[Federal Register: July 15, 1996 (Volume 61, Number 156)]
[Notices]               
[Page 36970-36971]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy96-127]


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[[Page 36970]]

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 of the interest rates and 
assumptions 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 assumptions for determining the variable-rate 
premium under part 4006 apply to premium payment years beginning in 
May, June, and July 1996. The interest assumptions for performing 
multiemployer plan valuations following mass withdrawal under part 4281 
apply to valuation dates occurring in August 1996. 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 third quarter (July through September) of 
1996.

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 
(202-326-4179 for TTY and TDD).

SUPPLEMENTARY INFORMATION: Before July 1996, the rates and assumptions 
to be used under the PBGC regulations discussed below were set forth in 
tables in the regulations, even though the tabulated rates were merely 
copied from (or based on) rates published by other agencies, or were 
identical to rates in other PBGC regulations. In a final rule effective 
July 1, 1996 (61 FR 34001), the PBGC reorganized, renumbered, and 
significantly shortened its regulations. Tables that simply set forth 
information available elsewhere were among the unnecessary items that 
were removed. The PBGC will now publish the new rates and assumptions 
in Federal Register notices on or about the 15th of each month, with 
tables of the rates for recent periods. The rates will be published 
monthly or quarterly, as appropriate, regardless of whether they have 
changed.

Variable-Rate Premiums

    Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income 
Security Act of 1974 and Sec. 4006.4(b)(1) of the PBGC's regulation on 
Premium Rates (29 CFR part 4006) prescribe methods for determining a 
single-employer plan's unfunded vested benefits for premium computation 
purposes. These methods (previously codified at 29 CFR part 2610) 
involve use of an assumed interest rate equal to a specified percentage 
(currently 80 percent) of the annual yield on 30-year Treasury 
securities for the month preceding the beginning of the plan year for 
which premiums are being paid. The yield figure is reported in Federal 
Reserve Statistical Releases G.13 and H.15. The assumed interest rates 
to be used for computing premiums for plan years beginning in May, 
June, and July 1996 (i.e., 80 percent of the yield figures for April, 
May, and June 1996) are 5.43 percent, 5.54 percent, and 5.65 percent 
respectively.
    The following table lists the interest rates required under 29 CFR 
4006.4(b)(1) to be used in valuing vested benefits for purposes of 
determining variable-rate premiums for plans with premium payment years 
beginning within the specified months:

------------------------------------------------------------------------
                                                                   The  
                                                                required
            For premium payment years beginning in              interest
                                                                 rate is
------------------------------------------------------------------------
August 1995...................................................      5.38
September 1995................................................      5.49
October 1995..................................................      5.24
November 1995.................................................      5.10
December 1995.................................................      5.01
January 1996..................................................      4.85
February 1996.................................................      4.84
March 1996....................................................      4.99
April 1996....................................................      5.28
May 1996......................................................      5.43
June 1996.....................................................      5.54
July 1996.....................................................      5.65
------------------------------------------------------------------------

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. (These provisions were 
previously codified at 29 CFR parts 2610 and 2622.) The section 6601 
rate is established periodically (currently quarterly) by the Internal 
Revenue Service. The rate applicable to the third quarter (July through 
September) of 1996, as announced by the IRS, is 9 percent.
    The following table lists the late payment interest rates under 29 
CFR Secs. 4007.7(a) and 4062.7 for the specified time periods:

------------------------------------------------------------------------
                                                       Interest rate    
         From                    Through                 (percent)      
------------------------------------------------------------------------
10/1/89...............             3/31/91                     11       
4/1/91................            12/31/91                     10       
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................             9/30/96                      9       
------------------------------------------------------------------------

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. (These provisions were previously codified at 29 
CFR part 2644.) 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 third quarter (July through September) of 
1996 (i.e., the rate reported for June 17, 1996) is 8.25 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates under 29

[[Page 36971]]

CFR Sec. 4219.32(b) for the specified time periods:

------------------------------------------------------------------------
         From                    Through              Rate (percent)    
------------------------------------------------------------------------
4/1/90................             3/31/91                  10.00       
4/1/91................             6/30/91                   9.00       
7/1/91................             9/30/91                   8.50       
10/1/91...............            12/31/91                   8.00       
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................             9/30/96                   8.25       
------------------------------------------------------------------------

Multiemployer Plan Valuations Following Mass Withdrawal

    Section 4281.13 of the PBGC's regulation on Duties of Plan Sponsor 
Following Mass Withdrawal (29 CFR part 4281) prescribes methods for 
valuing benefits and certain assets of multiemployer plans following 
mass withdrawal under sections 4219(c)(1)(D) and 4281(b) of ERISA. 
These methods (previously codified at 29 CFR part 2676) involve use of 
the same interest assumptions used and prescribed under the PBGC's 
regulation on Allocation of Assets in Single-employer Plans (29 CFR 
part 4044). However, only part 4044 actually sets forth the prescribed 
interest assumptions; part 4281 simply refers to the assumptions in 
part 4044. The interest assumptions applicable to valuation dates in 
August 1996 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 5th day of July 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-17793 Filed 7-12-96; 8:45 am]
BILLING CODE 7708-01-P