[Federal Register Volume 62, Number 199 (Wednesday, October 15, 1997)]
[Notices]
[Pages 53668-53669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27272]


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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 rate for determining the variable-rate premium 
under part 4006 applies to premium payment years beginning in October 
1997. The interest assumptions for performing multiemployer plan 
valuations following mass withdrawal under part 4281 apply to valuation 
dates occurring in November 1997. 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 fourth quarter (October through December) of 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. 
(For TTY and TDD, call 800-877-8339 and request connection to 202-326-
4024).

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 payment years beginning in October 1997 is 5.53 percent 
(i.e., 85 percent of the 6.50% percent yield figure for September 
1997).
    The following table lists the assumed interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between November 1996 and October 1997. The rates for July through 
October 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.

------------------------------------------------------------------------
                                                             The assumed
          For premium payment years beginning in:              interest 
                                                              rate is-- 
------------------------------------------------------------------------
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
October 1997...............................................         5.53
------------------------------------------------------------------------

    For premium payment years beginning in October 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 5.20 
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 
premium payment instruction booklet also describes these rules and 
provides a worksheet for computing the assumed rate.

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. The section 6601 rate 
is established periodically (currently quarterly) by the Internal 
Revenue Service. The rate applicable to the fourth quarter (October 
through December) of 1997, as announced by the IRS, is 9 percent.
    The following table lists the late payment interest rates for 
premiums and employer liability for the specified time periods:

------------------------------------------------------------------------
                                                               Interest 
               From--                       Through--            rate   
                                                              (percent) 
------------------------------------------------------------------------
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

[[Page 53669]]

                                                                        
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.............................  12/31/96..............            9
1/1/97.............................  3/31/97...............            9
4/1/97.............................  6/30/97...............            9
7/1/97.............................  9/30/97...............            9
10/1/97............................  12/31/97..............            9
------------------------------------------------------------------------

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. 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 fourth quarter (October through December) of 
1997 (i.e., the rate reported for September 15, 1997) is 8.50 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                                 Rate   
               From--                       Through--         (percent) 
------------------------------------------------------------------------
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.............................  12/31/96..............         8.25
1/1/97.............................  3/31/97...............         8.25
4/1/97.............................  6/30/97...............         8.25
7/1/97.............................  9/30/97...............         8.50
10/1/97............................  12/31/97..............         8.50
------------------------------------------------------------------------

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 November 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, DC, on this 9th day of October 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-27272 Filed 10-14-97; 8:45 am]
BILLING CODE 7708-01-P