[Federal Register Volume 59, Number 240 (Thursday, December 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30856]
[[Page Unknown]]
[Federal Register: December 15, 1994]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 2619
Valuation of Plan Benefits in Single-Employer Plans; 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 Valuation of Plan Benefits in Single-Employer Plans (29
CFR Part 2619) by adding a new Table I-95 to appendix D. Table I-95
applies to any plan being terminated either in a distress termination
or involuntarily by the PBGC with a valuation date falling in 1995, 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, 1995.
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).
(These are not toll-free numbers.)
SUPPLEMENTARY INFORMATION: The regulation of the Pension Benefit
Guaranty Corporation (``PBGC'') on Valuation of Plan Benefits in
Single-Employer Plans (29 CFR part 2619) sets forth the methods for
valuing plan benefits of terminating single-employer plans covered
under Title IV of the Employee Retirement Income Security Act of 1974,
as amended (``ERISA''). Under ERISA section 4041(c) plans wishing to
terminate in a distress termination must value guaranteed benefits and
benefits liabilities under the plan using formulas set forth in part
2619, subpart C. (Plans terminating in a standard termination may, for
purposes of the Standard Termination Notice filed with PBGC, use these
formulas to value benefit liabilities, although this is not required.)
In addition, when the PBGC terminates an underfunded plan involuntarily
pursuant to ERISA Section 4042(a), it uses the subpart C formulas to
determine the amount of the plan's underfunding.
Under Sec. 2619.46, 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. Subpart D of part 2619 sets forth rules for
determining the expected retirement ages for plan participants entitled
to early retirement benefits. Appendices D and E of part 2619 contain
tables and examples to be used in determining the expected early
retirement ages.
There are two sets of tables in appendix D. The first set,
Selection of Retirement Rate Category (I-79 through I-94), is used to
determine whether a participant has a low, medium, or high probability
of retiring early. The second set of tables, Expected Retirement Ages
for Individuals in the Low/Medium/High Categories (II-A, II-B, and II-
C), is used to determine the expected retirement age after the
probability of early retirement has been determined.
The first set of tables determines the probability of early
retirement based on the year a participant would reach normal
retirement age and the participant's monthly benefit at normal
retirement age. The second set of tables establishes, by probability
category, the expected retirement age based on both the earliest age a
participant could retire under the plan and the normal retirement age
under the plan. 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.
Tables I-79 through I-94 in appendix D establish retirement rate
categories for the calendar years 1979 through 1994. The table for each
year applies only to plans with valuation dates in that year. The PBGC
updates these tables annually to reflect changes in the cost of living,
etc. This document amends appendix D to add Table I-95 in order to
provide an updated correlation, appropriate for calendar year 1995,
between the amount of a participant's benefit and the probability that
the participant will elect early retirement. Table I-95 will be used to
value benefits in plans with valuation dates that occur during calendar
year 1995.
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 1995, 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 1995.
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 it will not have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency; materially
alter the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or raise
novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles 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 2619
Employee benefit plans, Pension insurance, Pensions.
In consideration of the foregoing, appendix D to part 2619 of
subchapter C of chapter XXVI of title 29, Code of Federal Regulations,
is hereby amended as follows:
PART 2619--[AMENDED]
1. The authority citation for part 2619 continues to read as
follows:
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
2. Appendix D to part 2619 is amended by adding Table I-95 as
follows:
Appendix D--Tables Used To Determine Expected Retirement Age
* * * * *
Table I-95.--Selection of Retirement Rate Category
[For Plans with valuation dates after December 31, 1994, and before
January 1, 1996]
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Participant's Retirement Rate Category is--
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Medium\2\ if monthly High\3\ if
Participant reaches Low\1\ if benefit at NRA is monthly
NRA in year-- monthly -------------------------- benefit at
benefit at NRA is
NRA is less From To greater
than-- than--
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1996................ 389 389 1,637 1,637
1997................ 402 402 1,691 1,691
1998................ 416 416 1,748 1,748
1999................ 430 430 1,808 1,808
2000................ 444 444 1,869 1,869
2001................ 459 459 1,933 1,933
2002................ 475 475 1,998 1,998
2003................ 491 491 2,066 2,066
2004................ 508 508 2,137 2,137
2005 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, DC, this 12th day of December 1994.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 94-30856 Filed 12-14-94; 8:45 am]
BILLING CODE 7708-01-M
