[Federal Register Volume 79, Number 230 (Monday, December 1, 2014)]
[Rules and Regulations]
[Pages 71019-71020]
From the Federal Register Online via the Government Printing Office [http://www.gpo.gov/]
[FR Doc No: 2014-28216]
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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 for determining expected retirement ages for
participants in pension plans undergoing distress or involuntary
termination with valuation dates falling in 2015. This table is needed
in order to compute the value of early retirement benefits and, thus,
the total value of benefits under a plan.
DATES: Effective Date: January 1, 2015.
FOR FURTHER INFORMATION CONTACT: Catherine B. Klion
(Klion.Catherine@pbgc.gov), Assistant General Counsel for Regulatory
Affairs, Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005, 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 Pension Benefit Guaranty Corporation
(PBGC) administers the pension plan termination insurance program under
Title IV of the Employee Retirement Income Security Act of 1974
(ERISA). 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. Guaranteed benefits and benefit liabilities under a
plan that is undergoing a distress termination must be valued in
accordance with subpart B of part 4044. In addition, when 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-14 with Table I-
15 in order to provide an updated correlation, appropriate for calendar
year 2015, between the amount of a participant's benefit and the
probability that the participant will elect early retirement. Table I-
15 will be used to value benefits in plans with valuation dates during
calendar year 2015.
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 2015, 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 2015.
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.
In consideration of the foregoing, 29 CFR part 4044 is amended as
follows:
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
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-14 and adding
in its place Table I-15 to read as follows:
Appendix D to Part 4044--Tables Used to Determine Expected Retirement
Age
Table I-15--Selection of Retirement Rate Category
[For Plans with valuation dates after December 31, 2014, and before January 1, 2016]
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Participant's retirement rate category is--
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Low \1\ if Medium \2\ if monthly benefit High \3\ if
If participant reaches URA in year-- monthly at URA is-- monthly
benefit at URA -------------------------------- benefit at URA
is less than-- is greater
From-- To-- than--
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2016............................................ 618 618 2,610 2,610
[[Page 71020]]
2017............................................ 631 631 2,667 2,667
2018............................................ 646 646 2,728 2,728
2019............................................ 661 661 2,791 2,791
2020............................................ 676 676 2,855 2,855
2021............................................ 691 691 2,921 2,921
2022............................................ 707 707 2,988 2,988
2023............................................ 724 724 3,057 3,057
2024............................................ 740 740 3,127 3,127
2025 or later................................... 757 757 3,199 3,199
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\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.
* * * * *
Issued in Washington, DC, this 24th day of November, 2014.
Judith Starr,
General Counsel, Pension Benefit Guaranty Corporation.
[FR Doc. 2014-28216 Filed 11-28-14; 8:45 am]
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