Pension Insurer Proposal Stems Rising Tide of Liability Suits

Federal regulators have blessed a controversial method for calculating the penalty companies must pay when exiting multiemployer pension plans, dismantling an emerging legal strategy that threatened the future of union-brokered plans.

The Pension Benefit Guaranty Corporation, which is tasked with insuring private-sector plans, issued a proposed rule this month that would allow those plans to choose the interest rates they use to calculate the unfunded liability individual employers pay when they’re withdrawing from a joint pension arrangement.

The proposed regulation would effectively green-light the “Segal Blend,” an increasingly popular mix of interest rates that hit a major stumbling block last ...