[Federal Register Volume 62, Number 178 (Monday, September 15, 1997)]
[Notices]
[Pages 48323-48324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24396]
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PENSION BENEFIT GUARANTY CORPORATION
Interest Assumption for Determining Variable-Rate Premium;
Interest Assumptions for Multiemployer Plan Valuations Following Mass
Withdrawal
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice of interest rates and assumptions.
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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 September
1997. The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in October 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 was 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
[[Page 48324]]
payment years beginning in September 1997 is 5.59 percent (i.e., 85
percent of the 6.58 percent yield figure for August 1997).
The following table lists the assumed interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between October 1996 and September 1997. The rates for July through
September 1997 in the table reflect an applicable percentage of 85
percent and thus apply 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.
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The assumed
For premium payment years beginning in: interest rate
is:
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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
August 1997............................................. 5.53
September 1997.......................................... 5.59
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For premium payment years beginning in September 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 5.26
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
1997 premium payment instruction booklet also describes these rules and
provides a worksheet for computing the assumed rate.
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 October 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, D.C., on this 10th day of September 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-24396 Filed 9-12-97; 8:45 am]
BILLING CODE 7708-01-P
