[Federal Register Volume 61, Number 222 (Friday, November 15, 1996)]
[Rules and Regulations]
[Pages 58479-58480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29336]
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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 1996.
EFFECTIVE DATE: December 1, 1996.
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
(202-326-4179 for TTY and TDD).
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
1996.
For annuity benefits, the interest assumptions will be 6.00 percent
for the first 20 years following the valuation date and 4.75 percent
thereafter. For benefits to be paid as lump sums, the interest
assumptions to be used by the PBGC will be 4.75 percent for the period
during which a benefit is in pay status, 4.00 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 above annuity interest assumptions
represent a decrease (from those in effect for November 1996) of .20
percent for the first 20 years following the valuation date and are
otherwise unchanged. The lump sum interest assumptions represent a
decrease (from those in effect for November 1996) of .25 percent for
the period during which a benefit is in pay status and for the seven
years directly preceding that period; they are otherwise unchanged.
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 1996, 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 hereby
amended as follows:
PART 4044--[AMENDED]
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.
Appendix B to Part 4044--[Amended]
2. In appendix B, a new entry is added to Table I, and Rate Set 38
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 1996..................... .0600 1-20 .0475 >20 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<>n1), interest rate i1 shall apply from the
valuation date for a period of y years, and thereafter the immediate
annuity
[[Page 58480]]
rate shall apply; (3) For benefits for which the deferral period is y
years (where y is an integer and n1<> 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 Immediate Deferred annuities (percent)
valuation date annuity ----------------------------------------------------------------
Rate set -------------------------- rate
On or after Before (percent) i1 i2 i3 n1 n2
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* * * * * * *
38.............................................. 12-1-96 01-1-97 4.75 4.00 4.00 4.00 7 8
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Issued in Washington, DC, on this 12th day of November 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-29336 Filed 11-14-96; 8:45 am]
BILLING CODE 7708-01-P
