Actuarial Equivalence Fight Goes to the First Circuit

Yet another battle in the actuarial equivalence fight has just been resolved—and is immediately headed for appellate review. In Belknap v. Partners Healthcare System, Inc., the Plaintiff argued that the annuity payment he received from his plan was not the “actuarial equivalent” of the single life benefit he would have received had he started his monthly benefit at age 65 as is required by ERISA. He argued that the life expectancy table used to predict a participants lifespan when translating his single life benefit into an annuity was from the 1950s, and thus was not reasonable. Reaching a finding rejected by most courts that have decided the issue, the Court ruled that nothing in ERISA required that “inputs” into the actuarial calculation be reasonable ones. Recognizing that the decision was controversial, the Court did allow for an immediate appeal to the First Circuit.

The Court’s opinion, while not in the majority, recognizes the difficulty that Plaintiffs have with these actuarial equivalence cases. Without any guidance from the DOL or the Treasury department, how is a plan fiduciary/sponsor supposed to know when mortality table is no longer reasonable—for example, mortality rates went much higher as a result of the COVID-19 pandemic over the last few years. Perhaps the First Circuit will provide some answers to these questions.