Supreme Court grants certiorari in multiemployer withdrawal liability case

On June 30, 2025, the Supreme Court granted certiorari in (agreed to review) M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund – a case involving the validity of calculating multiemployer plan withdrawal liability based on a valuation interest rate adopted after the end of the “measurement” plan year.

Below we provide a brief note on the issue being considered by the Court in this case.

Background – Why calculation of withdrawal liability matters to employers

Some employers 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 are also employers that maintain their own (“single employer”) retirement 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., their loading dock workers).

When, as in M & K v. IAM National Pension Fund, an employer withdraws from one of these plans, it will generally trigger “withdrawal liability” if the plan's actuary determines that there are not enough assets in the plan to pay for all of the plan’s vested benefit liability, i.e., there is an unfunded vested benefit liability (UVB). The amount of that UVB, and the withdrawing employer’s withdrawal liability, can be large and is very interest rate sensitive and therefore very highly leveraged: in this case, the withdrawal liability assessed by the fund using the fund’s interest rate was $6.2 million; while using the interest rate proposed by the employer, it would have been $1.8 million.

The M & K v. IAM National Pension Fund litigation

In M & K v. IAM National Pension Fund, the issue is when the withdrawal liability valuation interest rate must have been adopted. In this regard, the critical statutory provision states that withdrawal liability is to be calculated “as of the end of the plan year.”

The Second Circuit, interpreting this rule, has held, in National Retirement Fund v. Metz Culinary Management, Inc., that:

ERISA requires the assumptions to be adopted on or before the measurement date, so that “[a]bsent any change to the previous plan year’s assumption made by the Measurement Date, the interest rate assumption in place from the previous plan year will roll over automatically.”

Under the Metz approach, the applicable interest rate with respect to the M&K withdrawal would be 7.5 percent – “the interest rate assumption in place” at the end of 2017, the measurement year for the employer’s 2018 withdrawal. Using that rate, the withdrawn employer would have owed a withdrawal liability of $1.8 million.

After a January 24, 2018, meeting, however, the fund had adopted a 6.5 percent valuation interest rate, for 2017. And the DC Circuit Court of Appeals found that the latter, “as of” rate was applicable to W&K’s withdrawal, generating withdrawal liability of (as noted) $6.2 million.

The issue on certiorari

The Supreme Court, in granting W&K’s petition for review, has limited its review to the following issue:

Whether [ERISA’s] instruction to compute withdrawal liability “as of the end of the plan year” requires the plan to base the computation on the actuarial assumptions most recently adopted before the end of the year, or allows the plan to use different actuarial assumptions that were adopted after, but based on information available as of, the end of the year.

The position of the Solicitor General

The Supreme Court asked the US Solicitor General to submit an amicus curiae brief “expressing the views of the United States.” The SG argued:

That the Court should take the case.

That the question before the Court should include the words (as above) “based on information available as of, the end of the year,” to make clear that any post-measurement date adoption of a different interest rate would only be based on facts as of the end of the measurement plan year.

That, as so formulated, the Court should affirm the DC Circuit’s decision to use the fund’s “as of” valuation interest rate that was (contra-Metz) adopted after the end of the (December 31, 2017) Measurement Date but “as of” that date.

Concerns about manipulation

It is common practice, e.g., in single employer plans, for the plan to adopt a valuation interest rate after the plan year’s valuation date – sometimes, more than a year after that date. And the SG generally argues the logic of that approach here.

In the context of withdrawals, however, employers have a justified concern that a valuation interest rate adopted post-Measurement Date might be manipulated and might reflect the fund’s concern to get the highest withdrawal liability payment from a withdrawing employer more than “the actuary’s best estimate of anticipated experience under the plan” (the standard under ERISA).

The court in Metz specifically raised this concern in adopting its standard “require[ing] the plan to base the [withdrawal liability] computation on the actuarial assumptions most recently adopted before the end of the [prior] year.” In the Metz court’s view (quoting the SG) “selecting assumptions ‘after the Measurement Date would create significant opportunity for manipulation and bias’ because plan sponsors could ‘pressure actuaries’ to change their assumptions so as ‘to assess greater withdrawal liability’ on departing employers – for example, by lowering the discount rate.”

The SG dismissed these concerns as “overstated,” arguing that the Supreme Court has found that “actuaries as ‘trained professionals’ who are ‘subject to regulatory standards’ and are not ‘vulnerable to suggestions of bias or its appearance.’”

It will be interesting to see if the current Supreme Court is prepared to subscribe to that view, in light of, e.g., its recent decision in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al.

This is one of the two controversial issues being litigated on the subject of withdrawal liability. It is important to note that the issue of what is a reasonable discount rate to use for purposes of determining withdrawal liability is not being argued in this case. It’s been more than 30 years since the Supreme Court provided any guidance on that matter (all it said was that the rate used to determine withdrawal liability need not be identical to the rate used to determine minimum funding) in Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California.

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We will continue to follow this issue.