[Federal Register Volume 64, Number 240 (Wednesday, December 15, 1999)]
[Rules and Regulations]
[Pages 69922-69923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32608]
=======================================================================
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4044
Allocation of Assets in Single-Employer Plans; Interest
Assumptions for Valuing Benefits
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Pension Benefit Guaranty Corporation's regulation on
Allocation of Assets in Single-Employer Plans prescribes interest
assumptions for valuing benefits under terminating single-employer
plans. This final rule amends the regulation to adopt interest
assumptions for plans with valuation dates in January 2000. Interest
assumptions are also published on the PBGC's web site (http://
www.pbgc.gov).
EFFECTIVE DATE: January 1, 2000.
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, 202-326-4024.
(For TTY/TDD users, call the Federal relay service toll-free at 1-800-
877-8339 and ask to be connected to 202-326-4024.)
SUPPLEMENTARY INFORMATION: The PBGC's regulation on Allocation of
Assets in Single-Employer Plans (29 CFR part 4044) prescribes actuarial
assumptions for valuing plan benefits of terminating single-employer
plans covered by title IV of the Employee Retirement Income Security
Act of 1974.
Among the actuarial assumptions prescribed in part 4044 are
interest assumptions. These interest assumptions are intended to
reflect current conditions in the financial and annuity markets.
Two sets of interest assumptions are prescribed, one set for the
valuation of benefits to be paid as annuities and one set for the
valuation of benefits to be paid as lump sums. This amendment adds to
appendix B to part 4044 the annuity and lump sum interest assumptions
for valuing benefits in plans with valuation dates during January 2000.
For annuity benefits, the interest assumptions will be 6.90 percent
for the first 25 years following the valuation date and 6.25 percent
thereafter. The annuity interest assumptions (in comparison with those
in effect during December 1999) reflect a 5-year increase in the period
during which the initial rate applies (from a period of 20 years
following the valuation date to a period of 25 years following the
valuation date). The initial rate, in effect for the first 25 years
following the valuation date, represents an increase (from the initial
rate in effect for December 1999) of 0.40 percent. The ultimate rate,
in effect thereafter, represents an increase (from the ultimate rate in
effect for December 1999) of 1.00 percent.
For benefits to be paid as lump sums, the interest assumptions to
be used by the PBGC will be 5.00 percent for the period during which a
benefit is in pay status, 4.25 percent during the seven-year period
directly preceding the benefit's placement in pay status, and 4.00
percent during any other years preceding the benefit's placement in pay
status. The lump sum interest assumptions represent a decrease (from
those in effect for December 1999), of 0.25 percent for the period
during which a benefit is in pay status and for the seven-year period
directly preceding the benefit's placement in pay status; they are
otherwise unchanged.
The PBGC has determined that notice and public comment on this
amendment are impracticable and contrary to the public interest. This
finding is based on the need to determine and issue new interest
assumptions promptly so that the assumptions can reflect, as accurately
as possible, current market conditions.
Because of the need to provide immediate guidance for the valuation
of benefits in plans with valuation dates during January 2000, the PBGC
finds that good cause exists for making the assumptions set forth in
this amendment 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 amendment, the Regulatory Flexibility Act of 1980 does not apply.
See 5 U.S.C. 601(2).
List of Subjects in 29 CFR Part 4044
Pension insurance, Pensions.
In consideration of the foregoing, 29 CFR part 4044 is amended as
follows:
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
1. The authority citation for part 4044 continues to read as
follows:
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
2. In appendix B, a new entry is added to Table I, and Rate Set 75
is added to Table II, as set forth below. The introductory text of each
table is republished for the convenience of the reader and remains
unchanged.
Appendix B to Part 4044--Interest Rates Used to Value Annuities and
Lump Sums
TABLE I.--Annuity Valuations:
[This table sets forth, for each indicated calendar month, the
interest rates (denoted by i1, i2, . . ., and
referred to generally as it) assumed to be in effect
between specified anniversaries of a valuation date that occurs
within that calendar month; those anniversaries are specified in the
columns adjacent to the rates. The last listed rate is assumed to be
in effect after the last listed anniversary date.]
--------------------------------------------------------------------------------------------------------------------------------------------------------
The values of it are:
For valuation dates occurring in the month-- -----------------------------------------------------------------------------------------------------------
it for t = it for t = it for t =
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
January 2000................................ .0690 1-25 .0625 >25 N/A N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 69923]]
Table II.--Lump Sum Valuations:
[In using this table: (1) For benefits for which the participant
or beneficiary is entitled to be in pay status on the valuation
date, the immediate annuity rate shall apply; (2) For benefits for
which the deferral period is y years (where y is an integer and 0 < y=""> n1), interest rate i1, shall
apply from the valuation date for a period of y years, and
thereafter the immediate annuity rate shall apply; (3) For benefits
for which the deferral period is y years (where y is an integer and
n1 < y=""> n1 + n2),
interest rate i2 shall apply from the valuation date for
a period of y-n1 years, interest rate i2 shall
apply for the following n1 years, and thereafter the
immediate annuity rate shall apply; (4) For benefits for which the
deferral period is y years (where y is an integer and y > n1
+ n2), interest rate i3 shall apply from the
valuation date for a period of y-n1-n2 years,
interest rate i2 shall apply for the following n2
years, interest rate i1 shall apply for the following
n1 years, and thereafter the immediate annuity rate shall
apply.]
--------------------------------------------------------------------------------------------------------------------------------------------------------
For plans with a Deferred annuities (percent)
valuation date Immediate -----------------------------------------------------------
Rate set ------------------------ annuity
On or rate i1 i2 i3 n1 n2
after Before (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
75...................................................... 1-1-00 2-1-00 5.00 4.25 4.00 4.00 7 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Issued in Washington, DC, on this 13th day of December 1999.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 99-32608 Filed 12-14-99; 8:45 am]
BILLING CODE 7708-01-P
