Seyfarth Synopsis: Just before its summer recess, the Supreme Court agreed to review whether multiemployer pension funds can impose withdrawal liability based on actuarial assumptions adopted after the relevant plan year. The expected decision may have significant implications for employers' ability to assess the impact of a contemplated withdrawal.
At the end of June, the Supreme Court granted certiorari in M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, No. 23-1209 (U.S. June 30, 2025 amended July 3, 2025) to consider an important question in calculating how much employers withdrawing from multiemployer pension funds are legally obligated to pay.
Withdrawing employers have to pay a portion of the fund's unfunded vested benefits (i.e. the amount of vested benefits that a fund is legally obligated to pay but for which the fund does not have sufficient assets to meet). The withdrawal liability calculation is to be determined based on the fund's financials as of the end of the plan year before the withdrawal. It can take many funds six months if not more after the end of a plan year to finalize their year-end financials and thus be able to issue a withdrawal liability assessment in the following plan year. In that interim, as the financials are being finalized, fund actuaries have on occasion changed actuarial assumptions, such as interest rates or mortality tables, retroactive to the prior plan year.
M&K—which arises from a 2024 D.C. Circuit decision—concerns just such a situation. An employer withdrew from the multiemployer pension fund in December 2018, which meant that its withdrawal liability had to be calculated as of the end of 2017. However, in January 2018, the pension fund's actuary adopted new valuation assumptions and used those to calculate withdrawal liability (which resulted in an increase in plan liabilities, and thus the withdrawal liability, versus the assumptions in place at the end of 2017).
The D.C. Circuit held that this was acceptable and that a plan actuary may use assumptions adopted after the end of the relevant plan year, so long as those assumptions are based on information available by the end of the plan year. In so holding, the D.C. Circuit split from a 2020 decision of the 2nd Circuit, National Retirement Fund v. Metz Culinary Management, Inc., which held that a plan actuary must use the assumptions actually adopted by the end of the plan year. The Supreme Court granted certiorari to resolve this split.
The forthcoming decision may have significant consequences for withdrawing employers and multiemployer pension funds. Changes in actuarial assumptions can greatly alter withdrawal liability, so a rule requiring use of actuarial assumptions actually adopted by the end of a plan year would give more predictability to employers contemplating withdrawal. Conversely, if a fund can change actuarial assumptions after the end of the relevant plan year, employers might be in the dark as to what their liability might be if they do withdraw. Although funds can take some time to complete their financials in order to issue a withdrawal liability assessment, an employer-retained actuary with a recent estimate and knowledge of the fund's assumptions as of the end of a plan year can provide a close estimate of withdrawal liability.
The Supreme Court has not yet set a date for oral argument, but a decision is expected by June of 2026.
We'll monitor any developments and keep you updated, but if you have any questions in the interim, please reach out to the authors or your Seyfarth attorney for more information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
