Senate Banking Chair Brown Asks State and Federal Regulators to Study How Private Equity Companies Are Managing Workers’ Retirement Assets

On March 16, 2022, Senate Banking Committee Chairman Sherrod Brown wrote to the National Association of Insurance Commissioners (NAIC) and the Federal Insurance Office (FIO) of the U.S. Treasury Department highlighting concerns about private equity’s growing role in the insurance industry and asking the two regulatory bodies to further study the issue and report to Congress no later than May 31, 2022.

According to the Senator’s letter,

“Investment firms like asset managers and private equity funds often take on much higher risk strategies than traditional insurance companies, and do not face all of the same capital, liquidity, and policyholder protection requirements as well-regulated insurance companies. Consequently, many workers who chose to invest their retirement savings in conservative and long-lived insurance firms now find themselves paying premiums to much riskier firms with less experience in the insurance business. While investment firms might benefit from huge profits in the short term, failure to adequately manage these risks may ultimately cost policyholders their retirement incomes.”

Senator Brown’s letter also expressed concern about the growing presence of private-equity-backed life insurers in the pension risk transfer (PRT) market and specifically referenced several recent PRT transactions, including Athene’s assumption of pension obligations to workers and retirees of Lockheed Martin and Alcoa.

Below are the questions Senator Brown asked FIO and NAIC to examine:

  1. What risks do the more aggressive investment strategies pursued by private equity-controlled insurers present to policyholders?
  2. What risks do lending and other shadow-bank activities pursued by companies that also own or control significant amounts of life insurance-related assets pose to policyholders?
  3. Are there risks to the broader economy related to investment strategies, lending, and other shadow-bank activities pursued by these companies?
  4. In cases of pension risk transfer arrangements, what is the impact on protections for pension plan beneficiaries if plans are terminated and replaced with lump-sum payouts or annuity contracts? Specifically, how are protections related to ERISA and PBGC insurance affected in these cases?
  5. Given that many private equity firms and asset managers are not public companies, what risks to transparency arise from the transfer of insurance obligations to these firms? Will retirees and the public have visibility into the investment strategies of the firms they are relying on for their retirements?
  6. Are state regulatory regimes capable of assessing and managing the risks related to the more complex structures and investment strategies of private equity-controlled insurance companies or obligations? If not, how can FIO work with state regulators to aid in the assessment and management of these risks?

National Association of Insurance Commissioners task force plans investigation of private equity-owned insurers, including issues related to pension transactions

On December 7, 2021, the Financial Stability Task Force of the National Association of Insurance Commissioners (NAIC) discussed private equity ownership of life insurers. The task force will assign a subsidiary working group to examine issues related to private equity ownership of insurers (though not necessarily exclusive to private equity-owned insurers). It published a draft list of the issues to be considered.

The list specifically includes issues related to pension risk transfers like Athene’s transactions with pension plans sponsored by JCPenney, Lockheed Martin and Alcoa. It includes consideration of the complex investments used by private equity-owned insurers to support these pension obligations and how obligations to plan beneficiaries would be met if the investments do not perform as expected. It also includes a review of Department of Labor protections for pension beneficiaries and state guaranty association coverage of benefits.

Another issue listed in the draft document is the use of offshore reinsurers and complex affiliated sidecar vehicles. Athene disclosed that in 2020 it reinsured 80-100% of deposits held by its US insurance subsidiaries to its Bermuda reinsurance subsidiaries. Athene also stated that it used a sidecar investment vehicle in the JCPenney and Lockheed Martin transactions.

The task force is made up of state insurance commissioners, including those from Florida, New York, Pennsylvania, Texas, and California each of whom has received multiple emails from workers and retirees over the past several months asking them to investigate Apollo-backed Athene’s pension risk transfer deals. As of December, those five insurance Commissioners on the Task Force had received a combined 115 such requests via this website alone.

Retirees whose pension benefits are now in the hands of Athene may be interested in following these developments.

Read the NAIC’s full list of draft regulatory considerations here.

