98-30447. Interest Assumption for Determining Variable-Rate Premium; Interest Assumptions for Multiemployer Plan Valuations Following Mass Withdrawal

[Federal Register Volume 63, Number 219 (Friday, November 13, 1998)]
[Notices]
[Pages 63511-63512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30447]


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PENSION BENEFIT GUARANTY CORPORATION


Interest Assumption for Determining Variable-Rate Premium; 
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 web site 
(http://www.pbgc.gov).

DATES: The interest rate for determining the variable-rate premium 
under part 4006 applies to premium payment years beginning in November 
1998. The interest assumptions for performing multiemployer plan 
valuations following mass withdrawal under part 4281 apply to valuation 
dates occurring in December 1998.

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:

Variable-Rate Premiums

    Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income 
Security Act of 1974 (ERISA) and Sec. 4006.4(b)(1) of the PBGC's 
regulation on Premium Rates (29 CFR part 4006) prescribe use of an 
assumed interest rate in determining a single-employer plan's variable-
rate premium. The rate is the ``applicable percentage'' (described in 
the statute and the regulation) 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 ``premium payment year''). The yield 
figure is reported in Federal Reserve Statistical Releases G.13 and 
H.15.
    For plan years beginning before July 1, 1997, the applicable 
percentage of the 30-year Treasury yield was 80 percent. The Retirement 
Protection Act of 1994 (RPA) amended ERISA section 
4006(a)(3)(E)(iii)(II) to change the applicable percentage to 85 
percent, effective for plan years beginning on or after July 1, 1997. 
(The amendment also provides for a further increase in the applicable 
percentage--to 100 percent--when the Internal Revenue Service adopts 
new mortality tables for determining current liability.)
    The assumed interest rate to be used in determining variable-rate 
premiums for premium payment years beginning in November 1998 is 4.26 
percent (i.e., 85 percent of the 5.01 percent yield figure for October 
1998).
    (Under section 774(c) of the RPA, the amendment to the applicable 
percentage was deferred for certain regulated public utility (RPU) 
plans for as long as six months. The applicable percentage for RPU 
plans has therefore remained 80 percent for plan years beginning before 
January 1, 1998. For ``partial'' RPU plans, the assumed interest rates 
to be used in determining variable-rate premiums can be computed by 
applying the rules in Sec. 4006.5(g) of the premium rates regulation. 
The PBGC's 1997 premium payment instruction booklet also describes 
these rules and provides a worksheet for computing the assumed rate.)
    The following table lists the assumed interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between December 1997 and November 1998. The rate for December 1997 in 
the table (which reflects an applicable percentage of 85 percent) 
applies only to non-RPU plans. However, the rates for months after 
December 1997 apply to RPU (and ``partial'' RPU) plans as well as to 
non-RPU plans.

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                                                                  The
                                                                assumed
           For premium payment years beginning in:              interest
                                                                rate is:
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December 1997................................................       5.19
January 1998.................................................       5.09
February 1998................................................       4.94
March 1998...................................................       5.01
April 1998...................................................       5.06
May 1998.....................................................       5.03

[[Page 63512]]

June 1998....................................................       5.04
July 1998....................................................       4.85
August 1998..................................................       4.83
September 1998...............................................       4.71
October 1998.................................................       4.42
November 1998................................................       4.26
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Multiemployer Plan Valuations Following Mass Withdrawal

    The PBGC's regulation on Duties of Plan Sponsor Following Mass 
Withdrawal (29 CFR part 4281) prescribes the use of interest 
assumptions under the PBGC's regulation on Allocation of Assets in 
Single-employer Plans (29 CFR part 4044). The interest assumptions 
applicable to valuation dates in December 1998 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 6th day of November 1998.
John Seal,
Acting Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 98-30447 Filed 11-12-98; 8:45 am]
BILLING CODE 7708-01-P