A federal judge on Friday denied a request from two Verizon Communications Inc. retirees to stop the transfer of $7.5 billion in pension obligations to Prudential Insurance Co. of America.
The ex-employees argued that the move, under which Verizon will buy a group annuity contract that would make Prudential responsible for paying retirees’ pensions, would deny roughly 41,000 Verizon workers their federal legal protections. The pair also claimed that the transfer would constitute a breach of Verizon’s fiduciary duty to diversify plan investments, since a single organization would handle all of the pensions.
Verizon isn’t the first to pursue such a deal. Earlier this year, General Motors Co. (GM) also transferred its pension obligations to Prudential. The difference, the Verizon retirees say, is that GM employees had a say in the deal.
But U.S. District Judge Sidney Fitzwater ruled that “the plaintiffs have failed to carry their burden of showing a substantial likelihood of success on the merits,” clearing the way for the deal to close on Dec. 10.
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