October 15, 2011 Interest Rate Update
October 15, 2011 Sign up to receive the Monthly Interest Rate Summary email
NOTE: This page was updated on March 12, 2012 to correct the below select and ultimate interest rates for valuing annuity benefits.
The immediate interest rate for valuing lump sum payments for the month of November 2011 is 1.50%. The deferred interest rate I1 is 4.00%, I2 is 4.00%, and I3 is 4.00%. (The immediate interest rate for October 2011 was 1.75% for lump sum payments; the deferred interest rate I1 was 4.00%, I2 was 4.00%, and I3 was 4.00%).
NOTE: The Pension Protection Act of 2006 changed the interest rate methodology to be used to determine the present value of vested benefits for purposes of the variable-rate premium (i.e., the "premium funding target") for plan years beginning on or after January 1, 2008. Under the new rules, present value is determined using three interest rates ("spot segment rates"), each of which applies to cash flows during specified periods. See IRC section 430(h)(2)(B) for a description of these periods. The spot segment rates are based on the yields on high quality corporate bonds as determined by the Internal Revenue Service. IRS publishes the spot segment rates monthly. For premium purposes, the applicable segment rates are the rates for the month preceding the month in which the plan year begins.
See also PBGC's final rule implementing changes in the variable-rate premium made by the Pension Protection Act of 2006.
The spot first, second, and third segment rates for determining the variable rate premium amount for premium payment years commencing in October 2011 are, respectively, 1.98%, 4.49%, and 5.80%. The spot first, second, and third segment rates for determining the variable rate premium amount for premium payment years commencing in September 2011 were, respectively, 1.85%, 4.62% and 6.02%.
The select and ultimate interest rates for valuing annuity benefits in single-employer plans and multiemployer plans for the month of November 2011 are 4.09% for the first 20 years following the date of plan termination and 4.30% thereafter, respectively. (The select interest rate for October 2011 was 4.09% for the first 20 years and the ultimate rate was 4.30%).
The interest rate that PBGC will charge on employer liability, unpaid contributions, and unpaid premiums, for the calendar quarter beginning October 1, and ending December 31, 2011, is 3.00%. (The interest rate for July 1 to September 30, 2011 was 4.00%).
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 October 1, and ending December 31, 2011, is 3.25%. (The interest rate for July 1 to September 30, 2011 was 3.25%).
This page was updated on March 12, 2012.