[Federal Register: June 15, 2000 (Volume 65, Number 116)]
[Rules and Regulations]
[Page 37482-37483]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jn00-6]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4022 and 4044
Benefits Payable in Terminated Single-Employer Plans; Allocation
of Assets in Single-Employer Plans; Interest Assumptions for Valuing
and Paying Benefits
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: The Pension Benefit Guaranty Corporation's regulations on
Benefits Payable in Terminated Single-Employer Plans and Allocation of
Assets in Single-Employer Plans prescribe interest assumptions for
valuing and paying benefits under terminating single-employer plans.
This final rule amends the regulations to adopt interest assumptions
for plans with valuation dates in July 2000. Interest assumptions are
also published on the PBGC's web site (http://www.pbgc.gov).
EFFECTIVE DATE: July 1, 2000.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005, 202-326-4024.
(For TTY/TDD users, call the Federal relay service toll-free at 1-800-
877-8339 and ask to be connected to 202-326-4024.)
SUPPLEMENTARY INFORMATION: The PBGC's regulations prescribe actuarial
assumptions--including interest assumptions--for valuing and paying
plan benefits of terminating single-employer plans covered by title IV
of the Employee Retirement Income Security Act of 1974. The interest
assumptions are intended to reflect current conditions in the financial
and annuity markets.
Three sets of interest assumptions are prescribed: (1) A set for
the valuation of benefits for allocation purposes under section 4044
(found in Appendix B to Part 4044), (2) a set for the PBGC to use to
determine whether a benefit is payable as a lump sum and to determine
lump-sum amounts to be paid by the PBGC (found in Appendix B to Part
4022), and (3) a set for private-sector pension practitioners to refer
to if they wish to use lump-sum interest rates determined using the
PBGC's historical methodology (found in Appendix C to Part 4022). (See
the PBGC's two final rules published March 17, 2000, in the Federal
Register (at 65 FR 14752 and 14753). Effective May 1, 2000, these rules
changed how the interest assumptions are used and where they are set
forth in the PBGC's regulations.)
Accordingly, this amendment (1) adds to Appendix B to Part 4044 the
interest assumptions for valuing benefits for allocation purposes in
plans with valuation dates during July 2000, (2) adds to Appendix B to
Part 4022 the interest assumptions for the PBGC to use for its own
lump-sum payments in plans with valuation dates during July 2000, and
(3) adds to Appendix C to Part 4022 the interest assumptions for
private-sector pension practitioners to refer to if they wish to use
lump-sum interest rates determined using the PBGC's historical
methodology for valuation dates during July 2000.
For valuation of benefits for allocation purposes, the interest
assumptions that the PBGC will use (set forth in Appendix B to part
4044) will be 7.40 percent for the first 25 years following the
valuation date and 6.25 percent thereafter. These interest assumptions
represent an increase (from those in effect for June 2000) of 0.30
percent for the first 25 years following the valuation date and are
otherwise unchanged.
The interest assumptions that the PBGC will use for its own lump-
sum payments (set forth in Appendix B to part 4022) will be 5.50
percent for the period during which a benefit is in pay status, 4.75
percent during the seven-year period directly preceding the benefit's
placement in pay status, and 4.00 percent during any other years
preceding the benefit's placement in pay status. These interest
assumptions represent an increase (from those in effect for June 2000)
of 0.25 percent for the period during which a benefit is in pay status
and for the seven-year period directly preceding the benefit's
placement in pay status and are otherwise unchanged.
For private-sector payments, the interest assumptions (set forth in
Appendix C to part 4022) will be the same as those used by the PBGC for
determining and paying lump sums (set forth in Appendix B to part
4022).
The PBGC has determined that notice and public comment on this
amendment are impracticable and contrary to the public interest. This
finding is based on the need to determine and issue new interest
assumptions promptly so that the assumptions can reflect, as accurately
as possible, current market conditions.
Because of the need to provide immediate guidance for the valuation
and payment of benefits in plans with valuation dates during July 2000,
the PBGC finds that good cause exists for making the assumptions set
forth in this amendment effective less than 30 days after publication.
The PBGC has determined that this action is not a ``significant
regulatory action'' under the criteria set forth in Executive Order
12866.
Because no general notice of proposed rulemaking is required for
this amendment, the Regulatory Flexibility Act of 1980 does not apply.
See 5 U.S.C. 601(2).
List of Subjects
29 CFR Part 4022
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4044
Employee benefit plans, Pension insurance, Pensions.
In consideration of the foregoing, 29 CFR parts 4022 and 4044 are
amended as follows:
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
1. The authority citation for part 4022 continues to read as
follows:
Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.
2. In appendix B to part 4022, Rate Set 81, as set forth below, is
added to the table. (The introductory text of the table is omitted.)
[[Page 37483]]
Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments
* * * * * * *
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For plans with a valuation Deferred annuities (percent)
date Immediate ---------------------------------------------------------------------
Rate set ---------------------------- annuity rate
On or after Before (percent) i1 i2 i3 n1 n2
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* * * * * * *
81...................................... 7-1-00 8-1-00 5.50 4.75 4.00 4.00 7 8
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3. In appendix C to part 4022, Rate Set 81, as set forth below, is
added to the table. (The introductory text of the table is omitted.)
Appendix C to Part 4022--Lump Sum Interest Rates for Private-Sector
Payments
* * * * * * *
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For plans with a valuation Deferred annuities (percent)
date Immediate ---------------------------------------------------------------------
Rate set ---------------------------- annuity rate
On or after Before (percent) i1 i2 i3 n1 n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
81...................................... 7-1-00 8-1-00 5.50 4.75 4.00 4.00 7 8
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PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
4. The authority citation for part 4044 continues to read as
follows:
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
5. In appendix B to part 4044, a new entry, as set forth below, is
added to the table. (The introductory text of the table is omitted.)
Appendix B to Part 4044--Interest Rates Used to Value Benefits
* * * * * * *
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The values of i are:
For valuation dates occurring ----------------------------------------------------------------------------------
in the month-- it for t= it for t = it for t =
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* * * * * *
*
July 2000.................... .0740 1-25 0625 >25 N/A N/A
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Issued in Washington, DC, on this 8th day of June 2000.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 00-15118 Filed 6-14-00; 8:45 am]
BILLING CODE 7708-01-P