96-31715. Disclosure to Participants; Benefits Payable in Terminated Single-Employer Plans  

  • [Federal Register Volume 61, Number 241 (Friday, December 13, 1996)]
    [Rules and Regulations]
    [Pages 65473-65474]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-31715]
    
    
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    PENSION BENEFIT GUARANTY CORPORATION
    
    29 CFR Parts 4011 and 4022
    
    
    Disclosure to Participants; Benefits Payable in Terminated 
    Single-Employer Plans
    
    AGENCY: Pension Benefit Guaranty Corporation.
    
    ACTION: Final rule.
    
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    SUMMARY: This rule amends the appendix to the Pension Benefit Guaranty 
    Corporation's regulation on Benefits Payable in Terminated Single-
    Employer Plans by adding the maximum guaranteeable pension benefit that 
    may be paid by the PBGC with respect to a plan participant in a single-
    employer pension plan that terminates in 1997. This rule also amends 
    Appendix B to the PBGC's regulation on Disclosure to Participants by 
    adding information on 1997 maximum guaranteed benefit amounts. The 
    amendment is necessary because the maximum guarantee amount changes 
    each year, based on changes in the contribution and benefit base under 
    section 230 of the Social Security Act. The effect of the amendment is 
    to advise plan participants and beneficiaries of the increased maximum 
    guarantee amount for 1997.
    
    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: Section 4022(b) of the Employee Retirement 
    Income Security Act of 1974 provides for certain limitations on 
    benefits guaranteed by the PBGC in terminating single-employer pension 
    plans covered under Title IV of ERISA. One of the limitations, set 
    forth in section 4022(b)(3)(B), is a dollar ceiling on the amount of 
    the monthly benefit that may be paid to a plan participant (in the form 
    of a life annuity beginning at age 65) by the PBGC. The ceiling is 
    equal to ``$750 multiplied by a fraction, the numerator of which is the 
    contribution and benefit base (determined under section 230 of the 
    Social Security Act) in effect at the time the plan terminates and the 
    denominator of which is such contribution and benefit base in effect in 
    calendar year 1974 [$13,200]''. This formula is also set forth in 
    Sec. 4022.22(b) of the PBGC's regulation on Benefits Payable in 
    Terminated Single-Employer Plans (29 CFR Part 4022).
        Section 230(d) of the Social Security Act (42 U.S.C. 430(d)) 
    provides special rules for determining the contribution and benefit 
    base for purposes of ERISA section 4022(b)(3)(B). Each year the Social 
    Security Administration determines, and notifies the PBGC of, the 
    contribution and benefit base to be used by the PBGC under these 
    provisions. The PBGC has been notified by the Social Security 
    Administration that, under section 230 of the Social Security Act, 
    $48,600 is the contribution and benefit base that is to be used to 
    calculate the PBGC maximum guaranteeable benefit for 1997. Accordingly, 
    the formula under section 4022(b)(3)(B) of ERISA and 29 CFR 
    Sec. 4022.22(b) is: $750 multiplied by $48,600/$13,200. Thus, the 
    maximum monthly benefit guaranteeable by the PBGC in 1997 is $2,761.36 
    per month in the form of a life annuity beginning at age 65. If a 
    benefit is payable in a
    
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    different form or begins at a different age, the maximum guaranteeable 
    amount will be the actuarial equivalent of $2,761.36 per month.
        The appendix to part 4022 lists the maximum guaranteeable benefit 
    payable by the PBGC to participants in single-employer plans that have 
    terminated in each year from 1974 through 1996. This amendment updates 
    the appendix for plans that terminate in 1997.
        Section 4011 of ERISA requires plan administrators of certain 
    underfunded plans to provide notice to plan participants and 
    beneficiaries of the plan's funding status and the limits of the PBGC's 
    guarantee. The PBGC's regulation on Disclosure to Participants (29 CFR 
    Part 4011) implements the statutory notice requirement. This rule 
    amends Appendix B to the regulation on Disclosure to Participants by 
    adding information on 1997 maximum guaranteed benefit amounts. Plan 
    administrators may, subject to the requirements of that regulation, 
    include this information in participant notices.
        Because the maximum guaranteeable benefit is determined according 
    to the formula in section 4022(b)(3)(B) of ERISA, and these amendments 
    make no change in its method of calculation but simply list 1997 
    maximum guaranteeable benefit amounts for the information of the 
    public, general notice of proposed rulemaking is not required. 
    Moreover, because the 1997 maximum guaranteeable benefit is effective, 
    under the statute, at the time that the Social Security contribution 
    and benefit base is effective, i.e., January 1, 1997, and is not 
    dependent on the issuance of this rule, the PBGC finds that good cause 
    exists for making these amendments effective less than 30 days after 
    publication (5 U.S.C. 553).
        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
    
    29 CFR Part 4011
    
        Pensions, Reporting and recordkeeping requirements.
    
    29 CFR Part 4022
    
        Pension insurance, Pensions, Reporting and recordkeeping 
    requirements.
        In consideration of the foregoing, 29 CFR parts 4011 and 4022 are 
    amended as follows:
    
    PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
    
        1. The authority citation for Part 4022 continues to read as 
    follows:
    
        Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.
    
        2. The appendix to part 4022 is amended by adding a new entry to 
    the table to read as follows. The introductory text is reproduced for 
    the convenience of the reader and remains unchanged.
    
    Appendix to Part 4022--Maximum Guaranteeable Monthly Benefit
    
        The following table lists by year the maximum guaranteeable monthly 
    benefit payable in the form of a life annuity commencing at age 65 as 
    described by Sec. 4022.22(b) to a participant in a plan that terminated 
    in that year:
    
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                                                                  Maximum   
                                                               guaranteeable
                               Year                               monthly   
                                                                  benefit   
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                      *        *        *        *        *                 
    1997.....................................................      2,761.36 
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    PART 4011--DISCLOSURE TO PARTICIPANTS
    
        3. The authority citation for Part 4011 continues to read as 
    follows:
    
        Authority: 29 U.S.C. 1302(b)(3), 1311.
    
        4. Appendix B to part 4011 is amended by adding a new entry to the 
    table to read as follows. The introductory text is reproduced for the 
    convenience of the reader and remains unchanged.
    
                                                  Appendix B to Part 4011--Table of Maximum Guaranteed Benefits                                             
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                                               The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the 
                                                                                 amount  (monthly or annual) listed below:                                  
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            If a plan terminates in--                   Age 65                      Age 62                      Age 60                      Age 55          
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                                                 Monthly       Annual        Monthly       Annual        Monthly       Annual        Monthly       Annual   
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                       *                  *                  *                  *                  *                  *                  *                  
    1997....................................     $2,761.36    $33,136.32     $2,181.47    $26,177.64     $1,794.88    $21,538.56     $1,242.61    $14,911.32
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        Issued at Washington, D.C., this 10th day of December, 1996.
    Martin Slate,
    Executive Director, Pension Benefit Guaranty Corporation.
    [FR Doc. 96-31715 Filed 12-12-96; 8:45 am]
    BILLING CODE 7708-01-P
    
    
    

Document Information

Effective Date:
1/1/1997
Published:
12/13/1996
Department:
Pension Benefit Guaranty Corporation
Entry Type:
Rule
Action:
Final rule.
Document Number:
96-31715
Dates:
January 1, 1997.
Pages:
65473-65474 (2 pages)
PDF File:
96-31715.pdf