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On August 6, 2025, the Sixth Circuit Court of Appeals upheld the lower court’s decision in Ace-Saginaw Paving Company v. Operating Engineers Local 324 Pension Fund, holding that, in making a determination of multiemployer plan withdrawal liability, the plan’s actuary may not consider “policy issues” – in this case, choosing an (exceptionally low) plan valuation interest rate “that gave the remaining employers a lower chance of getting stuck having to pay extra in the future” – in making his “best estimate” of the current value of the plan’s unfunded vested benefits.
In this article we provide a brief note on the decision, beginning with a discussion of why this case may matter to employers who are not large multiemployer plan contributors.
Sponsors who may be interested in this decision …
Some employers, especially those in industries where multiemployer plans are common (e.g., transportation), provide retirement benefits for many of their employees through one or more multiemployer (“Taft-Hartley”) plans, and that benefit format represents, in effect, a strategic “fact of life” for them.
But there is also a (larger) group of employers that maintain their own (“single employer”) retirement savings plan for the vast majority of their employees, but who nevertheless make contributions to one or more multiemployer plans for certain discrete groups of unionized employees – e.g., a Teamsters plan for their loading dock or truck drivers.
The possibility of having to pay multiemployer plan withdrawal liability, after, e.g., a plant shutdown or reduction in force or even a change in union representation, is an issue for both sorts of employers. And often a key determinant of the size of an employer’s withdrawal liability will be the discount rate used by the plan’s actuary to value plan liabilities.
We have been covering a series of cases involving disputes over the withdrawal liability calculation discount rate – one version of this issue is currently before the Supreme Court.
The dispute
Ace-Saginaw Paving Company involves the same issue. As in all of these cases, the plan’s actuary calculates withdrawal liability based on a lower rate than that used for plan funding and the withdrawing employer disputes that calculation. As the Sixth Circuit explains, ERISA requires that the withdrawal liability valuation assumptions (critically, the valuation interest rate assumption) meet a two-part test. “[A]ssumptions: (1) … must be reasonable; and (2) … must be the actuary’s best estimate.”
Employers in these cases generally argue that withdrawal liability should be calculated based on the plan’s funding assumptions. In this case, the plan’s valuation interest rate assumption was 7.75%.
And, in these cases, the plan’s actuary typically uses a much lower valuation interest rate assumption. In this case the actuary used 2.27% (“a rate calculated by the Pension Benefit Guaranty Corporation (PBGC) to approximate the return of a certain set of annuities”).
The spread in the withdrawal liability was more than $10 million – $6,297,833 (based on the 7.75% rate) versus $16,386,924 (based on the 2.27% rate).
So, while this is a very technical issue, there is often a lot of money involved.
The court’s decision
In Ace-Saginaw Paving Company, the court found that, whatever the merits of using a conservative interest rate to calculate withdrawal liability, the actuary in this case in fact adopted that rate for “policy reasons” – to protect non-withdrawing employers from a (statistically unlikely) possibility that the ultimate cost of benefits might be greater than expected. The evidence for this finding was letters written by the actuary to plan trustees explaining that his reason for using the PBGC interest rate, rather than the plan’s funding interest rate, was not because the (lower) PBGC rate was a “best estimate” but because it would “discourag[e] employers from leaving the plan.”
And whatever the merits of a policy of discouraging employers from leaving the plan, basing the withdrawal liability interest rate on it did not meet the statutory standard – because it was not developed as the actuary’s “best estimate.”
Unlike in other similar cases decided at the Circuit Court level, the Court did not, however, instruct the actuary to recalculate the withdrawal liability using the funding interest rate. Here, the Court instructed that the actuary should recalculate the withdrawal liability using a rate that satisfies ERISA, leaving room that the rate might differ from the rate he used in funding calculations.
Practically …
Again, obviously these cases turn on very technical issues. But the (as it were) “smoking gun” in this case was explicit evidence that the actuary developed his valuation interest rate without regard to the statutory standard and (instead) with regard to maximizing the benefit to non-withdrawing employers.
Sponsors facing a large withdrawal liability bill from a multiemployer plan would do well to look into this issue and to the actual facts (e.g., in actuary/plan correspondence) of how the plan’s withdrawal liability valuation interest rate was derived. This is not the only case in which the actuary has put in writing that it considered other, non-statutory reasons for adopting an unusually low rate.
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We will continue to follow this issue.