2012-22727. Allocation of Assets in Single-Employer Plans; Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits
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Start Preamble
AGENCY:
Pension Benefit Guaranty Corporation.
ACTION:
Final rule.
SUMMARY:
This final rule amends the Pension Benefit Guaranty Corporation's regulations on Benefits Payable in Terminated Single-Employer Plans and Allocation of Assets in Single-Employer Plans to prescribe interest assumptions under the benefit payments regulation for valuation dates in October 2012 and interest assumptions under the asset allocation regulation for valuation dates in the fourth quarter of 2012. The interest assumptions are used for valuing and paying benefits under terminating single-employer plans covered by the pension insurance system administered by PBGC.
DATES:
Effective October 1, 2012.
Start Further InfoFOR FURTHER INFORMATION CONTACT:
Catherine B. Klion (Klion.Catherine@PBGC.gov), 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.)
End Further Info End Preamble Start Supplemental InformationSUPPLEMENTARY INFORMATION:
PBGC's regulations on Allocation of Assets in Single-Employer Plans (29 CFR Part 4044) and Benefits Payable in Terminated Single-Employer Plans (29 CFR Part 4022) prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits under terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions in the regulations are also published on PBGC's Web site (http://www.pbgc.gov).
The interest assumptions in Appendix B to Part 4044 are used to value benefits for allocation purposes under ERISA section 4044. PBGC uses the interest assumptions in Appendix B to Part 4022 to determine whether a benefit is payable as a lump sum and to determine the amount to pay. Appendix C to Part 4022 contains interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology. Currently, the rates in Appendices B and C of the benefit payment regulation are the same.
The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the asset allocation regulation are updated quarterly; assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for October 2012 and updates the asset allocation interest assumptions for the fourth quarter (October through December) of 2012.
The fourth quarter 2012 interest assumptions under the allocation regulation will be 3.07 percent for the first 20 years following the valuation date and 3.00 percent thereafter. In comparison with the interest assumptions in effect for the third quarter of 2012, these interest assumptions represent no change in the select period (the period during which the select rate (the initial rate) applies), an increase of 0.12 percent in the select rate, and a decrease of 0.66 percent in the ultimate rate (the final rate).
The October 2012 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for September 2011, these interest assumptions are unchanged.
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 current market conditions as accurately as possible.
Because of the need to provide immediate guidance for the valuation and payment of benefits under plans with valuation dates during October 2012, PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.
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).
Start List of Subjects Start Printed Page 56771List of Subjects
29 CFR Part 4022
- Employee benefit plans
- Pension insurance
- Pensions
- Reporting and recordkeeping requirements
29 CFR Part 4044
- Employee benefit plans
- Pension insurance
- Pensions
In consideration of the foregoing, 29 CFR parts 4022 and 4044 are amended as follows:
Start PartPART 4022—BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
End Part Start Amendment Part1. The authority citation for part 4022 continues to read as follows:
End Amendment Part Start Amendment Part2. In appendix B to part 4022, an entry for Rate Set 228 is added to the table to read as follows:
End Amendment PartAppendix B to Part 4022—Lump Sum Interest Rates for PBGC Payments
* * * * *Rate set For plans with a valuation date Immediate annuity rate (percent) Deferred annuities (percent) On or after Before i1 i2 i3 n1 n2 * * * * * * * 228 10-1-12 11-1-12 0.75 4.00 4.00 4.00 7 8 3. In appendix C to part 4022, an entry for Rate Set 228 is added to the table to read as follows:
Appendix C to Part 4022—Lump Sum Interest Rates for Private-Sector Payments
* * * * *Start PartRate set For plans with a valuation date Immediate annuity rate (percent) Deferred annuities (percent) On or after Before i1 i2 i3 n1 n2 * * * * * * * 228 10-1-12 11-1-12 0.75 4.00 4.00 4.00 7 8 PART 4044—ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
End Part Start Amendment Part4. The authority citation for part 4044 continues to read as follows:
End Amendment Part Start Amendment Part5. In appendix B to part 4044, an entry for October—December 2012 is added to the table to read as follows:
End Amendment PartAppendix B to Part 4044—Interest Rates Used to Value Benefits
* * * * *Start SignatureFor valuation dates occurring in the month— The values of it are: it for t = it for t = it for t = * * * * * * * October—December 2012 0.0307 1-20 0.0300 >20 N/A N/A Issued in Washington, DC, on this 11th day of September 2012.
Laricke Blanchard,
Deputy Director for Policy, Pension Benefit Guaranty Corporation.
[FR Doc. 2012-22727 Filed 9-13-12; 8:45 am]
BILLING CODE 7709-01-P
Document Information
- Comments Received:
- 0 Comments
- Effective Date:
- 10/1/2012
- Published:
- 09/14/2012
- Department:
- Pension Benefit Guaranty Corporation
- Entry Type:
- Rule
- Action:
- Final rule.
- Document Number:
- 2012-22727
- Dates:
- Effective October 1, 2012.
- Pages:
- 56770-56771 (2 pages)
- Topics:
- Employee benefit plans, Pension insurance, Pensions, Reporting and recordkeeping requirements
- PDF File:
- 2012-22727.pdf
- Supporting Documents:
- » Adjustment of Civil Penalties for Inflation
- » Allocation of Assets in Single-Employer Plans: Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits
- » Benefits Payable in Terminated Single-Employer Plans: Interest Assumptions for Paying Benefits
- » Adjustment of Civil Penalties for Inflation
- » Agency Information Collection Activities; Proposals, Submissions, and Approvals: Disclosure of Termination Information
- » Agency Information Collection Activities; Proposals, Submissions, and Approvals: Mergers and Transfers Between Multiemployer Plans
- » Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Paying Benefits
- » Allocation of Assets in Single-Employer Plans; Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits
- » Privacy Act; Systems of Records
- » Benefits Payable in Terminated Single-Employer Plans: Interest Assumptions for Paying Benefits
- CFR: (2)
- 29 CFR 4022
- 29 CFR 4044