[Federal Register: December 1, 2005 (Volume 70, Number 230)]

[Rules and Regulations]               

[Page 72074-72075]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr01de05-7]                         



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PENSION BENEFIT GUARANTY CORPORATION



29 CFR Parts 4011 and 4022



 

Disclosure to Participants; Benefits Payable in Terminated 

Single-Employer Plans



AGENCY: Pension Benefit Guaranty Corporation.



ACTION: Final rule.



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SUMMARY: This rule amends Appendix D to the Pension Benefit Guaranty 

Corporation's regulation on Benefits Payable in Terminated Single-

Employer Plans by adding the maximum guaranteeable pension benefit that 

may be paid by the PBGC with respect to a plan participant in a single-

employer pension plan that terminates in 2006. This rule also amends 

the PBGC's regulation on Disclosure to Participants by adding 

information on 2006 maximum guaranteed benefit amounts to Appendix B. 

The amendment is necessary because the maximum guarantee amount changes 

each year, based on changes in the contribution and benefit base under 

section 230 of the Social Security Act. The effect of the amendment is 

to advise plan participants and beneficiaries of the increased maximum 

guarantee amount for 2006.



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: Section 4022(b) of the Employee Retirement 

Income Security Act of 1974 provides for certain limitations on 

benefits guaranteed by the PBGC in terminating single-employer pension 

plans covered under Title IV of ERISA. One of the limitations, set 

forth in section 4022(b)(3)(B), is a dollar ceiling on the amount of 

the monthly benefit that may be paid to a plan participant (in the form 

of a life annuity beginning at age



[[Page 72075]]



65) by the PBGC. The ceiling is equal to ``$750 multiplied by a 

fraction, the numerator of which is the contribution and benefit base 

(determined under section 230 of the Social Security Act) in effect at 

the time the plan terminates and the denominator of which is such 

contribution and benefit base in effect in calendar year 1974 

[$13,200].'' This formula is also set forth in Sec.  4022.22(b) of the 

PBGC's regulation on Benefits Payable in Terminated Single-Employer 

Plans (29 CFR part 4022). Appendix D to part 4022 lists, for each year 

beginning with 1974, the maximum guaranteeable benefit payable by the 

PBGC to participants in single-employer plans that have terminated in 

that year.

    Section 230(d) of the Social Security Act (42 U.S.C. 430(d)) 

provides special rules for determining the contribution and benefit 

base for purposes of ERISA section 4022(b)(3)(B). Each year the Social 

Security Administration determines, and notifies the PBGC of, the 

contribution and benefit base to be used by the PBGC under these 

provisions, and the PBGC publishes an amendment to Appendix D to part 

4022 to add the guarantee limit for the coming year.

    The PBGC has been notified by the Social Security Administration 

that, under section 230 of the Social Security Act, $69,900 is the 

contribution and benefit base that is to be used to calculate the PBGC 

maximum guaranteeable benefit for 2006. Accordingly, the formula under 

section 4022(b)(3)(B) of ERISA and 29 CFR 4022.22(b) is: $750 

multiplied by $69,900/$13,200. Thus, the maximum monthly benefit 

guaranteeable by the PBGC in 2006 is $3,971.59 per month in the form of 

a life annuity beginning at age 65. This amendment updates Appendix D 

to part 4022 to add this maximum guaranteeable amount for plans that 

terminate in 2006. (If a benefit is payable in a different form or 

begins at a different age, the maximum guaranteeable amount is the 

actuarial equivalent of $3,971.59 per month.)

    For certain underfunded plans, section 4011 of ERISA requires the 

plan administrator to provide notice to plan participants and 

beneficiaries of the plan's funding status and the limits of the PBGC's 

guarantee. The PBGC's regulation on Disclosure to Participants (29 CFR 

part 4011) implements the statutory notice requirement. This rule 

amends Appendix B to the regulation on Disclosure to Participants by 

adding information on 2006 maximum guaranteed benefit amounts. Plan 

administrators may, subject to the requirements of that regulation, 

include this information in participant notices.

    General notice of proposed rulemaking is unnecessary. The maximum 

guaranteeable benefit is determined according to the formula in section 

4022(b)(3)(B) of ERISA, and these amendments make no change in its 

method of calculation but simply list 2006 maximum guaranteeable 

benefit amounts for the information of the public.

    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



29 CFR Part 4011



    Employee benefit plans, Pension insurance, Reporting and 

recordkeeping requirements.



29 CFR Part 4022



    Pension insurance, Pensions, Reporting and recordkeeping 

requirements.





0

In consideration of the foregoing, 29 CFR parts 4011 and 4022 are 

amended as follows:



PART 4011--DISCLOSURE TO PARTICIPANTS



0

1. The authority citation for Part 4011 continues to read as follows:



    Authority: 29 U.S.C. 1302(b)(3), 1311.





0

2. Appendix B to part 4011 is amended by adding a new entry to the end 

of the table to read as follows.



                                             Appendix B to Part 4011.--Table of Maximum Guaranteed Benefits

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                                                   The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below

                                                                              is the amount (monthly or annual) listed below:

                                                 -------------------------------------------------------------------------------------------------------

            If a plan terminates in--                      Age 65                    Age 62                    Age 60                    Age 55

                                                 -------------------------------------------------------------------------------------------------------

                                                    Monthly       Annual      Monthly       Annual      Monthly       Annual      Monthly       Annual

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                                                                      * * * * * * *

2006............................................    $3,971.59   $47,659.08    $3,137.56   $37,650.72    $2,581.53   $30,978.36    $1,787.22   $21,446.64

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* * * * *



PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS



0

3. 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.





0

4. Appendix D to part 4022 is amended by adding a new entry to the end 

of the table to read as follows. The introductory text is reproduced 

for the convenience of the reader and remains unchanged.



Appendix D to Part 4022--Maximum Guaranteeable Monthly Benefit



    The following table lists by year the maximum guaranteeable 

monthly benefit payable in the form of a life annuity commencing at 

age 65 as described by Sec.  4022.22(b) to a participant in a plan 

that terminated in that year:



------------------------------------------------------------------------

                                                             Maximum

                         Year                             guaranteeable

                                                         monthly benefit

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                                * * * * *

2006..................................................          3,971.59

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    Issued in Washington, DC, this 16th day of November, 2005.

Vincent K. Snowbarger,

Deputy Executive Director, Pension Benefit Guaranty Corporation.

[FR Doc. 05-23517 Filed 11-30-05; 8:45 am]



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