[Federal Register: October 13, 2006 (Volume 71, Number 198)]

[Rules and Regulations]               

[Page 60428-60429]

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

[DOCID:fr13oc06-7]                         





[[Page 60428]]



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PENSION BENEFIT GUARANTY CORPORATION



29 CFR Parts 4022 and 4044



 

Benefits Payable in Terminated Single-Employer Plans; Allocation 

of Assets in Single-Employer Plans; Interest Assumptions for Valuing 

and Paying Benefits



AGENCY: Pension Benefit Guaranty Corporation.



ACTION: Final rule.



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SUMMARY: The Pension Benefit Guaranty Corporation's regulations on 

Benefits Payable in Terminated Single-Employer Plans and Allocation of 

Assets in Single-Employer Plans prescribe interest assumptions for 

valuing and paying benefits under terminating single-employer plans. 

This final rule amends the regulations to adopt interest assumptions 

for plans with valuation dates in November 2006. Interest assumptions 

are also published on the PBGC's Web site http://www.pbgc.gov.





DATES: Effective November 1, 2006.



FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Manager, 

Regulatory and Policy Division, Legislative and Regulatory Department, 

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 PBGC's regulations prescribe actuarial 

assumptions--including interest assumptions--for valuing and paying 

plan benefits of terminating single-employer plans covered by title IV 

of the Employee Retirement Income Security Act of 1974. The interest 

assumptions are intended to reflect current conditions in the financial 

and annuity markets.

    Three sets of interest assumptions are prescribed: (1) A set for 

the valuation of benefits for allocation purposes under section 4044 

(found in Appendix B to part 4044), (2) a set for the PBGC to use to 

determine whether a benefit is payable as a lump sum and to determine 

lump-sum amounts to be paid by the PBGC (found in Appendix B to part 

4022), and (3) a set for private-sector pension practitioners to refer 

to if they wish to use lump-sum interest rates determined using the 

PBGC's historical methodology (found in Appendix C to part 4022).

    This amendment (1) adds to Appendix B to part 4044 the interest 

assumptions for valuing benefits for allocation purposes in plans with 

valuation dates during November 2006, (2) adds to Appendix B to part 

4022 the interest assumptions for the PBGC to use for its own lump-sum 

payments in plans with valuation dates during November 2006, and (3) 

adds to Appendix C to part 4022 the interest assumptions for private-

sector pension practitioners to refer to if they wish to use lump-sum 

interest rates determined using the PBGC's historical methodology for 

valuation dates during November 2006.

    For valuation of benefits for allocation purposes, the interest 

assumptions that the PBGC will use (set forth in Appendix B to part 

4044) will be 5.70 percent for the first 20 years following the 

valuation date and 4.75 percent thereafter. These interest assumptions 

represent a decrease (from those in effect for October 2006) of 0.30 

percent for the first 20 years following the valuation date and are 

otherwise unchanged. These interest assumptions reflect the PBGC's 

recently updated mortality assumptions, which are effective for 

terminations on or after January 1, 2006. See the PBGC's final rule 

published December 2, 2005 (70 FR 72205), which is available at http://www.pbgc.gov

[fxsp0]/docs/05-23554.pdf. Because the updated mortality 



assumptions reflect improvements in mortality, these interest 

assumptions are higher than they would have been using the old 

mortality assumptions.

    The interest assumptions that the PBGC will use for its own lump-

sum payments (set forth in Appendix B to part 4022) will be 2.75 

percent for the period during which a benefit is in pay status and 4.00 

percent during any years preceding the benefit's placement in pay 

status. These interest assumptions represent a decrease (from those in 

effect for October 2006) of 0.25 percent in the immediate annuity rate 

and are otherwise unchanged. For private-sector payments, the interest 

assumptions (set forth in Appendix C to part 4022) will be the same as 

those used by the PBGC for determining and paying lump sums (set forth 

in Appendix B to part 4022).

    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 current market 

conditions as accurately as possible.

    Because of the need to provide immediate guidance for the valuation 

and payment of benefits in plans with valuation dates during November 

2006, 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



29 CFR Part 4022



    Employee benefit plans, Pension insurance, Pensions, Reporting and 

recordkeeping requirements.



29 CFR Part 4044



    Employee benefit plans, Pension insurance, Pensions.



0

In consideration of the foregoing, 29 CFR parts 4022 and 4044 are 

amended as follows:



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



0

1. 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

2. In appendix B to part 4022, Rate Set 157, as set forth below, is 

added to the table.



Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments



* * * * *



[[Page 60429]]







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                                                               For plans with a                                Deferred annuities  (percent)

                                                                valuation date        Immediate   ------------------------------------------------------

                          Rate set                          ----------------------  annuity rate

                                                               On or                  (percent)        i1         i2         i3         n1         n2

                                                               after      Before

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



                                                                      * * * * * * *

157........................................................    11-1-06    12-1-06            2.75       4.00       4.00       4.00          7          8

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





0

3. In appendix C to part 4022, Rate Set 157, as set forth below, is 

added to the table.



Appendix C to Part 4022--Lump Sum Interest Rates for Private-Sector 

Payments



* * * * *



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

                                                               For plans with a                                Deferred annuities  (percent)

                                                                valuation date        Immediate   ------------------------------------------------------

                          Rate set                          ----------------------  annuity rate

                                                               On or                  (percent)        i1         i2         i3         n1         n2

                                                               after      Before

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



                                                                      * * * * * * *

157........................................................    11-1-06    12-1-06            2.75       4.00       4.00       4.00          7          8

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



PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS



0

4. 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

5. In appendix B to part 4044, a new entry for November 2006, as set 

forth below, is added to the table.



Appendix B to Part 4044--Interest Rates Used to Value Benefits



* * * * *



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                                                                      The values of it are:

 For valuation dates occurring in the month--  -----------------------------------------------------------------

                                                    it      for t =       it      for t =       it      for t =

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



                                                  * * * * * * *

November 2006.................................      .0570       1-20      .0475        >20        N/A        N/A

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    Issued in Washington, DC, on this 5th day of October 2006.

James C. Gerber,

Acting Interim Director, Pension Benefit Guaranty Corporation.

[FR Doc. E6-16958 Filed 10-12-06; 8:45 am]



BILLING CODE 7709-01-P