[Federal Register Volume 68, Number 135 (Tuesday, July 15, 2003)]
[Notices]
[Pages 41851-41852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17844]


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

DATES: The required interest rate for determining the variable-rate 
premium under part 4006 applies to premium payment years beginning in 
July 2003. The interest assumptions for performing multiemployer plan 
valuations following mass withdrawal under part 4281 apply to valuation 
dates occurring in August 2003. 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 third quarter (July through September) of 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:

[[Page 41852]]

Variable-Rate Premiums

    Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income 
Security Act of 1974 (ERISA) and 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 
the ``applicable percentage'' (currently 100 percent) 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''). (Although the Treasury Department has ceased 
issuing 30-year securities, the Internal Revenue Service announces a 
surrogate yield figure each month--based on the 30-year Treasury bond 
maturing in February 2031--which the PBGC uses to determine the 
required interest rate.)
    The required interest rate to be used in determining variable-rate 
premiums for premium payment years beginning in July 2003 is 4.37 
percent.
    The following table lists the required interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between August 2002 and July 2003.

------------------------------------------------------------------------
                                                                  The
                                                                required
           For premium payment years beginning in--             interest
                                                               rate is--
------------------------------------------------------------------------
August 2002..................................................       5.39
September 2002...............................................       5.08
October 2002.................................................       4.76
November 2002................................................       4.93
December 2002................................................       4.96
January 2003.................................................       4.92
February 2003................................................       4.94
March 2003...................................................       4.81
April 2003...................................................       4.80
May 2003.....................................................       4.90
June 2003....................................................       4.53
July 2003....................................................       4.37
------------------------------------------------------------------------

Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability

    Section 4007(b) of ERISA and 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, 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 third quarter (July through September) of 2003, 
as announced by the IRS, is 5 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)
------------------------------------------------------------------------
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.......................................     12/31/02            6
1/1/03.......................................      9/30/03            5
------------------------------------------------------------------------

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 third quarter (July through September) of 
2003 (i.e., the rate reported for June 16, 2003) is 4.25 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                    From--                       Through--       rate
                                                              (percent)
------------------------------------------------------------------------
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........................................     12/31/02         4.75
1/1/03........................................      9/30/03         4.25
------------------------------------------------------------------------

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 August 2003 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 July, 2003.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit 
Guaranty Corporation.
[FR Doc. 03-17844 Filed 7-14-03; 8:45 am]
BILLING CODE 7708-01-P