[Federal Register Volume 70, Number 10 (Friday, January 14, 2005)]
[Notices]
[Pages 2678-2679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-794]


=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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 
January 2005. The interest assumptions for performing multiemployer 
plan valuations following mass withdrawal under part 4281 apply to 
valuation dates occurring in February 2005. 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 first quarter (January through March) of 2005.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Acting 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. Pursuant to the Pension 
Funding Equity Act of 2004, 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. Thus, the 
required interest rate to be used in determining variable-rate premiums 
for premium payment years beginning in January 2005 is 4.73 percent 
(i.e., 85 percent of the 5.57 percent composite corporate bond rate for 
December 2004 as determined by the Treasury).
    The following table lists the required interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between February 2004 and January 2005.

------------------------------------------------------------------------
                                                                 The
                                                               required
          For premium payment years beginning in:              interest
                                                               rate is:
------------------------------------------------------------------------
February 2004..............................................         4.83
March 2004.................................................         4.79
April 2004.................................................         4.62
May 2004...................................................         4.98
June 2004..................................................         5.26
July 2004..................................................         5.25
August 2004................................................         5.10
September 2004.............................................         4.95
October 2004...............................................         4.79
November 2004..............................................         4.73
December 2004..............................................         4.75
January 2005...............................................         4.73
------------------------------------------------------------------------

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 first quarter (January 
through March) of 2005, 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)
------------------------------------------------------------------------
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
10/1/03......................................         3/31/04          4
4/1/04.......................................         6/30/04          5
7/1/04.......................................         9/30/04          4
10/1/04......................................         3/31/05          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 first quarter (January through March) of 
2005

[[Page 2679]]

(i.e., the rate reported for December 15, 2004) is 5.25 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                                Interest
                    From--                        Through--       Rate
                                                               (percent)
------------------------------------------------------------------------
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
10/1/03......................................         9/30/04       4.00
10/1/04......................................        12/31/04       4.50
1/1/05.......................................         3/31/05       5.25
------------------------------------------------------------------------

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 February 2005 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 10th day of January 2005.
Joseph H. Grant,
Chief Operating Officer, Pension Benefit Guaranty Corporation.
[FR Doc. 05-794 Filed 1-13-05; 8:45 am]
BILLING CODE 7708-01-P