[Federal Register: October 15, 1998 (Volume 63, Number 199)]
[Notices]               
[Page 55415-55416]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15oc98-123]

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PENSION BENEFIT GUARANTY CORPORATION

 
Interest Assumption for Determining Variable-Rate Premium; 
Interest on Late Premium Payments; Interest on Underpayments and 
Overpayments of Single-Employer Plan Termination Liability and 
Multiemployer Withdrawal Liability; Interest Assumptions for 
Multiemployer Plan Valuations Following Mass Withdrawal

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of interest rates and assumptions.

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SUMMARY: This notice informs the public of the interest rates and 
assumptions to be used under certain Pension Benefit Guaranty 
Corporation regulations. These rates and assumptions are published 
elsewhere (or are derivable from rates published elsewhere), but are 
collected and published in this notice for the convenience of the 
public. Interest rates are also published on the PBGC's web site 
(http://www.pbgc.gov).

DATES: The interest rate for determining the variable-rate premium 
under part 4006 applies to premium payment years beginning in October 
1998. The interest assumptions for performing multiemployer plan 
valuations following mass withdrawal under part 4281 apply to valuation 
dates occurring in November 1998. The interest rates for late premium 
payments under part 4007 and for underpayments and overpayments of 
single-employer plan termination liability under part 4062 and 
multiemployer withdrawal liability under part 4219 apply to interest 
accruing during the fourth quarter (October through December) of 1998.

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:

Variable-Rate Premiums

    Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income 
Security Act of 1974 (ERISA) and Sec. 4006.4(b)(1) of the PBGC's 
regulation on Premium Rates (29 CFR part 4006) prescribe use of an 
assumed interest rate in determining a single-employer plan's variable-
rate premium. The rate is the ``applicable percentage'' (described in 
the statute and the regulation) of the annual yield on 30-year Treasury 
securities for the month preceding the beginning of the plan year for 
which premiums are being paid (the ``premium payment year''). The yield 
figure is reported in Federal Reserve Statistical Releases G.13 and 
H.15.
    For plan years beginning before July 1, 1997, the applicable 
percentage of the 30-year Treasury yield was 80 percent. The Retirement 
Protection Act of 1994 (RPA) amended ERISA section 
4006(a)(3)(E)(iii)(II) to change the applicable percentage to 85 
percent, effective for plan years beginning on or after July 1, 1997. 
(The amendment also provides for a further increase in the applicable 
percentage--to 100 percent--when the Internal Revenue Service adopts 
new mortality tables for determining current liability.)
    The assumed interest rate to be used in determining variable-rate 
premiums for premium payment years beginning in October 1998 is 4.42 
percent (i.e., 85 percent of the 5.20 percent yield figure for 
September 1998).
    (Under section 774(c) of the RPA, the amendment to the applicable 
percentage was deferred for certain regulated public utility (RPU) 
plans for as long as six months. The applicable percentage for RPU 
plans has therefore remained 80 percent for plan years beginning before 
January 1, 1998. For ``partial'' RPU plans, the assumed interest rates 
to be used in determining variable-rate premiums can be computed by 
applying the rules in Sec. 4006.5(g) of the premium rates regulation. 
The PBGC's 1997 premium payment instruction booklet also describes 
these rules and provides a worksheet for computing the assumed rate.)
    The following table lists the assumed interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between November 1997 and October 1998. The rates for November and 
December 1997 in the table (which reflect an applicable percentage of 
85 percent) apply only to non-RPU plans. However, the rates for months 
after December 1997 apply to RPU (and ``partial'' RPU) plans as well as 
to non-RPU plans.

