[Federal Register Volume 59, Number 240 (Thursday, December 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30856]


[[Page Unknown]]

[Federal Register: December 15, 1994]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 2619

 

Valuation of Plan Benefits in Single-Employer Plans; Expected 
Retirement Age

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's 
regulation on Valuation of Plan Benefits in Single-Employer Plans (29 
CFR Part 2619) by adding a new Table I-95 to appendix D. Table I-95 
applies to any plan being terminated either in a distress termination 
or involuntarily by the PBGC with a valuation date falling in 1995, and 
is used to determine expected retirement ages for plan participants. 
This table is needed in order to compute the value of early retirement 
benefits and, thus, the total value of benefits under the plan.

EFFECTIVE DATE: January 1, 1995.

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 20005-4026; 202-326-4024 (202-326-4179 for TTY and TDD). 
(These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION: The regulation of the Pension Benefit 
Guaranty Corporation (``PBGC'') on Valuation of Plan Benefits in 
Single-Employer Plans (29 CFR part 2619) sets forth the methods for 
valuing plan benefits of terminating single-employer plans covered 
under Title IV of the Employee Retirement Income Security Act of 1974, 
as amended (``ERISA''). Under ERISA section 4041(c) plans wishing to 
terminate in a distress termination must value guaranteed benefits and 
benefits liabilities under the plan using formulas set forth in part 
2619, subpart C. (Plans terminating in a standard termination may, for 
purposes of the Standard Termination Notice filed with PBGC, use these 
formulas to value benefit liabilities, although this is not required.) 
In addition, when the PBGC terminates an underfunded plan involuntarily 
pursuant to ERISA Section 4042(a), it uses the subpart C formulas to 
determine the amount of the plan's underfunding.
    Under Sec. 2619.46, early retirement benefits are valued based on 
the annuity starting date, if a retirement date has been selected, or 
the expected retirement age, if the annuity starting date is not known 
on the valuation date. Subpart D of part 2619 sets forth rules for 
determining the expected retirement ages for plan participants entitled 
to early retirement benefits. Appendices D and E of part 2619 contain 
tables and examples to be used in determining the expected early 
retirement ages.
    There are two sets of tables in appendix D. The first set, 
Selection of Retirement Rate Category (I-79 through I-94), is used to 
determine whether a participant has a low, medium, or high probability 
of retiring early. The second set of tables, Expected Retirement Ages 
for Individuals in the Low/Medium/High Categories (II-A, II-B, and II-
C), is used to determine the expected retirement age after the 
probability of early retirement has been determined.
    The first set of tables determines the probability of early 
retirement based on the year a participant would reach normal 
retirement age and the participant's monthly benefit at normal 
retirement age. The second set of tables establishes, by probability 
category, the expected retirement age based on both the earliest age a 
participant could retire under the plan and the normal retirement age 
under the plan. This expected retirement age is used to compute the 
value of the early retirement benefit and, thus, the total value of 
benefits under the plan.
    Tables I-79 through I-94 in appendix D establish retirement rate 
categories for the calendar years 1979 through 1994. The table for each 
year applies only to plans with valuation dates in that year. The PBGC 
updates these tables annually to reflect changes in the cost of living, 
etc. This document amends appendix D to add Table I-95 in order to 
provide an updated correlation, appropriate for calendar year 1995, 
between the amount of a participant's benefit and the probability that 
the participant will elect early retirement. Table I-95 will be used to 
value benefits in plans with valuation dates that occur during calendar 
year 1995.
    The PBGC has determined that notice of and public comment on this 
rule are impracticable and contrary to the public interest. Plan 
administrators need to be able to estimate accurately the value of plan 
benefits as early as possible before initiating the termination 
process. For that purpose, if a plan has a valuation date in 1995, the 
plan administrator needs the updated table being promulgated in this 
rule. Accordingly, the public interest is best served by issuing this 
table expeditiously, without an opportunity for notice and comment, to 
allow as much time as possible to estimate the value of plan benefits 
with the proper table for plans with valuation dates in early 1995. 
Moreover, because of the need to provide immediate guidance for the 
valuation of benefits under such plans, and because no adjustment by 
ongoing plans is required by this amendment, the PBGC finds that good 
cause exists for making this amendment to the regulation 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 it will not have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency; materially 
alter the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or raise 
novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in Executive Order 
12866.
    Because no general notice of proposed rulemaking is required for 
this regulation, the Regulatory Flexibility Act of 1980 does not apply 
(5 U.S.C. 601(2)).

List of Subjects in 29 CFR Part 2619

    Employee benefit plans, Pension insurance, Pensions.

    In consideration of the foregoing, appendix D to part 2619 of 
subchapter C of chapter XXVI of title 29, Code of Federal Regulations, 
is hereby amended as follows:

PART 2619--[AMENDED]

    1. The authority citation for part 2619 continues to read as 
follows:

    Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.

    2. Appendix D to part 2619 is amended by adding Table I-95 as 
follows:

Appendix D--Tables Used To Determine Expected Retirement Age

* * * * *

           Table I-95.--Selection of Retirement Rate Category           
   [For Plans with valuation dates after December 31, 1994, and before  
                            January 1, 1996]                            
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                          Participant's Retirement Rate Category is--   
                     ---------------------------------------------------
                                     Medium\2\ if monthly     High\3\ if
 Participant reaches   Low\1\ if       benefit at NRA is       monthly  
    NRA in year--       monthly   --------------------------  benefit at
                       benefit at                               NRA is  
                      NRA is less      From          To        greater  
                         than--                                 than--  
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1996................          389          389        1,637        1,637
1997................          402          402        1,691        1,691
1998................          416          416        1,748        1,748
1999................          430          430        1,808        1,808
2000................          444          444        1,869        1,869
2001................          459          459        1,933        1,933
2002................          475          475        1,998        1,998
2003................          491          491        2,066        2,066
2004................          508          508        2,137        2,137
2005 or later.......          525          525        2,209        2,209
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\1\Table II-A.                                                          
\2\Table II-B.                                                          
\3\Table II-C.                                                          

    Issued at Washington, DC, this 12th day of December 1994.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 94-30856 Filed 12-14-94; 8:45 am]
BILLING CODE 7708-01-M