[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Rules and Regulations]
[Pages 65607-65608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32732]
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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 1998. This rule also amends
Appendix B to the PBGC's regulation on Disclosure to Participants by
adding information on 1998 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 1998.
EFFECTIVE DATE: January 1, 1998.
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). The appendix to
Part 4022 lists, for each year beginning with 1974, the maximum
guaranteeable benefit payable by the PBGC to participants in single-
employer plans that have terminated in that year.
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,
[[Page 65608]]
the contribution and benefit base to be used by the PBGC under these
provisions, and the PBGC publishes an amendment to the appendix to Part
4022 to add the guarantee limit for the coming year. (The PBGC's
general practice has been to issue the amendments on or about December
15 of each year, at the same time it issues interest updates for other
regulations. However, the information needed for the guarantee limit
amendments is typically available earlier than the information for the
interest updates. The PBGC intends in the future to publish its annual
guarantee limit amendments earlier than December 15.)
The PBGC has been notified by the Social Security Administration
that, under section 230 of the Social Security Act, $50,700 is the
contribution and benefit base that is to be used to calculate the PBGC
maximum guaranteeable benefit for 1998. Accordingly, the formula under
section 4022(b)(3)(B) of ERISA and 29 CFR Sec. 4022.22(b) is: $750
multiplied by $50,700/$13,200. Thus, the maximum monthly benefit
guaranteeable by the PBGC in 1998 is $2,880.68 per month in the form of
a life annuity beginning at age 65. This amendment updates the appendix
to Part 4022 to add this maximum guaranteeable amount for plans that
terminate in 1998. (If a benefit is payable in a different form or
begins at a different age, the maximum guaranteeable amount is the
actuarial equivalent of $2,880.68 per month.)
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 1998 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 1998
maximum guaranteeable benefit amounts for the information of the
public, general notice of proposed rulemaking is not required.
Moreover, because the 1998 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, 1998, 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 4011--DISCLOSURE TO PARTICIPANTS
1. The authority citation for Part 4011 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1311.
2. 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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* * * * * * *
1998.................................................... $2,880.68 $34,568.16 $2,275.74 $27,308.88 $1,872.44 $22,469.28 $1,296.31 $15,555.72
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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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* * * * *
1998........................................... 2,880.68
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Issued at Washington, D.C., this 10th day of December, 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-32732 Filed 12-12-97; 8:45 am]
BILLING CODE 7708-01-P
