[Federal Register Volume 70, Number 49 (Tuesday, March 15, 2005)]
[Rules and Regulations]
[Pages 12585-12587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5010]


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

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.

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

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 April 2005. Interest assumptions are 
also published on the PBGC's Web site (http://www.pbgc.gov).

DATES: Effective Date: April 1, 2005.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Attorney, 
Legislative and Regulatory Department, 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 April 2005, (2)

[[Page 12586]]

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 April 2005, 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 April 2005.
    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 3.80 percent for the first 20 years following the 
valuation date and 4.75 percent thereafter. These interest assumptions 
are unchanged from those in effect for March 2005.
    The interest assumptions that the PBGC will use for its own lump-
sum payments (set forth in Appendix B to part 4022) will be 2.75 
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 March 2005.
    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 April 
2005, 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.

0
In consideration of the foregoing, 29 CFR parts 4022 and 4044 are 
amended as follows:

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS

0
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.


0
2. In Appendix B to part 4022, Rate Set 138, 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

* * * * *

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      For plans with a                            Deferred annuities  (percent)
                                                                       valuation date       Immediate  -------------------------------------------------
                             Rate set                             ------------------------   annuity
                                                                      On or                    rate        i1        i2        i3        n1        n2
                                                                      after      Before     (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
138..............................................................     4-1-05      5-1-05         2.75      4.00      4.00      4.00         7         8
--------------------------------------------------------------------------------------------------------------------------------------------------------


0
3. In Appendix C to part 4022, Rate Set 138, 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                       Deferred annuities  (percent)
                                       valuation date      Immediate -------------------------------------------
            Rate set             -------------------------  annuity
                                     On or                    rate       i1        i2        i3        n1     n2
                                     after       Before    (percent)
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
138.............................     4-1-05       5-1-05       2.75      4.00      4.00      4.00         7   8
----------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

0
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.


0
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

* * * * *

[[Page 12587]]



----------------------------------------------------------------------------------------------------------------
                                                                         The values of it are:
    For valuation dates occurring in the month--     -----------------------------------------------------------
                                                         it     for t =      it     for t =      it      for t=
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
April 2005..........................................   .0380       1-20    .0475        >20      N/A        N/A
----------------------------------------------------------------------------------------------------------------


    Issued in Washington, DC, on this 9th day of March 2005.
Vincent K. Snowbarger,
Deputy Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 05-5010 Filed 3-14-05; 8:45 am]
BILLING CODE 7708-01-P