Supreme Court Backs Post-Date ERISA Assumptions in 2018 Pension Liability Case
Updated
Updated · Rhode Island Lawyers Weekly · May 22
Supreme Court Backs Post-Date ERISA Assumptions in 2018 Pension Liability Case
6 articles · Updated · Rhode Island Lawyers Weekly · May 22
A unanimous Supreme Court ruled that ERISA permits pension plans to use actuarial assumptions adopted after the statutory measurement date when calculating an employer’s withdrawal liability.
The dispute centered on four employers that left the IAM National Pension Fund in 2018; the fund used a 6.50% discount rate adopted in January 2018 instead of the 7.50% rate in effect on Dec. 31, 2017.
Arbitrators had sided with the employers, but federal courts and the D.C. Circuit overturned those awards, setting up a circuit split with the 2nd Circuit that the justices resolved.
Justice Ketanji Brown Jackson wrote that ERISA’s text requires assumptions to be reasonable and the actuary’s best estimate, while employers can still challenge allegedly inflated assumptions in arbitration.
How will pension funds wield new power to retroactively inflate an employer's exit bill?
Will a ruling meant to stabilize pensions actually cause more employers to flee the system?