[Federal Register Volume 60, Number 241 (Friday, December 15, 1995)]
[Rules and Regulations]
[Pages 64324-64325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30497]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 2621 and 2627
Limitation on Guaranteed Benefits in Single-Employer Plans;
Disclosure to Participants
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: This rule amends Appendix A to 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 1996. 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 1996. This rule also amends Appendix B to the
PBGC's Disclosure to Participants regulation by adding information on
1996 maximum guaranteed benefit amounts. Plan administrators may,
subject to the requirements of that regulation, include this
information in participant notices.
EFFECTIVE DATE: January 1, 1996.
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.
[[Page 64325]]
The PBGC has been notified by the Social Security Administration that,
under section 230 of the Social Security Act, $46,500 is the
contribution and benefit base that is to be used to calculate the PBGC
maximum guaranteeable benefit for 1996. Accordingly, the formula under
section 4022(b)(3)(B) of ERISA and 29 CFR Sec. 2621.3(a)(2) is: $750
multiplied by $46,500/$13,200. Thus, the maximum monthly benefit
guaranteeable by the PBGC in 1996 is $2,642.05 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 $2,642.05 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 1995. This amendment updates
appendix A for plans that terminate in 1996.
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 Disclosure to Participants regulation (part 2627)
implements the statutory notice requirement. This rule amends Appendix
B to the PBGC's Disclosure to Participants regulation by adding
information on 1996 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 1996
maximum guaranteeable benefit amounts for the public's knowledge,
general notice of proposed rulemaking is not required. Moreover,
because the 1996 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, 1996, and is not dependent on the
issuance of this regulation, 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 in 29 CFR Parts 2621 and 2627
Employee benefit plans, Pension insurance, and Pensions.
In consideration of the foregoing, parts 2621 and 2627 of
subchapter C, chapter XXVI, title 29, Code of Federal Regulations are
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:
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Maximum
guaranteeable
Year monthly
benefit
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* * * * *
1996.................................................... 2,642.05
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PART 2627--DISCLOSURE TO PARTICIPANTS
3. The authority citation for Part 2627 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1311.
4. Appendix B to part 2627 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 B to Part 2627--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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1996............................................ $2,642.05 $31,704.60 $2,087.22 $25,046.64 $1,717.33 $20,607.96 $1,188.92 $14,267.04
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Issued at Washington, DC this 11th day of December, 1995.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 95-30497 Filed 12-14-95; 8:45 am]
BILLING CODE 7708-01-P
