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Notice

Required Interest Rate Assumption for Determining Variable-Rate Premium for Premium Payment Years Beginning in January Through August 2006

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Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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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 (the “required interest rate”) for premium payment years beginning in January through August 2006. It reflects changes made by the Pension Protection Act of 2006, which was signed into law on August 17, 2006.

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).

DATES:

The required interest rate assumption for determining the variable-rate premium under part 4006 applies to premium payment years beginning in January through August 2006.

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FOR 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.)

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SUPPLEMENTARY INFORMATION:

Each month PBGC publishes a notice in the Federal Register informing the public of the interest rates and assumptions to be used under certain PBGC regulations. One such rate is the required interest rate used pursuant to 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) in determining a single-employer plan's variable-rate premium.

The Pension Funding and Equity Act of 2004 (“PFEA”) set the required interest rate for plan years beginning in 2004 or 2005 as 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 (the “composite corporate bond rate”) for the month preceding the beginning of the plan year for which premiums are being paid (the “premium payment year”).

The Pension Protection Act of 2006 (“PPA”), which was signed into law on August 17, 2006, extended the applicability of the PFEA required interest rate to plan years beginning in 2006 and 2007. Before PPA was signed into law, the required interest rate for plan years beginning in 2006 was 85 percent of the annual yield on 30-year Treasury securities. Accordingly, this was the required interest rate published each month by the PBGC for premium payment years beginning in January though August of 2006. This notice revises those published rates to reflect changes made by PPA.

On August 18, 2006, the Internal Revenue Service issued Notice 2006-75, announcing the composite corporate bond rates needed to determine the required interest rates for premium payment years beginning in January through August 2006.

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in January 2006 is 4.86 percent (i.e., 85 percent of the 5.72 percent composite corporate bond rate announced in IRS Notice 2006-75 for December 2005).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in February 2006 is 4.80 percent (i.e., 85 percent of the 5.65 percent composite corporate bond rate announced in IRS Notice 2006-75 for January 2006).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in March 2006 is 4.87 percent (i.e., 85 percent of the 5.73 percent composite corporate bond rate announced in IRS Notice 2006-75 for February 2006).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in April 2006 is 5.01 percent (i.e., 85 percent of the 5.89 percent composite corporate bond rate announced in IRS Notice 2006-75 for March 2006).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in May 2006 is 5.25 percent (i.e., 85 percent of the 6.18 percent composite corporate bond rate announced in IRS Notice 2006-75 for April 2006).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in June 2006 is 5.35 percent (i.e., 85 percent of the 6.29 percent composite corporate bond rate announced in IRS Notice 2006-75 for May 2006).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in July 2006 is 5.36 percent (i.e., 85 percent of the 6.31 percent composite corporate bond rate announced in IRS Notice 2006-75 for June 2006).

The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in August 2006 is 5.36 percent (i.e., 85 percent of the 6.30 percent composite corporate bond rate announced in IRS Notice 2006-75 for July 2006).

The following table lists the required interest rates to be used in determining variable-rate premiums for premium payment years beginning in January through August 2006.

For premium payment years beginning in . . .The required interest rate is . . .
January 20064.86
February 20064.80
March 20064.87
April 20065.01
May 20065.25
June 20065.35
July 20065.36
August 20065.36

PBGC will post the revised required interest rates (listed above) on its Web site (http://www.pbgc.gov).

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Issued in Washington, DC, on this 23rd day of August 2006.

Vincent K. Snowbarger,

Interim Director, Pension Benefit Guaranty Corporation.

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[FR Doc. E6-14210 Filed 8-24-06; 8:45 am]

BILLING CODE 7709-01-P