------------------------------------------------------------------------
                                                                  The
                                                                assumed
           For premium payment years beginning in:              interest
                                                                rate is:
------------------------------------------------------------------------
November 1997................................................       5.38
December 1997................................................       5.19
January 1998.................................................       5.09
February 1998................................................       4.94
March 1998...................................................       5.01
April 1998...................................................       5.06
May 1998.....................................................       5.03
June 1998....................................................       5.04
July 1998....................................................       4.85

[[Page 55416]]

August 1998..................................................       4.83
September 1998...............................................       4.71
October 1998.................................................       4.42
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Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability

    Section 4007(b) of ERISA and Sec. 4007.7(a) of the PBGC's 
regulation on Payment of Premiums (29 CFR part 4007) require the 
payment of interest on late premium payments at the rate established 
under section 6601 of the Internal Revenue Code. Similarly, Sec. 4062.7 
of the PBGC's regulation on Liability for Termination of Single-
employer Plans (29 CFR part 4062) requires that interest be charged or 
credited at the section 6601 rate on underpayments and overpayments of 
employer liability under section 4062 of ERISA. The section 6601 rate 
is established periodically (currently quarterly) by the Internal 
Revenue Service. The rate applicable to the fourth quarter (October 
through December) of 1998, as announced by the IRS, is 8 percent.
    The following table lists the late payment interest rates for 
premiums and employer liability for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                      From                          Through      rate
                                                               (percent)
------------------------------------------------------------------------
10/1/92.........................................     6/30/94           7
7/1/94..........................................     9/30/94           8
10/1/94.........................................     3/31/95           9
4/1/95..........................................     6/30/95          10
7/1/95..........................................     3/31/96           9
4/1/96..........................................     6/30/96           8
7/1/96..........................................    12/31/96           9
1/1/97..........................................     3/31/97           9
4/1/97..........................................     6/30/97           9
7/1/97..........................................     9/30/97           9
10/1/97.........................................    12/31/97           9
1/1/98..........................................     3/31/98           9
4/1/98..........................................     6/30/98           8
7/1/98..........................................     9/30/98           8
10/1/98.........................................    12/31/98           8
------------------------------------------------------------------------

Underpayments and Overpayments of Multiemployer Withdrawal 
Liability

    Section 4219.32(b) of the PBGC's regulation on Notice, Collection, 
and Redetermination of Withdrawal Liability (29 CFR part 4219) 
specifies the rate at which a multiemployer plan is to charge or credit 
interest on underpayments and overpayments of withdrawal liability 
under section 4219 of ERISA unless an applicable plan provision 
provides otherwise. For interest accruing during any calendar quarter, 
the specified rate is the average quoted prime rate on short-term 
commercial loans for the fifteenth day (or the next business day if the 
fifteenth day is not a business day) of the month preceding the 
beginning of the quarter, as reported by the Board of Governors of the 
Federal Reserve System in Statistical Release H.15 (``Selected Interest 
Rates''). The rate for the fourth quarter (October through December) of 
1998 (i.e., the rate reported for September 15, 1998) is 8.50 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                                 Rate
                      From                          Through    (percent)
------------------------------------------------------------------------
10/1/92.........................................     6/30/94        6.00
7/1/94..........................................     9/30/94        7.25
10/1/94.........................................    12/31/94        7.75
1/1/95..........................................     3/31/95        8.50
4/1/95..........................................     9/30/95        9.00
10/1/95.........................................     3/31/96        8.75
4/1/96..........................................    12/31/96        8.25
1/1/97..........................................     3/31/97        8.25
4/1/97..........................................     6/30/97        8.25
7/1/97..........................................     9/30/97        8.50
10/1/97.........................................    12/31/97        8.50
1/1/98..........................................     3/31/98        8.50
4/1/98..........................................     6/30/98        8.50
7/1/98..........................................     9/30/98        8.50
10/1/98.........................................    12/31/98        8.50
------------------------------------------------------------------------

Multiemployer Plan Valuations Following Mass Withdrawal

    The PBGC's regulation on Duties of Plan Sponsor Following Mass 
Withdrawal (29 CFR part 4281) prescribes the use of interest 
assumptions under the PBGC's regulation on Allocation of Assets in 
Single-employer Plans (29 CFR part 4044). The interest assumptions 
applicable to valuation dates in November 1998 under part 4044 are 
contained in an amendment to part 4044 published elsewhere in today's 
Federal Register. Tables showing the assumptions applicable to prior 
periods are codified in appendix B to 29 CFR part 4044.

    Issued in Washington, DC, on this 8th day of October 1998.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 98-27661 Filed 10-14-98; 8:45 am]
BILLING CODE 7708-01-P