[Federal Register: January 15, 1998 (Volume 63, Number 10)]
[Notices]
[Page 2426-2427]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ja98-100]
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PENSION BENEFIT GUARANTY CORPORATION
Interest Assumption for Determining Variable-Rate Premium;
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 to be used under certain
Pension Benefit Guaranty Corporation regulations. These rates and
assumptions are published elsewhere (or are derivable 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 home page (http://www.pbgc.gov).
DATES: The interest rate for determining the variable-rate premium
under part 4006 applies to premium payment years beginning in January
1998. The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in February 1998. 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 1998.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005, 202-326-4024.
(For TTY/TDD users, 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 in determining a single-employer plan's variable-
rate premium. The rate is the ``applicable percentage'' (described in
the statute and the regulation) of the annual yield on 30-year Treasury
securities for the month preceding the
[[Page 2427]]
beginning of the plan year for which premiums are being paid (the
``premium payment year''). The yield figure is reported in Federal
Reserve Statistical Releases G.13 and H.15.
For plan years beginning before July 1, 1997, the applicable
percentage of the 30-year Treasury yield was 80 percent. The Retirement
Protection Act of 1994 (RPA) amended ERISA section
4006(a)(3)(E)(iii)(II) to change the applicable percentage to 85
percent, effective for plan years beginning on or after July 1, 1997.
(The amendment also provides for a further increase in the applicable
percentage--to 100 percent--when the Internal Revenue Service adopts
new mortality tables for determining current liability.)
The assumed interest rate to be used in determining variable-rate
premiums for premium payment years beginning in January 1998 is 5.09
percent (i.e., 85 percent of the 5.99 percent yield figure for December
1997).
(Under section 774(c) of the RPA, the amendment to the applicable
percentage was deferred for certain regulated public utility (RPU)
plans for as long as six months. The applicable percentage for RPU
plans has therefore remained 80 percent for plan years beginning before
January 1, 1998. For ``partial'' RPU plans, the assumed interest rates
to be used in determining variable-rate premiums can be computed by
applying the rules in Sec. 4006.5(g) of the premium rates regulation.
The PBGC's 1997 premium payment instruction booklet also describes
these rules and provides a worksheet for computing the assumed rate.)
The following table lists the assumed interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between February 1997 and January 1998. The rates for July through
December 1997 in the table (which reflect an applicable percentage of
85 percent) apply only to non-RPU plans. However, the rates for months
before July 1997 and after December 1997 apply to RPU (and ``partial''
RPU) plans as well as to non-RPU plans.
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The assumed
For premium payment years beginning in interest
rate is
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February 1997.............................................. 5.46
March 1997................................................. 5.35
April 1997................................................. 5.54
May 1997................................................... 5.67
June 1997.................................................. 5.55
July 1997.................................................. 5.75
August 1997................................................ 5.53
September 1997............................................. 5.59
October 1997............................................... 5.53
November 1997.............................................. 5.38
December 1997.............................................. 5.19
January 1998............................................... 5.09
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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 1998, as announced by the IRS, is 9 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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1/1/92........................................ 3/31/92 9
4/1/92........................................ 9/30/92 8
10/1/92....................................... 6/30/94 7
7/1/94........................................ 9/30/94 8
10/1/94....................................... 3/31/95 9
4/1/95........................................ 6/30/95 10
7/1/95........................................ 3/31/96 9
4/1/96........................................ 6/30/96 8
7/1/96........................................ 12/31/96 9
1/1/97........................................ 3/31/97 9
4/1/97........................................ 6/30/97 9
7/1/97........................................ 9/30/97 9
10/1/97....................................... 12/31/97 9
1/1/98........................................ 3/31/98 9
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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 quarter (January through March) of
1998 (i.e., the rate reported for December 15, 1997) is 8.50 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
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Rate
From Through (percent)
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1/1/92........................................ 3/31/92 7.50
4/1/92........................................ 9/30/92 6.50
10/1/92....................................... 6/30/94 6.00
7/1/94........................................ 9/30/94 7.25
10/1/94....................................... 12/31/94 7.75
1/1/95........................................ 3/31/95 8.50
4/1/95........................................ 9/30/95 9.00
10/1/95....................................... 3/31/96 8.75
4/1/96........................................ 12/31/96 8.25
1/1/97........................................ 3/31/97 8.25
4/1/97........................................ 6/30/97 8.25
7/1/97........................................ 9/30/97 8.50
10/1/97....................................... 12/31/97 8.50
1/1/98........................................ 3/31/98 8.50
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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 1998 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 1998.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 98-1062 Filed 1-14-98; 8:45 am]
BILLING CODE 7708-01-P