[Federal Register Volume 60, Number 241 (Friday, December 15, 1995)]
[Rules and Regulations]
[Pages 64325-64327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30495]
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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-96 to appendix D. Table I-96
applies to any plan being terminated either in a distress termination
or involuntarily by the PBGC with a valuation date falling in 1996, 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, 1996.
[[Page 64326]]
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
benefit 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-95), 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-95 in appendix D establish retirement rate
categories for the calendar years 1979 through 1995. 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-96 in order to
provide an updated correlation, appropriate for calendar year 1996,
between the amount of a participant's benefit and the probability that
the participant will elect early retirement. Table I-96 will be used to
value benefits in plans with valuation dates that occur during calendar
year 1996.
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 1996, 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 1996.
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 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-96 as
follows:
Appendix D--Tables Used To Determine Expected Retirement Age
* * * * *
Table I-96.--Selection of Retirement Rate Category
[For Plans with valuation dates after December 31, 1995, and before January 1, 1997]
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Participant's retirement rate
category is-- High \3\ if
--------------------------------------- monthly
Low\1\ if Medium \2\ if monthly benefit at
Participant reaches NRA in year-- monthly benefit at NRA is NRA is
benefit at -------------------------- greater
NRA is less than--
than-- From To
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1997........................................................ 400 400 1,684 1,684
1998........................................................ 413 413 1,738 1,738
1999........................................................ 426 426 1,794 1,794
2000........................................................ 440 440 1,850 1,850
2001........................................................ 453 453 1,907 1,907
2002........................................................ 467 467 1,966 1,966
2003........................................................ 482 482 2,027 2,027
2004........................................................ 497 497 2,090 2,090
2005........................................................ 512 512 2,155 2,155
[[Page 64327]]
2006 or later............................................... 528 528 2,221 2,221
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\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.
Issued at Washington, DC this 11th day of December, 1995.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 95-30495 Filed 12-14-95; 8:45 am]
BILLING CODE 7708-01-P
