Browse: Departments   Dates   Agencies  

PENSION BENEFIT GUARANTY CORPORATION

Pension Benefit Guaranty Corporation

CFR Citation: 29 CFR Parts 4011 and 4022

NOTICE: RULES

ACTION: Single-employer plans:

DOCUMENT ACTION: Final rule.

SUBJECT CATEGORY: Disclosure to Participants; Benefits Payable in Terminated Single-employer Plans

EFFECTIVE DATES: January 1, 2004.

DOCUMENT SUMMARY: This rule amends appendix D to the Pension Benefit Guaranty Corporation's regulation on Benefits Payable in Terminated Single Employer Plans by adding the maximum guaranteeable pension benefit that may be paid by the PBGC with respect to a plan participant in a single employer pension plan that terminates in 2004. This rule also amends the PBGC's regulation on Disclosure to Participants by adding information on 2004 maximum guaranteed benefit amounts to Appendix B. The amendment is necessary because the maximum guarantee amount changes each year, based on changes in the contribution and benefit base under section 230 of the Social Security Act. The effect of the amendment is to advise plan participants and beneficiaries of the increased maximum guarantee amount for 2004.

SUMMARY: Disclosure to participants; benefits payable in terminated plans,

SUPPLEMENTAL INFORMATION

Section 4022(b) of the Employee Retirement Income Security Act of 1974 provides for certain limitations on benefits guaranteed by the PBGC in terminating singleemployer pension plans covered under Title IV of ERISA. One of the limitations, set forth in section 4022(b)(3)(B), is a dollar ceiling on the amount of the monthly benefit that may be paid to a plan participant (in the form of a life annuity beginning at age 65) by the PBGC. The ceiling is equal to ``$750 multiplied by a fraction, the numerator of which is the contribution and benefit base (determined under section 230 of the Social Security Act) in effect at the time the plan terminates and the denominator of which is such contribution and benefit base in effect in calendar year 1974 [$13,200].'' This formula is also set forth in Sec. 4022.22(b) of the PBGC's regulation on Benefits Payable in Terminated SingleEmployer Plans (29 CFR part 4022). Appendix D to part 4022 lists, for each year beginning with 1974, the maximum guaranteeable benefit payable by the PBGC to participants in singleemployer plans that have terminated in that year.

Section 230(d) of the Social Security Act (42 U.S.C. 430(d)) provides special rules for determining the contribution and benefit base for purposes of ERISA section 4022(b)(3)(B). Each year the Social Security Administration determines, and notifies the PBGC of, the contribution and benefit base to be used by the PBGC under these provisions, and the PBGC publishes an amendment to appendix D to part 4022 to add the guarantee limit for the coming year.

The PBGC has been notified by the Social Security Administration that, under section 230 of the Social Security Act, $65,100 is the contribution and benefit base that is to be used to calculate the PBGC maximum guaranteeable benefit for 2004. Accordingly, the formula under section 4022(b)(3)(B) of ERISA and 29 CFR 4022.22(b) is: $750 multiplied by $65,100/$13,200. Thus, the maximum monthly benefit guaranteeable by the PBGC in 2004 is $3,698.86 per month in [[Page 67033]]
the form of a life annuity beginning at age 65. This amendment updates Appendix D to Part 4022 to add this maximum guaranteeable amount for plans that terminate in 2004. (If a benefit is payable in a different form or begins at a different age, the maximum guaranteeable amount is the actuarial equivalent of $3,698.86 per month.)

Section 4011 of ERISA requires plan administrators of certain underfunded plans to provide notice to plan participants and beneficiaries of the plan's funding status and the limits of the PBGC's guarantee. The PBGC's regulation on Disclosure to Participants (29 CFR part 4011) implements the statutory notice requirement. This rule amends Appendix B to the regulation on Disclosure to Participants by adding information on 2004 maximum guaranteed benefit amounts. Plan administrators may, subject to the requirements of that regulation, include this information in participant notices.

General notice of proposed rulemaking is unnecessary. The maximum guaranteeable benefit is determined according to the formula in section 4022(b)(3)(B) of ERISA, and these amendments make no change in its method of calculation but simply list 2004 maximum guaranteeable benefit amounts for the information of the public.

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
29 CFR Part 4011

Employee benefit plans.

Pension insurance, Reporting and recordkeeping requirements. 29 CFR Part 4022

Pension insurance, Pensions, Reporting and recordkeeping requirements.
In consideration of the foregoing, 29 CFR parts 4011 and 4022 are amended as follows:
PART 4011DISCLOSURE TO PARTICIPANTS
1. The authority citation for part 4011 continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3), 1311.
2. Appendix B to part 4011 is amended by adding a new entry in numerical order to the table to read as follows.
Appendix B to Part 4011.Table of Maximum Guaranteed Benefits The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the amount (monthly or annual) listed below:
If a plan terminates in Age 65 Age 62 Age 60 Age 55
Monthly Annual Monthly Annual Monthly Annual Monthly Annual * * * * * * * 2004............................................ $3,698.86 $44,386.32 $2,922.10 $35,065.20 $2,404.26 $28,851.12 $1,664.49 $19,973.88 * * * * *
PART 4022BENEFITS PAYABLE IN TERMINATED SINGLEEMPLOYER PLANS 3. 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. 4. Appendix D to part 4022 is amended by adding a new entry to the table to read as follows. The introductory text is reproduced for the convenience of the reader and remains unchanged.
Appendix D to Part 4022.Maximum Guaranteeable Monthly Benefit

The following table lists by year the maximum guaranteeable monthly benefit payable in the form of a life annuity commencing at age 65 as described by Sec. 4022.22(b) to a participant in a plan that terminated in that year:
Maximum guaranteeable Year monthly benefit * * * * *
2004..................................................... 3,698.86

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. 0329642 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.)