Archer Daniels Midland Sheds $500 million in Pension Liabilities

The Archer Daniels Midland Company is an American global food processing and commodities trading corporation, headquartered in Chicago, Illinois. On November 2, 2018 they transferred about $500 million in payments for 3,800 retirees to Prudential Insurance Co. of America. This is the first such transfer for the company whose pension plan assets total $2.448 billion, with projected benefit obligations of $3.109 billion and a funding ratio of 78.7%.

AK Steel Corp. Transfers Millions in Pension Liabilities

On October 26, 2018, AK Steel Corporation of West Chester, Ohio, purchased a group annuity contract from Massachusetts Mutual Life Insurance Company in a move that will affect about 5,400 retirees. The transaction will transfer some $280 million in pension liabilities. This is the third such de-risking transaction for AK Steel; the company purchased two other group annuity contracts from an unnamed insurance company in 2016 to transfer $210 million in pension liabilities. As of December 31, the company’s pension plan assets totaled $2.322 billion, while estimated benefit obligations totaled $2.808 billion, for a funding ratio of 82.7%. For more information on the risks associated with pension de-risking contact Edward Stone at eddie@edwardstonelaw.com.

As of Dec. 31, AK Steel’s pension plan assets totaled $2.322 billion, while projected benefit obligations totaled $2.808 billion, for a funding ratio of 82.7%.

Edward Stone – Cheddar.com Interview Sears Bankruptcy

Attorney Eddie Stone, Edward Stone Law founder and special counsel to ProtectSeniors.org was interviewed by Cheddar TV on October 19, 2018 regarding the Sears Chapter 11 bankruptcy filing and its impact on the Sears pension plans.  The Sears pension plans are underfunded to the tune of $1.5 billion, and if the Sears bankruptcy moves from reorganization to liquidation, the pension obligations will be taken over by the PBGC (Pension Benefit Guaranty Corporation).  Ironically, the former CEO of Sears, Eddie Lampert, blames the company’s financial woes on its pension obligations.  Click here to view the entire interview.

Cheddar TV is the leading post-cable news, media, and entertainment company broadcasting live from various locations, including the floor of the New  York Stock Exchange.

Sears Bankruptcy Will Impact Retirees

Sears formally filed for bankruptcy protection on Monday, October 15, 2018 in the Southern District of New York, after being unable to repay $134 million in loans.  According to media reports, Sears plans to close about 142 of its 700 stores by year end.  But the Sears bankruptcy filing could do more than just leave hundreds of mall locations without anchors.  If the Sears reorganization plan turns into a liquidation, the Sears pensioners, who number between 90,000 – 100,000, will feel the consequences.  Sears had pension liabilities of $4 billion in 2017 and its pension plans were reported to be underfunded by about $1.5 billion.  Sears was one of the many companies to jump on the pension de-risking bandwagon in 2017, when they transferred $515 million in pension liabilities to MetLife. MetLife is now responsible for paying future pension benefits to about 51,000 Sears retirees.  Speaking to MarketWatch on the risks facing retirees,  Edward Stone said: “If pensions are turned over to the Pension Benefit Guaranty Corp., a U.S. government agency whose mission is to protect retirement incomes, many pensioners will likely see their benefits reduced.” Click here for the full article on MarketWatch.com.  For more information on the risks associated with pension de-risking contact Edward Stone at eddie@edwardstonelaw.com.

Edward Stone – Guest Speaker at Association of BellTel Retirees 2018 Annual Meeting

Edward Stone, Special Counsel to ProtectSeniors.org was a guest speaker at the 2018 annual membership meeting of the Association of BellTel Retirees in Atlantic City, New Jersey on June 6, 2018.  Mr. Stone’s presentation on pension derisking offered retirees information on the status of state legislative initiatives in New York, New Jersey, Virginia, Massachusetts, Pennsylvania, and Connecticut.  Stone stressed to the retirees the importance of taking action now to protect their retirement benefits. Retirees lose all federal protections provided by the Employee Retirement Income Security Act (ERISA) and the Pension Benefit Guaranty Corporation (PBGC) in a pension derisking transfer.  Protections that are lost include: uniform protection from creditors and bankruptcy trustees; ERISA’s fiduciary duty standards; mandated annual financial disclosures; minimum funding thresholds; ready access to the federal courts; and PBGC coverage.  State legislation must be enacted to replace the protections that have been lost.  If you would like more information on pension derisking, please contact Edward Stone Law at admin@edwardstonelaw.com.

