the department advanced before the Fourth Circuit in Konya v. Lockheed Martin, a case in which it filed an amicus brief in January. There, the department sought to clarify the legal framework governing pension risk transfers, arguing that fiduciaries should receive deference when they act prudently and loyally during the transaction process.

The January filing represented the agency's first public position on pension risk transfers since a series of class-action lawsuits began challenging such transactions in 2024. In that brief, the department argued that plaintiffs had misapplied ERISA and decades of agency guidance in claiming that pension transfers themselves constituted fiduciary breaches.

Labor Department officials framed the issue as critical to preserving the nation's voluntary employer-sponsored retirement system. Deputy Secretary of Labor Keith Sonderling said at the time that ERISA provides employers with an "off-ramp" allowing them to annuitize pension obligations and that maintaining that flexibility is important to encouraging businesses to continue offering defined benefit retirement plans.

Assistant Secretary for Employee Benefits Security Daniel Aronowitz similarly argued that ERISA focuses on process rather than outcomes and does not permit courts to second-guess discretionary fiduciary decisions after the fact merely because another option may have appeared preferable in hindsight.

Concerned about discouraging employers. Together, the two filings suggest the Trump administration's Labor Department is attempting to establish a consistent legal position supporting pension risk transfers as a legitimate tool for managing pension liabilities. The department argues that continued litigation challenging business decisions surrounding annuity purchases could discourage employers from using pension risk transfers, potentially upsetting the balance Congress established between federal retirement protections and state insurance regulation.

Risks and concerns. However, organizations such as the AARP have previously been vocal about the potential dangers of such risk transfers, stating that they “do not eliminate risk.” Retirees for Justice have echoed that concern.

The AARP explains:

“In general, when plans transfer risk to insurers and individuals, the workers and retirees cease to be participants in the pension plan. As a result, ERISA no longer governs the benefits, and workers and retirees lose its protections. In addition, the Pension Benefit Guaranty Corporation no longer insures the benefits. Among other consequences, the plan’s workers could bear the risk of reduced benefits in the event that the annuity provider defaults. Concerns about defaults are growing as annuity providers owned or controlled by private equity firms are playing a larger role in pension risk transfers.”

And, of course, the plaintiffs in these and similar lawsuits have alleged that they are harmed when pension obligations are transferred to insurers that do not represent the “safest available” option.

Companies: Bristol-Myers Squibb; Lockheed Martin

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