ERISA § 1055(d) Requires “Reasonable” Actuarial Assumptions: Outdated Mortality Tables Can Defeat Actuarial Equivalence

Introduction

In Thomas Reichert v. Kellogg Co. (consolidated with a parallel FedEx appeal), the Sixth Circuit addressed whether ERISA’s qualified joint and survivor annuity (“QJSA”) rules allow pension plans to compute married retirees’ benefits using decades-old mortality tables that allegedly depress monthly payments. The plaintiffs—retired, married participants in defined benefit plans sponsored by Kellogg (now split into Kellanova and WK Kellogg) and FedEx—claimed their plans violated ERISA by using outdated mortality data (including the “UP 1984 Mortality Table” and, for FedEx, the “1971 GAM Mortality Table”), thereby failing to provide QJSAs that are the “actuarial equivalent” of the single life annuity (“SLA”) they would receive if unmarried.

Two district courts dismissed the complaints at the pleading stage, accepting the defendants’ view that ERISA § 1055(d) does not constrain a plan’s choice of mortality tables or actuarial assumptions. The Sixth Circuit reversed, holding that § 1055(d)’s actuarial-equivalence requirement does prohibit the use of “unreasonable, inappropriate actuarial assumptions,” including unreasonably outdated mortality tables, and that plaintiffs plausibly stated claims for underpayment.

Summary of the Opinion

The Sixth Circuit reversed both dismissals and remanded. The court held:

  • ERISA § 1055(d)’s command that a QJSA be the “actuarial equivalent of a single annuity for the life of the participant” incorporates a requirement that the actuarial assumptions used to establish equivalence be reasonable.
  • Plaintiffs plausibly alleged unreasonableness where plans used mortality data rooted in the 1960s–1970s, producing conversion factors that allegedly reduce QJSA monthly payments below what actuarial equivalence would require today.
  • The court declined to address FedEx’s alternative dismissal arguments because they were not ruled on below, citing the “court of review, not first view” principle.

A dissent argued the majority impermissibly added atextual “reasonableness” language, emphasizing that Congress used “reasonable” expressly elsewhere in ERISA and that tax-qualification rules under the Internal Revenue Code already police actuarial assumptions.

Analysis

Precedents Cited

1) ERISA’s protective purpose and trust-law roots

  • Lockheed Corp. v. Spink, 517 U.S. 882 (1996): Used to frame ERISA’s role—ERISA does not force employers to create plans but protects employees from being “left empty-handed” once benefits are promised.
  • Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989): Supports the court’s emphasis that ERISA draws from trust law, informing fiduciary standards and interpretive posture.
  • Akers v. Palmer, 71 F.3d 226 (6th Cir. 1995): Reinforces fiduciaries’ obligation to protect participants and manage plan obligations with prudence under ERISA.

2) Plan structure and benefit forms (context for “actuarial equivalence”)

  • West v. AK Steel Corp., 484 F.3d 395 (6th Cir. 2007) and Smith v. CommonSpirit Health, 37 F.4th 1160 (6th Cir. 2022): Cited for the defined contribution vs. defined benefit distinction.
  • Spirt v. Tchrs. Ins. & Annuity Ass'n, 691 F.2d 1054 (2d Cir. 1982) and Esden v. Bank of Boston, 229 F.3d 154 (2d Cir. 2000): Provide background definitions of SLA benefit forms and conversion concepts.
  • Shields v. Reader's Digest Ass'n, Inc., 331 F.3d 536 (6th Cir. 2003): Explains why JSAs typically pay lower monthly amounts than SLAs because payments may continue for longer due to survivor benefits.

3) Pleading standard and review posture

  • Jones v. City of Cincinnati, 521 F.3d 555 (6th Cir. 2008): Establishes de novo review for Rule 12(b)(6) dismissals.
  • Ohio Pub. Emps. Ret. Sys. v. Fed. Home Loan Mortg. Corp., 830 F.3d 376 (6th Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009)): Supplies the plausibility standard and the “accept well-pleaded facts as true” lens.

4) Statutory interpretation methodology

  • United States ex rel. Felten v. William Beaumont Hosp., 993 F.3d 428 (6th Cir. 2021), and Robinson v. Shell Oil Co., 519 U.S. 337 (1997): Used for the “text and context” approach and consulting structure/purpose if ambiguity remains.
  • Bostock v. Clayton Cnty., 590 U.S. 644 (2020): Cited for “ordinary public meaning” at enactment time.

5) Technical “term of art” and actuarial equivalence

  • Corning Glass Works v. Brennan, 417 U.S. 188 (1974): Supports interpreting technical terms by reference to the relevant science.
  • Stephens v. U.S. Airways Grp., 644 F.3d 437 (D.C. Cir. 2011): Provides a modern formulation: “Two modes of payment are actuarially equivalent when their present values are equal under a given set of actuarial assumptions.”
  • United States v. Hansen, 599 U.S. 762 (2023), and NLRB v. Coca-Cola Bottling Co., 350 U.S. 264 (1956): Support the principle that borrowed or technical terms carry technical meaning.

