[Federal Register Volume 62, Number 135 (Tuesday, July 15, 1997)]
[Notices]
[Pages 37944-37945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18573]
=======================================================================
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
Interest Assumption for Determining Variable-Rate Premium;
Interest on Late Premium Payments; Interest on Underpayments and
Overpayments of Single-Employer Plan Termination Liability and
Multiemployer Withdrawal Liability; Interest Assumptions for
Multiemployer Plan Valuations Following Mass Withdrawal
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice of interest rates and assumptions.
-----------------------------------------------------------------------
SUMMARY: This notice informs the public of the interest rates and
assumptions to be used under certain Pension Benefit Guaranty
Corporation regulations. These rates and assumptions are published
elsewhere (or are derivable from rates published elsewhere), but are
collected and published in this notice for the convenience of the
public. Interest rates are also published on the PBGC's home page
(http://www.pbgc.gov).
DATES: The interest rate for determining the variable-rate premium
under part 4006 applies to premium payment years beginning in July
1997. The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in August 1997. The interest rates for late premium
payments under part 4007 and for underpayments and overpayments of
single-employer plan termination liability under part 4062 and
multiemployer withdrawal liability under part 4219 apply to interest
accruing during the third quarter (July through September) of 1997.
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
(202-326-4179 for TTY and TDD).
SUPPLEMENTARY INFORMATION:
Variable-Rate Premiums
Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income
Security Act of 1974 (ERISA) and Sec. 4006.4(b)(1) of the PBGC's
regulation on Premium Rates (29 CFR part 4006) prescribe use of an
assumed interest rate in determining a single-employer plan's variable-
rate premium. The rate is the ``applicable percentage'' (described in
the statute and the regulation) of the annual yield on 30-year Treasury
securities for the month preceding the beginning of the plan year for
which premiums are being paid (the ``premium payment year''). The yield
figure is reported in Federal Reserve Statistical Releases G.13 and
H.15.
For plan years beginning before July 1, 1997, the applicable
percentage of the 30-year Treasury yield has been 80 percent. The
Retirement Protection Act of 1994 (RPA) amended ERISA section
4006(a)(3)(E)(iii)(II) to provide that the applicable percentage is 85
percent for plan years beginning on or after July 1, 1997, through (at
least) plan years beginning before January 1, 2000.
However, under section 774(c) of the RPA, the application of the
amendment is deferred for certain regulated public utility (RPU) plans
for as long as six months. The applicable percentage for RPU plans will
therefore remain 80 percent for plan years beginning before January 1,
1998. (The rules governing the applicable percentages for ``partial''
RPU plans are described in Sec. 4006.5(g) of the premium rates
regulation.)
For plans for which the applicable percentage is 85 percent, the
assumed interest rate to be used in determining variable-rate premiums
for premium payment years beginning in July 1997 is 5.75 percent (i.e.,
85 percent of the 6.77 percent yield figure for June 1997).
The following table lists the assumed interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between August 1996 and July 1997. The rate for July 1997 in the table
reflects an applicable percentage of 85 percent and thus applies only
to non-RPU plans. However, the rates for months before July 1997, which
reflect an applicable percentage of 80 percent, apply to RPU (and
``partial'' RPU) plans as well as to non-RPU plans.
------------------------------------------------------------------------
The assumed
For premium payment years beginning in-- interest
rate is--
------------------------------------------------------------------------
August 1996................................................ 5.62
September 1996............................................. 5.47
October 1996............................................... 5.62
November 1996.............................................. 5.45
December 1996.............................................. 5.18
January 1997............................................... 5.24
February 1997.............................................. 5.46
March 1997................................................. 5.35
April 1997................................................. 5.54
May 1997................................................... 5.67
June 1997.................................................. 5.55
July 1997.................................................. 5.75
------------------------------------------------------------------------
For premium payment years beginning in July 1997, the assumed
interest rate to be used in determining variable-rate premiums for RPU
plans (determined using an applicable percentage of 80 percent) is 5.42
percent. For ``partial'' RPU plans, the assumed interest rates to be
used in determining variable-rate premiums can be computed by applying
the rules in Sec. 4006.5(g) of the premium rates regulation. The PBGC's
premium payment instruction booklet also describes these rules and
provides a worksheet for computing the assumed rate.
Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability
Section 4007(b) of ERISA and Sec. 4007.7(a) of the PBGC's
regulation on Payment of Premiums (29 CFR part 4007) require the
payment of interest on late premium payments at the rate established
under section 6601 of the Internal Revenue Code. Similarly, Sec. 4062.7
of the PBGC's regulation on Liability for Termination of Single-
employer Plans (29 CFR part 4062) requires that interest be charged or
credited at the section 6601 rate on underpayments and overpayments of
employer liability under section 4062 of ERISA. The section 6601 rate
is established periodically (currently quarterly) by the Internal
Revenue Service. The rate applicable to the third quarter (July through
September) of 1997, as announced by the IRS, is 9 percent.
[[Page 37945]]
The following table lists the late payment interest rates for
premiums and employer liability for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
------------------------------------------------------------------------
4/1/91.......................................... 12/31/91 10
1/1/92.......................................... 3/31/92 9
4/1/92.......................................... 9/30/92 8
10/1/92......................................... 6/30/94 7
7/1/94.......................................... 9/30/94 8
10/1/94......................................... 3/31/95 9
4/1/95.......................................... 6/30/95 10
7/1/95.......................................... 3/31/96 9
4/1/96.......................................... 6/30/96 8
7/1/96.......................................... 12/31/96 9
1/1/97.......................................... 3/31/97 9
4/1/97.......................................... 6/30/97 9
7/1/97.......................................... 9/30/97 9
------------------------------------------------------------------------
Underpayments and Overpayments of Multiemployer Withdrawal
Liability
Section 4219.32(b) of the PBGC's regulation on Notice, Collection,
and Redetermination of Withdrawal Liability (29 CFR part 4219)
specifies the rate at which a multiemployer plan is to charge or credit
interest on underpayments and overpayments of withdrawal liability
under section 4219 of ERISA unless an applicable plan provision
provides otherwise. For interest accruing during any calendar quarter,
the specified rate is the average quoted prime rate on short-term
commercial loans for the fifteenth day (or the next business day if the
fifteenth day is not a business day) of the month preceding the
beginning of the quarter, as reported by the Board of Governors of the
Federal Reserve System in Statistical Release H.15 (``Selected Interest
Rates''). The rate for the third quarter (July through September) of
1997 (i.e., the rate reported for June 16, 1997) is 8.50 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
------------------------------------------------------------------------
Rate
From-- Through-- (percent)
------------------------------------------------------------------------
7/1/91.......................................... 9/30/91 8.50
10/1/91......................................... 12/31/91 8.00
1/1/92.......................................... 3/31/92 7.50
4/1/92.......................................... 9/30/92 6.50
10/1/92......................................... 6/30/94 6.00
7/1/94.......................................... 9/30/94 7.25
10/1/94......................................... 12/31/94 7.75
1/1/95.......................................... 3/31/95 8.50
4/1/95.......................................... 9/30/95 9.00
10/1/95......................................... 3/31/96 8.75
4/1/96.......................................... 12/31/96 8.25
1/1/97.......................................... 3/31/97 8.25
4/1/97.......................................... 6/30/97 8.25
7/1/97.......................................... 9/30/97 8.50
------------------------------------------------------------------------
Multiemployer Plan Valuations Following Mass Withdrawal
The PBGC's regulation on Duties of Plan Sponsor Following Mass
Withdrawal (29 CFR part 4281) prescribes the use of interest
assumptions under the PBGC's regulation on Allocation of Assets in
Single-employer Plans (29 CFR part 4044). The interest assumptions
applicable to valuation dates in August 1997 under part 4044 are
contained in an amendment to part 4044 published elsewhere in today's
Federal Register. Tables showing the assumptions applicable to prior
periods are codified in appendix B to 29 CFR part 4044.
Issued in Washington, DC, on this 10th day of July 1997.
John Seal,
Acting Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-18573 Filed 7-14-97; 8:45 am]
BILLING CODE 7708-01-P
