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Jack Cohen, chairman of a group representing 230,000 retirees who once worked for companies that emerged from the 1984 breakup of Ma Bell, doesn’t want to be de-risked.

In a recent interview Cohen quoted a line from an Institutional Investor story on the post-2008 transformation of Wall Street and how new regulations had succeeded only in pushing risky lending out of banks and into the hands of asset managers. “Risk taking cannot be destroyed, it can only be transferred from one spot to another,” Cohen said with a gravelly laugh. He frames much of the conversation about the Association of BellTel Retirees’ lawsuit to stop corporations from transferring their pension responsibilities around this point: Companies such as his former employer Verizon Communications like to talk about eliminating their pension liabilities and may be able to financially engineer deals — known in industry parlance as pension risk transfers — to remove some of the threats that their promises to retirees pose to their current earnings, but the “de” in “de-risking” is a lie. Instead, he says, Verizon, Ford Motor Co., General Motors Co., J.C. Penney Co. and all the other companies that have done these transactions have just shifted the risk to pensioners themselves. “Pensions are a vanishing breed,” bemoans Cohen, 73, who began his 26-year career with Verizon in 1968 with a sales job at what was then called New York Telephone Co.

Pension risk transfers allow corporations to either move their defined benefit liabilities to an insurance company — along with sufficient assets to back those promises — or directly provide employees with a lump sum of cash that represents what they earned during their tenure. If corporations and insurance companies have come up with dry jargon to describe their efforts to get out from under pensions, it is Cohen who puts the process in more-colorful terms. “Corporations want to get rid of their legacy costs,” he says. “They call them an albatross on their neck, but I call them earned benefits.”

Cohen’s group, the Association of BellTel Retirees, is behind a petition for a writ of certiorari, better known as a cert petition, that urges the U.S. Supreme Court to review its case against Verizon alleging that the company violated the Employee Retirement Income Security Act. The case grew out of a deal that Verizon struck in 2012 to buy a group annuity from Prudential Financial and spin off the liabilities of 41,000 retirees to the insurer. In Pundt v. Verizon Communications Inc., the plaintiffs — pensioners who were left behind in Verizon’s plan after the annuity purchase — claim that a series of conflicting decisions by lower circuit courts on companies’ responsibilities under federal pension law undermine ERISA as a national standard. The plaintiffs want the Supreme Court to give the Verizon retirees “standing” — the right to sue — even though their benefits have not yet been hurt. Waiting for proof of harm, which a lower court said it needed to do, will be too late, they argue. Cohen hopes to stop companies from cutting their ties to retirees in the future.

The case is an important one as U.S. companies increasingly look to get rid of some or all of the risks associated with the expensive retirement promises they’ve made to employees since World War II. Although under ERISA employers have always been able to buy annuities from insurers to cover their retirees’ benefits or to offer lump sums, regulatory changes and longer life spans have pushed companies in recent years to think hard about pension risk. More than 500 companies did risk transfer deals between 2007 and 2013. The market is rewarding the transactions by boosting the share prices of companies that do them, and big insurance companies, including Prudential Insurance Co. of America, owned by Prudential Financial, and MetLife, are eager to take on these obligations, which offer both a rich source of new business and a hedge to the mortality risk embedded in their life insurance policies.

Now retirees and their advocates are raising questions about the potential risk to their benefits in these deals and about the expanded financial services role that insurance companies are taking as populations in both rich countries and the developing world reach retirement age at an unprecedented rate.

The corporate pension has been pronounced dead multiple times during the past few decades, but everybody is still picking at the carcass. The asset management industry, whose growth was initially fueled by the trillions of dollars held in defined benefit pension funds, sees opportunity in helping companies build portfolios that may ultimately appeal to insurance companies. Insurers view the business as fertile ground that requires their core expertise of hedging liabilities, and reinsurers are innovating in areas like longevity risk — the possibility that pensioners will essentially live too long.

