Supreme Court will review withdrawal liability assumption setting 

September 3, 2025

The US Supreme Court will hear a case concerning the actuarial assumptions used to determine an employer’s withdrawal liability from a multiemployer defined benefit (DB) pension plan. The court’s review will be limited to one question: Must the plan use the actuarial assumptions most recently adopted before the “measurement date” for determining withdrawal liability, or can the plan use assumptions adopted after the measurement date based on information that was available as of that date? The decision may have a significant effect on the calculation of withdrawal liability for all multiemployer plans across the country. The court is set to hear the case during the 2025-2026 term, which begins in October.

Multiemployer plans allow different employers­­ — generally in the same or a related industry — to participate in the same pension plan. When employers withdraw from multiemployer plans, they must pay a “withdrawal liability” to avoid unfairly shifting their share of a plan’s underfunding to the employers remaining in the plan. ERISA requires that withdrawal liability be based on the employer’s unfunded vested benefits (UVBs) as of the measurement date, which is generally the last day of the plan year before the plan withdraws.

ERISA also requires that actuaries determine UVBs using assumptions “which, in the aggregate, are reasonable … and reflect the actuary’s best estimate of anticipated experience under the plan.” Typically, the discount rate is the most significant assumption for this calculation. However, nothing in the statute explicitly discusses when the actuary should actually set the assumptions. Likewise, the Pension Benefit Guaranty Corporation’s 2022 proposal on withdrawal liability assumptions discusses three approaches for setting the discount rate assumption but doesn’t address the timing.

Assumptions “as of” the measurement date. Actuaries typically set assumptions after the measurement date to reflect all relevant information available as of that date. This means that employers withdrawing early in a year might initially receive estimates of their withdrawal liability prepared using the prior year’s assumptions and then updated assessments reflecting the new assumptions and other updated information. This can result in a larger final assessment than the estimate if interest rates drop significantly from one year to the next because a lower discount rate produces a larger withdrawal liability.

The case going to the Supreme Court involves four employers that withdrew from the IAM National Pension Fund in 2018. The plan assessed withdrawal liability for the employers using assumptions the plan’s actuary set in 2018 based on information available as of the Dec. 31, 2017, measurement date. The assumptions used for the calculations included a discount rate of 6.50%, which was 100 basis points lower than the 7.50% discount rate the plan used for withdrawal liability calculations in the previous year. The employers disputed their assessments, arguing that the withdrawal liability should have been calculated based on assumptions most recently adopted by the measurement date, not those set afterwards.

The disputes went to arbitration. The arbitrators found that using assumptions set after the measurement date violated ERISA and instructed the plan to revise the withdrawal liability calculations using a 7.50% discount rate. The plan sued to vacate the arbitrators’ rulings, and the district court found that the arbitrators’ decisions were incorrect. In its opinion, the court said that plans may use assumptions adopted after the measurement date, but actuaries may only consider information available on or before the measurement date when setting the assumptions.

In their request to the Supreme Court, the employers argued that the split in the circuit courts will lead to the law being applied differently in different parts of the country — and consequently, employers will no longer be able to make “rational, informed decisions” about their pension plans when negotiating union contracts because they “cannot reliably predict what assumptions would govern their possible withdrawal.” The Supreme Court agreed to hear the case, limited only to the question of whether a plan can use assumptions adopted after the measurement date based on information available on that date. The eventual ruling may have significant implications on the calculation of withdrawal liability and future litigation in this area.

• Supreme Court docket No. 23-1209
• M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund (DC Circuit Court of Appeals, Feb. 9, 2024)
• Nat’l Ret. Fund on Behalf of Legacy Plan of Nat’l Ret. Fund v. Metz Culinary Mgmt., Inc. (Second Circuit Court of Appeals, Jan. 2, 2020)

• At long last, PBGC proposes withdrawal liability assumption rules (Nov. 14, 2022)

• Executive order: DC fiduciary FAQ (Aug. 13, 2025)
• Update for DC plan fiduciaries on DOL’s cryptocurrency guidance (July 23, 2025)
• Retirement income for US DC plans: Point of view (May 9, 2025)
• A primer: Private investments in defined contribution plans (Aug. 28, 2024)