[Federal Register Volume 61, Number 222 (Friday, November 15, 1996)]
[Rules and Regulations]
[Pages 58479-58480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29336]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4044


Allocation of Assets in Single-Employer Plans; Interest 
Assumptions for Valuing Benefits

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: The Pension Benefit Guaranty Corporation's regulation on 
Allocation of Assets in Single-Employer Plans prescribes interest 
assumptions for valuing benefits under terminating single-employer 
plans. This final rule amends the regulation to adopt interest 
assumptions for plans with valuation dates in December 1996.

EFFECTIVE DATE: December 1, 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: The PBGC's regulation on Allocation of 
Assets in Single-Employer Plans (29 CFR part 4044) prescribes actuarial 
assumptions for valuing plan benefits of terminating single-employer 
plans covered by title IV of the Employee Retirement Income Security 
Act of 1974.
    Among the actuarial assumptions prescribed in part 4044 are 
interest assumptions. These interest assumptions are intended to 
reflect current conditions in the financial and annuity markets.
    Two sets of interest assumptions are prescribed, one set for the 
valuation of benefits to be paid as annuities and one set for the 
valuation of benefits to be paid as lump sums. This amendment adds to 
appendix B to part 4044 the annuity and lump sum interest assumptions 
for valuing benefits in plans with valuation dates during December 
1996.
    For annuity benefits, the interest assumptions will be 6.00 percent 
for the first 20 years following the valuation date and 4.75 percent 
thereafter. For benefits to be paid as lump sums, the interest 
assumptions to be used by the PBGC will be 4.75 percent for the period 
during which a benefit is in pay status, 4.00 percent during the seven-
year period directly preceding the benefit's placement in pay status, 
and 4.00 percent during any other years preceding the benefit's 
placement in pay status. The above annuity interest assumptions 
represent a decrease (from those in effect for November 1996) of .20 
percent for the first 20 years following the valuation date and are 
otherwise unchanged. The lump sum interest assumptions represent a 
decrease (from those in effect for November 1996) of .25 percent for 
the period during which a benefit is in pay status and for the seven 
years directly preceding that period; they are otherwise unchanged.
    The 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, as accurately 
as possible, current market conditions.
    Because of the need to provide immediate guidance for the valuation 
of benefits in plans with valuation dates during December 1996, the 
PBGC finds that good cause exists for making the assumptions set forth 
in this amendment 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 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).

List of Subjects in 29 CFR Part 4044

    Pension insurance, Pensions.

    In consideration of the foregoing, 29 CFR part 4044 is hereby 
amended as follows:

PART 4044--[AMENDED]

    1. The authority citation for part 4044 continues to read as 
follows:

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

Appendix B to Part 4044--[Amended]

    2. In appendix B, a new entry is added to Table I, and Rate Set 38 
is added to Table II, as set forth below. The introductory text of each 
table is republished for the convenience of the reader and remains 
unchanged.

Appendix B to Part 4044--Interest Rates Used to Value Annuities and 
Lump Sums--Table I.--Annuity Valuations

[This table sets forth, for each indicated calendar month, the interest 
rates (denoted by i1, i2, * * * , and referred to generally 
as it) assumed to be in effect between specified anniversaries of 
a valuation date that occurs within that calendar month; those 
anniversaries are specified in the columns adjacent to the rates. The 
last listed rate is assumed to be in effect after the last listed 
anniversary date.]

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                                                                The values of it are:                           
 For valuation dates occurring in  -----------------------------------------------------------------------------
            the month--                  it         For t=         it         For t=         it         For t=  
----------------------------------------------------------------------------------------------------------------
                                                                                                                
*                  *                  *                  *                  *                    *              
                                                *                                                               
December 1996.....................        .0600         1-20        .0475          >20          N/A          N/A
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Table II.--Lump Sum Valuations

[In using this table: (1) For benefits for which the participant or 
beneficiary is entitled to be in pay status on the valuation date, the 
immediate annuity rate shall apply; (2) For benefits for which the 
deferral period is y years (where y is an integer and 
0n1), interest rate i1 shall apply from the 
valuation date for a period of y years, and thereafter the immediate 
annuity

[[Page 58480]]

rate shall apply; (3) For benefits for which the deferral period is y 
years (where y is an integer and n1 n1+n2), 
interest rate i2 shall apply from the valuation date for a period 
of y-n1 years, interest rate i1 shall apply for the following 
n1 years, and thereafter the immediate annuity rate shall apply; 
(4) For benefits for which the deferral period is y years (where y is 
an integer and y>n1+n2), interest rate i3 shall apply 
from the valuation date for a period of y-n1-n2 years, 
interest rate i2 shall apply for the following n2 years, 
interest rate i1 shall apply for the following n1 years, and 
thereafter the immediate annuity rate shall apply.]

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                                                      For plans with a       Immediate                     Deferred annuities (percent)                 
                                                       valuation date         annuity   ----------------------------------------------------------------
                    Rate set                     --------------------------     rate                                                                    
                                                  On or after     Before     (percent)        i1           i2           i3           n1           n2    
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                   *                  *                  *                  *                  *                  *                  *                  
38..............................................      12-1-96      01-1-97         4.75         4.00         4.00         4.00            7            8
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    Issued in Washington, DC, on this 12th day of November 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-29336 Filed 11-14-96; 8:45 am]
BILLING CODE 7708-01-P