The DOJ argued that the Court should accept the case and allow the actuary to select assumptions after the measurement date (defined below), provided such assumptions are based on information as of the measurement date, even though that information may be obtained after the measurement date.

This is the position that Segal and certain other actuarial firms argued in their amicus curiae (friend of the court) brief filed with the DC Circuit Court of Appeals in one of the cases.

Background on withdrawal liability

Under ERISA, an employer’s allocable share of withdrawal liability is determined based on the last day of the plan year before the plan year in which the employer withdrew from the plan. This is the “measurement date.”

To determine unfunded vested benefits (assets over vested liabilities) when calculating withdrawal liability, ERISA requires the actuary to use reasonable assumptions and methods that offer the actuary’s best estimate of anticipated experience under the plan. To calculate withdrawal liability, the plan must use the plan actuary’s determination of assets and liabilities. These determinations are based on the actuary’s assumptions.

Generally, the actuary reviews a plan’s actuarial assumptions after the end of the plan year, based on data that is available after the measurement date. The actuary may decide to modify those assumptions based on a review of the actual experience of the plan for the prior year. The modified assumptions reflect the actuary’s best estimate as of the measurement date.

The appellate courts’ different decisions in two withdrawal liability cases

In 2020, the Second Circuit Court of Appeals held in National Retirement Fund v. Metz Culinary Management that the actuarial assumptions must be adopted on or before the measurement date. Consequently, absent any changes to the previous plan year’s assumptions made by the measurement date, the assumptions in place from the previous plan year roll over automatically.

In M&K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, the DC Circuit Court of Appeals in 2024 rejected the Second Circuit’s holding in Metz, finding instead that the actuary may change assumptions after the measurement date, provided that the change in assumptions is based on information as of the measurement date. Following the DC Circuit Court of Appeal’s decision, the employer appealed the case to the U.S. Supreme Court.

The Justice Department’s brief

In its brief to the Court, the DOJ (in coordination with the Pension Benefit Guaranty Corporation) agrees with the DC Circuit’s holding in M&K Employee Solutions. The brief rejects the Second Circuit’s timing rule as articulated in Metz that all assumptions must be selected on or before the measurement date.

The DOJ’s brief also suggests reframing the issue to be considered by the Court to avoid limiting the question to assumptions subscribed to at the end of the year.

Next step

It is not clear when the Court will decide whether to hear the case. It could decide before June 25 (the last day of the current term) or may make that decision during its next term, which begins in October.

If the Court agrees to hear the case, the case will not be argued until the Court’s next term.