6) Historical state cases and actuarial-table accuracy (used as evidence of professional meaning)

  • O'Dea v. Pub. Sch. Emp. Ret. Bd., 88 Pa. D. & C. 593 (Pa. Ct. C.P. 1954)
  • King Cnty. Emp. Ass'n v. State Ret. Bd., 336 P.2d 387 (Wash. 1959) (en banc)
  • Berry v. Bd. of Ret., 23 Cal. App. 3d 757 (1972)

The majority cited these decisions as reflecting a pre-ERISA understanding that actuarial equivalence requires use of the “best” or “most accurate” then-available tables—supporting the majority’s inference that using highly outdated tables defeats equivalence.

7) Reasonableness, actuarial discretion, and deference

  • Concrete Pipe & Prods. of Cali., Inc. v. Constr. Laborers Pension Tr. for S. Cali., 508 U.S. 602 (1993): Used to anchor a “scope of professional acceptability” frame—courts defer to actuaries when assumptions are within professional norms.
  • Sofco Erectors, Inc. v. Trs. of Ohio Operating Eng'rs Pension Fund, 15 F.4th 407 (6th Cir. 2021): Reinforces deference to actuarial judgments under ERISA provisions that explicitly invoke reasonableness.

8) Avoiding surplusage/absurdity and cross-provision comparisons

  • Tiger Lily, LLC v. U.S. Dep't of Hous. & Urban Dev., 5 F.4th 666 (6th Cir. 2021): Invoked for giving effect to each word/phrase—here, “actuarial equivalent” must do real work.
  • Hibbs v. Winn, 542 U.S. 88 (2004): Used to reject a reading that renders text superfluous.
  • Dodd v. United States, 545 U.S. 353 (2005) (quoting Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000)): Cited for the canon against absurd results.
  • Russello v. United States, 464 U.S. 16 (1983), and City of Columbus v. Ours Garage & Wreckage Serv., Inc., 536 U.S. 424 (2002): Used to address, but ultimately limit, the inference from Congress’s use of “reasonable” in other ERISA sections.

9) Enforcement scheme and statutory purpose

  • Mertens v. Hewitt Assocs., 508 U.S. 248 (1993): Defendants invoked ERISA’s “comprehensive and reticulated” scheme to argue against reading in new obligations; the majority distinguished this as enforcing express statutory text rather than creating new remedies.
  • Boggs v. Boggs, 520 U.S. 833 (1997): Cited to emphasize § 1055’s purpose—ensuring “a stream of income to surviving spouses.”
  • Husted v. A. Philip Randolph Inst., 584 U.S. 756 (2018), and Helix Energy Sols. Grp., Inc v. Hewitt, 598 U.S. 39 (2023): Used to discount policy arguments as improper drivers of interpretation and to prioritize unambiguous text.

10) Appellate restraint on issues not decided below

  • Maldonado v. Nat'l Acme Co., 73 F.3d 642 (6th Cir. 1996)
  • Stoudemire v. Mich. Dep't of Corr., 705 F.3d 560 (6th Cir. 2013)
  • Christian Healthcare Ctrs., Inc. v. Nessel, 117 F.4th 826 (6th Cir. 2024)

These authorities supported the panel’s decision to leave FedEx’s alternative dismissal arguments for the district court on remand.

11) Agency interpretation after Loper Bright

  • Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024): The majority relied on it to give “great respect” to Treasury’s “roughly contemporaneous” and consistent understanding that equivalence is determined using “reasonable actuarial factors” (26 C.F.R. § 1.401(a)-11(b)(2)).

Legal Reasoning

1) The operative statutory command: actuarial equivalence “for the life of the participant”

The court treated § 1055(d)(1)(B) (and the parallel QOSA provision) as requiring equivalence between two benefit streams: (i) the SLA payable “for the life of the participant” and (ii) the QJSA payable over the joint lives and then the survivor’s life. Because actuarial equivalence is fundamentally a present-value comparison, mortality assumptions are not incidental; they are essential to the conversion.

2) “Actuarial equivalent” as a term of art that imports professional standards

The majority’s central move was definitional: it anchored “actuarial equivalent” in actuarial science as of 1974, concluding that the concept historically meant equal present value using appropriate mortality assumptions. It reasoned that equivalence cannot be achieved if a plan relies on mortality tables that no longer reasonably reflect current longevity.

3) Reasonableness is implied by the concept, not appended as a free-floating policy choice

While § 1055(d) does not say “reasonable,” the court held reasonableness is inherent: a QJSA cannot be the actuarial equivalent of an SLA “for the life of the participant” if the plan assumes mortality patterns that are materially inconsistent with the life expectancy of the participant population today. The court framed “reasonableness” as a professional range, not a single mandated table.

4) Guardrails: deference to actuaries, but not to assumptions outside professional acceptability

Drawing from Concrete Pipe & Prods. of Cali., Inc. v. Constr. Laborers Pension Tr. for S. Cali. and Sofco Erectors, Inc. v. Trs. of Ohio Operating Eng'rs Pension Fund, the majority emphasized that courts can give actuaries latitude when assumptions fall “within the scope of professional acceptability.” But allegations that a plan used mortality data from the 1960s–1970s plausibly plead the opposite—assumptions so outdated that they systematically depress QJSA values.

