[Federal Register: January 16, 2009 (Volume 74, Number 11)]
[Rules and Regulations]
[Page 2863-2864]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16ja09-19]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4022
Benefits Payable in Terminated Single-Employer Plans; Interest
Assumptions for Valuing and Paying Benefits
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: Pension Benefit Guaranty Corporation's regulation on Benefits
Payable in Terminated Single-Employer Plans prescribes interest
assumptions for valuing and paying certain benefits under terminating
single-employer plans. This final rule amends the benefit payments
regulation to adopt interest assumptions for plans with valuation dates
in February 2009. As discussed below, this final rule does not address
the interest assumptions under PBGC's regulation on Allocation of
Assets in Single-Employer Plans. Interest assumptions are also
published on PBGC's Web site (http://www.pbgc.gov).
DATES: Effective February 1, 2009.
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: 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.
These interest assumptions are found in two PBGC regulations: the
regulation on Benefits Payable in Terminated Single-Employer Plans (29
CFR Part 4022) and the regulation on Allocation of Assets in Single-
Employer Plans (29 CFR Part 4044). Before 2009, PBGC updated the
assumptions under the two regulations each month in a single rulemaking
document. In a final rule published in the Federal Register on December
29, 2008 (at 73 FR 79362), PBGC announced a change in its practice for
determining the interest assumptions for use under the asset allocation
regulation. As explained in the preamble to that final rule (73 FR
79362 at 79363), the new practice leads to assumptions that remain
unchanged within a calendar quarter. Accordingly, the assumptions
published December 29, 2008, remain in effect for January, February,
and March 2009, and need not be updated for February 2009. Thus this
final rule document updates the benefit payments regulation only.
Similarly, future updates to the asset allocation regulation will be
made quarterly rather than monthly; between quarterly updates of the
asset allocation regulation, only the benefit payment regulation will
be updated each month.
Two sets of interest assumptions are prescribed under the benefit
payments regulation: (1) A set for PBGC to use to determine whether a
benefit is payable as a lump sum and to determine lump-sum amounts to
be paid by PBGC (found in Appendix B to Part 4022), and (2) a set for
private-sector pension practitioners to refer to if they wish to use
lump-sum interest rates determined using PBGC's historical methodology
(found in Appendix C to Part 4022).
This amendment (1) adds to Appendix B to Part 4022 the interest
assumptions for PBGC to use for its own lump-sum payments in plans with
valuation dates during February 2009, and (2) 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 PBGC's historical
[[Page 2864]]
methodology for valuation dates during February 2009.
The interest assumptions that PBGC will use for its own lump-sum
payments (set forth in Appendix B to part 4022) will be 3.00 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
January 2009) of 1.00 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 PBGC for determining and paying lump sums (set forth in
Appendix B to part 4022).
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 February
2009, PBGC finds that good cause exists for making the assumptions set
forth in this amendment effective less than 30 days after publication.
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 4022
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
0
In consideration of the foregoing, 29 CFR part 4022 is 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 184, as set forth below, is
added to the table.
Appendix B to Part 4022--Lump Sum Interest Rates For PBGC Payments
* * * * *
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For plans with a valuation Deferred annuities (percent)
date Immediate -----------------------------------------------------------------------------
Rate set -------------------------------- annuity rate
On or after Before (percent) i1 i2 i3 n1 n2
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* * * * * * *
184 2-1-09 3-1-09 3.00 4.00 4.00 4.00 7 8
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0
3. In appendix C to part 4022, Rate Set 184, as set forth below, is
added to the table.
Appendix C to Part 4022--Lump Sum Interest Rates For Private-Sector
Payments
* * * * *
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For plans with a valuation Deferred annuities (percent)
date Immediate -----------------------------------------------------------------------------
Rate set -------------------------------- annuity rate
On or after Before (percent) i1 i2 i3 n1 n2
--------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
184 2-1-09 3-1-09 3.00 4.00 4.00 4.00 7 8
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Issued in Washington, DC, on this 12th day of January 2009.
Vincent K. Snowbarger,
Deputy Director for Operations, Pension Benefit Guaranty Corporation.
[FR Doc. E9-832 Filed 1-15-09; 8:45 am]
BILLING CODE 7709-01-P