E7-2087. Required Interest Rate Assumption for Determining Variable-Rate Premium for Premium Payment Years Beginning in January 2007

AGENCY:

Pension Benefit Guaranty Corporation.

ACTION:

Notice of interest rate assumption.

SUMMARY:

This notice informs the public of the interest rate assumption to be used for determining the variable-rate premium under the Pension Benefit Guaranty Corporation's regulation on premium rates, for premium payment years beginning in January 2007. This notice revises a previously-published notice to reflect the recent publication by the Internal Revenue Service of updated mortality tables. This interest rate assumption can be derived from rates published elsewhere, but is published in this notice for the convenience of the public. Interest rates are also published on the PBGC's Web site (http://www.pbgc.gov).

DATES:

The required interest rate assumption for determining the variable-rate premium under part 4006 applies to premium payment years beginning in January 2007.

FOR FURTHER INFORMATION CONTACT:

Catherine B. Klion, Manager, Regulatory and Policy Division, Legislative and Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005, 202-326-4024. (TTY/TDD users may call the Federal relay service toll-free at 1-800-877-8339 and ask to be connected to 202-326-4024.)

SUPPLEMENTARY INFORMATION:

Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income Security Act of 1974 (ERISA) and § 4006.4(b)(1) of the PBGC's regulation on Premium Rates (29 CFR part 4006) prescribe use of an assumed interest rate (the “required interest rate”) in determining a single-employer plan's variable-rate premium.

On February 2, 2007 (at 72 FR 4955), the Internal Revenue Service (IRS) published final regulations containing updated mortality tables for determining current liability under section 412(l)(7) of the Code and section 302(d)(7) of ERISA for plan years beginning on or after January 1, 2007. As a result, in accordance with section 4006(a)(3)(E)(iii)(II) of ERISA, the required interest rate for plan years beginning on or after January 1, 2007, is 100 percent of the annual rate of interest determined by the Secretary of the Treasury on amounts invested conservatively in long-term investment grade corporate bonds for the month preceding the beginning of the plan year for which premiums are being paid (premium payment year).

On January 12, 2007 (at 72 FR 1564), the Pension Benefit Guaranty Corporation (PBGC) published a notice informing the public of the interest rate assumption to be used for determining variable-rate premiums for premium payment years beginning in January 2007. In light of IRS's publication of the updated mortality tables, that required interest rate assumption has changed.

The required interest rate to be used for determining variable-rate premiums for premium payment years beginning in January 2007 is 5.75 percent (i.e., 100 percent of the 5.75 percent composite corporate bond rate for December 2006).

PBGC will post the revised required interest rate on its Web site (http://www.pbgc.gov).

Issued in Washington, DC, on this 5th day of February 2007.

Vincent K. Snowbarger,

Interim Director, Pension Benefit Guaranty Corporation.