Alcoa Retirees: Contact your state insurance commissioner and elected representative in Congress today!
A Message to Alcoa Pension Plan Participants from UNITE HERE
On November 17, 2021, Alcoa announced that it will transfer approximately $1 billion of pension obligations to Athene, an insurance company affiliated with the private equity firm Apollo Global Management. Approximately 11,200 pension plan participants will be affected. Pension plan assets will be transferred to Athene and Athene’s subsidiaries will provide group annuity contracts to pay benefits to plan participants. Alcoa stated that Athene will take over payment obligations in December 2021.
On December 14, 2021, Alcoa announced that an additional $500 million of pension obligations and related assets will be transferred to Athene, affecting approximately 2,600 more Alcoa pension plan participants. (You can read the company’s November announcement here and its December announcement here.)
In a typical annuity buyout, plan participants lose the protections of the Employee Retirement Income Security Act (ERISA) and the Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures pension benefits.
If an annuity provider becomes insolvent and is unable to meet its obligations, beneficiaries’ primary protection for recovering unpaid benefits would be the patchwork system of State Guaranty Associations. Some states would only cover $250,000 per annuitant.
Athene entered the pension risk transfer market in 2017. From its inception, Athene’s assets have been managed by private equity giant Apollo Global Management. Apollo recently announced its plan to acquire and merge with Athene. Athene seeks to make profits for its shareholders by earning more on investment returns from plan assets than it is required to pay out to recipients.
In June 2020, NBC News reported on Apollo and Athene in an article titled “As insurance companies take over pension plans, are your payments at risk?” It quoted Joseph M. Belth, professor emeritus of insurance at Indiana University, as saying:
“I think private equity firms are in it for the quick buck and that is what troubles me. Policyholders are pawns in the hands of people like [Former Apollo CEO] Black.”
The article described Athene and Apollo’s investment practices, reporting about Athene’s Iowa-based insurance subsidiary:
- Athene Annuity and Life Company had a surplus of $1.2 billion. In comparison, Prudential Annuities Life Assurance Corp. had a surplus of $6.4 billion with similar assets.
- Athene Annuity and Life Company had a high concentration of investments in Apollo-related entities, “$4.1 billion in stocks, bonds and mortgage loans of its ‘parent, subsidiaries and affiliates,” which one expert described as “too many eggs in one basket and an affiliated basket.”
- Athene Annuity and Life Company’s reinsurance and coinsurance agreements were overwhelmingly (95%) with affiliated companies.
Are you one of the retirees affected by this transaction? Make your voice heard:
Alcoa Pension Plan Participants Deserve Security and Transparency – click here to write to your elected member of congress and your state’s insurance commissioner to your express your concerns about the transaction with Athene.
For more information:
Athene is regulated by state insurance agencies and the Bermuda Monetary Authority. If you have questions or concerns you can contact your state’s agency. You can find their contact information on the website of the National Association of Insurance Commissioners.
To find out your State Guaranty Association’s level of protection for annuity benefits, you can contact the National Organization of Life & Health Insurance Guaranty Associations by calling 703-481-5206 or emailing [email protected].
This information is being provided by UNITE HERE, a labor organization that represents workers in the US and Canada.