The U.S. government also has a stake in the outcome. Although risk transfer deals reduce the Pension Benefit Guaranty Corp.’s potential exposure, they could weaken the agency — which was established more than 40 years ago to insure corporate pensions — because the healthiest plans are moved out and it loses premiums. Nonetheless, the government is cautious, not wanting to weaken pensions and increase older Americans’ dependence on Social Security and other safety nets. Already, federal, state and local pensions face a $7 trillion shortfall, about 40 percent of U.S. GDP last year.

Pension risk transfer deals change the landscape for everyone: corporations, insurance companies, asset managers, the government and retirees. They distribute pension risks from specific companies to insurers and reinsurers. Advocates for pensioners contend that individuals are also taking on some of these risks. When pensions are replaced by annuities, they are removed from federal oversight and guarantees under the PBGC. Instead, pensioners are subject to insurance regulations and the strength of guaranty associations that vary from state to state; in some states retirement income is vulnerable for the first time to creditors. Others argue that retirees are wasting valuable energy worrying about annuities when lump-sum distributions — also a pension risk transfer strategy — are the bigger threat. In fact, because of quirks in regulations, companies are encouraged to offer one-time lump sums, which require employees to manage the risks of outliving their savings.

W. Thomas Reeder Jr. agrees that pension risk transfers reorder the defined benefit world. As director of the PBGC, he worries that companies may be transferring lower-risk liabilities to insurers while higher risks are kept in plans that continue to be covered by the agency. The PBGC has started analyzing the transactions, but it doesn’t yet have enough data to draw any firm conclusions. “Companies are trying to shrink the size of their liabilities,” says Reeder, who worked as benefits tax counsel in the Office of Tax Policy at the U.S. Treasury Department before joining the PBGC last October. “We’re concerned about the effect on our rate base and on retirement security.”

Although the PBGC’s soundness has been questioned over the years — the agency relies on fees, its investments and assets from pension plans that it takes over as trustee, and it is not backed by the full faith of the U.S. government — pensioners worry more about the health of insurance companies. They aren’t alone: Last year the International Monetary Fund said in a report that the transfer of pension risks to the insurance industry could itself pose a risk as financial institutions become more interconnected. The IMF contended that “too big to fail” insurance companies are imperiling workers’ pensions and may need to be better regulated.

In April — the same month that the Communications Workers of America union went on strike against Verizon — the IMF again warned about the systemic risks posed by large insurers. The most recent caution came just days after MetLife, one of the largest insurance companies active in pension transactions, successfully fought its designation by the U.S. government as a systemically important financial institution, which would have required it to hold more capital and submit to more oversight.

Clearly, insurance companies are playing a much larger role in financial services in the U.S. than ever before. Since the 1970s asset managers have profited from investing baby boomers’ retirement savings, but now this generation of 60-somethings is turning away from fund managers who know how to invest assets and to insurers for retirement income — either directly through defined contribution plans and annuities or indirectly through defined benefit plans.

Still, a strong case can be made that the deals help companies reduce the risk of their pension obligations. A company like Ford is probably better at manufacturing cars than managing longevity risk. Risk transfers can position companies to compete with younger businesses (like Tesla Motors, in this case) whose workers are covered by defined contribution plans in which employees shoulder the risk of creating nest eggs. Arguably, retirees also want healthier corporations that are better positioned to make good on obligations to pensioners that remain even after annuity and lump-sum deals.

When corporate vice president and treasurer Robert O’Keef was leading an effort to evaluate the viability of a pension risk transfer for Motorola Solutions, the Schaum­burg, Illinois–based company had $11 billion in global retirement liabilities for 95,000 participants. Created in January 2011 after Motorola spun off its mobile phone business to focus solely on public safety and government communications, Motorola Solutions has just $6 billion in annual revenue and 15,000 employees. Relative to the size of the company, “we had one of the largest pension obligations of any company in the U.S., whatever yardstick you used — revenue, market cap or employee base,” O’Keef says. In 2014, Motorola transferred $3.1 billion in U.S. liabilities for 31,000 retirees.

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