Legal firm Schlichter Bogard & Denton has initiated a lawsuit against Alcoa USA Corporation. The corporation is accused of violating fiduciary obligations in transferring pension liabilities, allegedly leading to employee financial loss.
These alleged violations may infringe on the Employee Retirement Income Security Act of 1974, according to the legal firm. The claim suggests that Alcoa’s actions resulted in undervalued pensions, causing financial hardship for employees.
Further allegations claim Alcoa did not act in the employees’ best interest, breaching trust and magnifying potential damages. If the lawsuit is successful, it could influence similar future cases.
Schlichter Bogard & Denton is noted for its robust representation of employee rights, specifically regarding pension-related matters. It seeks maximum compensation for its clients and changes to prevent such offenses in future.
Alcoa has not yet released an official response. The prevailing economic and legal implications for Alcoa, its workforce, and the broader corporate landscape will be closely monitored.
From 2018 to 2022, Alcoa allegedly moved over $2 billion of pension responsibilities to Athene Annuity and Life Co. This company is deemed high-risk, thus affecting almost 28,000 retired workers and beneficiaries of Alcoa.
Alcoa’s alleged breach in pension liabilities transfer
This move is considered a breach of fiduciary duties, jeopardizing the financial security of former employees and others.
The plaintiffs perceived this transfer as a loss of their participant roles in ERISA-governed plans and a deprivation of their retirement benefit protections under the same law. They allege the system was manipulated, undermining the principles of ERISA by depriving them of access to comprehensive retirement plans and associated security.
Fiduciaries allegedly chose Athene, disregarding ERISA guidelines requiring them to pick the safest annuity available. This decision has ignited the concerns of plan participants over their pension benefits.
The lawsuit points out that Athene’s annuities are more risky due to its investment in low-grade, high-risk assets, possibly putting retirees’ benefits at great financial risk. As retirees typically rely heavily on their annuities for income after work, increased exposure to potential financial instability could result in severe hardship.
Lastly, the plaintiffs argue that the decision to transfer pension benefits to Athene has reduced the value of their pensions without appropriate compensation, thus increasing the risk of default and placing pensioners and their beneficiaries in a precarious situation. As a result, they seek to rectify this situation urgently by bringing these concerns to court. Unchecked, this could set a precedent, disrupting the retirement plans of future pensioners.
