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assumptions used to calculate withdrawal liability

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Client asked for withdrawal liability estimates for a number of years preceding withdrawal from multi-employer pension plan.  The plan used the same rate to calculate liabilities (including estimates of withdrawal liability) and minimum funding for years prior to withdrawal.  Upon withdrawal, the discount rate used to calculate the liabilities was changed from 7% to the PBGC rate and the liability skyrocketed.  The rate for funding purposes stayed at 7%.  The plan has had similar funding ratios, etc. for several years and there are no obvious signs as to why such a large discount rate change is warranted. 

We would like to talk to an actuary experienced in calculating withdrawal liability who can assess the reasonableness of the assumptions employed. 

All references greatly appreciated!  

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As one bit of information in a wide background to help you consider actuaries’ and lawyers’ advice about withdrawal liability to a multiemployer pension plan, consider the attached court decision.

Among other findings, Judge Sweet found fault with the plan’s asymmetric use of a “Segal Blend” rate to assume for withdrawal liability a lower investment return than the plan and its actuary estimate for funding and other purposes.


This is one of several cases in which a withdrawn employer challenges, on statutory and even constitutional grounds, a plan actuary’s use of differing assumptions about investment returns.


The New York Times Company v Newspaper and Mail Deliverers Publishers Pension Fund.pdf

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Thank you, Peter! 

I have seen the NY Times case and it will no doubt be very useful to my client.  I'm also aware of the Concrete Pipe case (this is a Supreme Court case that touches on the constitutional issue and I suspect the case you were alluding to in your email).  And, I am also familiar with the Chicago Truck Drivers v. CPC Logistics case from 2012 (which found fault in that the Segal Blend, used to calculate liability, was not based on the actuary's best estimate).  If you are aware of any other cases on this point, would you mind sharing?  It would be most appreciated.  

And, if there are any actuaries out there interested in talking with us about the reasonableness of the assumptions used, we would love to hear from you!


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As you undoubtedly know, the actuary must follow the Labor Code section 1393(a) in setting the discount assumption for withdrawal liability. The law that the actuary must follow in setting the discount rate for funding purposes has similar -- but not identical -- language in section 1084(c).

You probably also know that the employer has a larger burden to overcome regarding the appropriateness of actuarial assumptions used for withdrawal liability. Regardless, you probably want to start by reviewing the stated reasons by the actuary as to why he/she thinks one discount rate is reasonable for funding and a different rate is reasonable for withdrawal liability.

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