February 15, 2004 Interest Rate Update
NOTE: The Pension Funding Equity Act of 2004 (signed into law by the President on April 10, 2004) changed the rules for determining the required interest rate for premium payment years beginning in 2004 and 2005. As a result, the Variable Rate Premium amount originally published on this page has been recalculated.See updated premium interest rates .
The immediate interest rate for valuing lump sum payments for the month of March 2004 is 3.00%. The deferred interest rate I1 is 4.00%, I2 is 4.00%, and I3 is 4.00%. (The immediate interest rate for February 2004 was 3.25% for lump sum payments; the deferred interest rate I1 was 4.00%, I2 was 4.00%, and I3 was 4.00%.)
On March 27, 2002, the Internal Revenue Service in Notice 2002-26 announced that it had determined the rate of interest on 30-year Treasury securities for February 2002 and that it would determine and publish the rate of interest on 30-year Treasury securities for succeeding months pending enactment of legislative changes that address the discontinuace of 30-year Treasury securities. The PBGC has concluded that it is appropriate to use the February rate announced in Notice 2002-26, and future rates determined in the manner described in that notice in setting the required interest rate for purposes of calculating the variable rate premium.
The required interest rate for determining the variable rate premium amount for premium payment years commencing in February 2004 is 4.23%. (The required rate for January 2004 was 4.31%.) See updated premium interest rates .
NOTE: 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 variable-rate premium to 100 percent (from 85 percent) of the annual yield on 30-year Treasury securities expired at the end of 2003. Thus, the required interest rate for plan years beginning in January 2004 has been determined under prior law and represents a significant decrease from the rate for plan years beginning in December 2003.
Legislation has been proposed that would further change the rules for determining the required interest rate. If such legislation is adopted, and the change affects the required interest rate for plan years beginning in January 2004, PBGC will publish the new required interest rate and post it on this page.
The select and ultimate interest rates for valuing annuity benefits in single-employer plans and multiemployer plans for the month of March 2004 are 4.10% for the first 20 years following the date of plan termination and 5.00% thereafter, respectively. (The select interest rate for February 2004 was 4.10% for the first 20 years and the ultimate rate was 5.00%.)
The interest rate that PBGC will charge on employer liability, unpaid contributions, and unpaid premiums, for the calendar quarter beginning January 1, and ending March 31, 2004, is 4%. (The interest rate for October 1 to December 31, 2003 was 4%.)
The interest rate to be charged by multiemployer pension plans on withdrawal liability payments that are overdue or in default, or that is to be credited by such plans on overpayments of withdrawal liability during the calendar quarter beginning January 1, and ending March 31, 2004, is 4%. (The interest rate for October 1 to December 31, 2003 was 4%.)
This page was updated on March 15, 2004.