[Federal Register Volume 69, Number 74 (Friday, April 16, 2004)]
[Notices]
[Pages 20652-20653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8733]


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PENSION BENEFIT GUARANTY CORPORATION


Required Interest Rate Assumption for Determining Variable-Rate 
Premium for Premium Payment Years Beginning in January Through April 
2004

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of interest rate assumptions.

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SUMMARY: This notice informs the public of the interest rate 
assumptions to be used for determining the variable-rate premium under 
part 4006 of the Pension Benefit Guaranty Corporation regulations for 
premium payment years beginning in January through April 2004. These 
interest rate assumptions 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).
    The provisions of the Job Creation and Worker Assistance Act of 
2002 that temporarily increased the required interest rate to be used 
to determine the PBGC's variable-rate premium to 100 percent (from 85 
percent) of the annual yield on 30-year Treasury securities expired at 
the end of 2003. The Pension Funding Equity Act of 2004, which was 
signed into law by the President on April 10, 2004, changes the rules 
for determining the required interest rate for premium payment years 
beginning in 2004 or 2005. On April 15, 2004, the PBGC published a 
notice informing the public of interest rates and assumptions to be 
used under certain PBGC regulations. The April 15, 2004, notice stated 
that the PBGC intended shortly to publish a Federal Register notice 
reflecting the new required interest rates. The PBGC is now informing 
the public of those new required interest rates for premium payment 
years beginning in January through April 2004.

DATES: The required interest rate assumption for determining the 
variable-rate premium under part 4006 applies to premium payment years 
beginning in January through April 2004.

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 the ``applicable percentage'' (currently 85 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''). The provisions of the Job Creation and 
Worker Assistance Act of 2002 that temporarily increased the required 
interest rate to be used to determine the PBGC's variable-rate premium 
to 100 percent (from 85 percent) of the annual yield on 30-year 
Treasury securities expired at the end of 2003.
    The Pension Funding Equity Act of 2004, which was signed into law 
by the President on April 10, 2004, changes the rules for determining 
the required interest rate for premium payment years beginning in 2004 
or 2005. For premium payment years beginning in 2004 or 2005, the 
required interest rate is the ``applicable percentage'' (currently 85 
percent) of the annual rate of interest determined by the Secretary of 
the Treasury on amounts invested conservatively in long-term investment 
grade corporate bonds for the month preceding the beginning of the plan 
year for which premiums are being paid. On April 12, 2004, the Internal 
Revenue Service issued Notice 2004-34 announcing the composite 
corporate bond rates needed to determine the required interest rates 
for premium payment years beginning in January through April 2004. (See 
Table 1 of IRS Notice 2004-34.)
    The required interest rate to be used in determining variable-rate 
premiums for premium payment years beginning

[[Page 20653]]

in January 2004 is 4.94 percent (i.e., 85 percent of the 5.81 percent 
composite corporate bond rate announced in IRS Notice 2004-34 for 
December 2003).
    The required interest rate to be used in determining variable-rate 
premiums for premium payment years beginning in February 2004 is 4.83 
percent (i.e., 85 percent of the 5.68 percent composite corporate bond 
rate announced in IRS Notice 2004-34 for January 2004).
    The required interest rate to be used in determining variable-rate 
premiums for premium payment years beginning in March 2004 is 4.79 
percent (i.e., 85 percent of the 5.63 percent composite corporate bond 
rate announced in IRS Notice 2004-34 for February 2004).
    The required interest rate to be used in determining variable-rate 
premiums for premium payment years beginning in April 2004 is 4.62 
percent (i.e., 85 percent of the 5.44 percent composite corporate bond 
rate announced in IRS Notice 2004-34 for March 2004).
    The following table lists the required interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between May 2003 and April 2004. Note that the required interest rate 
for premium payment years beginning in May through December 2003 were 
determined under the Job Creation and Worker Assistance Act of 2002, 
and that the required interest rate for premium payment years beginning 
in January through April 2004 were determined under the Pension Funding 
Equity Act of 2004.

------------------------------------------------------------------------
                                                           The required
         For premium payment years beginning in:           interest rate
                                                                is:
------------------------------------------------------------------------
May 2003\*\.............................................            4.90
June 2003\*\............................................            4.53
July 2003\*\............................................            4.37
August 2003\*\..........................................            4.93
September 2003\*\.......................................            5.31
October 2003\*\.........................................            5.14
November 2003\*\........................................            5.16
December 2003\*\........................................            5.12
January 2004\**\........................................            4.94
February 2004\**\.......................................            4.83
March 2004\**\..........................................            4.79
April 2004\**\..........................................           4.62
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\*\ The required interest rates for premium payment years beginning in
  May through December 2003 were determined under the Job Creation and
  Worker Assistance Act of 2002.
\**\ The required interest rates for premium payment years beginning in
  January through April 2004 were determined under the Pension Funding
  Equity Act of 2004.


    Issued in Washington, DC, on this 13th day of April, 2004.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit 
Guaranty Corporation.
[FR Doc. 04-8733 Filed 4-15-04; 8:45 am]
BILLING CODE 7708-01-P