[Federal Register: September 15, 1999 (Volume 64, Number 178)]
[Rules and Regulations]
[Page 49986-49987]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15se99-15]
[[Page 49986]]
=======================================================================
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4044
Allocation of Assets in Single-Employer Plans; Interest
Assumptions for Valuing Benefits
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Pension Benefit Guaranty Corporation's regulation on
Allocation of Assets in Single-Employer Plans prescribes interest
assumptions for valuing benefits under terminating single-employer
plans. This final rule amends the regulation to adopt interest
assumptions for plans with valuation dates in October 1999. Interest
assumptions are also published on the PBGC's web site (http://
www.pbgc.gov).
EFFECTIVE DATE: October 1, 1999.
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: The PBGC's regulation on Allocation of Asses
in Single-Employer Plans (29 CFR part 4044) prescribes actuarial
assumptions for valuing plan benefits of terminating single-employer
plans covered by title IV of the Employee Retirement Income Security
Act of 1974.
Among the actuarial assumptions prescribed in part 4044 are
interest assumptions. These interest assumptions are intended to
reflect current conditions in the financial and annuity markets.
Two sets of interest assumptions are prescribed, one set for the
valuation of benefits to be paid as annuities and one set for the
valuation of benefit to be paid as lump sums. This amendment adds to
appendix B to part 4044 the annuity and lump sum interest assumptions
for valuing benefits in plans with valuation dates during October 1999.
For annuity benefits, the interest assumptions will be 6.30 percent
for the first 20 years following the valuation date and 5.25 percent
thereafter. The annuity interest assumptions are unchanged from those
in effect for September 1999. For benefits to be paid as lump sums, the
interest assumptions to be used by the PBGC will be 5.00 percent for
the period during which a benefits is in pay status, 4.25 percent
during the seven-year period directly preceding the benefit's placement
in pay status, and 4.00 percent during any other years preceding the
benefit's placement in pay status. The lump sum interest assumptions
are unchanged from those in effect for September 1999.
The PBGC has determined that notice and public comment on this
amendment are impracticable and contrary to the public interest. This
finding is based on the need to determine and issue new interest
assumptions promptly so that the assumptions can reflect, as accurately
as possible, current market conditions.
Because of the need to provide immediate guidance for valuation of
benefits in plans with valuation dates during October 1999, the PBGC
finds that good cause exists for making the assumptions set forth in
this amendment effective less than 30 days after publication.
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 amendment, the Regulatory Flexibility Act of 1980 does not apply.
See 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
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.
2. In appendix B, a new entry is added to Table I, and Rate Set 72
is added to Table II, as set forth below. The introductory text of each
table is republished for the convenience of the reader and remains
unchanged.
Appendix B to Part 4044--Interest Rates Used to Value Annuities and
Lump Sums
Table I.--Annuity Valuations
[This table sets forth, for each indicated calendar month, the interest rates (denoted by i<INF>1</INF>, i<INF>2</INF>, * * *, and
referred to generally as i<INF>t</INF>) assumed to be in effect between specified anniversaries of a valuation date that
occurs within that calendar month; those anniversaries are specified in the columns adjacent to the rates. The
last listed rate is assumed to be in effect after the last listed anniversary date.]
----------------------------------------------------------------------------------------------------------------
The values of i<INF>t</INF> are:
For valuation dates occurring ----------------------------------------------------------------------------------
in the month-- i<INF>t</INF> for t = i<INF>t</INF> for t = i<INF>t</INF> for t =
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
October 1999................. .0630 1-20 .0525 >20 N/A N/A
----------------------------------------------------------------------------------------------------------------
[[Page 49987]]
Table II.--Lump Sum Valuations
[In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status on the valuation date, the immediate
annuity rate shall apply; (2) For benefits for which the deferral period is y years (where y is an integer and 0 < y <ls-thn-eq> n<INF>1</INF>), interest rate i<INF>1</INF>
shall apply from the valuation date for a period of y years, and thereafter the immediate annuity rate shall apply; (3) For benefits for which the
deferral period is y years (where y is an integer and n<INF>1</INF> < y <ls-thn-eq> n<INF>1</INF> + n<INF>2</INF>), interest rate i<INF>2</INF> shall apply from the valuation date for a period of
y - n<INF>1</INF> years, interest rate i<INF>1</INF> shall apply for the following n<INF>1</INF> years, and thereafter the immediate annuity rate shall apply; (4) For benefits for which
the deferral period is y years (where y is an integer and y > n<INF>1</INF> + n<INF>2</INF>), interest rate i<INF>3</INF> shall apply from the valuation date for a period of y - n<INF>1</INF> - n<INF>2</INF>
years, interest rate i<INF>2</INF> shall apply for the following n<INF>2</INF> years, interest rate i<INF>1</INF> shall apply for the following n<INF>1</INF> years, and thereafter the immediate
annuity rate shall apply.]
--------------------------------------------------------------------------------------------------------------------------------------------------------
For plans with a valuation date Immediate Deferred annuities (percent)
Rate set ---------------------------------- annuity rate ------------------------------------------------------------------------------------
On or after Before (percent) i<INF>1</INF> i<INF>2</INF> i<INF>3</INF> n<INF>1</INF> n<INF>2</INF>
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
72 10-1-99 11-1-99 5.00 4.25 4.00 4.00 7 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Issued in Washington, DC, on this 7th day of September 1999.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 99-23849 Filed 9-14-99; 8:45 am]
BILLING CODE 7708-01-P