Browse: Departments   Dates   Agencies  

PENSION BENEFIT GUARANTY CORPORATION

Pension Benefit Guaranty Corporation

CFR Citation: 29 CFR Parts 4022 and 4044

NOTICE: RULES

ACTION: Single-employer plans:

DOCUMENT ACTION: Final rule.

SUBJECT CATEGORY: Benefits Payable in Terminated Single-Employer Plans; Allocation of Assets in Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits

EFFECTIVE DATES: January 1, 2004.

DOCUMENT SUMMARY: The Pension Benefit Guaranty Corporation's regulations on Benefits Payable in Terminated SingleEmployer Plans and Allocation of Assets in SingleEmployer Plans prescribe interest assumptions for valuing and paying benefits under terminating singleemployer plans. This final rule amends the regulations to adopt interest assumptions for plans with valuation dates in January 2004. Interest assumptions are also published on the PBGC's Web site (http://www.pbgc.gov).

SUMMARY: Allocation of assets—; Interest assumptions for valuing and paying benefits,

SUPPLEMENTAL INFORMATION

The PBGC's regulations prescribe actuarial assumptionsincluding interest assumptionsfor valuing and paying plan benefits of terminating singleemployer 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.

Three sets of interest assumptions are prescribed: (1) A set for the valuation of benefits for allocation purposes under section 4044 (found in appendix B to part 4044), (2) a set for the PBGC to use to determine whether a benefit is payable as a lump sum and to determine lumpsum amounts to be paid by the PBGC (found in appendix B to part 4022), and (3) a set for privatesector pension practitioners to refer to if they wish to use lumpsum interest rates determined using the PBGC's historical methodology (found in appendix C to part 4022).

Accordingly, this amendment (1) adds to appendix B to part 4044 the interest assumptions for valuing benefits for allocation purposes in plans with valuation dates during January 2004, (2) adds to appendix B to part 4022 the interest assumptions for the PBGC to use for its own lumpsum payments in plans with valuation dates during January 2004, and (3) adds to appendix C to part 4022 the interest assumptions for privatesector pension practitioners to refer to if they wish to use lumpsum interest rates determined using the PBGC's historical methodology for valuation dates during January 2004.

For valuation of benefits for allocation purposes, the interest assumptions that the PBGC will use (set forth in appendix B to part 4044) will be 4.20 percent for the first 20 years following the valuation date and 5.00 percent thereafter. These interest assumptions represent a decrease (from those in effect for December 2003) of 0.50 percent for the first 20 years following the valuation date and of 0.25 percent thereafter.

The interest assumptions that the PBGC will use for its own lump sum payments (set forth in appendix B to part 4022) will be 3.25 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 are unchanged from those in effect for December 2003.

For privatesector payments, the interest assumptions (set forth in appendix C to part 4022) will be the same as those used by the PBGC for determining and paying lump sums (set forth in appendix B to part 4022).

The 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, as accurately as possible, current market conditions.

Because of the need to provide immediate guidance for the valuation and payment of benefits in plans with valuation dates during January 2004, the PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.

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 amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).
List of Subjects

29 CFR Part 4022

Employee benefit plans, Pension insurance, Pensions, Reporting and recordkeeping requirements.

29 CFR Part 4044

Employee benefit plans, Pension insurance, Pensions. In consideration of the foregoing, 29 CFR parts 4022 and 4044 are amended as follows:
PART 4022BENEFITS PAYABLE IN TERMINATED SINGLEEMPLOYER PLANS 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. 2. In appendix B to part 4022, Rate Set 123, as set forth below, is added to the table. (The introductory text of the table is omitted.) Appendix B to Part 4022Lump Sum Interest Rates for PBGC Payments * * * * *
For plans with a valuation date Immediate Deferred annuities (percent)

Rate set annuity rate
On or after Before (percent) i1 i2 i3 n1 n2 * * * * * * * 123 1104 2104 3.25 4.00 4.00 4.00 7 8 [[Page 69607]]
3. In appendix C to part 4022, Rate Set 123, as set forth below, is added to the table. (The introductory text of the table is omitted.) Appendix C to Part 4022Lump Sum Interest Rates for PrivateSector Payments
* * * * *
For plans with a valuation date Immediate Deferred annuities (percent)

Rate set annuity rate
On or after Before (percent) i1 i2 i3 n1 n2 * * * * * * * 123 1104 2104 3.25 4.00 4.00 4.00 7 8 PART 4044ALLOCATION OF ASSETS IN SINGLEEMPLOYER PLANS
4. The authority citation for part 4044 continues to read as follows:

Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362. 5. In appendix B to part 4044, a new entry, as set forth below, is added to the table. (The introductory text of the table is omitted.) Appendix B to Part 4044Interest Rates Used to Value Benefits * * * * *
The values of it are: For valuation dates
occurring in the month it for t = it for t = it for t = * * * * * * * January 2004................ .0420 120 .0500 2 N/A N/A 0

Issued in Washington, DC, on this 10th day of December, 2003. Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit Guaranty Corporation.
[FR Doc. 0330947 Filed 121203; 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 20005, 2023264024. (TTY/TDD users may call the Federal relay service tollfree at 1800 8778339 and ask to be connected to 2023264024.)