Read More: The National Law Review, “Turning Up the Magnification: Regulators have PE-Controlled Insurers Under the Microscope (Again)”

State Treasurers call for new guidance for pension plans in response to growing role of private equity-backed insurers

Illinois State Treasurer Michael Frerichs, Wisconsin State Treasurer Sarah Godlewski, and Colorado State Treasurer David Young sent a letter to Secretary of Labor Marty Walsh calling for new guidance from the Department of Labor to ensure the safekeeping of retirement assets when plans transfer liabilities to insurers.

Citing the growing role of private equity-backed insurers in the annuity and pension risk transfer markets, including Athene’s recent annuity buyout of the JCPenney pension plan, the treasurers called on the DOL to issue additional guidance.

“When retirement assets are put into riskier, more complex financial instruments outside the governance of ERISA and PBGC, it behooves regulatory agencies – at both the federal and state level – to ask tough questions and provide guidance to protect plan fiduciaries and beneficiaries. We believe that this fast-evolving area of pension transactions requires additional review and regulatory guidance. Accordingly, we urge DOL to issue additional guidance to pension plan fiduciaries.”

Read the full letter.

Retirees for Justice joins call for Department of Labor to update Interpretative Bulletin 95-1

Retirees for Justice, a retiree advocacy group committed to preserving earned benefits for retirees and their families, has joined the call for the DOL to update its guidance for pension plan fiduciaries regarding the selection of an annuity provider when transferring liabilities for benefits.

“Retiree earned benefits are not handouts. Many of today’s retirees worked for decades based upon promises made by their employers about their benefits packages- often trading higher salaries for pensions, life insurance and health care for life. These benefits need to be protected consistent with ERISA’s original protective purpose. With literally hundreds of billions in pension liabilities at stake, retirees and their families who did not choose a pension risk transfer need to know that the chosen insurer was fully and completely vetted by a Defined Benefit Plan Sponsor that is held to ERISA’s highest fiduciary standards.”

Read the full letter.

To find out more about Retirees for Justice, visit:

Senator Murphy raises concern about growing role of Apollo and private equity in pension risk transfer market

EBSA nominee Lisa Gomez commits to work on the issue in the interests of workers and their families

On October 7, 2021, a confirmation hearing was held by the U.S. Senate Committee on Health, Education, Labor and Pensions on the nomination of Lisa Gomez to head the Employee Benefits Security Administration (EBSA), the agency of the U.S. Department of Labor responsible for enforcing ERISA.

Senator Chris Murphy of Connecticut asked nominee Lisa Gomez about the growing role of private equity, led by Apollo Global Management, in the pension risk transfer market.

Watch the video below:


In his question, Senator Murphy said, “…Private equity firms, led by Apollo Global Management, essentially buy up the pension liabilities and transfer them into annuities. But these entities are seeking to profit off the spread of the investment returns and the benefits that are paid and they often end up moving the assets away from traditional, secure investments into much riskier investments.” He also raised the issue of the loss of uniform, federal protections for retirees after annuity buyouts, saying, “I have heard a lot of concern about this growing practice, about the risk that it puts many pension benefits in, especially since you lose ERISA and PBGC protection when they get moved into these annuities.” Murphy asked Gomez if she was familiar with the issue and if she would commit to working with members of the committee on it.

In response, nominee Lisa Gomez said, “I am familiar with the issue. I do think that as with everything, on every issue, I commit to support workers and their families and making sure that we are acting in their interests. I would look forward to working with you and other members of Congress as well as with the Department to look into this issue and see what needs to be done to make sure that we are working in the interests of these workers and their families.” 

JCPenney and Lockheed Martin retirees have sent hundreds of emails to members of Congress and state insurance commissioners after their pension plans announced annuity buyout transactions with Athene, an insurance company affiliated with Apollo.

If you are a participant in a JCPenney or Lockheed Martin pension plan, click the links below to find out more and get involved:

If you are a member of a different plan and would like to get involved, please send us a message: