[Federal Register Volume 61, Number 241 (Friday, December 13, 1996)]
[Rules and Regulations]
[Pages 65476-65477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31713]


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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4044


Allocation of Assets in Single-Employer Plans; Valuation of 
Benefits and Assets; 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 Allocation of Assets in Single-Employer Plans by 
substituting new Table I-97 in place of existing Table I-96 in appendix 
D. Table I-97 applies to any plan being terminated either in a distress 
termination or involuntarily by the PBGC with a valuation date falling 
in 1997, 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, 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 20005-4026; 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) sets forth (in 
subpart B) the methods for valuing plan benefits of terminating single-
employer plans covered under Title IV of the Employee Retirement Income 
Security Act of 1974. Under ERISA section 4041(c), plans wishing to 
terminate in a distress termination must value guaranteed benefits and 
benefit liabilities under the plan in accordance with part 4044, 
subpart B. In addition, when the PBGC terminates an underfunded plan 
involuntarily pursuant to ERISA Section 4042(a), it uses the subpart B 
valuation rules to determine the amount of the plan's underfunding.
    Under Sec. 4044.51(b), 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. Sections 4044.55 through 4044.57 set forth 
rules for determining the expected retirement ages for plan 
participants entitled to early retirement benefits. Appendix D of part 
4044 contains tables to be used in determining the expected early 
retirement ages.
    Table I in appendix D (Selection of Retirement Rate Category) is 
used to determine whether a participant has a low, medium, or high 
probability of retiring early. The determination is based on the year a 
participant would reach ``unreduced retirement age'' (i.e., the earlier 
of the normal retirement age or the age at which an unreduced benefit 
is first payable) and the participant's monthly benefit at unreduced 
retirement age. The table applies only to plans with valuation dates in 
the current year and is updated annually by the PBGC to reflect changes 
in the cost of living, etc.
    Tables II-A, II-B, and II-C (Expected Retirement Ages for 
Individuals in the Low, Medium, and High Categories respectively) are 
used to determine the expected retirement age after the probability of 
early retirement has been determined using Table I. These tables 
establish, by probability category, the expected retirement age based 
on both the earliest age a participant could retire under the plan and 
the unreduced retirement age. 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.
    This document amends appendix D to replace Table I-96 with Table I-
97 in order to provide an updated correlation, appropriate for calendar 
year 1997, between the amount of a participant's benefit and the 
probability that the participant will elect early retirement. Table I-
97 will be used to value benefits in plans with valuation dates during 
calendar year 1997.
    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 1997, 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 1997. 
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 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 4044

    Pension insurance, Pensions.

    In consideration of the foregoing, 29 CFR part 4044 is 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.

    2. Appendix D to part 4044 is amended by removing Table I-96 and 
adding in its place Table I-97 to read as follows:

Appendix D to Part 4044--Tables Used to Determine Expected 
Retirement Age

                                Table I-97--Selection of Retirement Rate Category                               
              [For Plans with valuation dates after December 31, 1996, and before January 1, 1998]              
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                                                            Participant's Retirement Rate Category is--         
                                                 ---------------------------------------------------------------
                                                                   Medium \2\ if monthly benefit    High \3\ if 
        Participant reaches URA in year--           Low \1\ if               at URA is                monthly   
                                                      monthly    -------------------------------- benefit at URA
                                                  benefit at URA                                    is greater  
                                                  is less than--       From             To            than--    
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1998............................................             409             409           1,723           1,723
1999............................................             421             421           1,771           1,771

[[Page 65477]]

                                                                                                                
2000............................................             432             432           1,821           1,821
2001............................................             445             445           1,872           1,872
2002............................................             457             457           1,924           1,924
2003............................................             470             470           1,978           1,978
2004............................................             483             483           2,033           2,033
2005............................................             496             496           2,090           2,090
2006............................................             510             510           2,149           2,149
2007 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, D.C., this 10th day of December, 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-31713 Filed 12-12-96; 8:45 am]
BILLING CODE 7708-01-P