December 31, 2006 Interest Rate Update
The immediate interest rate for valuing lump sum payments for the month of January 2007 is 2.75%. The deferred interest rate I1 is 4.00%, I2 is 4.00%, and I3 is 4.00%. (The immediate interest rate for December 2006 was 3.00% for lump sum payments; the deferred interest rate I1 was 4.00%, I2 was 4.00%, and I3 was 4.00%.)
For plan years beginning in 2004 and 2005, the Pension Funding Equity Act of 2004 ("PFEA") provides for a required interest rate of 85% 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.
PPA extended the applicability of the PFEA required interest rate to plan years beginning in 2006 and 2007.
The required interest rate for determining the variable rate premium amount for premium payment years commencing in December 2006 is 4.90%. (The required rate for November 2006 was 5.05%.)
The select and ultimate interest rates for valuing annuity benefits in single-employer plans and multiemployer plans for the month of January 2007 are 4.88% for the first 20 years following the date of plan termination and 4.55% thereafter, respectively. (The select interest rate for December 2006 was 5.80% for the first 20 years and the ultimate rate was 4.75%.)
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, 2007, is 8.00%. (The interest rate for October 1 to December 31, 2006 was also 8.00%.)
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 January 1, and ending March 31, 2007, is 8.25%. (The interest rate for October 1 to December 31, 2006 was also 8.25%.)
This page was updated on December 22, 2006.