[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: 94-30858]
[[Page Unknown]]
[Federal Register: December 15, 1994]
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 2621
Limitation on Guaranteed Benefits in Single-Employer Plans
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule amends appendix A of the Limitation on Guaranteed
Benefits regulation of the Pension Benefit Guaranty Corporation
(``PBGC'') 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 1995. The maximum
guaranteeable benefit is computed in accordance with the formula in
section 4022(b)(3) of the Employee Retirement Income Security Act of
1974, which provides that the maximum guaranteeable benefit is based on
the contribution and benefit base determined under section 230 of the
Social Security Act. The latter number is adjusted annually, and that
adjustment automatically changes the dollar amount of the maximum
guaranteeable benefit paid by PBGC. The effect of this amendment is to
advise plan participants and beneficiaries of the increased maximum
guaranteeable benefit for 1995.
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: Section 4022(b) of the Employee Retirement
Income Security Act of 1974, as amended, (``ERISA'') provides for
certain limitations on benefits guaranteed by the Pension Benefit
Guaranty Corporation (``PBGC'') in terminating single-employer pension
plans covered under Title IV of ERISA. One of the limitations set forth
in section 4022(b)(3) is a dollar ceiling on the amount of the monthly
benefit that may be paid to a plan participant by the PBGC.
Subparagraph (B) of section 4022(b)(3) provides that the amount of
monthly benefit payable in the form of a life annuity beginning at age
65 shall not exceed ``$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. 2621.3(a)(2) of the PBGC's regulation
entitled Limitation on Guaranteed Benefits in Single-Employer Plans (29
CFR Part 2621).
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 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,
$45,300 is the contribution and benefit base that is to be used to
calculate the PBGC maximum guaranteeable benefit for 1995. Accordingly,
the formula under section 4022(b)(3)(B) of ERISA and 29 CFR
Sec. 2621.3(a)(2) is: $750 multiplied by $45,300/$13,200. Thus, the
maximum monthly benefit guaranteeable by the PBGC in 1995 is $2,573.86
per month in the form of a life annuity beginning at age 65. If a
benefit is payable in a different form or begins at a different age,
the maximum guaranteeable amount will be the actuarial equivalent of
$2,573.86 per month.
Appendix A to part 2621 lists the maximum guaranteeable benefit
payable by the PBGC to participants in single-employer plans that have
terminated in each year from 1974 through 1994. This amendment updates
appendix A for plans that terminate in 1995.
Because the maximum guaranteeable benefit is determined according
to the formula in section 4022(b)(3)(B) of ERISA, and this amendment
makes no change in its method of calculation but simply lists the 1995
maximum guaranteeable benefit amount for the public's knowledge,
general notice of proposed rulemaking is not required. Moreover,
because the 1995 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, 1995, and is not dependent on the
issuance of this regulation, the PBGC finds that good cause exists for
making this amendment 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 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 2621
Employee benefit plans, Pension insurance, and Pensions.
In consideration of the foregoing, part 2621 of subchapter C,
chapter XXVI, title 29, Code of Federal Regulations, is hereby amended
as follows:
PART 2621--LIMITATION ON GUARANTEED BENEFITS IN SINGLE-EMPLOYER
PLANS
1. The authority citation for Part 2621 continues to read as
follows:
Authority: 29 U.S.C. 1302, 1322, 1322b.
2. Appendix A to part 2621 is amended by adding a new entry to read
as follows. The introductory text is reproduced for the convenience of
the reader and remains unchanged.
Appendix A to Part 2621 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. 2621.3(a)(2) to a participant in a plan that
terminated in that year:
------------------------------------------------------------------------
Maximum
guaranteeable
Year monthly
benefit
------------------------------------------------------------------------
* * * * *
1995..................................................... 2,573.86
------------------------------------------------------------------------
Issued at Washington, DC this 12th day of December, 1994.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 94-30858 Filed 12-14-94; 8:45 am]
BILLING CODE 7708-01-M
