[Federal Register: April 14, 2006 (Volume 71, Number 72)]
[Notices]
[Page 19567-19568]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ap06-103]
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PENSION BENEFIT GUARANTY CORPORATION
Required Interest Rate Assumption for Determining Variable-Rate
Premium for Single-Employer Plans; 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
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice of interest rates and assumptions.
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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. Interest rates are also published on the PBGC's Web site
(http://www.pbgc.gov).
DATES: The required interest rate for determining the variable-rate
premium under part 4006 applies to premium payment years beginning in
April 2006. The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in May 2006. 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 2006.
FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Attorney,
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.)
SUPPLEMENTARY INFORMATION:
Variable-Rate Premiums
Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income
Security Act of 1974 (ERISA) and Sec. 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 required interest rate to be used in
determining variable-rate premiums for premium payment years beginning
in April 2006 is 4.02 percent (i.e., 85 percent of the 4.73 percent
Treasury Securities Rate for March 2006).
The Pension Funding Equity Act of 2004 (``PFEA'')--under which the
required interest rate is 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--applies only for premium payment years beginning in 2004 or
2005. Congress is considering legislation that would extend the PFEA
rate for one more year. If legislation that changes the rules for
determining the required interest rate for plan years beginning in
April 2006 is adopted, the PBGC will promptly publish a Federal
Register notice with the new rate.
The following table lists the required interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between May 2005 and April 2006.
------------------------------------------------------------------------
The required
For premium payment years beginning in: interest rate
is: (percent)
------------------------------------------------------------------------
May 2005................................................ 4.72
June 2005............................................... 4.60
July 2005............................................... 4.47
August 2005............................................. 4.56
September 2005.......................................... 4.61
October 2005............................................ 4.62
November 2005........................................... 4.83
December 2005........................................... 4.91
January 2006............................................ 3.95
February 2006........................................... 3.90
March 2006.............................................. 3.89
April 2006.............................................. 4.02
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Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability
Section 4007(b) of ERISA and section 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, section
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 2006, as announced by the IRS, is 7 percent.
The following table lists the late payment interest rates for
premiums and employer liability for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
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4/1/00........................................ 3/31/01 9
4/1/01........................................ 6/30/01 8
7/1/01........................................ 12/31/01 7
1/1/02........................................ 12/31/02 6
1/1/03........................................ 9/30/03 5
10/1/03....................................... 3/31/04 4
4/1/04........................................ 6/30/04 5
7/1/04........................................ 9/30/04 4
10/1/04....................................... 3/31/05 5
4/1/05........................................ 9/30/05 6
10/1/05....................................... 6/30/06 7
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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
[[Page 19568]]
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 2006 (i.e., the rate reported for March 15, 2005) is
7.50 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
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4/1/00........................................ 6/30/00 8.75
7/1/00........................................ 3/31/01 9.50
4/1/01........................................ 6/30/01 8.50
7/1/01........................................ 9/30/01 7.00
10/1/01....................................... 12/31/01 6.50
1/1/02........................................ 12/31/02 4.75
1/1/03........................................ 9/30/03 4.25
10/1/03....................................... 9/30/04 4.00
10/1/04....................................... 12/31/04 4.50
1/1/05........................................ 3/31/05 5.25
4/1/05........................................ 6/30/05 5.50
7/1/05........................................ 9/30/05 6.00
10/1/05....................................... 12/31/05 6.50
1/1/06........................................ 3/31/06 7.25
4/1/06........................................ 6/30/06 7.50
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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 2006 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.
Issued in Washington, DC, on this 7th day of April 2006.
Vincent K. Snowbarger,
Deputy Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 06-3571 Filed 4-13-06; 8:45 am]
BILLING CODE 7709-01-P