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Notice

Required Interest Rate Assumption for Determining Variable-Rate Premium for Premium Payment Years Beginning in January Through April 2004

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Information about this document as published in the Federal Register.

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AGENCY:

Pension Benefit Guaranty Corporation.

ACTION:

Notice of interest rate assumptions.

SUMMARY:

This notice informs the public of the interest rate assumptions to be used for determining the variable-rate premium under part 4006 of the Pension Benefit Guaranty Corporation regulations for premium payment years beginning in January through April 2004. These interest rate assumptions can be derived from rates published elsewhere, but are collected and published in this notice for the convenience of the public. Interest rates are also published on the PBGC's Web site (http://www.pbgc.gov).

The provisions of the Job Creation and Worker Assistance Act of 2002 that temporarily increased the required interest rate to be used to determine the PBGC's variable-rate premium to 100 percent (from 85 percent) of the annual yield on 30-year Treasury securities expired at the end of 2003. The Pension Funding Equity Act of 2004, which was signed into law by the President on April 10, 2004, changes the rules for determining the required interest rate for premium payment years beginning in 2004 or 2005. On April 15, 2004, the PBGC published a notice informing the public of interest rates and assumptions to be used under certain PBGC regulations. The April 15, 2004, notice stated that the PBGC intended shortly to publish a Federal Register notice reflecting the new required interest rates. The PBGC is now informing the public of those new required interest rates for premium payment years beginning in January through April 2004.

DATES:

The required interest rate assumption for determining the variable-rate premium under part 4006 applies to premium payment years beginning in January through April 2004.

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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.)

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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 the “applicable percentage” (currently 85 percent) 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 provisions of the Job Creation and Worker Assistance Act of 2002 that temporarily increased the required interest rate to be used to determine the PBGC's variable-rate premium to 100 percent (from 85 percent) of the annual yield on 30-year Treasury securities expired at the end of 2003.

The Pension Funding Equity Act of 2004, which was signed into law by the President on April 10, 2004, changes the rules for determining the required interest rate for premium payment years beginning in 2004 or 2005. For premium payment years beginning in 2004 or 2005, the required interest rate is the “applicable percentage” (currently 85 percent) of the annual rate of interest determined by the Secretary of the Treasury on amounts invested conservatively in long-term investment grade corporate bonds for the month preceding the beginning of the plan year for which premiums are being paid. On April 12, 2004, the Internal Revenue Service issued Notice 2004-34 announcing the composite corporate bond rates needed to determine the required interest rates for premium payment years beginning in January through April 2004. (See Table 1 of IRS Notice 2004-34.)

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning Start Printed Page 20653in January 2004 is 4.94 percent (i.e., 85 percent of the 5.81 percent composite corporate bond rate announced in IRS Notice 2004-34 for December 2003).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in February 2004 is 4.83 percent (i.e., 85 percent of the 5.68 percent composite corporate bond rate announced in IRS Notice 2004-34 for January 2004).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in March 2004 is 4.79 percent (i.e., 85 percent of the 5.63 percent composite corporate bond rate announced in IRS Notice 2004-34 for February 2004).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in April 2004 is 4.62 percent (i.e., 85 percent of the 5.44 percent composite corporate bond rate announced in IRS Notice 2004-34 for March 2004).

The following table lists the required interest rates to be used in determining variable-rate premiums for premium payment years beginning between May 2003 and April 2004. Note that the required interest rate for premium payment years beginning in May through December 2003 were determined under the Job Creation and Worker Assistance Act of 2002, and that the required interest rate for premium payment years beginning in January through April 2004 were determined under the Pension Funding Equity Act of 2004.

For premium payment years beginning in:The required interest rate is:
May 2003*4.90
June 2003*4.53
July 2003*4.37
August 2003*4.93
September 2003*5.31
October 2003*5.14
November 2003*5.16
December 2003*5.12
January 2004**4.94
February 2004**4.83
March 2004**4.79
April 2004**4.62
* The required interest rates for premium payment years beginning in May through December 2003 were determined under the Job Creation and Worker Assistance Act of 2002.
** The required interest rates for premium payment years beginning in January through April 2004 were determined under the Pension Funding Equity Act of 2004.
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Issued in Washington, DC, on this 13th day of April, 2004.

Joseph H. Grant,

Deputy Executive Director and Chief Operating Officer, Pension Benefit Guaranty Corporation.

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[FR Doc. 04-8733 Filed 4-15-04; 8:45 am]

BILLING CODE 7708-01-P