99-26958. Allocation of Assets in Single-Employer Plans; Interest Assumptions for Valuing Benefits  

  • [Federal Register Volume 64, Number 199 (Friday, October 15, 1999)]
    [Rules and Regulations]
    [Pages 55828-55829]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-26958]
    
    
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    PENSION BENEFIT GUARANTY CORPORATION
    
    29 CFR Part 4044
    
    
    Allocation of Assets in Single-Employer Plans; Interest 
    Assumptions for Valuing Benefits
    
    AGENCY: Pension Benefit Guaranty Corporation.
    
    ACTION: Final rule.
    
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    SUMMARY: The Pension Benefit Guaranty Corporation's regulation on 
    Allocation of Assets in Single-Employer Plans prescribes interest 
    assumptions for valuing benefits under terminating single-employer 
    plans. This final rule amends the regulation to adopt interest 
    assumptions for plans with valuation dates in November 1999. Interest 
    assumptions are also published on the PBGC's web site (http://
    www.pbgc.gov).
    
    EFFECTIVE DATE: November 1, 1999.
    
    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: The PBGC's regulation on Allocation of 
    Assets in Single-Employer Plans (29 CFR part 4044) prescribes actuarial 
    assumptions for valuing plan benefits of terminating single-employer 
    plans covered by title IV of the Employee Retirement Income Security 
    Act of 1974.
        Among the actuarial assumptions prescribed in part 4044 are 
    interest assumptions. These interest assumptions are intended to 
    reflect current conditions in the financial and annuity markets.
        Two sets of interest assumptions are prescribed, one set for the 
    valuation of benefits to be paid as annuities and one set for the 
    valuation of benefits to be paid as lump sums. This amendment adds to 
    appendix B to part 4044 the annuity and lump sum interest assumptions 
    for valuing benefits in plans with valuation dates during November 
    1999.
        For annuity benefits, the interest assumptions will be 6.30 percent 
    for the first 20 years following the valuation date and 5.25 percent 
    thereafter. The annuity interest assumptions are unchanged from those 
    in effect for October 1999. For benefits to be paid as lump sums, the 
    interest assumptions to be used by the PBGC will be 5.00 percent for 
    the period during which a benefit is in pay status, 4.25 percent during 
    the seven-year period directly preceding the benefit's placement in pay 
    status, and 4.00 percent during any other years preceding the benefit's 
    placement in pay status. The lump sum interest assumptions are 
    unchanged from those in effect for October 1999.
        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 
    of benefits in plans with valuation dates during November 1999, 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 in 29 CFR Part 4044
    
        Pension insurance, Pensions.
    
        In consideration of the foregoing, 29 CFR part 4044 is amended as 
    follows:
    
    PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
    
        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. In appendix B, a new entry is added to Table I, and Rate Set 73 
    is added to Table II, as set forth below. The introductory text of each 
    table is republished for the convenience of the reader and remains 
    unchanged.
    
    [[Page 55829]]
    
    Appendix B to Part 4044--Interest Rates Used To Value Annuities and 
    Lump Sums
    
                                              Table I.--Annuity Valuations
      [This table sets forth, for each indicated calendar month, the interest rates (denoted by i1, i2, . . . , and
      referred to generally as it) assumed to be in effect between specified anniversaries of a valuation date that
     occurs within that calendar month; those anniversaries are specified in the columns adjacent to the rates. The
                  last listed rate is assumed to be in effect after the last listed anniversary date.]
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                                                                 The values of it are:
    For valuation dates occurring ----------------------------------------------------------------------------------
            in the month--              it        for t =         it        for t =          it           for t =
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    *                  *                  *                  *                  *                  *
                                                            *
    November 1999................        .0630         1-20        .0525          >20  N/A             N/A
    ----------------------------------------------------------------------------------------------------------------
    
    
                                                                 Table II.--Lump Sum Valuations
      [In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status on the valuation date, the immediate
     annuity rate shall apply; (2) For benefits for which the deferral period is y years (where y is an integer and 0 < y=""> n1), interest rate i1
       shall apply from the valuation date for a period of y years, and thereafter the immediate annuity rate shall apply; (3) For benefits for which the
     deferral period is y years (where y is an integer and n1 < y=""> n1 + n2), interest rate i2 shall apply from the valuation date for a period of
     y-n1 years, interest rate i1 shall apply for the following n1 years, and thereafter the immediate annuity rate shall apply; (4) For benefits for which
      the deferral period is y years (where y is an integer and y > n1 + n2), interest rate i3 shall apply from the valuation date for a period of y-n1-n2
      years, interest rate i2 shall apply for the following n2 years, interest rate i1 shall apply for the following n1 years, and thereafter the immediate
                                                                   annuity rate shall apply.]
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                       For plans with a valuation date     Immediate                                 Deferred annuities (percent)
        Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                        On or after         Before         (percent)            i1               i2               i3               n1               n2
    --------------------------------------------------------------------------------------------------------------------------------------------------------
     
                       *                  *                  *                  *                  *                  *                  *
               73           11-1-99          12-1-99             5.00             4.25             4.00             4.00                7                8
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        Issued in Washington, DC, on this 8th day of October 1999.
    David M. Strauss,
    Executive Director, Pension Benefit Guaranty Corporation.
    [FR Doc. 99-26958 Filed 10-14-99; 8:45 am]
    BILLING CODE 7708-01-P
    
    
    

Document Information

Effective Date:
11/1/1999
Published:
10/15/1999
Department:
Pension Benefit Guaranty Corporation
Entry Type:
Rule
Action:
Final rule.
Document Number:
99-26958
Dates:
November 1, 1999.
Pages:
55828-55829 (2 pages)
PDF File:
99-26958.pdf
CFR: (1)
29 CFR 4044