 

Virginia Pension Derisking Legislation – Effective as of July 1, 2018

Virginia is the latest state to enact legislation protecting retirees in pension derisking transfers.  Senate Bill SB755 introduced by Senator Glen Sturtevant (R-Midlothian) with support from Delegate Dawn Adams (D-Richmond) received unanimous support in both the Virginia House and Senate.  Virginia law now provides that (1) amounts payable to a participant under an annuity providing retirement benefits are exempt from creditors’ claims, and (2) subsequent transfers of group annuity contracts funding retirement benefits are prohibited without the prior written approval of the State Corporation Commission.  Amending Section 38.2-3125 of the Virginia Code, this new legislation went into effect on July 1, 2018. The complete text of SB755 is available here: SB755.

Lawsuit Filed in the Wake of MetLife’s Failure to Keep Track of Retirees

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Earlier this year we reported on MetLife’s failure to pay retirees to whom it owed benefits resulting from pension de-risking transfers.  A lawsuit has now been filed against MetLife by Edward Roycroft, a former Martindale-Hubbell employee who retired in 1999.  Roycroft was supposed to receive his benefits in 1999, but MetLife did not pay him his benefits until 2013.  Styled as a class action, the lawsuit includes claims of conversion and unjust enrichment and alleges damages to the class in excess of $500 million. The case is styled as Roycroft v. MetLife, Inc., 18-cv-05481 (S.D.N.Y.).  The Commonwealth of Massachusetts, Securities Division, has also charged MetLife with fraud for making materially misleading statements in public filings causing harm to investors.

Prudential Loses Track of Annuity Clients

Prudential Financial Inc. has reported that it has lost track of some of its annuity clients.  This announcement comes on the heels of MetLife’s announcement in December, 2017 that it had lost track of about 30,000 people to whom it owed pension payments as a result of pension de-risking transfers.  According to BloombergMarkets, Prudential will also take a charge tied to losing track of its customers.

If you are a retiree who believes you are missing payments from Prudential, please contact us at eddie@edwardstonelaw.com or (203) 504-8425.

 

 

MetLife Fails to Pay Pensions

In December, 2017 MetLife revealed that it had failed to pay approximately 30,000 people to whom it owed benefits resulting from pension de-risking transfers. Now, the Securities Exchange Commission (SEC) is looking into this failure to pay pensions.  MetLife is also facing inquiries from several state insurance regulators, including the Superintendent of Financial Services in New York.  MetLife shares took a hit after the company postponed its earnings report due to these unpaid pensions. While MetLife has claimed to be unaware of any intentional wrongdoing in connection with its failure to make payments to these people, this reinforces the need for legislation to protect retirees impacted in pension de-risking transfers. More information on Pension De-Risking can be found here.

If you are a retiree who believes you are missing payments from MetLife, please contact us at eddie@edwardstonelaw.com or (203) 504-8425.

Association of BellTel Retirees Chairman Speaks Out on Pension De-Risking

In a recent interview with PlanSponsor, Jack Cohen, Chairman of the Association of BellTel Retirees, spoke out about the need for protections for retirees in pension de-risking transfers.  “It’s really an unfortunate picture, but we also have to be realistic and keep working hard,” Cohen concludes. “I know that de-risking is a phenomenon whose time has come. But this does not mean we should stop asking questions and stop working to make risk transfers the best we can for retirees. We have to wonder if the insurance companies can stand to take all that risk, and how they will manage it. What we are concerned with is trying to recoup at least some of the protections that we had under ERISA. We are not looking for pie in the sky—we’re looking for Congress and the state legislatures to recognize this could become an economic disaster if we do not protect peoples’ pensions.”

In 2012, 41,000 Verizon retirees were removed from the Verizon pension plan when Verizon purchased a group annuity contract from Prudential to replace the pension benefits for these retirees.  A subsequent legal challenge to the transfer by the Association of BellTel Retirees was ultimately unsuccessful, but the challenge brought much needed attention to the risks facing retirees in pension de-risking transfers.  In late 2015, Connecticut became the first state to pass legislation protecting retirees in pension de-risking transfers. Bills are now pending in New York, Pennsylvania, and Virginia which would replace some of the protections lost to retirees who reside in those states.