[Federal Register Volume 61, Number 241 (Friday, December 13, 1996)]
[Rules and Regulations]
[Pages 65476-65477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31713]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4044
Allocation of Assets in Single-Employer Plans; Valuation of
Benefits and Assets; Expected Retirement Age
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's
regulation on Allocation of Assets in Single-Employer Plans by
substituting new Table I-97 in place of existing Table I-96 in appendix
D. Table I-97 applies to any plan being terminated either in a distress
termination or involuntarily by the PBGC with a valuation date falling
in 1997, and is used to determine expected retirement ages for plan
participants. This table is needed in order to compute the value of
early retirement benefits and, thus, the total value of benefits under
the plan.
EFFECTIVE DATE: January 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 20005-4026; 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) sets forth (in
subpart B) the methods for valuing plan benefits of terminating single-
employer plans covered under Title IV of the Employee Retirement Income
Security Act of 1974. Under ERISA section 4041(c), plans wishing to
terminate in a distress termination must value guaranteed benefits and
benefit liabilities under the plan in accordance with part 4044,
subpart B. In addition, when the PBGC terminates an underfunded plan
involuntarily pursuant to ERISA Section 4042(a), it uses the subpart B
valuation rules to determine the amount of the plan's underfunding.
Under Sec. 4044.51(b), early retirement benefits are valued based
on the annuity starting date, if a retirement date has been selected,
or the expected retirement age, if the annuity starting date is not
known on the valuation date. Sections 4044.55 through 4044.57 set forth
rules for determining the expected retirement ages for plan
participants entitled to early retirement benefits. Appendix D of part
4044 contains tables to be used in determining the expected early
retirement ages.
Table I in appendix D (Selection of Retirement Rate Category) is
used to determine whether a participant has a low, medium, or high
probability of retiring early. The determination is based on the year a
participant would reach ``unreduced retirement age'' (i.e., the earlier
of the normal retirement age or the age at which an unreduced benefit
is first payable) and the participant's monthly benefit at unreduced
retirement age. The table applies only to plans with valuation dates in
the current year and is updated annually by the PBGC to reflect changes
in the cost of living, etc.
Tables II-A, II-B, and II-C (Expected Retirement Ages for
Individuals in the Low, Medium, and High Categories respectively) are
used to determine the expected retirement age after the probability of
early retirement has been determined using Table I. These tables
establish, by probability category, the expected retirement age based
on both the earliest age a participant could retire under the plan and
the unreduced retirement age. This expected retirement age is used to
compute the value of the early retirement benefit and, thus, the total
value of benefits under the plan.
This document amends appendix D to replace Table I-96 with Table I-
97 in order to provide an updated correlation, appropriate for calendar
year 1997, between the amount of a participant's benefit and the
probability that the participant will elect early retirement. Table I-
97 will be used to value benefits in plans with valuation dates during
calendar year 1997.
The PBGC has determined that notice of and public comment on this
rule are impracticable and contrary to the public interest. Plan
administrators need to be able to estimate accurately the value of plan
benefits as early as possible before initiating the termination
process. For that purpose, if a plan has a valuation date in 1997, the
plan administrator needs the updated table being promulgated in this
rule. Accordingly, the public interest is best served by issuing this
table expeditiously, without an opportunity for notice and comment, to
allow as much time as possible to estimate the value of plan benefits
with the proper table for plans with valuation dates in early 1997.
Moreover, because of the need to provide immediate guidance for the
valuation of benefits under such plans, and because no adjustment by
ongoing plans is required by this amendment, the PBGC finds that good
cause exists for making this amendment to the regulation 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 regulation, the Regulatory Flexibility Act of 1980 does not apply
(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--[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.
2. Appendix D to part 4044 is amended by removing Table I-96 and
adding in its place Table I-97 to read as follows:
Appendix D to Part 4044--Tables Used to Determine Expected
Retirement Age
Table I-97--Selection of Retirement Rate Category
[For Plans with valuation dates after December 31, 1996, and before January 1, 1998]
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Participant's Retirement Rate Category is--
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Medium \2\ if monthly benefit High \3\ if
Participant reaches URA in year-- Low \1\ if at URA is monthly
monthly -------------------------------- benefit at URA
benefit at URA is greater
is less than-- From To than--
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1998............................................ 409 409 1,723 1,723
1999............................................ 421 421 1,771 1,771
[[Page 65477]]
2000............................................ 432 432 1,821 1,821
2001............................................ 445 445 1,872 1,872
2002............................................ 457 457 1,924 1,924
2003............................................ 470 470 1,978 1,978
2004............................................ 483 483 2,033 2,033
2005............................................ 496 496 2,090 2,090
2006............................................ 510 510 2,149 2,149
2007 or later................................... 525 525 2,209 2,209
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\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.
* * * * *
Issued at Washington, D.C., this 10th day of December, 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-31713 Filed 12-12-96; 8:45 am]
BILLING CODE 7708-01-P
