[Federal Register: January 12, 2007 (Volume 72, Number 8)]
[Notices]
[Page 1564-1565]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ja07-109]
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PENSION BENEFIT GUARANTY CORPORATION
Required Interest Rate Assumption for Determining Variable-Rate
Premium for Single-Employer Plans; 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 can be derived 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 required interest rate for determining the variable-rate
premium under part 4006 applies to premium payment years beginning in
January 2007. The interest assumptions for performing multiemployer
plan valuations following mass withdrawal under part 4281 apply to
valuation dates occurring in February 2007. 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 first quarter (January through March) of 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:
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 (the ``required interest rate'') in determining a
single-employer plan's variable-rate premium. Pursuant to the Pension
Protection Act of 2006, for premium payment years beginning in 2006 or
2007, the required interest rate is the ``applicable percentage''
(currently 85 percent) of the annual rate of interest determined by the
Secretary of the Treasury on amounts invested conservatively in long-
term investment grade corporate bonds for the month preceding the
beginning of the plan year for which premiums are being paid (the
``premium payment year''). Thus, the required interest rate to be used
in determining variable-rate premiums for premium payment years
beginning in January 2007 is 4.89 percent (i.e., 85 percent of the 5.75
percent composite corporate bond rate for December 2006 as determined
by the Treasury).
On December 2, 2005, the Internal Revenue Service published
proposed regulations containing updated mortality tables for
determining current liability under section 412(l)(7) of the Code and
section 302(d)(7) of ERISA for plan years beginning on or after January
1, 2007, http://www.irs.gov/pub/irs-regs/12498805.pdf. If these
regulations are finalized and effective for plan years beginning on or
after January 1, 2007, the required interest rate to be used in
determining variable-rate premiums would be 100 percent (instead of 85
percent) of the composite corporate bond rate. If the required interest
rate for premium payment years beginning in January 2007 changes, the
PBGC will promptly publish a Federal Register notice with the new rate.
The following table lists the required interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between February 2006 and January 2007.
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The required
For premium payment years beginning in: interest rate
is:
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February 2006........................................... 4.80
March 2006.............................................. 4.87
April 2006.............................................. 5.01
May 2006................................................ 5.25
June 2006............................................... 5.35
July 2006............................................... 5.36
August 2006............................................. 5.36
September 2006.......................................... 5.19
October 2006............................................ 5.06
November 2006........................................... 5.05
December 2006........................................... 4.90
January 2007............................................ 4.89
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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 first quarter (January
through March) of 2007, 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:
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Interest
From-- Through-- rate
(percent)
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4/1/00........................................ 3/31/01 9
4/1/01........................................ 6/30/01 8
7/1/01........................................ 12/31/01 7
1/1/02........................................ 12/31/02 6
1/1/03........................................ 9/30/03 5
10/1/03....................................... 3/31/04 4
4/1/04........................................ 6/30/04 5
7/1/04........................................ 9/30/04 4
10/1/04....................................... 3/31/05 5
4/1/05........................................ 9/30/05 6
10/1/05....................................... 6/30/06 7
7/1/06........................................ 3/31/07 8
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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 first
[[Page 1565]]
quarter (January through March) of 2007 (i.e., the rate reported for
December 15, 2006) is 8.25 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
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Interest
From-- Through-- rate
(percent)
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7/1/00........................................ 3/31/01 9.50
4/1/01........................................ 6/30/01 8.50
7/1/01........................................ 9/30/01 7.00
10/1/01....................................... 12/31/01 6.50
1/1/02........................................ 12/31/02 4.75
1/1/03........................................ 9/30/03 4.25
10/1/03....................................... 9/30/04 4.00
10/1/04....................................... 12/31/04 4.50
1/1/05........................................ 3/31/05 5.25
4/1/05........................................ 6/30/05 5.50
7/1/05........................................ 9/30/05 6.00
10/1/05....................................... 12/31/05 6.50
1/1/06........................................ 3/31/06 7.25
4/1/06........................................ 6/30/06 7.50
7/1/06........................................ 9/30/06 8.00
10/1/06....................................... 3/31/07 8.25
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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 February 2007 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 9th day of January 2007.
Vincent K. Snowbarger,
Interim Director, Pension Benefit Guaranty Corporation.
[FR Doc. E7-337 Filed 1-11-07; 8:45 am]
BILLING CODE 7709-01-P