Pension Benefit Guaranty Corporation.Start Printed Page 71471
This rule amends the Pension Benefit Guaranty Corporation's regulation on Benefits Payable in Terminated Single-Employer Plans by adding the maximum guaranteeable pension benefit that may be paid by the PBGC with respect to a plan participant in a single-employer pension plan that terminates in 2003. This rule also amends the PBGC's regulation on Disclosure to Participants by adding information on 2003 maximum guaranteed benefit amounts. The amendment is necessary because the maximum guarantee amount changes each year, based on changes in the contribution and benefit base under section 230 of the Social Security Act. The effect of the amendment is to advise plan participants and beneficiaries of the increased maximum guarantee amount for 2003.
January 1, 2003.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 20005-4026; 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
Section 4022(b) of the Employee Retirement Income Security Act of 1974 provides for certain limitations on benefits guaranteed by the PBGC in terminating single-employer pension plans covered under Title IV of ERISA. One of the limitations, set forth in section 4022(b)(3)(B), is a dollar ceiling on the amount of the monthly benefit that may be paid to a plan participant (in the form of a life annuity beginning at age 65) by the PBGC. The ceiling is equal to “$750 multiplied by a fraction, the numerator of which is the contribution and benefit base (determined under section 230 of the Social Security Act) in effect at the time the plan terminates and the denominator of which is such contribution and benefit base in effect in calendar year 1974 [$13,200].” This formula is also set forth in § 4022.22(b) of the PBGC's regulation on Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022). Appendix D to part 4022 lists, for each year beginning with 1974, the maximum guaranteeable benefit payable by the PBGC to participants in single-employer plans that have terminated in that year.
Section 230(d) of the Social Security Act (42 U.S.C. 430(d)) provides special rules for determining the contribution and benefit base for purposes of ERISA section 4022(b)(3)(B). Each year the Social Security Administration determines, and notifies the PBGC of, the contribution and benefit base to be used by the PBGC under these provisions, and the PBGC publishes an amendment to Appendix D to Part 4022 to add the guarantee limit for the coming year.
The PBGC has been notified by the Social Security Administration that, under section 230 of the Social Security Act, $64,500 is the contribution and benefit base that is to be used to calculate the PBGC maximum guaranteeable benefit for 2003. Accordingly, the formula under section 4022(b)(3)(B) of ERISA and 29 CFR § 4022.22(b) is: $750 multiplied by $64,500/$13,200. Thus, the maximum monthly benefit guaranteeable by the PBGC in 2003 is $3,664.77 per month in the form of a life annuity beginning at age 65. This amendment updates Appendix D to Part 4022 to add this maximum guaranteeable amount for plans that terminate in 2003. (If a benefit is payable in a different form or begins at a different age, the maximum guaranteeable amount is the actuarial equivalent of $3,664.77 per month.)
Section 4011 of ERISA requires plan administrators of certain underfunded plans to provide notice to plan participants and beneficiaries of the plan's funding status and the limits of the PBGC's guarantee. The PBGC's regulation on Disclosure to Participants (29 CFR Part 4011) implements the statutory notice requirement. This rule amends Appendix B to the regulation on Disclosure to Participants by adding information on 2003 maximum guaranteed benefit amounts. Plan administrators may, subject to the requirements of that regulation, include this information in participant notices.
General notice of proposed rulemaking is unnecessary. The maximum guaranteeable benefit is determined according to the formula in section 4022(b)(3)(B) of ERISA, and these amendments make no change in its method of calculation but simply list 2003 maximum guaranteeable benefit amounts for the information of the public.
The 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 regulation, the Regulatory Flexibility Act of 1980 does not apply (5 U.S.C. 601(2)).Start List of Subjects
List of Subjects
End List of Subjects Start Amendment Part
In consideration of the foregoing,End Amendment Part Start Part
PART 4011—DISCLOSURE TO PARTICIPANTSEnd Part Start Amendment Part
1. The authority citation for Part 4011 continues to read as follows:End Amendment Part Start Amendment Part
2. Appendix B to part 4011 is amended by adding a new entry in numerical order to the table to read as follows.End Amendment Part
|If a plan terminates in—||The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the amount (monthly or annual) listed below:|
|Age 65||Age 62||Age 60||Age 55|
|* * * * * * *|
PART 4022—BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANSEnd Part Start Amendment Part
3. The authority citation for Part 4022 continues to read as follows:End Amendment Part Start Amendment Part
4. Appendix D to part 4022 is amended by adding a new entry to the table to read as follows. The introductory text is reproduced for the convenience of the reader and remains unchanged.End Amendment Part
|Year||Maximum guaranteeable monthly benefit|
|* * * * *|
Issued in Washington, DC, this 25th day of November, 2002.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit Guaranty Corporation.
[FR Doc. 02-30304 Filed 11-29-02; 8:45 am]
BILLING CODE 7708-01-P