Withdrawal liability

[lexi]

What do you think about the following:

In the past, a multiemployer pension plan has always used an (actuarial) assumption of 8% in calculating withdrawal liability.

Is there any reason to believe that the trustees, who have reserved the right in the trust agrmn't to calculate employers' withdrawal liability w/o reference to a specific % number, could not change how they calculate it for 2006?

For example, if an ER withdrew in January 2006 and was assessed a liability based on an 8% assumption, is the trustee potentially estopped from changing the rate for employers who withdraw in November 2006?

Also, is the trustee required to use an actuarial value? (Can they never use a higher value?)

Thanks in advance for your help.

[Bill Ecklund]

The actuarial assumptions used in calculating withdrawal liability are usually determined by the Actuary. The Trustees generally accept the recommendation of the Actuary in selecting those assumptions. The assumptions can change from time to time, based upon the Actuary’s determination that an assumption has now become unreasonable to use. Generally once adopted, the actuarial assumptions are used for withdrawals during a Plan year. It would be highly unusual (although probably not illegal) to change those assumptions during the Plan year. If a withdrawing employer believes that an actuarial assumption has been improperly adopted or changed, their recourse is to first request a review and then arbitrate the issue.