[Federal Register: December 1, 2005 (Volume 70, Number 230)]
[Rules and Regulations]
[Page 72076-72077]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01de05-8]
[[Page 72076]]
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PENSION BENEFIT GUARANTY CORPORATION
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.
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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 2006, 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, 2006.
FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Attorney,
Legislative and Regulatory Department, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005-4026; 202-326-
4024. (TTY/TDD users may 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) of the asset allocation regulation, 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-05 with Table I-
06 in order to provide an updated correlation, appropriate for calendar
year 2006, between the amount of a participant's benefit and the
probability that the participant will elect early retirement. Table I-
06 will be used to value benefits in plans with valuation dates during
calendar year 2006.
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 2006, the
plan administrator needs the updated table being promulgated in this
rule. Accordingly, the public interest is best served by 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 2006.
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 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.
0
In consideration of the foregoing, 29 CFR part 4044 is amended as
follows:
PART 4044--[AMENDED]
0
1. The authority citation for part 4044 continues to read as follows:
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
0
2. Appendix D to part 4044 is amended by removing Table I-05 and adding
in its place Table I-06 to read as follows:
Appendix D to Part 4044--Tables Used To Determine Expected Retirement
Age
Table I-06.--Selection of Retirement Rate Category
[For plans with valuation dates after December 31, 2005, and before January 1, 2007]
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Participant's retirement rate category is--
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Low \1\ if Medium \2\ if monthly benefit at URA
Participant reaches URA in year-- monthly benefit is High \3\ if
at URA is less -------------------------------------- monthly benefit
than-- From To is greater than--
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2007................................ 500 500 2,113 2,113
2008................................ 512 512 2,164 2,164
2009................................ 524 524 2,216 2,216
2010................................ 536 536 2,269 2,269
2011................................ 549 549 2,324 2,324
2012................................ 562 562 2,379 2,379
2013................................ 576 576 2,437 2,437
[[Page 72077]]
2014................................ 590 590 2,495 2,495
2015................................ 604 604 2,555 2,555
2016 or later....................... 618 618 2,616 2,616
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\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.
* * * * *
Issued in Washington, DC, this 16th day of November, 2005.
Vincent K. Snowbarger,
Deputy Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 05-23516 Filed 11-30-05; 8:45 am]
BILLING CODE 7708-01-P