M & K Employee Solutions, LLC v. Trustees of IAM Nat. Pension Fund
The Court holds that ERISA does not require a multiemployer pension plan to calculate an employer's withdrawal liability using actuarial assumptions adopted on or before the measurement date. Actuaries may select their assumptions, such as the discount rate, after that date, so long as the assumptions satisfy the statute's reasonableness and best-estimate requirements.
Case background
Under the Employee Retirement Income Security Act (ERISA), an employer that stops participating in an underfunded multiemployer pension plan must pay “withdrawal liability,” its share of the plan’s unfunded vested benefits, calculated “as of” the last day of the plan year preceding the employer’s withdrawal. Valuing those benefits depends on hard data about the plan and on actuarial assumptions about the future, including the discount rate. Petitioners are four employers that withdrew from the IAM National Pension Fund between April and December 2018. The Fund assessed each employer’s liability as of December 31, 2017, applying a 6.50% discount rate it had adopted with its actuarial firm in January 2018, rather than the 7.50% rate it had used before, which sharply increased the amounts owed. In separate arbitrations, the arbitrators held the assessments erroneous and required the Fund to use the assumptions in effect on the measurement date. The District Courts disagreed, the D.C. Circuit affirmed in a consolidated appeal, and its decision conflicted with one from the Second Circuit.
Questions Presented
(1) Whether 29 U.S.C. § 1391’s instruction to compute withdrawal liability “as of the end of the plan year” requires the plan to base the computation on the actuarial assumptions most recently adopted before the end of the year, or allows the plan to use different actuarial assumptions that were adopted after, but based on information available as of, the end of the year.
Holding
The provisions of ERISA governing the calculation of withdrawal liability, §§ 1391 and 1393, do not require the actuarial assumptions underlying that calculation to be selected on or before the measurement date. Section 1391’s “as of” language means the hard data feeding the calculation must be fixed on the measurement date, but actuarial assumptions are predictive tools, not facts about the plan. Section 1393 requires only that assumptions be reasonable and reflect the actuary’s best estimate, and it sets no deadline for selecting them. Petitioners’ antiretroactivity and policy arguments do not overcome the absence of a textual deadline.
The Court
Justice Jackson delivered the opinion for a unanimous Court.
What this episode contains
This episode is an AI-narrated reading of the majority opinion in M & K Employee Solutions, LLC v. Trustees of IAM Nat. Pension Fund, written by Justice Jackson.
AI disclosure: The voice in this episode is AI-generated, using a machine learning model styled to loosely resemble the authoring justice. Tone, inflection, pacing, and emphasis are artifacts of the model and should not be attributed to Justice Jackson. The text being read is the Court’s published majority opinion, lightly adapted to improve readability for the spoken format.