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ARTICLE · 18 APRIL 2013

De-Risking On Trial? U.S. Verizon Litigation Still Active

Osler, Hoskin & Harcourt LLP
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Existing law and regulations clearly contemplate that pension obligations may be irrevocably transferred to outside insurers and that the decision whether to annuitize benefits is not a fiduciary decision.

CanadaEmployment and HR
Carol Buckmann
Carol Buckmann
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In our March 13 webinar on de-risking defined benefit pension plans, I stated that the U.S. litigation launched by a group of Verizon retirees challenging the annuitization of their pensions was not dead, even though a federal district court refused to stop the purchase of annuities from Prudential, and the annuities were purchased in 2012. (For those of you who missed it, here is a link to the podcast of our U.S. webinar covering de-risking.) There have been some new developments in the Verizon litigation of interest to all sponsors considering de-risking through transferring liabilities to insurance companies.

Plaintiffs have filed an amended complaint alleging breaches with respect to the non-annuitized participants and alleging that the pension plan was not 80% funded, which, if true, would prevent full annuitization of their benefits due to restrictions on "prohibited payments" that apply to underfunded plans. Verizon responded by filing documents with the

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