On May 21, 2026, the Supreme Court ruled in favor of a multiemployer pension fund on a withdrawal liability actuarial assumption question, holding that ERISA does not require pension funds to assess withdrawal liability based on actuarial assumptions adopted before the measurement date. In M&K Employee Solutions v. Trustees of the IAM National Pension Fund, the Court ruled 9-0 in favor of the fund, resolving a circuit court split about the actuarial assumptions funds are allowed to use when calculating withdrawal liability.
As background, withdrawal liability occurs when an employer withdraws (either completely or partially) from a multiemployer pension plan. In general, withdrawal liability represents the employer’s share of unfunded vested benefits (“UVBs”) payable by the fund. Withdrawal liability is calculated based on the fund’s UVBs as of the statutory measurement date—the last day of the plan year preceding the employer’s withdrawal. To calculate withdrawal liability, a fund’s actuary uses both fund-specific data, such as the number of beneficiaries and the value of the plan’s assets, and various actuarial assumptions about the future. The relevant actuarial assumption in this case was the interest rate used to discount future benefit payments to their present value.
The Employee Retirement Income Security Act of 1974 (“ERISA”) requires that withdrawal liability be calculated based on the value of a fund’s UVBs “as of” the measurement date and that the actuarial assumptions must be reasonable, take into account the experience of the fund and reasonable expectations, and offer the actuary’s best estimate of anticipated experience under the fund.
In this case, in November 2017, the fund’s actuary performed an annual valuation using a discount rate of 7.5%, which resulted in about $500 million in UVBs. In January 2018, the actuary lowered the discount rate from 7.5% to 6.5%, resulting in a significant increase in UVBs and, correspondingly, the withdrawal liability owed by withdrawing employers. The petitioners were four employers who withdrew from the fund between April and December 2018, and whose withdrawal liability was based on a measurement date of December 31, 2017.
The employers argued that the actuarial assumptions are factual inputs into the UVB calculation, similar to hard data such as the number of participants, and that ERISA therefore requires actuaries to use the actuarial assumptions in place at the time of the measurement date when calculating withdrawal liability. The Court rejected this argument, and instead held that actuarial assumptions are predictive judgments that are required under ERISA to be reasonable based on the actuary’s best estimate, but are not subject to a specific deadline. As a result, the requirement under ERISA that UVBs be calculated as of the end of the plan year applies to factual data about the plan, but not actuarial assumptions. The ruling appears to give funds and their actuaries flexibility to update actuarial assumptions in response to data such as investment returns that may not be available until after the end of a plan year.
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