The U.S. Supreme Court Monday asked a federal appeals court to review the panel's earlier decision upholding the right of communications firm Verizon Communications Inc. to “derisk” the pension plan offered to management employees.

Under that arrangement, New York-based Verizon in 2012 transferred about $7.5 billion in benefit obligations to Prudential Insurance Co. of America by purchasing a group annuity. The agreement covered about 41,000 management participants who retired and began receiving benefits before Jan. 1, 2010.

Soon after that action, a group of Verizon retirees challenged that the transaction — one of the first in the pension derisking realm. The suit, filed in the U.S. District Court in Dallas, alleged that that Verizon violated a provision in the Employee Retirement Income Security Act by not disclosing in its summary plan description that it retained the right to remove participants from its pension plan by transferring benefit obligations to an insurer.

The suit argued that ERISA regulations require a summary plan description to include a statement detailing the circumstances that could result in participants losing benefits they would reasonably expect the plan to provide.

That suit was later dismissed by a federal judge who said the plaintiffs incorrectly interpreted that regulation as requiring that summary plan descriptions include when benefits will not be provided by a pension plan.

In 2015, the 5th U.S. Circuit Court of Appeals upheld the lower court ruling.

But in a one-sentence decision, the Supreme Court vacated the appeals court ruling, saying that the court now must review its ruling in light of the high court's decision earlier this month — Spokeo Inc. v. Robins — in which the justices said an injury must be concrete for a plaintiff to sue.

A Verizon spokesman said the company doubts the remand will impact the case.

“We don't believe the Supreme Court's remand of the case back to the 5th Circuit on the narrow Constitutional standing issue will change the outcome of our case,” the spokesman said in an email statement.

But a group representing Verizon pension plan participants welcomed the Supreme Court order.

“The order by the U.S. Supreme Court to vacate the lower court decision and send it back to be completely re-evaluated is a huge vindication of our argument,” Jack Cohen, chairman of the Cold Spring Harbor, New York-based Association of BellTel Retirees Inc., said in a statement.

“The court has sent a powerful message that Verizon retirees — and, by extension, millions of others whose pensions have been de-risked — cannot simply be dismissed. When our assets were sold off without our consent we sought relief through the judicial system and today the highest court in the land said that we must continue to be heard,” Mr. Cohen added.

Several dozen companies in recent years have taken actions similar to Verizon's by shifting pension plan liabilities to insurers through the purchase of group annuities.

For employers, the appeal of such an approach is that they no longer are exposed to higher than expected contributions to their pension plans, if, for example, investment returns are less than expected and/or interest rates decline, boosting the value of plan liabilities.

In addition, through derisking, employers, by reducing the size of their pension plans, also reduce premium payments to the Pension Benefit Guaranty Corp. The so-called flat rate PBGC premium is based on the number of participants a company has in its pension plan, while plan sponsors are liable for an additional so-called variable rate premium if their plans are underfunded.