[Federal Register Volume 62, Number 220 (Friday, November 14, 1997)]
[Rules and Regulations]
[Pages 61012-61013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30043]
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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 December 1997.
EFFECTIVE DATE: December 1, 1997.
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 and TDD, call 800-877-8339 and request connection 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 December
1997.
For annuity benefits, the interest assumptions will be 5.60 percent
for the first 25 years following the valuation date and 5.00 percent
thereafter. The annuity interest assumptions represent a decrease (from
those in effect for November 1997) of 0.10 percent for the first 25
years following the valuation date and are otherwise unchanged. For
benefits to be paid as lump sums, the interest assumptions to be used
by the PBGC will be 4.50 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. The lump sum interest assumptions
are unchanged from those in effect for November 1997.
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 December 1997, 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 50
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.
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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* * * * * *
*
December 1997............... .0560 1-25 .0500 >25 N/A N/A
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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
[[Page 61013]]
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 Deferred annuities (percent)
valuation date Immediate -----------------------------------------------------------
Rate set ------------------------ annuity
On or rate i1 i2 i3 n1 n2
after Before (percent)
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* * * * * * *
50...................................................... 12-1-97 01-1-98 4.50 4.00 4.00 4.00 7 8
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Issued in Washington, D.C., on this 10th day of November 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-30043 Filed 11-13-97; 8:45 am]
BILLING CODE 7708-01-P
