Supreme Court Clarifies Timing of Actuarial Assumptions in ERISA Withdrawal Liability Calculations

Withdrawal liability is an exit price that an employer must pay when it stops contributing to a multiemployer pension plan that is underfunded (i.e., a plan that does not have enough assets to pay 100% of the retirement benefits that its participants have been promised). The amount of an employer’s withdrawal liability depends on the pension plan’s valuation as of a specific “snapshot” or “measurement” date: the last day of the year before the year in which the employer withdraws from the pension plan. This means that if an employer withdraws from a plan at some point in 2026, its withdrawal liability will be calculated according to what the plan’s valuation was as of December 31, 2025.

Pension plans hire actuaries to perform these complicated valuation calculations. The calculations are inherently backward-looking, since they depend on information that does not become available until long after the measurement date passes.

The discount rate that the actuary selects arguably has the biggest impact on the amount of an employer’s withdrawal liability. This rate projects the growth of the plan’s assets over time and discounts future benefit payments to their present value. A small decrease in the discount rate (e.g., lowering it from 7.5% to 6.5%) can significantly increase the amount of an employer’s withdrawal liability (e.g., from $2 million to $6 million). That is what occurred in M & K Emp. Sols., LLC v. Trs. of the IAM Nat’l Pension Fund, 608 U.S. ____ (2026).

The question presented in M & K involved whether there are any time limits governing when an actuary may change the discount-rate assumption. Specifically, does the actuary have to make the change on or before the measurement date, as the Second Circuit held in Metz Culinary? Or can the actuary change the rate after the measurement date, so long as the change is based on the body of knowledge up to the measurement date, as the D.C. Circuit held in the case on review?

In a unanimous (9-0) ruling, the Supreme Court adopted the D.C. Circuit’s interpretation, holding that the statute does not impose any deadline requiring actuarial assumptions to be selected on or before the measurement date. Nothing in the statute’s text imposes such a rule requiring actuaries to select a rate based on stale or incomplete data, and the statute’s structure suggests that Congress deliberately omitted that requirement.

On its face, M & K is narrow in scope. It resolves a simple timing issue about when a rate may be changed. It does not directly answer the bigger question that is on every withdrawal liability practitioner’s mind: To what extent may an actuary use a lower discount rate for withdrawal liability purposes (e.g., 6.5%) than for minimum funding purposes (e.g., 7.5%)? In practice, that bigger question about when actuaries may use different rates for different purposes arises far more frequently and will likely need to be resolved by the Supreme Court at some point soon.

If and when the Supreme Court agrees to answer this bigger question, M & K suggests that the Court will side with the pension plans once again. This is because M & K stresses that ERISA “must be read by judges with the minds of the specialists” and repeatedly cites “ASOP 27” throughout its opinion. ASOP 27 is an actuarial professional standard that, among other things, allows actuaries to use different discount rates for different purposes. Several recent Circuit Court decisions, beginning with the Sixth Circuit’s decision in Sofco, have held that actuarial professional standards are irrelevant in this context. Those Circuit Court decisions are now on shaky ground in light of M & K’s endorsement of that same authority.

 If you have questions about withdrawal liability, multiemployer pension plans, or how this decision may affect your organization, please contact Neil Gregorio, Brian Pepicelli, Patrick Kukalis, or any member of Tucker Arensberg’s ERISA litigation group.