[Federal Register Volume 65, Number 73 (Friday, April 14, 2000)]
[Rules and Regulations]
[Pages 20083-20085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9292]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4022 and 4044


Benefits Payable in Terminated Single-Employer Plans; Allocation 
of Assets in Single-Employer Plans; Interest Assumptions for Valuing 
and Paying Benefits

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: The Pension Benefit Guaranty Corporation's regulations on 
Benefits

[[Page 20084]]

Payable in Terminated Single-employer Plans and Allocation of Assets in 
Single-Employer Plans prescribe interest assumptions for valuing and 
paying benefits under terminating single-employer plans. This final 
rule amends the regulations to adopt interest assumptions for plans 
with valuation dates in May 2000. Interest assumptions are also 
published on the PBGC's web site (http://www.pbgc.gov).

EFFECTIVE DATE: May 1, 2000.

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/TDD users, call the Federal relay service toll-free at 1-800-
877-8339 and ask to be connected to 202-326-4024.)

SUPPLEMENTARY INFORMATION: The PBGC's regulations prescribe actuarial 
assumptions--including interest assumptions--for valuing and paying 
plan benefits of terminating single-employer plans covered by title IV 
of the Employee Retirement Income Security Act of 1974. The interest 
assumptions are intended to reflect current conditions in the financial 
and annuity markets.
    On March 17, 2000, the PBGC published in the Federal Register (at 
65 FR 14752 and 14753) two final rules changing how the interest rates 
are to be used and where they are to be set forth in the PBGC's 
regulations. These two final rules are effective May 1, 2000, which is 
also the effective date of this amendment to the interest rate tables.
    As of May 1, 2000, three sets of interest rate assumptions are 
prescribed: (1) A set for the valuation of benefits for allocation 
purposes under section 4044 (found in Appendix B to Part 4044), (2) a 
set for the PBGC to use to determine whether a benefit is payable as a 
lump sum and to determine lump-sum amounts to be paid by the PBGC 
(found in Appendix B to Part 4022), and (3) a set for private-sector 
pension practitioners to refer to if they wish to use lump-sum interest 
rates determined using the PBGC's historical methodology (found in 
Appendix C to Part 4022). (For a more detailed explanation of the lump-
sum interest rates for private-sector payments, see 65 FR 14753.)
    Accordingly, this amendment (1) Adds to Appendix B to Part 4044 the 
interest assumptions for valuing benefits for allocation purposes in 
plans with valuation dates during May 2000, (2) adds to Appendix B to 
Part 4022 the interest assumptions for the PBGC to use for its own 
lump-sum payments in plans with valuation dates during May 2000, and 
(3) adds to Appendix C to Part 4022 the interest assumptions for 
private-sector pension practitioners to refer to if they wish to use 
lump-sum interest rates determined using the PBGC's historical 
methodology for valuation dates during May 2000.
    For valuation of benefits for allocation purposes, the interest 
assumptions that the PBGC will use (set forth in Appendix B to part 
4044) will be 7.00 percent for the first 25 years following the 
valuation date and 6.25 percent thereafter. These interest assumptions 
represent a decrease (from those in effect for April 2000) of 0.10 
percent for the first 25 years following the valuation date and are 
otherwise unchanged.
    The interest assumptions that the PBGC will use for its own lump-
sum payments (set forth in Appendix B to part 4022) will be 5.25 
percent for the period during which a benefit is in pay status, 4.50 
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. These interest 
assumptions are unchanged from those in effect for April 2000.
    For private-sector payments, the interest rate assumptions (set 
forth in Appendix C to part 4022) will be the same as those used by the 
PBGC for determining and paying lump sums (set forth in Appendix B to 
part 4022).
    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 
and payment of benefits in plans with valuation dates during May 2000, 
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

29 CFR Part 4022

    Employee benefit plans, Pension insurance, Pensions, Reporting and 
recordkeeping requirements.

29 CFR Part 4044

    Employee benefit plans, Pension insurance, Pensions.

    In consideration of the foregoing, 29 CFR parts 4022 and 4044, as 
amended by the final rules effective May 1, 2000, published March 17, 
2000 (at 65 FR 14752 and 14753), are further amended as follows:

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS

    1. The authority citation for part 4022 continues to read as 
follows:

    Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.


    2. In appendix B to part 4022, Rate Set 79, as set forth below, is 
added to the table. (The introductory text of the table is omitted.)

Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments

* * * * *

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                                                             For plans with a                                Deferred annuities (percent)
                                                              valuation date       Immediate -----------------------------------------------------------
                        Rate set                         ------------------------   annuity
                                                             On or                   rate         i 1         i 2         i 3         n 1         n 2
                                                             after      Before     (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   *                  *                  *                  *                  *                  *                  *
79......................................................     5-1-00      6-1-00        5.25        4.50        4.00        4.00           7           8
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 20085]]


    3. In appendix C to part 4022, Rate Set 79, as set forth below, is 
added to the table. (The introductory text of the table is omitted.)

Appendix C to Part 4022--Lump Sum Interest Rates For Private-Sector 
Payments

* * * * *

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      For plans with a       Immediate                     Deferred annuities (percent)
                                                       valuation date         annuity   ----------------------------------------------------------------
                    Rate set                     --------------------------     rate
                                                  On or after     Before     (percent)        i1           i2           i3           n1           n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
          *                  *                  *                  *                  *                  *                  *
79..............................................      5-1-00       6-1-00         5.25         4.50         4.00         4.00            7            8
--------------------------------------------------------------------------------------------------------------------------------------------------------

PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

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

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


    5. In appendix B to part 4044, a new entry, as set forth below, is 
added to the table. (The introductory text of the table is omitted.)

Appendix B to Part 4044--Interest Rates Used To Value Benefits

* * * * *

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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 =
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*                  *                  *                  *                  *                  *
                                               *
May 2000................................      .0700        1-25       .0625         >25         N/A         N/A
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    Issued in Washington, DC, on this 10th day of April 2000.
John Seal,
Acting Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 00-9292 Filed 4-13-00; 8:45 am]
BILLING CODE 7708-01-P