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Segal Blend Explained

"This article discusses: [1] The origins of the Segal Blend; [2] The purpose of withdrawal liability; [3] What's blended in Segal Blend; [4] The impact of the Segal Blend; [5] Arbitration and litigation about the Segal Blend; [6] The future for the Segal Blend."

Segal Model Pension Plan Funded Status Rose in Q2

"During the second quarter (Q2) of 2025, the funded status of Segal's model pension plan ... rose by 7 percentage points, to 105 percent, ... This increase in funded status is attributable to a 9 percent increase in assets, partially offset by a 1 percent increase in liabilities."

Segal Model Pension Plan’s Funded Status Increases in Q4 2024

"During the fourth quarter of 2024, the funded status of Segal's model pension plan ... rose by 5 percentage points, to 110 percent ... This increase in funded status is attributable to a 7 percent decrease in liabilities, partially offset by a 2 percent decrease in assets."

'Segal Blend' Withdrawal Liability Calculation Violates ERISA, Sixth Circuit Holds in Milestone Decision

"The Fund argued unsuccessfully that the Segal Blend complied with the statute's best estimate requirement. The Court rejected this attempt to shift the risk (associated with anticipated investment returns) to the withdrawing employer.... While the Fund may petition the U.S. Supreme Court for review, acceptance is unlikely in the current absence of a circuit court split." [Sofco Erectors, Inc. v. Trustees of Ohio Operating Engineers Pension Fund, No. 20-3639 (6th Cir. Sept. 28, 2021)]

Another District Court Rejects Use of Segal Blend for Use in Multiemployer Plan Withdrawal Liability

"Employers who have withdrawn from a multiemployer pension fund that has assessed a withdrawal liability using the Segal Blend or some other discount rate assumption that varies from that used for funding and who do want to consider challenging that liability should consider: [1] Getting an analysis from an actuary independent from the fund of what the difference in withdrawal liability would have been had the fund used the same discount rate it does for funding calculations. [2] Determining whether that difference is sufficient to justify the cost and effort of pursuing arbitration and a possible court battle." [Sofco Erectors, Inc. v. Trustees of the Ohio Operating Engineers Pension Fund, No. 19-2238 (S.D. Ohio May 19, 2020)]

First Crack in the Armor of the Segal Blend?

"The matter was appealed to the United States Court of Appeals for the Second Circuit. In May 2019, oral argument was held. Last week the case ended. Surprisingly, the parties stipulated by which the appeal was withdrawn with prejudice and counsel fees were not sought. ... [T]he stipulation left intact [the District Court's] decision that using the Segal Blend violated ERISA. The Second Circuit approved that settlement on September 16, 2019." [The New York Times Co. v. Newspapers & Mail Deliverers'-Publishers' Pension Fund, No. 17-6178 (S.D.N.Y. Mar. 26, 2018)]

'Segal Blend' Method Still in Question for Withdrawal Liability (PDF)

"[T]he District Court of New Jersey upheld the use of the Segal Blend in the case of Manhattan Ford Lincoln v. UAW Local 259 Pension Fund. Numerous other cases have subsequently been filed regarding assumptions for withdrawal liability assessments. The difference in opinion of the various courts keeps the door open for future challenges"

Segal Blend Litigation, Part Two: New Jersey District Court Holds That Use of Segal Blend Did Not Violate MPPAA

"Judge Kevin McNulty of the United States District Court for New Jersey held that using the Segal Blend by the UAW Local 259 Pension Fund did not violate MPPAA. The decision creates a split within the two district courts to have considered the issue, and opens the door to a possible Circuit Court split ... A Supreme Court decision on this issue would then become a real possibility." [Manhattan Ford Lincoln, Inc. v. UAW Local 259 Pension Fund, No. 17-5076 (D.N.J. July 3, 2018)]

Segal Blend Rejected as Discount Rate for Determining Withdrawal Liability

"The Segal Blend is not prohibited as a matter of law, but [the court found it] was inappropriately applied as it was lower than the actuary's best estimate of anticipated plan experience in the long-term and included interest rates for assets that were not included in the Fund's portfolio." [The New York Times Co. v. Newspapers & Mail Deliverers'-Publishers' Pension Fund, No. 17-6178 (S.D.N.Y. Mar. 26, 2018)]

Court Disallows Use of 'Segal Blend' for Calculation of Withdrawal Liability

"Judge Sweet found the arbitrator's emphasis on fairness to be misplaced. Instead, he focused on the [statutory] requirement in ERISA Section 4213(a) that the interest rate assumption 'offer the actuary's best estimate of anticipated experience under the plan.' ... In the same manner as Judge Sweet attacked the use of the 'Segal Blend' (a combination of the funding interest rate assumption and PBGC Rates) as 'including interest rates for assets not included in the Fund's portfolio' and, therefore, not representative of the 'best estimate of anticipated experience under the plan,' plans using PBGC Rates to calculate withdrawal liability also would be susceptible to attack." [The New York Times Co. v. Newspapers & Mail Deliverers'-Publishers' Pension Fund, No. 17-6178 (S.D.N.Y. Mar. 26, 2018)]