Western States Office and Professional Employees Pension Fund v. Welfare & Pension Administration Service, Inc., No. 20-35545 (9th Cir. 2022)
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Under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001–1461, when an employer withdraws from a multiemployer pension plan, the employer is required to pay for its share of unfunded benefits. Withdrawal liability may be paid in annual installments, calculated in part based on the “highest contribution rate” the employer was required to pay into the plan during a specified time period. When a multiemployer plan is underfunded and in critical status, the employer must pay a surcharge of five or 10 percent of the total amount of contributions the employer was required to make to the plan each year.
The district court entered summary judgment in favor of the defendant in an action brought by a multiemployer pension plan, seeking a recalculation of the defendant’s annual withdrawal liability payments. The Ninth Circuit affirmed. For purposes of determining an employer’s annual withdrawal payment, a surcharge paid by the employer when a plan is in critical status is not included in the calculation of the “highest contribution rate.” The surcharge automatically imposed on an employer when a plan is in critical status does not increase the applicable contribution rate, which in this case is the dollar amount per compensable hours.
Court Description: ERISA. The panel affirmed the district court’s summary judgment in favor of the defendant in an ERISA action brought by a multiemployer pension plan, seeking a recalculation of defendant’s annual withdrawal liability payments following its withdrawal from the plan. When an employer withdraws from a multiemployer pension plan, it is required to pay for its share of unfunded benefits. That share, called withdrawal liability, may be paid in annual installments, calculated in part based on the “highest contribution rate” the employer was required to pay into the plan during a specified time period. In addition, when a multiemployer plan is underfunded and in critical status, the employer must pay a surcharge of five or ten percent of the total amount of contributions the employer was required to make to the plan each year. The panel held that, for purposes of determining an employer’s annual withdrawal payment, a surcharge paid by the employer when a plan is in critical status is not included in the calculation of the “highest contribution rate.” WESTERN STATES OFFICE FUND V. WPAS 3
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