seventy-six, only seven actually retired before age 62. In fact, the average retirement age of this group of retirees is 62.45 years. Using the defendants' proposed XRA assumption, defendants calculate the assumed retirement age for this group of 76 employees as 62.62 years; using the PBGC's XRA assumption, defendants calculate the assumed retirement age for the same group as 61.51 years. Comparing these calculations to the actual average retirement age of the group, the defendants conclude that their XRA assumption would have been a more accurate predictor of the experience of the NJ Zinc Plan. Defs.' Mem. at 95-96; Kleinberg Aff. at P 14.
We disagree. The task before the Court is to determine which assumptions an actuary would have used in 1981 to determine the Full Funding Amount. Certainly, an actuary in 1981 would not have had the benefit of hindsight to aid in this task. We therefore conclude that consideration of such data is impermissible. In addition, even if we were willing to consider historical data regarding employee retirement, we are not convinced that the statistical difference highlighted in the defendants' brief is significant. Moreover, defendants' statistics look only at a relatively short period of time: given the ages of the Plan participants at the time of the spin-off, the XRA assumption would cover a period beyond 2010. We do not believe that it is reasonable to conclude that these statistics constitute a "retirement pattern" for the Kinek plaintiffs over the entire life of the NJ Zinc Plan.
3. The Purchase of Annuities
Finally, defendants claim that they could have purchased annuities for the Kinek plaintiffs at an amount less than the liabilities calculated under the PBGC assumptions, and therefore never would have agreed to fund the NJ Zinc Plan on the basis of the PBGC's XRA assumption. Kleinberg Aff. P 7. We believe that this is nothing more than speculation on the part of defendants' actuary, for an annuity premium quotation was not obtained at the time of spin-off, and the defendants have not offered any objective evidence to support this claim.
4. Calculating the Full Funding Amount Using the PBGC's Expected Retirement Age
We therefore conclude that the XRA assumptions set forth in the PBGC's regulations should be used to calculate the Full Funding Amount. As we noted above, using the PBGC's XRA assumption, the Kinek plaintiffs calculate the Full Funding Amount as $ 3,570,734, while the PBGC calculates the amount as $ 3,518,449 using that same assumption. According to the Kinek plaintiffs' actuary, the discrepancy between these two figures is the result of minor differences in methodology. Poulin Supp. Aff. at P 4-6. Although Mr. Poulin explains the discrepancy in some detail, we are not provided with sufficient information to determine whether the Kinek plaintiffs' calculation is more reasonable than the PBGC's. Absent the tools with which we can make a principled determination, we will seek common ground and adopt the PBGC's figure, which is the lower of the two. Accordingly, we hold that the defendants should have transferred to the NJ Zinc Plan $ 3,518,449 and are now liable for that amount.
The next issue for the Court to determine is whether prejudgment interest should be awarded to the plaintiffs, and if so, at what rate. Because of the significant impact interest has on the amount the defendants will be required to pay, the parties have briefed the issue thoroughly. The parties conceded at oral argument that the question of whether to award prejudgment interest is a matter within the sound discretion of this Court. See also Katsaros v. Cody, 744 F.2d 270, 281 (2d Cir.) ("ERISA grants the court wide discretion in fashioning equitable relief to protect the rights of pension fund beneficiaries including the award of prejudgment interest"), cert. denied, 469 U.S. 1072 (1984); see also Wickham Contracting v. Local Union No. 3, 955 F.2d 831, 833-36 (2d Cir.) (discussing law of prejudgment interest under several federal statutes, including ERISA), cert. denied, 121 L. Ed. 2d 302, 113 S. Ct. 394 (1992). In the exercise of that discretion, we conclude that the proper rate of prejudgment interest is 9.5% per annum -- the effective discount rate that is used to determine the extent of G & W's full-funding obligation as of September 30, 1981.
We will begin by exploring the different interest rates proposed by the parties. The Kinek plaintiffs propose that this Court should award a prejudgment interest rate based on what the NJ Zinc Plan would have earned on the money that G & W should have transferred to the Plan on September 30, 1981 (the "Shortfall"). In other words, the Kinek plaintiffs propose that the Court approximate the market rate of interest available to pension plans like the NJ Zinc Plan for the past thirteen years. With regard to the period between October 1, 1981 and December 31, 1992 (the date the NJ Zinc Plan was terminated), the plaintiffs ask the Court to apply the actual investment return rate of the NJ Zinc Plan during that period. n15 For the period beginning on January 1, 1983, plaintiffs claim the Court should estimate the rates of return that the Plan would have realized had it continued to make investments with the money that G & W should have transferred at the time of the spin-off. The Kinek plaintiffs suggest that the best sources on which to base these estimates are the investment returns reported by pension plans of similar size over the relevant periods. We have set forth the specific rates of return proposed by the Kinek plaintiffs in the margin. n16
n15 During this period, the Kinek plaintiffs estimate the rate of return for the NJ Zinc Plan as follows:
10/81 - 12/81 16.06%
1/82 - 9/82 15.06%
10/82 - 12/82 10.55%
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