Legal Status
Legal Status
Rule
Benefits Payable in Terminated Single-Employer Plans; Allocation of Assets in Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits
A Rule by the Pension Benefit Guaranty Corporation on
Document Details
Information about this document as published in the Federal Register.
- Printed version:
- Publication Date:
- 11/14/2003
- Agency:
- Pension Benefit Guaranty Corporation
- Dates:
- December 1, 2003.
- Effective Date:
- 12/01/2003
- Document Type:
- Rule
- Document Citation:
- 68 FR 64525
- Page:
- 64525-64527 (3 pages)
- CFR:
- 29 CFR 4022
- 29 CFR 4044
- Document Number:
- 03-28542
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- AGENCY:
- ACTION:
- SUMMARY:
- EFFECTIVE DATE:
- 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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Published Document
This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.
AGENCY:
Pension Benefit Guaranty Corporation.
ACTION:
Final rule.
SUMMARY:
The Pension Benefit Guaranty Corporation's regulations on Benefits Payable in Terminated Single-Employer Plans and Allocation of Assets in Single-Employer Plans prescribe interest assumptions for valuing and paying benefits under terminating single-employer plans. This final rule amends the regulations to adopt interest Start Printed Page 64526assumptions for plans with valuation dates in December 2003. Interest assumptions are also published on the PBGC's Web site http://www.pbgc.gov.
EFFECTIVE DATE:
December 1, 2003.
Start Further InfoFOR 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 InformationSUPPLEMENTARY INFORMATION:
The 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.
Three sets of interest assumptions are prescribed: (1) A set for the valuation of benefits for allocation purposes under section 4044 (found in appendix B to part 4044); (2) a set for the PBGC to use to determine whether a benefit is payable as a lump sum and to determine lump-sum amounts to be paid by the PBGC (found in appendix B to part 4022); and (3) a set for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using the PBGC's historical methodology (found in appendix C to part 4022).
Accordingly, 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 December 2003, (2) adds to appendix B to part 4022 the interest assumptions for the PBGC to use for its own lump-sum payments in plans with valuation dates during December 2003, 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 the PBGC's historical methodology for valuation dates during December 2003.
For valuation of benefits for allocation purposes, the interest assumptions that the PBGC will use (set forth in appendix B to part 4044) will be 4.70 percent for the first 20 years following the valuation date and 5.25 percent thereafter. These interest assumptions represent an increase (from those in effect for November 2003) of 0.10 percent for the first 20 years following the valuation date and are otherwise unchanged.
The interest assumptions that the PBGC will use for its own lump-sum payments (set forth in appendix B to part 4022) will be 3.25 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. These interest assumptions are unchanged from those in effect for November 2003.
For private-sector payments, the interest assumptions (set forth in appendix C to part 4022) will be the same as those used by the PBGC for determining and paying lump sums (set forth in appendix B to part 4022).
The 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, as accurately as possible, current market conditions.
Because of the need to provide immediate guidance for the valuation and payment of benefits in plans with valuation dates during December 2003, the PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.
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 amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 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 122, as set forth below, is added to the table. (The introductory text of the table is omitted.)
End Amendment Part Start AppendixAppendix 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 | ni | n2 | ||
* * * * * * * | ||||||||
122 | 12-1-03 | 1-1-04 | 3.25 | 4.00 | 4.00 | 4.00 | 7 | 8 |
3. In appendix C to part 4022, Rate Set 122, as set forth below, is added to the table. (The introductory text of the table is omitted.)
End Amendment Part Start AppendixAppendix 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 | ni | n2 | ||
* * * * * * * | ||||||||
122 | 12-1-03 | 1-1-04 | 3.25 | 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, as set forth below, is added to the table. (The introductory text of the table is omitted.)
End Amendment Part Start AppendixAppendix B to Part 4044—Interest Rates Used To Value Benefits
For valuation dates occurring in the month— | The values of it are: | |||||
---|---|---|---|---|---|---|
it | for t = | it | for t = | it | for t = | |
* * * * * * * | ||||||
December 2003 | .0470 | 1-20 | .0525 | >20 | N/A | N/A |
Issued in Washington, DC, on this 10th day of November 2003.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit Guaranty Corporation.
[FR Doc. 03-28542 Filed 11-13-03; 8:45 am]
BILLING CODE 7708-01-P