[Federal Register Volume 67, Number 240 (Friday, December 13, 2002)]
[Rules and Regulations]
[Pages 76682-76683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31434]


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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 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 January 2003. Interest assumptions 
are also published on the PBGC's Web site (http://www.pbgc.gov).

EFFECTIVE DATE: January 1, 2003.

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: 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.
    Three sets of interest 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).
    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 January 2003, (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 January 2003, 
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 January 2003.
    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 5.30 percent for the first 20 years following the 
valuation date and 5.25 percent thereafter. These interest assumptions 
(in comparison with those in effect for December 2002) reflect a 5-year 
decrease in the period during which the initial rate applies (from a 
period of 25 years following the valuation date to a period of 20 years 
following the valuation date). The initial rate, in effect during the 
20-year period, is unchanged from the initial rate in effect for 
December 2002. The ultimate rate, in effect thereafter, represents an 
increase (from the ultimate rate in effect for December 2002) of 1.00 
percent.
    The interest assumptions that the PBGC will use for its own lump-
sum payments (set forth in Appendix B to part 4022) will be 4.00 
percent for the period during which a benefit is in pay status and 4.00 
percent during any years preceding the benefit's placement in pay 
status. These interest assumptions are unchanged from those in effect 
for December 2002.
    For private-sector payments, the interest 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 January 
2003, 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 are 
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.


[[Page 76683]]



    2. In appendix B to part 4022, Rate Set 111, 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 valuation date             Immediate          Deferred annuities (percent)
                                         ------------------------------------------------------   annuity  ---------------------------------------------
                Rate set                                                                           rate
                                                 On or after                   Before            (percent)     i1        i2        i3       n1      n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
111.....................................  1-1-03                     2-1-03                          4.00      4.00      4.00      4.00       7       8
--------------------------------------------------------------------------------------------------------------------------------------------------------


    3. In appendix C to part 4022, Rate Set 111, 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 valuation date             Immediate          Deferred annuities (percent)
                                         ------------------------------------------------------   annuity  ---------------------------------------------
                Rate set                                                                           rate
                                                 On or after                   Before            (percent)     i1        i2        i3       n1      n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
111.....................................  1-1-03                     2-1-03                          4.00      4.00      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 =
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
January 2003............................      .0530        1-20       .0525   20
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    Issued in Washington, DC, on this 6th day of December 2002.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit 
Guaranty Corporation.
[FR Doc. 02-31434 Filed 12-12-02; 8:45 am]
BILLING CODE 7708-01-P