The U.S. 6th Circuit Court of Appeals (which covers Michigan employers) recently issued a long-awaited decision about the appropriateness of interest rate assumptions used by union pension funds to calculate withdrawal liability. The court affirmed a district court’s opinion holding the Ohio Operating Engineers Pension Fund’s use of the “Segal Blend” violated the Employee Retirement Income Security Act (ERISA).
How We Got Here
When multiemployer pension plans have unfunded “future liabilities,” employers that cease to have an obligation to contribute to them are assessed a portion of the unfunded “withdrawal liability.” Under ERISA, a plan must use reasonable actuarial assumptions to calculate the amount of lability.