DOL: Modernizing Guidance on Pension Risk Transfers

United Food and Commercial Workers International Union has joined the American Federal of Labor and Congress of Industrial Organizations and sister unions in calling on the Department of Labor to modernize Interpretive Bulletin 95-1, its guidance to pension fiduciaries.

In 1995, Interpretive Bulletin 95-1 established the “safest annuity available” standard for fiduciaries considering a pension risk transfer transaction. Since then, the complexity of annuity insurers’ assets, liabilities, and capital has changed, especially for insurers owned by private equity firms, like Athene.

As a leader in pension risk transfer deals, Athene exemplifies why this guidance needs modernizing:

  • Athene’s assets include a higher percentage of illiquid asset-backed securities, collateralized loan obligations and alternative investments than its peers.[2]  We believe fiduciaries need guidance to evaluate the proportion of illiquid assets backing pension promises and how they are valued by an annuity provider.
  • Apollo reports that  “As a result of its internal reinsurance structure and third-party direct to Bermuda business, a significant majority of Athene’s aggregate capital is held by its Bermuda reinsurance subsidiaries” according to Apollo’s 2023 10-K.[3] We believe fiduciaries need guidance in evaluating capital surpluses and pensioners’ ability to rely on that capital when it is held offshore, given different accounting requirements between Bermuda and the U.S.

On June 24, 2024, Department of Labor’s Employee Benefits Security Administration issued a report to Congress analyzing whether IB 95-1 should be updated, finding:

As set forth above, some stakeholders urged EBSA to update the Interpretive Bulletin to focus fiduciaries’ attention on issues such as insurers’ ownership structures; exposure to risky assets and non-traditional liabilities; and use of affiliated and offshore reinsurance. While at least some industry participants view these issues as fully addressed by the existing Interpretive Bulletin, EBSA finds that further consideration should be given to whether the Interpretive Bulletin’s guidance should be amended to enhance fiduciary decision-making on these issues. These issues—separately or in combination—may expose annuitants to excessive risk.




[1] Department of Labor Report to Congress on Employee Benefits Security Administration’s Interpretive Bulletin 95-1, June 2024, p. 22 https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/secure-2.0/report-to-congress-on-interpretive-bulletin-95-1.pdf

[2] Athene Investor Presentation entitled “Athene Asset Portfolio: Risk & Stress Considerations Update”, February 2023, https://irathene.q4cdn.com/886888837/files/doc_presentations/2023/athene-2023-asset-risk-stress-considerations-vfinal.pdf p. 11

[3] Apollo Global Management 10-K Report to the Securities and Exchange Commission for the period ending 12/31/2023, p. 19 https://www.sec.gov/Archives/edgar/data/1858681/000185868124000031/apo-20231231.htm