[Federal Register: November 30, 2001 (Volume 66, Number 231)]
[Rules and Regulations]               
[Page 59694-59695]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



29 CFR Part 4044

Allocation of Assets in Single-Employer Plans; Valuation of 
Benefits and Assets; Expected Retirement Age

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.


SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's 
regulation on Allocation of Assets in Single-Employer Plans by 
substituting a new table that applies to any plan being terminated 
either in a distress termination or involuntarily by the PBGC with a 
valuation date falling in 2002, and is used to determine expected 
retirement ages for plan participants. This table is needed in order to 
compute the value of early retirement benefits and, thus, the total 
value of benefits under the plan.

EFFECTIVE DATE: January 1, 2002.

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 20005-4026; 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 regulation on Allocation of 
Assets in Single-Employer Plans (29 CFR part 4044) sets forth (in 
subpart B) the methods for valuing plan benefits of terminating single-
employer plans covered under Title IV of the Employee Retirement Income 
Security Act of 1974. Under ERISA section 4041(c), guaranteed benefits 
and benefit liabilities under a plan that is undergoing a distress 
termination must be valued in accordance with part 4044, subpart B. In 
addition, when the PBGC terminates an underfunded plan involuntarily 
pursuant to ERISA Section 4042(a), it uses the subpart B valuation 
rules to determine the amount of the plan's underfunding.
    Under Sec. 4044.51(b), early retirement benefits are valued based 
on the annuity starting date, if a retirement date has been selected, 
or the expected retirement age, if the annuity starting date is not 
known on the valuation date. Sections 4044.55 through 4044.57 set forth 
rules for determining the expected retirement ages for plan 
participants entitled to early retirement benefits. Appendix D of part 
4044 contains tables to be used in determining the expected early 
retirement ages.
    Table I in appendix D (Selection of Retirement Rate Category) is 
used to determine whether a participant has a low, medium, or high 
probability of retiring early. The determination is based on the year a 
participant would reach ``unreduced retirement age'' (i.e., the earlier 
of the normal retirement age or the age at which an unreduced benefit 
is first payable) and the participant's monthly benefit at unreduced 
retirement age. The table applies only to plans with valuation dates in 
the current year and is updated annually by the PBGC to reflect changes 
in the cost of living, etc.
    Tables II-A, II-B, and II-C (Expected Retirement Ages for 
Individuals in the Low, Medium, and High Categories respectively) are 
used to determine the expected retirement age after the probability of 
early retirement has been determined using Table I. These tables 
establish, by probability category, the expected retirement age based 
on both the earliest age a participant could retire under the plan and 
the unreduced retirement age. This expected retirement age is used to 
compute the value of the early retirement benefit and, thus, the total 
value of benefits under the plan.
    This document amends appendix D to replace Table I-01 with Table I-
02 in order to provide an updated correlation, appropriate for calendar 
year 2002, between the amount of a participant's benefit and the 
probability that the participant will elect early retirement. Table I-
02 will be used to value benefits in plans with valuation dates during 
calendar year 2002.
    The PBGC has determined that notice of and public comment on this 
rule are impracticable and contrary to the public interest. Plan 
administrators need to be able to estimate accurately the value of plan 
benefits as early as possible before initiating the termination 
process. For that purpose, if a plan has a valuation date in 2002, the 
plan administrator needs the updated table being promulgated in this 
rule. Accordingly, the public interest is best served by

[[Page 59695]]

issuing this table expeditiously, without an opportunity for notice and 
comment, to allow as much time as possible to estimate the value of 
plan benefits with the proper table for plans with valuation dates in 
early 2002.
    The PBGC has determined that this action is not a ``significant 
regulatory action'' under the criteria set forth in Executive Order 
    Because no general notice of proposed rulemaking is required for 
this regulation, the Regulatory Flexibility Act of 1980 does not apply 
(5 U.S.C. 601(2)).

List of Subjects in 29 CFR Part 4044

    Pension insurance, Pensions.

    In consideration of the foregoing, 29 CFR part 4044 is amended as 


    1. The authority citation for part 4044 continues to read as 

    Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.

    2. Appendix D to part 4044 is amended by removing Table I-01 and 
adding in its place Table I-02 to read as follows:

Appendix D to Part 4044--Tables Used to Determine Expected 
Retirement Age

                                Table I-02--Selection of Retirement Rate Category
              [For Plans with valuation dates after December 31, 2001, and before January 1, 2003]
                                                      Participant's retirement rate category is--
                                                         Medium \2\ if monthly benefit at URA     High \3\ if
  Participant reaches URA in year--       Low \1\ if                      is                    monthly benefit
                                       monthly benefit  -------------------------------------- at URA is greater
                                        at URA is less          From                To               than--
2003................................                458                458              1,936              1,936
2004................................                471                471              1,988              1,988
2005................................                483                483              2,042              2,042
2006................................                497                497              2,097              2,097
2007................................                510                510              2,154              2,154
2008................................                524                524              2,212              2,212
2009................................                538                538              2,272              2,272
2010................................                552                552              2,333              2,333
2011................................                567                567              2,396              2,396
2012 or later.......................                583                583              2,461             2,461
\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.

* * * * *

    Issued in Washington, DC, this 26th day of November, 2001.
Hazel Broadnax,
Acting Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 01-29764 Filed 11-29-01; 8:45 am]