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Notice

Required Interest Rate Assumption for Determining Variable-Rate Premium; Interest on Late Premium Payments; Interest on Underpayments and Overpayments of Single-Employer Plan Termination Liability and Multiemployer Withdrawal Liability; Interest Assumptions for Multiemployer Plan Valuations Following Mass Withdrawal

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Start Preamble

AGENCY:

Pension Benefit Guaranty Corporation.

ACTION:

Notice of interest rates and assumptions.

SUMMARY:

This notice informs the public of the interest rates and assumptions to be used under certain Pension Benefit Guaranty Corporation regulations. These rates and assumptions are published elsewhere (or can be derived from rates published elsewhere), but are collected and published in this notice for the convenience of the public. Included in this notice are required interest rates for determining the variable-rate premium for premium payment years beginning in January through April 2002. Interest rates are also published on the PBGC's Web site (http://www.pbgc.gov).

DATES:

The required interest rates for determining the variable-rate premium under part 4006 apply to premium payment years beginning in January through April 2002. The interest assumptions for performing multiemployer plan valuations following mass withdrawal under part 4281 apply to valuation dates occurring in May 2002. The interest rates for late premium payments under part 4007 and for underpayments and overpayments of single-employer plan termination liability under part 4062 and multiemployer withdrawal liability under part 4219 apply to interest accruing during the second quarter (April through June) of 2002.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General Counsel, Office of the General Counsel, 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 Information

SUPPLEMENTARY INFORMATION:

Variable-Rate Premiums

Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income Security Act of 1974 (ERISA) and § 4006.4(b)(1) of the PBGC's regulation on Premium Rates (29 CFR part 4006) prescribe use of an assumed interest rate (the “required interest rate”) in determining a single-employer plan's variable-rate premium. The required interest rate is described as the “applicable percentage” of the annual yield on 30-year Treasury securities for the month preceding the beginning of the plan year for which premiums are being paid (the “premium payment year”).

The Treasury Department has suspended issuance of 30-year Treasury securities and, effective February 18, 2002, ceased supplying the Federal Reserve Board with an estimate of the annual yield on 30-year Treasury securities, which until then had been published in Federal Reserve Statistical Release H.15. However, the Internal Revenue Service in Notice 2002-26 Start Printed Page 18256(scheduled for publication in Internal Revenue Bulletin 2002-15) announced that it had determined the rate of interest on 30-year Treasury securities for February 2002 and that it would determine and publish the rate of interest on 30-year Treasury securities for succeeding months pending enactment of legislative changes that address the discontinuance of 30-year Treasury securities. The PBGC has concluded that it is appropriate to use the February rate announced in Notice 2002-26, and future rates determined in the manner described in that notice, in setting the required interest rate for purposes of calculating the variable-rate premium.

Until March 9, 2002, the applicable percentage of the 30-year Treasury rate (to be used in determining the required interest rate) under section 4006(a)(3)(E)(iii)(II) of ERISA had been 85 percent. However, the Job Creation and Worker Assistance Act of 2002 (Public Law No. 107-147), signed into law on that date, changes the applicable percentage to 100 percent for plan years beginning after December 31, 2001, and before January 1, 2004.

Accordingly, the required interest rates to be used in determining variable-rate premiums for premium payment years beginning in January through April 2002 are 5.48 percent for January, 5.45 percent for February, 5.40 percent for March, and 5.71 percent for April (i.e., 100 percent of the 30-year Treasury rate figures for December 2001 through March 2002).

The following table lists the required interest rates to be used in determining variable-rate premiums for premium payment years beginning between May 2001 and April 2002.

For premium payment years beginning inThe required interest rate is
May 20014.80
June 20014.91
July 20014.82
August 20014.77
September 20014.66
October 20014.66
November 20014.52
December 20014.35
January 20025.48
February 20025.45
March 20025.40
April 20025.71

Late Premium Payments; Underpayments and Overpayments of Single-Employer Plan Termination Liability

Section 4007(b) of ERISA and § 4007.7(a) of the PBGC's regulation on Payment of Premiums (29 CFR part 4007) require the payment of interest on late premium payments at the rate established under section 6601 of the Internal Revenue Code. Similarly, § 4062.7 of the PBGC's regulation on Liability for Termination of Single-employer Plans (29 CFR part 4062) requires that interest be charged or credited at the section 6601 rate on underpayments and overpayments of employer liability under section 4062 of ERISA. The section 6601 rate is established periodically (currently quarterly) by the Internal Revenue Service. The rate applicable to the second quarter (April through June) of 2002, as announced by the IRS, is 6 percent.

The following table lists the late payment interest rates for premiums and employer liability for the specified time periods:

FromThroughInterest rates (percent)
4/1/966/30/968
7/1/963/31/989
4/1/9812/31/988
1/1/993/31/997
4/1/993/31/008
4/1/003/31/019
4/1/016/30/018
7/1/0112/31/017
1/1/026/30/026

Underpayments and Overpayments of Multiemployer Withdrawal Liability

Section 4219.32(b) of the PBGC's regulation on Notice, Collection, and Redetermination of Withdrawal Liability (29 CFR part 4219) specifies the rate at which a multiemployer plan is to charge or credit interest on underpayments and overpayments of withdrawal liability under section 4219 of ERISA unless an applicable plan provision provides otherwise. For interest accruing during any calendar quarter, the specified rate is the average quoted prime rate on short-term commercial loans for the fifteenth day (or the next business day if the fifteenth day is not a business day) of the month preceding the beginning of the quarter, as reported by the Board of Governors of the Federal Reserve System in Statistical Release H.15 (“Selected Interest Rates”). The rate for the second quarter (April through June) of 2002 (i.e., the rate reported for March 15, 2002) is 4.75 percent.

The following table lists the withdrawal liability underpayment and overpayment interest rates for the specified time periods:

FromThroughInterest rate (percent)
4/1/966/30/978.25
7/1/9712/31/988.50
1/1/999/30/997.75
10/1/9912/31/998.25
1/1/003/31/008.50
4/1/006/30/008.75
7/1/003/31/019.50
4/1/016/30/018.50
7/1/019/30/017.00
10/1/0112/31/016.50
1/1/026/30/024.75

Multiemployer Plan Valuations Following Mass Withdrawal

The PBGC's regulation on Duties of Plan Sponsor Following Mass Withdrawal (29 CFR part 4281) prescribes the use of interest assumptions under the PBGC's regulation on Allocation of Assets in Single-employer Plans (29 CFR part 4044). The interest assumptions applicable to valuation dates in May 2002 under part 4044 are contained in an amendment to part 4044 published elsewhere in today's Federal Register. Tables showing the assumptions applicable to prior periods are codified in appendix B to 29 CFR part 4044.

Start Signature

Issued in Washington, DC, on this 9th day of April 2002.

Steven A. Kandarian,

Executive Director, Pension Benefit Guaranty Corporation.

End Signature End Supplemental Information

[FR Doc. 02-9065 Filed 4-12-02; 8:45 am]

BILLING CODE 7708-01-P