Supreme Court Signals Openness to Letting Actuaries Set Assumptions After Valuation Date

The Supreme Court, during oral arguments Tuesday, appeared inclined to give pension plan actuaries flexibility to finalize key withdrawal liability assumptions after a plan’s valuation date.

In June 2025, the justices decided to hear the case M&K Employee Solutions LLC v. Trustees of the IAM National Pension Fund to consider whether actuarial assumptions used to calculate unfunded vested benefits must be fixed by the end of the prior plan year or may be selected later, so long as they measure the plan’s condition “as of” the end of the prior plan year. The court’s ruling could determine how multiemployer plans assess withdrawal liability and how predictable those assessments are for departing employers.

Under the Employee Retirement Income Security Act, employers may withdraw from multiemployer pension plans but must pay withdrawal liability if the plan is underfunded—covering their proportionate share of the deficit.

In M&K Employee Solutions, the pension fund’s actuary lowered the discount rate to 6.5% from 7.5% in January 2018, then calculated the employer’s 2018 withdrawal liability using this new rate.

The U.S. District of Columbia Circuit Court of Appeals ruled that ERISA allows actuaries to adopt new assumptions after year-end, provided those assumptions reflect information available “as of” the valuation date.

During oral arguments, the justices appeared wary of the employers’ request to freeze actuarial assumptions at year-end. Several questions suggested concern that such a rule could hamstring actuaries’ ability to do their jobs realistically and consistently.

Justice Ketanji Brown Jackson emerged as one of the most skeptical voices toward the employers’ position. She repeatedly questioned why actuarial assumptions—professional judgments about future plan performance—should be treated like fixed historical facts, rather than analytical conclusions that naturally follow the close of the plan year. Her questioning suggested a view that Congress anticipated retrospective calculations, not rigid, pre–year-end decisionmaking.

Chief Justice John Roberts also seemed unconvinced that the statute demands a hard cutoff. Through a series of hypotheticals, he probed whether errors or improved methodologies discovered shortly after year-end should really be ignored, even if they yield more accurate results.

Justice Neil Gorsuch likewise pressed the employers on why actuarial judgments could not be formed later using information that existed as of the valuation date, signaling discomfort with treating assumptions differently from other retrospective calculations.

By contrast, the employers’ core argument—that allowing post-year-end assumptions opens the door to manipulation—won little support from the justices. While Justice Brett Kavanaugh and Justice Sonia Sotomayor raised concerns about fairness and potential gamesmanship, neither appeared ready to embrace the strict rule the employers proposed as the solution.

Instead, several justices seemed more persuaded by the pension fund’s argument that ERISA already contains safeguards such as: assumptions must be reasonable, must reflect the actuary’s best estimate, and are subject to review in arbitration. Those mechanisms appeared to resonate with several justices as more consistent with how Congress designed the system to balance plan solvency with employer protections.

Potential Impact of Court Ruling

If the court ultimately rules in favor of the pension fund, plan sponsors are likely to retain broad discretion in how and when actuaries finalize assumptions—so long as those assumptions reasonably reflect conditions at the valuation date.

A decision favoring the employers, by contrast, would impose tighter procedural discipline on plans, requiring actuarial assumptions to be locked in earlier and potentially increasing operational costs and litigation over whether a particular assumption was timely selected.

While no outcome is certain, the tenor of the questioning suggests the court is more receptive to a flexible, professional-judgment-based approach than to a rigid temporal cutoff—an early signal that pension funds and actuaries may have the upper hand in this closely watched ERISA dispute.

The Supreme Court decided to hear the case during its current term, which began in October 2025 and ends in June or early July.