[Federal Register Volume 67, Number 72 (Monday, April 15, 2002)]
[Notices]
[Pages 18255-18256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9065]


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PENSION BENEFIT GUARANTY CORPORATION


Required Interest Rate 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 can be derived from rates published elsewhere), but are 
collected and published in this notice for the convenience of the 
public. Included in this notice are required interest rates for 
determining the variable-rate premium for premium payment years 
beginning in January through April 2002. Interest rates are also 
published on the PBGC's Web site (http://www.pbgc.gov).

DATES: The required interest rates for determining the variable-rate 
premium under part 4006 apply to premium payment years beginning in 
January through April 2002. The interest assumptions for performing 
multiemployer plan valuations following mass withdrawal under part 4281 
apply to valuation dates occurring in May 2002. 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 second quarter (April through June) of 
2002.

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. 
(TTY/TDD users may call the Federal relay service toll-free at 1-800-
877-8339 and ask to be connected 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 (the ``required interest rate'') in determining a 
single-employer plan's variable-rate premium. The required interest 
rate is described as the ``applicable percentage'' 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 Treasury Department has suspended issuance of 30-year Treasury 
securities and, effective February 18, 2002, ceased supplying the 
Federal Reserve Board with an estimate of the annual yield on 30-year 
Treasury securities, which until then had been published in Federal 
Reserve Statistical Release H.15. However, the Internal Revenue Service 
in Notice 2002-26

[[Page 18256]]

(scheduled for publication in Internal Revenue Bulletin 2002-15) 
announced that it had determined the rate of interest on 30-year 
Treasury securities for February 2002 and that it would determine and 
publish the rate of interest on 30-year Treasury securities for 
succeeding months pending enactment of legislative changes that address 
the discontinuance of 30-year Treasury securities. The PBGC has 
concluded that it is appropriate to use the February rate announced in 
Notice 2002-26, and future rates determined in the manner described in 
that notice, in setting the required interest rate for purposes of 
calculating the variable-rate premium.
    Until March 9, 2002, the applicable percentage of the 30-year 
Treasury rate (to be used in determining the required interest rate) 
under section 4006(a)(3)(E)(iii)(II) of ERISA had been 85 percent. 
However, the Job Creation and Worker Assistance Act of 2002 (Public Law 
No. 107-147), signed into law on that date, changes the applicable 
percentage to 100 percent for plan years beginning after December 31, 
2001, and before January 1, 2004.
    Accordingly, the required interest rates to be used in determining 
variable-rate premiums for premium payment years beginning in January 
through April 2002 are 5.48 percent for January, 5.45 percent for 
February, 5.40 percent for March, and 5.71 percent for April (i.e., 100 
percent of the 30-year Treasury rate figures for December 2001 through 
March 2002).
    The following table lists the required interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between May 2001 and April 2002.

------------------------------------------------------------------------
                                                                 The
                                                               required
           For premium payment years beginning in              interest
                                                               rate is
------------------------------------------------------------------------
May 2001...................................................         4.80
June 2001..................................................         4.91
July 2001..................................................         4.82
August 2001................................................         4.77
September 2001.............................................         4.66
October 2001...............................................         4.66
November 2001..............................................         4.52
December 2001..............................................         4.35
January 2002...............................................         5.48
February 2002..............................................         5.45
March 2002.................................................         5.40
April 2002.................................................         5.71
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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. The section 6601 rate 
is established periodically (currently quarterly) by the Internal 
Revenue Service. The rate applicable to the second quarter (April 
through June) of 2002, as announced by the IRS, is 6 percent.
    The following table lists the late payment interest rates for 
premiums and employer liability for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                     From                         Through       rates
                                                              (percent)
------------------------------------------------------------------------
4/1/96........................................      6/30/96            8
7/1/96........................................      3/31/98            9
4/1/98........................................     12/31/98            8
1/1/99........................................      3/31/99            7
4/1/99........................................      3/31/00            8
4/1/00........................................      3/31/01            9
4/1/01........................................      6/30/01            8
7/1/01........................................     12/31/01            7
1/1/02........................................      6/30/02            6
------------------------------------------------------------------------

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 second quarter (April through June) of 2002 
(i.e., the rate reported for March 15, 2002) is 4.75 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                     From                         Through        rate
                                                              (percent)
------------------------------------------------------------------------
4/1/96........................................      6/30/97         8.25
7/1/97........................................     12/31/98         8.50
1/1/99........................................      9/30/99         7.75
10/1/99.......................................     12/31/99         8.25
1/1/00........................................      3/31/00         8.50
4/1/00........................................      6/30/00         8.75
7/1/00........................................      3/31/01         9.50
4/1/01........................................      6/30/01         8.50
7/1/01........................................      9/30/01         7.00
10/1/01.......................................     12/31/01         6.50
1/1/02........................................      6/30/02         4.75
------------------------------------------------------------------------

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 May 2002 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 April 2002.
Steven A. Kandarian,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 02-9065 Filed 4-12-02; 8:45 am]
BILLING CODE 7708-01-P