Sixth Circuit Finds Pension Fund Violated ERISA By Using Artificially Low Interest Rate to Inflate Withdrawal Liability

In Ace-Saginaw Paving Co. v. Operating Eng’rs Loc. 324 Pension Fund, No. 24-1288, —F.4th—-, 2025 WL 2238023 (6th Cir. Aug. 6, 2025), the Sixth Circuit upheld a ruling that a pension fund’s actuary violated ERISA by applying an interest rate that did not reflect his “best estimate” when calculating a withdrawing employer’s liability. The decision underscores the fiduciary-like obligations ERISA places on actuaries and rejects manipulative assumptions designed to serve policy goals rather than actuarial integrity.

Multiemployer pension funds rely on employers’ ongoing contributions to support future retiree benefits. These contributions are based on actuarial assumptions about future investment returns. When an employer exits such a plan, ERISA requires the employer to pay its fair share of any unfunded vested benefits (UVBs) — essentially, the gap between promised benefits and assets available.

To determine this withdrawal liability, a fund’s actuary must use “actuarial assumptions and methods which, in the aggregate, are reasonable… and which, in combination, offer the actuary’s best estimate of anticipated experience under the plan.” 29 U.S.C. § 1393(a)(1). This “best estimate” requirement is the cornerstone of the case.

In 2018, Ace-Saginaw Paving partially withdrew from the Operating Engineers Local 324 Pension Fund. It believed its liability should be approximately $6.3 million, based on a 7.75% interest rate — the same one used by the Fund for minimum funding purposes. However, the Fund’s actuary, Jonathan Feldman, used a much lower 2.27% rate based on PBGC data, resulting in a staggering $16.3 million liability — more than double Ace’s estimate.

Pursuant to ERISA, the dispute went to arbitration. The arbitrator ruled that Feldman’s use of the 2.27% rate violated § 1393(a)(1), finding that he knowingly used a rate that would overstate Ace’s liability 77–95% of the time. The arbitrator held that Feldman’s assumption was not his “best estimate” and ordered the Fund to recalculate Ace’s liability accordingly.

The district court affirmed the arbitrator’s findings, granting summary judgment to Ace. However, it declined Ace’s request to mandate the use of the 7.75% minimum funding rate as the appropriate remedy, instead remanding the matter for recalculation using assumptions compliant with ERISA.

Both sides appealed — the Fund challenged the finding of an ERISA violation, and Ace challenged the refusal to order a specific interest rate. Ace also sought attorneys’ fees for defending the appeal.

The Sixth Circuit affirmed on all fronts, issuing a strongly worded rebuke of Feldman’s methodology. The panel agreed that Feldman failed the “best estimate” requirement by selecting a rate designed not to reflect future performance, but to discourage employers from withdrawing.

Two letters Feldman wrote to the Fund’s trustees — in 2012 and 2019 — were especially damning. In them, he admitted that the lower PBGC rate was selected to make withdrawal less attractive, and to prevent risk shifting to remaining employers. The court emphasized that while actuaries have wide latitude under ERISA, this discretion does not include using assumptions based on policy goals or fund management strategies. The job of the actuary is to be neutral and offer an honest estimate — not to make assumptions that effectively penalize employers for withdrawing.

The court drew parallels to its prior decision in Sofco Erectors, Inc. v. Trs. of Ohio Operating Eng’rs Pension Fund, 15 F.4th 407 (6th Cir. 2021), which also invalidated inflated withdrawal liability calculations. Here, as in Sofco, the court made clear that assumptions must reflect anticipated experience “under the plan,” not general risk aversion or fund-level concerns.

The panel rejected the Fund’s argument that the dire financial condition of the plan justified Feldman’s conservatism. ERISA already builds in disincentives for employers to exit a fund — the statute does not authorize actuaries to create further barriers by artificially skewing calculations.

Ace argued that the court should mandate a recalculation using the same 7.75% interest rate applied for minimum funding purposes. But the Sixth Circuit held that while using the same rate is permissible, it is not mandatory. Actuaries may adjust the rate for withdrawal liability — so long as the adjustment serves accuracy, not policy. Accordingly, the court upheld the district court’s decision to remand for a new actuarial estimate compliant with § 1393(a)(1).

As for attorneys’ fees, the court declined to award them under either Rule 38 or ERISA’s fee-shifting provision. It found the appeal was not frivolous and noted that both sides had appealed and neither prevailed entirely.

The Sixth Circuit remanded the matter for the Fund’s actuary to recompute Ace’s withdrawal liability using assumptions that comply with ERISA’s statutory requirements.