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PENSION BENEFIT GUARANTY CORPORATION

Pension Benefit Guaranty Corporation

CFR Citation: 29 CFR Part 4044

NOTICE: RULES

ACTION: Single-employer plans:

DOCUMENT ACTION: Final rule.

SUBJECT CATEGORY: Allocation of Assets in Single-Employer Plans; Valuation of Benefits and Assets; Expected Retirement Age

EFFECTIVE DATES: January 1, 2004.

DOCUMENT SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's regulation on Allocation of Assets in SingleEmployer Plans by substituting a new table that applies to any plan being terminated either in a distress termination or involuntarily by the PBGC with a valuation date falling in 2004, and is used to determine expected retirement ages for plan participants. This table is needed in order to compute the value of early retirement benefits and, thus, the total value of benefits under the plan.

SUMMARY: Allocation of assets—; Valuation of benefits and assets; expected retirement age,

SUPPLEMENTAL INFORMATION

The PBGC's regulation on Allocation of Assets in SingleEmployer Plans (29 CFR part 4044) sets forth (in subpart B) the methods for valuing plan benefits of terminating single employer plans
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covered under Title IV of the Employee Retirement Income Security Act of 1974. Under ERISA section 4041(c), guaranteed benefits and benefit liabilities under a plan that is undergoing a distress termination must be valued in accordance with part 4044, subpart B. In addition, when the PBGC terminates an underfunded plan involuntarily pursuant to ERISA Section 4042(a), it uses the subpart B valuation rules to determine the amount of the plan's underfunding.

Under Sec. 4044.51(b), early retirement benefits are valued based on the annuity starting date, if a retirement date has been selected, or the expected retirement age, if the annuity starting date is not known on the valuation date. Sections 4044.55 through 4044.57 set forth rules for determining the expected retirement ages for plan participants entitled to early retirement benefits. Appendix D of part 4044 contains tables to be used in determining the expected early retirement ages.

Table I in appendix D (Selection of Retirement Rate Category) is used to determine whether a participant has a low, medium, or high probability of retiring early. The determination is based on the year a participant would reach ``unreduced retirement age'' (i.e., the earlier of the normal retirement age or the age at which an unreduced benefit is first payable) and the participant's monthly benefit at unreduced retirement age. The table applies only to plans with valuation dates in the current year and is updated annually by the PBGC to reflect changes in the cost of living, etc.

Tables IIA, IIB, and IIC (Expected Retirement Ages for Individuals in the Low, Medium, and High Categories respectively) are used to determine the expected retirement age after the probability of early retirement has been determined using Table I. These tables establish, by probability category, the expected retirement age based on both the earliest age a participant could retire under the plan and the unreduced retirement age. This expected retirement age is used to compute the value of the early retirement benefit and, thus, the total value of benefits under the plan.

This document amends appendix D to replace Table I03 with Table I 04 in order to provide an updated correlation, appropriate for calendar year 2004, between the amount of a participant's benefit and the probability that the participant will elect early retirement. Table I 04 will be used to value benefits in plans with valuation dates during calendar year 2004.

The PBGC has determined that notice of and public comment on this rule are impracticable and contrary to the public interest. Plan administrators need to be able to estimate accurately the value of plan benefits as early as possible before initiating the termination process. For that purpose, if a plan has a valuation date in 2004, the plan administrator needs the updated table being promulgated in this rule. Accordingly, the public interest is best served by issuing this table expeditiously, without an opportunity for notice and comment, to allow as much time as possible to estimate the value of plan benefits with the proper table for plans with valuation dates in early 2004.

The 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 regulation, the Regulatory Flexibility Act of 1980 does not apply (5 U.S.C. 601(2)).
List of Subjects in 29 CFR Part 4044

Pension insurance, Pensions.
In consideration of the foregoing, 29 CFR part 4044 is amended as follows:
PART 4044[AMENDED]
1. The authority citation for part 4044 continues to read as follows:

Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362. 2. Appendix D to part 4044 is amended by removing Table I03 and adding in its place Table I04 to read as follows:
Appendix D to Part 4044.Tables Used To Determine Expected Retirement Age
TABLE I04.Selection of Retirement Rate Category [For plans with valuation dates after December 31, 2003, and before January 1, 2005] Participant's Retirement Rate Category is Medium\2\ if monthly High\3\ if Low \1\ if benefit at URA is monthly Participant reaches URA in year monthly benefit at benefit at URA is URA is less From To greater than than 2005........................................................ 473 473 2,000 2,000 2006........................................................ 483 483 2,042 2,042 2007........................................................ 494 494 2,087 2,087 2008........................................................ 505 505 2,133 2,133 2009........................................................ 516 516 2,182 2,182 2010........................................................ 528 528 2,233 2,233 2011........................................................ 540 540 2,284 2,284 2012........................................................ 553 553 2,336 2,336 2013........................................................ 566 566 2,390 2,390 2014 or later............................................... 579 579 2,445 2,445 \1\ Table IIA.
\2\ Table IIB.
\3\ Table IIC.
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Issued in Washington, DC, this 21st day of November, 2003. Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit Guaranty Corporation.
[FR Doc. 0329641 Filed 112803; 8:45 am]
BILLING CODE 770801P

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 200054026; 202326 4024. (TTY/TDD users may call the Federal relay service tollfree at 1 8008778339 and ask to be connected to 2023264024.)