Key Takeaways
- • On May 21, 2026, the U.S. Supreme Court held in M & K Employee Solutions v. Trustees of the IAM National Pension Fund that a multiemployer pension fund's actuary is not required to use assumptions in place on the measurement date when calculating withdrawal liability.
- • The measurement date fixes facts such as fund assets and participant data, but actuarial assumptions may be selected after that date as long as they are based on information "as of" the measurement date, according to Littler Mendelson.
- • The dispute arose after the IAM National Pension Fund shifted its discount rate from 7.50% to 6.50% in January 2018 for four withdrawing employers, raising one employer's liability from about $1.8 million to about $6.2 million.
- • Employers can still challenge whether actuarial assumptions are reasonable and substantively justified under ERISA section 1393, so the decision does not give funds unlimited discretion.
- • Littler advises employers to model withdrawal exposure early and develop their own estimates, since funds may use later-adopted assumptions that can significantly increase liability.
Summary
The U.S. Supreme Court ruled on May 21, 2026, that when an employer withdraws from an underfunded multiemployer pension fund, the fund's actuary is not required to use assumptions already in effect on the measurement date, defined as the last day of the fund year preceding the withdrawal. According to Littler Mendelson's analysis, the measurement date fixes facts about the fund, such as assets and participant data, but not actuarial assumptions. An actuary may therefore set assumptions after the measurement date, retroactive to it, provided they rest on information "as of" that date. For example, a fund with a December 31, 2025 measurement date could adopt assumptions on March 1, 2026.
Withdrawal liability under ERISA equals an employer's share of the fund's adjusted unfunded vested benefits, and it is highly sensitive to the discount rate. A lower discount rate increases the present value of nonforfeitable benefits and therefore the liability. The case stems from four employers that withdrew from the IAM National Pension Fund in 2018. Before the measurement date of December 31, 2017, the fund's actuary had used a 7.50% discount rate. In January 2018 the actuary adopted a 6.50% rate for withdrawal liability purposes, which sharply increased the employers' liabilities. For one employer, the figure rose from about $1.8 million to about $6.2 million.
The employers initially won in arbitration, which held that the fund had to use assumptions in effect on the measurement date. The district courts and the D.C. Circuit ruled against the employers, creating a circuit split with the Second Circuit's decision in National Retirement Fund on Behalf of Legacy Plan of National Retirement Fund v. Metz Culinary Management, Inc., 946 F.3d 146 (2d Cir. 2020). The Supreme Court granted certiorari and sided with the fund. It reasoned that ERISA's "as of" language does not fix assumptions to the measurement date and pointed to ERISA section 1393, which requires assumptions to be reasonable and reflect the actuary's best estimate of anticipated experience but contains no timing rule.
Littler notes that the ruling forecloses arguments that a withdrawal assessment is invalid merely because assumptions were adopted after the measurement date. It is not, however, a blanket endorsement of fund discretion. Employers may still contest whether assumptions are reasonable and substantively supported by the fund's history and expectations. Littler adds that the litigants themselves may still challenge the 6.50% rate given the fund's assumed 7.50% investment return. The firm characterizes the practical effect as a return to the pre-Metz landscape, while cautioning that employers should expect more volatility in liability estimates and should monitor contribution levels, funding status, and union contract changes.
Withdrawal liability under ERISA equals an employer's share of the fund's adjusted unfunded vested benefits, and it is highly sensitive to the discount rate. A lower discount rate increases the present value of nonforfeitable benefits and therefore the liability. The case stems from four employers that withdrew from the IAM National Pension Fund in 2018. Before the measurement date of December 31, 2017, the fund's actuary had used a 7.50% discount rate. In January 2018 the actuary adopted a 6.50% rate for withdrawal liability purposes, which sharply increased the employers' liabilities. For one employer, the figure rose from about $1.8 million to about $6.2 million.
The employers initially won in arbitration, which held that the fund had to use assumptions in effect on the measurement date. The district courts and the D.C. Circuit ruled against the employers, creating a circuit split with the Second Circuit's decision in National Retirement Fund on Behalf of Legacy Plan of National Retirement Fund v. Metz Culinary Management, Inc., 946 F.3d 146 (2d Cir. 2020). The Supreme Court granted certiorari and sided with the fund. It reasoned that ERISA's "as of" language does not fix assumptions to the measurement date and pointed to ERISA section 1393, which requires assumptions to be reasonable and reflect the actuary's best estimate of anticipated experience but contains no timing rule.
Littler notes that the ruling forecloses arguments that a withdrawal assessment is invalid merely because assumptions were adopted after the measurement date. It is not, however, a blanket endorsement of fund discretion. Employers may still contest whether assumptions are reasonable and substantively supported by the fund's history and expectations. Littler adds that the litigants themselves may still challenge the 6.50% rate given the fund's assumed 7.50% investment return. The firm characterizes the practical effect as a return to the pre-Metz landscape, while cautioning that employers should expect more volatility in liability estimates and should monitor contribution levels, funding status, and union contract changes.
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