5) Rejection of defendants’ principal counter-readings

  • “Any table is allowed” would nullify the statute. If plans can pick arbitrary tables, “actuarial equivalent” becomes meaningless, because plan sponsors could engineer any conversion factor and label it equivalent.
  • Disclosure-only theory fails. The court rejected the notion that § 1055(d)(1)(B) is essentially a disclosure requirement, noting ERISA’s written-instrument rules and the Internal Revenue Code’s requirement that actuarial assumptions be specified “in a way which precludes employer discretion,” 26 U.S.C. § 401(a)(25).
  • Cross-ERISA comparisons do not defeat the implied constraint. Defendants pointed to other ERISA provisions expressly using “reasonable.” The majority found those provisions addressed different problems and lacked the “actuarial equivalent ... for the life of the participant” structure, weakening any negative inference.

6) Post-Loper Bright agency reliance as persuasive, not controlling

The court did not apply Chevron-style deference; instead, it cited Loper Bright Enters. v. Raimondo for the proposition that consistent, contemporaneous agency interpretations can receive “great respect.” It used Treasury’s regulation (26 C.F.R. § 1.401(a)-11(b)(2))—“reasonable actuarial factors”—as confirmatory of the court’s text-and-term-of-art reading.

7) The dissent’s textual objection

The dissent (Judge Nalbandian) argued the majority “read into the statute an atextual requirement” because § 1055(d) does not say “reasonable,” while other ERISA provisions do. The dissent further argued that the Internal Revenue Code regime provides the main practical constraint via tax-qualification consequences and that Treasury’s reasonableness regulation under the IRC should not be used to rewrite ERISA.

Impact

  • Pleading-stage viability for “outdated mortality table” underpayment claims. The decision makes clear that participants can plausibly plead a § 1055(d) violation by alleging the plan used unreasonably outdated mortality assumptions that depress QJSA values, even without pointing to a specific ERISA-mandated table.
  • Substantive constraint on plan discretion in converting SLAs to QJSAs. Plans must be prepared to justify the contemporaneous fitness of their mortality assumptions as professionally reasonable for their participant populations, especially where assumptions are rooted in old data.
  • Greater litigation and expert-driven disputes are likely. The majority acknowledged reasonableness is a range and that courts can defer to professionally acceptable actuarial judgments. Even so, the standard invites fact-intensive disputes over what counts as “unreasonably outdated” and whether a table materially misprices longevity.
  • Fiduciary-duty claims may track § 1055(d) compliance. Because the plaintiffs also pleaded breach of fiduciary duty under 29 U.S.C. § 1104 based on the alleged statutory violation, the ruling potentially broadens exposure beyond pure benefits claims, depending on proof and remedial theories on remand.
  • Practical pressure to modernize assumptions. Large plans that still rely on legacy tables may revisit assumptions and plan-document provisions to reduce risk, particularly for married-participant optional forms and any “setbacks” like those alleged in the FedEx plan.

Complex Concepts Simplified

  • Defined benefit plan: A pension promising a formula-based benefit (e.g., a monthly amount), unlike a 401(k) where the benefit depends on account investment performance.
  • SLA (single life annuity): Monthly payments for the participant’s life only. Payments stop when the participant dies.
  • JSA / QJSA (joint and survivor annuity / qualified joint and survivor annuity): Monthly payments during the participant’s life, and after death a continuing payment to the spouse (50%–100% of the joint-life amount). A QJSA must satisfy statutory conditions, including actuarial equivalence to an SLA.
  • Actuarial equivalence: Two different payment shapes (SLA vs. QJSA) are “equivalent” if their present values are equal—i.e., the discounted value today of expected future payments is the same.
  • Mortality table: A set of probabilities estimating how long people at different ages are expected to live. If the table assumes people die sooner than they actually do today, it can skew benefit conversions.
  • Conversion factor: A multiplier used to translate an SLA amount into a JSA amount, based on interest and mortality.
  • “Setback”: An adjustment that treats a beneficiary spouse as younger than their actual age for calculation purposes, increasing expected survivor duration and lowering the participant’s monthly amount (as alleged against FedEx).
  • Rule 12(b)(6) motion to dismiss: A procedural test of whether the complaint plausibly states a claim; courts assume the pleaded facts are true at this stage.

Conclusion

The Sixth Circuit’s key holding is that ERISA § 1055(d)’s requirement that a QJSA be the “actuarial equivalent of a single annuity for the life of the participant” is not satisfied by any conversion methodology a plan happens to choose. Instead, it implicitly requires reasonable actuarial assumptions—particularly mortality assumptions that reasonably reflect modern longevity—so that the converted married-participant benefit truly matches the SLA’s value.

By reversing the pleading-stage dismissals, the court opened the door to merits litigation over whether using mortality data drawn from the 1960s–1970s (and related plan adjustments) can systematically underpay married retirees in violation of ERISA. The dissent underscores an ongoing interpretive fault line—textual silence versus embedded technical meaning—which may shape how other courts, and potentially the Supreme Court, approach “term of art” methodology in ERISA benefit-calculation disputes.