[Federal Register: December 1, 2006 (Volume 71, Number 231)]

[Rules and Regulations]               

[Page 69481-69482]

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

[DOCID:fr01de06-10]                         



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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 that applies to any plan being terminated 

either in a distress termination or involuntarily by the PBGC with a 

valuation date falling in 2007, and is used to determine expected 

retirement ages for plan participants. This table is needed in order to 

compute the value of early retirement benefits and, thus, the total 

value of benefits under the plan.



DATES: Effective Date: January 1, 2007.



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 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 of the Employee Retirement Income 

Security Act of 1974. Under ERISA section 4041(c), guaranteed benefits 

and benefit liabilities under a plan that is undergoing a distress 

termination must be valued in accordance with part 4044, subpart B. In 

addition, when the 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



[[Page 69482]]



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-06 with Table I-

07 in order to provide an updated correlation, appropriate for calendar 

year 2007, between the amount of a participant's benefit and the 

probability that the participant will elect early retirement. Table I-

07 will be used to value benefits in plans with valuation dates during 

calendar year 2007.

    The 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 2007, 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 2007.

    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 in 29 CFR Part 4044



    Pension insurance, Pensions.





0

In consideration of the foregoing, 29 CFR part 4044 is amended as 

follows:



PART 4044--[AMENDED]



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-06 and adding 

in its place Table I-07 to read as follows:



Appendix D to Part 4044--Tables Used To Determine Expected Retirement 

Age



                               Table I-07.--Selection of Retirement Rate Category

              [For plans with valuation dates after December 31, 2006, and before January 1, 2008]

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                                                                  Participant's Retirement Rate Category is--

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

                                                                             Medium \2\ if monthly   High \3\ if

                                                               Low \1\ if      benefit at URA is       monthly

              Participant reaches URA in year--                 monthly   --------------------------  benefit at

                                                               benefit at                               URA is

                                                              URA is less      From          To        greater

                                                                 than--                                 than--

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2008........................................................          522          522        2,204        2,204

2009........................................................          534          534        2,257        2,257

2010........................................................          547          547        2,311        2,311

2011........................................................          560          560        2,367        2,367

2012........................................................          574          574        2,426        2,426

2013........................................................          588          588        2,486        2,486

2014........................................................          603          603        2,549        2,549

2015........................................................          618          618        2,612        2,612

2016........................................................          634          634        2,678        2,678

2017 or later...............................................          649          649        2,745        2,745

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\1\ Table II-A.

\2\ Table II-B.

\3\ Table II-C.



* * * * *



    Issued in Washington, DC, this 17th day of November, 2006.

Vincent K. Snowbarger,

Interim Director, Pension Benefit Guaranty Corporation.

 [FR Doc. E6-20387 Filed 11-30-06; 8:45 am]



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