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Monthly Interest Rate Statement

Monthly Interest Rate Statement

May 15, 2017

The purpose of this summary is to provide, in one place, a summary of current interest rates that relate to various calculations required under Title IV of ERISA.  PBGC posts this summary each month, as soon as all of the new information is available. 

Rate‑specific webpages containing additional information about and historical data for each type of rate included in this summary are available via PBGC's interest rates webpage.

 Rates that change each month

Description

What rate is used for

Most current
rate(s) available

When rate is used

ERISA 4022 Lump Sum Interest Rates

  

 

 

These interest rates are used to determine the lump sum equivalent of a participant's benefit when PBGC trustees a single-employer plan. If the value is less than $5,000, PBGC may pay that amount in one lump sum in lieu of a monthly annuity.  

Some ongoing pension plans use these rates to determine lump sum amounts, but the vast majority do not. Individuals seeking information about the interest rates their plans use to determine lump sums should contact their plan directly.

  • Immediate rate - 1.00%
  • Deferred rates (i1, i2, and i3) - 4.00%
  • Deferral periods (n1 and n2) - 7 and 8 years respectively

The ERISA 4022 Lump Sum Interest Rate Web page provides information about  how these rates are used, e.g., what i1, i2, i3, n1 and n2 represent, when to use the immediate rate, etc.

  • PBGC - Plans that terminate in June 2017
  • Ongoing plans that use ERISA 4022 rates to determine lump sums - depends on plan provisions

Variable-Rate Premiums

 

These rates, the spot segment rates, are used to determine the variable-rate premium (VRP) unless the plan has an election in effect to use the Alternative Premium Funding Target.

These rates are determined and published by the IRS.

 

  • 1st segment rate - 1.96% 
  • 2nd segment rate - 3.78% 
  • 3rd segment rate - 4.66%

These are the April 2017 spot segment rates.  They are used by plans with plan years beginning in May 2017 for determining either the 2017 or 2018 VRP, depending on whether the plan uses the "lookback rule". 

The VRP interest rate web page provides additional information about applicability.

 

Rates that change each calendar quarter

Because the rates shown below change quarterly, the rates shown below are identical to what was shown in last month's summary. Updated information will be included in the June 2017 Interest Rate Summary.

Description

What rate is used for

Most current
rate(s) available

When rate is used

ERISA 4044 Annuities

 

These rates are used for determining the present value of accrued benefits on a termination basis.  

  • Select rate - 2.15% for the first 20 years following the date of plan termination
  • Ultimate rate - 2.60% thereafter.

April 1, 2017 through
June 30, 2017 valuations

Late Premium Payments

 

PBGC charges interest on late PBGC premiums using the IRC section 6601(a) rate (i.e., what IRS charges for late tax payments).

Late payment penalties may also apply.  See Late Payment Charges for more information.

The same rates are also used to compute certain interest charges applicable when PBGC trustees a plan (e.g., interest on required contributions unpaid as of the termination date).

4%

Interest accrued
April 1, 2017 through
 June 30, 2017

Late Withdrawal Liability

 

Unless rules adopted by the plan provide otherwise, this is the rate of interest multiemployer plans:

  • charge employers who have withdrawn from the plan if withdrawal liability payments are late or in default and
  • credit such employers if they overpay their withdrawal liability.

3.75%

Interest charged or credited April 1, 2017 through
June 30, 2017

 

Monthly Interest Rate Summary Archive