[Federal Register Volume 61, Number 136 (Monday, July 15, 1996)]
[Notices]
[Pages 36970-36971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17793]
Federal Register / Vol. 61, No. 156 / Monday, July 15, 1996 /
Notices
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[[Page 36970]]
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.
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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 assumptions for determining the variable-rate
premium under part 4006 apply to premium payment years beginning in
May, June, and July 1996. The interest assumptions for performing
multiemployer plan valuations following mass withdrawal under part 4281
apply to valuation dates occurring in August 1996. 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
1996.
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: Before July 1996, the rates and assumptions
to be used under the PBGC regulations discussed below were set forth in
tables in the regulations, even though the tabulated rates were merely
copied from (or based on) rates published by other agencies, or were
identical to rates in other PBGC regulations. In a final rule effective
July 1, 1996 (61 FR 34001), the PBGC reorganized, renumbered, and
significantly shortened its regulations. Tables that simply set forth
information available elsewhere were among the unnecessary items that
were removed. The PBGC will now publish the new rates and assumptions
in Federal Register notices on or about the 15th of each month, with
tables of the rates for recent periods. The rates will be published
monthly or quarterly, as appropriate, regardless of whether they have
changed.
Variable-Rate Premiums
Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income
Security Act of 1974 and Sec. 4006.4(b)(1) of the PBGC's regulation on
Premium Rates (29 CFR part 4006) prescribe methods for determining a
single-employer plan's unfunded vested benefits for premium computation
purposes. These methods (previously codified at 29 CFR part 2610)
involve use of an assumed interest rate equal to a specified percentage
(currently 80 percent) 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 yield figure is reported in Federal
Reserve Statistical Releases G.13 and H.15. The assumed interest rates
to be used for computing premiums for plan years beginning in May,
June, and July 1996 (i.e., 80 percent of the yield figures for April,
May, and June 1996) are 5.43 percent, 5.54 percent, and 5.65 percent
respectively.
The following table lists the interest rates required under 29 CFR
4006.4(b)(1) to be used in valuing vested benefits for purposes of
determining variable-rate premiums for plans with premium payment years
beginning within the specified months:
------------------------------------------------------------------------
The
required
For premium payment years beginning in interest
rate is
------------------------------------------------------------------------
August 1995................................................... 5.38
September 1995................................................ 5.49
October 1995.................................................. 5.24
November 1995................................................. 5.10
December 1995................................................. 5.01
January 1996.................................................. 4.85
February 1996................................................. 4.84
March 1996.................................................... 4.99
April 1996.................................................... 5.28
May 1996...................................................... 5.43
June 1996..................................................... 5.54
July 1996..................................................... 5.65
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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. (These provisions were
previously codified at 29 CFR parts 2610 and 2622.) 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 1996, as announced by the IRS, is 9 percent.
The following table lists the late payment interest rates under 29
CFR Secs. 4007.7(a) and 4062.7 for the specified time periods:
------------------------------------------------------------------------
Interest rate
From Through (percent)
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10/1/89............... 3/31/91 11
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................ 9/30/96 9
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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. (These provisions were previously codified at 29
CFR part 2644.) 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
1996 (i.e., the rate reported for June 17, 1996) is 8.25 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates under 29
[[Page 36971]]
CFR Sec. 4219.32(b) for the specified time periods:
------------------------------------------------------------------------
From Through Rate (percent)
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4/1/90................ 3/31/91 10.00
4/1/91................ 6/30/91 9.00
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................ 9/30/96 8.25
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Multiemployer Plan Valuations Following Mass Withdrawal
Section 4281.13 of the PBGC's regulation on Duties of Plan Sponsor
Following Mass Withdrawal (29 CFR part 4281) prescribes methods for
valuing benefits and certain assets of multiemployer plans following
mass withdrawal under sections 4219(c)(1)(D) and 4281(b) of ERISA.
These methods (previously codified at 29 CFR part 2676) involve use of
the same interest assumptions used and prescribed under the PBGC's
regulation on Allocation of Assets in Single-employer Plans (29 CFR
part 4044). However, only part 4044 actually sets forth the prescribed
interest assumptions; part 4281 simply refers to the assumptions in
part 4044. The interest assumptions applicable to valuation dates in
August 1996 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 5th day of July 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-17793 Filed 7-12-96; 8:45 am]
BILLING CODE 7708-01-P