Justices agree that actuaries can use up-to-date assumptions in assessing costs of leaving a multi-employer pension plan

The Supreme Court resolved a technical but consequential dispute over how pension plan actuaries calculate withdrawal liability for employers leaving multi-employer pension plans. In a decision centered on the Employee Retirement Income Security Act (ERISA), the justices held that actuaries may use current actuarial assumptions rather than historical ones when computing an employer's share of unfunded liabilities.

The case addressed whether the Pension Benefit Guaranty Corporation's regulations permitting up-to-date assumptions complied with ERISA's statutory language requiring liability calculations based on plan assets and liabilities "as of the withdrawal date." Employers argued that historical assumptions provided greater accuracy for the withdrawal date itself, while the PBGC and plan trustees contended that current assumptions better reflected real economic conditions.

The Court sided with the PBGC's interpretation. Using current assumptions allows actuaries to account for changed market conditions, mortality data, and interest rates at the moment of withdrawal rather than locking in outdated projections. This approach produces more accurate assessments of pension obligations owed by departing employers.

The practical impact affects businesses considering exit from multi-employer plans, which cover unionized workers in construction, trucking, and other industries. Employers withdrawing from underfunded plans face substantial liability assessments. The ruling clarifies that these calculations will reflect present economic reality, potentially increasing or decreasing withdrawal costs depending on current conditions. Plans with assets performing better than historical assumptions predict may see lower employer assessments, while plans facing deteriorating conditions could trigger higher bills.

This decision provides clarity for actuarial practice across the pension industry and removes uncertainty about PBGC enforcement authority. It strengthens the regulator's hand in demanding realistic liability calculations from plans and employers. For multi-employer pension trustees managing declining industries like construction, the ruling confirms they can employ modern assumptions when assessing employer departures, resulting in fairer allocation of unfunded liabilities