[Federal Register: April 13, 2007 (Volume 72, Number 71)]
[Notices]
[Page 18693-18694]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ap07-82]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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
April 2007. The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in May 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 second quarter (April through June) 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'' 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'').
On February 2, 2007 (at 72 FR 4955), the Internal Revenue Service
(IRS) published final 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. As a result, in accordance with section
4006(a)(3)(E)(iii)(II) of ERISA, the ``applicable percentage'' to be
used in determining the required interest rate for plan years beginning
in 2007 is 100 percent.
The required interest rate to be used in determining variable-rate
premiums for premium payment years beginning in April 2007 is 5.84
percent (i.e., 100 percent of the 5.84 percent composite corporate bond
rate for March 2007 as determined by the Treasury).
The following table lists the required interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between May 2006 and April 2007.
------------------------------------------------------------------------
The
required
For premium payment years beginning in: interest
rate is:
------------------------------------------------------------------------
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............................................... 5.75
February 2007.............................................. 5.89
March 2007................................................. 5.85
April 2007................................................. 5.84
------------------------------------------------------------------------
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 second quarter (April
through June) 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:
------------------------------------------------------------------------
Interest
From Through rate
(percent)
------------------------------------------------------------------------
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........................................ 6/30/07 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
[[Page 18694]]
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 second quarter (April
through June) of 2007 (i.e., the rate reported for March 15, 2007) is
8.25 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
------------------------------------------------------------------------
Interest
From Through rate
(percent)
------------------------------------------------------------------------
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....................................... 6/30/07 8.25
------------------------------------------------------------------------
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 May 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 10th day of April 2007.
Vincent K. Snowbarger,
Interim Director, Pension Benefit Guaranty Corporation.
[FR Doc. E7-7097 Filed 4-12-07; 8:45 am]
BILLING CODE 7709-01-P