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Legal Status
Rule
Allocation of Assets in Single-Employer Plans; Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits
A Rule by the Pension Benefit Guaranty Corporation on 09/15/2009
Document Details
Information about this document as published in the Federal Register.
- Printed version:
- Publication Date:
- 09/15/2009
- Agency:
- Pension Benefit Guaranty Corporation
- Dates:
- Effective October 1, 2009.
- Effective Date:
- 10/01/2009
- Document Type:
- Rule
- Document Citation:
- 74 FR 47097
- Page:
- 47097-47099 (3 pages)
- CFR:
- 29 CFR 4022
- 29 CFR 4044
- Document Number:
- E9-22129
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- AGENCY:
- ACTION:
- SUMMARY:
- DATES:
- FOR FURTHER INFORMATION CONTACT:
- SUPPLEMENTARY INFORMATION:
- List of Subjects
- 29 CFR Part 4022
- 29 CFR Part 4044
- PART 4022—BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
- Appendix B to Part 4022—Lump Sum Interest Rates for PBGC Payments
- Appendix C to Part 4022—Lump Sum Interest Rates for Private-Sector Payments
- PART 4044—ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
- Appendix B to Part 4044—Interest Rates Used To Value Benefits
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AGENCY:
Pension Benefit Guaranty Corporation.
ACTION:
Final rule.
SUMMARY:
Pension Benefit Guaranty Corporation's regulations on Allocation of Assets in Single-Employer Plans and Benefits Payable in Terminated Single-Employer Plans prescribe interest assumptions for valuing and paying certain benefits under terminating single-employer plans. This final rule amends the asset allocation regulation to adopt interest assumptions for plans with valuation dates in the fourth quarter of 2009 and amends the benefit payments regulation to adopt interest assumptions for plans with valuation dates in October 2009. Interest assumptions are also published on PBGC's Web site ( http://www.pbgc.gov).
DATES:
Effective October 1, 2009.
Start Further InfoFOR FURTHER INFORMATION CONTACT:
Catherine B. Klion, Manager, Regulatory and Policy Division, Legislative and Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005, 202–326–4024. (TTY/TDD users may call the Federal relay service toll-free at 1–800–877–8339 and ask to be connected to 202–326–4024.)
End Further Info End Preamble Start Supplemental InformationSUPPLEMENTARY INFORMATION:
PBGC's regulations prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits of terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions are intended to reflect current conditions in the financial and annuity markets.
These interest assumptions are found in two PBGC regulations: the regulation on Allocation of Assets in Single-Employer Plans (29 CFR part 4044) and the regulation on Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022). Assumptions under the asset allocation regulation are updated quarterly; assumptions under the benefit payments regulation are updated monthly. This final rule updates the assumptions under the asset allocation regulation for the fourth quarter (October through December) of 2009 and updates the assumptions under the Start Printed Page 47098 benefit payments regulation for October 2009.
The interest assumptions prescribed under the asset allocation regulation (found in Appendix B to Part 4044) are used for the valuation of benefits for allocation purposes under ERISA section 4044. Two sets of interest assumptions are prescribed under the benefit payments regulation: (1) A set for PBGC to use to determine whether a benefit is payable as a lump sum and to determine lump-sum amounts to be paid by PBGC (found in Appendix B to Part 4022), and (2) a set for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology (found in Appendix C to Part 4022).
This amendment (1) adds to Appendix B to Part 4044 the interest assumptions for valuing benefits for allocation purposes in plans with valuation dates during the fourth quarter (October through December) of 2009, (2) adds to Appendix B to Part 4022 the interest assumptions for PBGC to use for its own lump-sum payments in plans with valuation dates during October 2009, and (3) adds to Appendix C to Part 4022 the interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology for valuation dates during October 2009.
The interest assumptions that PBGC will use for valuing benefits for allocation purposes (set forth in Appendix B to part 4044) will be 5.30 percent for the first 20 years following the valuation date and 5.01 percent thereafter. In comparison with the interest assumptions in effect for the third quarter of 2009, these interest assumptions represent a decrease of 0.01 percent for the first 20 years following the valuation date and a decrease of 0.03 percent for all years thereafter.
The interest assumptions that PBGC will use for its own lump-sum payments (set forth in Appendix B to part 4022) will be 2.50 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for September 2009, these interest assumptions represent a decrease of 0.50 percent in the immediate annuity rate and are otherwise unchanged. For private-sector payments, the interest assumptions (set forth in Appendix C to part 4022) will be the same as those used by PBGC for determining and paying lump sums (set forth in Appendix B to part 4022).
PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect current market conditions as accurately as possible.
Because of the need to provide immediate guidance for the valuation and payment of benefits in plans with valuation dates during October 2009, PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.
PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.
Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See5 U.S.C. 601(2).
Start List of SubjectsList of Subjects
29 CFR Part 4022
- Employee benefit plans
- Pension insurance
- Pensions
- Reporting and recordkeeping requirements
29 CFR Part 4044
- Employee benefit plans
- Pension insurance
- Pensions
In consideration of the foregoing, 29 CFR parts 4022 and 4044 are amended as follows:
End Amendment Part Start PartPART 4022—BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
End Part Start Amendment Part1. The authority citation for part 4022 continues to read as follows:
End Amendment Part Start AuthorityAuthority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.
End Authority Start Amendment Part2. In appendix B to part 4022, Rate Set 192, as set forth below, is added to the table.
End Amendment PartAppendix B to Part 4022—Lump Sum Interest Rates for PBGC Payments
Rate set | For plans with a valuation date | Immediate annuity rate (percent) | Deferred annuities (percent) | |||||
---|---|---|---|---|---|---|---|---|
On or after | Before | i1 | i2 | i3 | n1 | n2 | ||
* * * * * * * | ||||||||
192 | 10–1–09 | 11–1–09 | 2.50 | 4.00 | 4.00 | 4.00 | 7 | 8 |
3. In appendix C to part 4022, Rate Set 192, as set forth below, is added to the table.
End Amendment PartAppendix C to Part 4022—Lump Sum Interest Rates for Private-Sector Payments
Rate set | For plans with a valuation date | Immediate annuity rate (percent) | Deferred annuities (percent) | |||||
---|---|---|---|---|---|---|---|---|
On or after | Before | i1 | i2 | i3 | n1 | n2 | ||
* * * * * * * | ||||||||
192 | 10–1–09 | 11–1–09 | 2.50 | 4.00 | 4.00 | 4.00 | 7 | 8 |
PART 4044—ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
End Part Start Amendment Part4. The authority citation for part 4044 continues to read as follows:
End Amendment Part Start AuthorityAuthority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
End Authority Start Amendment Part5. In appendix B to part 4044, a new entry for October–December 2009, as set forth below, is added to the table.
End Amendment PartAppendix B to Part 4044—Interest Rates Used To Value Benefits
For valuation dates occurring in the months— | The values of it are: | |||||
---|---|---|---|---|---|---|
it | for t = | it | for t = | it | for t = | |
* * * * * * * | ||||||
October–December 2009 | 0.0530 | 1–20 | 0.0501 | >20 | N/A | N/A |
Issued in Washington, DC, on this 8th day of September 2009.
Vincent K. Snowbarger,
Acting Director, Pension Benefit Guaranty Corporation.
[FR Doc. E9–22129 Filed 9–14–09; 8:45 am]
BILLING CODE 7709–01–P