[Federal Register Volume 70, Number 240 (Thursday, December 15, 2005)]
[Rules and Regulations]
[Pages 74200-74202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24088]


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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

[[Page 74201]]

benefits under terminating single-employer plans. This final rule 
amends the regulations to adopt interest assumptions for plans with 
valuation dates in January 2006. Interest assumptions are also 
published on the PBGC's Web site (http://www.pbgc.gov).

DATES: Effective January 1, 2006.

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).
    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 2006, (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 2006, 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 2006.
    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 5.70 percent for the first 20 years following the 
valuation date and 4.75 percent thereafter. These interest assumptions 
represent an increase (from those in effect for December 2005) of 1.70 
percent for the first 20 years following the valuation date and are 
otherwise unchanged. These interest assumptions reflect the PBGC's 
recently updated mortality assumptions, which are effective for 
terminations on or after January 1, 2006. See the PBGC's final rule 
published December 2, 2005 (70 FR 72205), which is available at http://edocket.access.gpo.gov/2005/pdf/05-23554.pdf. Because the updated 
mortality assumptions reflect improvements in mortality, these interest 
assumptions are higher than they would have been using the old 
mortality assumptions.
    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 represent no change from those in 
effect for December 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 January 
2006, 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 147, as set forth below, is 
added to the table.

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)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          147            1-1-06           2-1-06             2.75             4.00             4.00             4.00                7                8
--------------------------------------------------------------------------------------------------------------------------------------------------------


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3. In appendix C to part 4022, Rate Set 147, as set forth below, is 
added to the table.

Appendix C to Part 4022--Lump Sum Interest Rates for Private-Sector 
Payments

* * * * *

[[Page 74202]]



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                   For plans with a valuation date     Immediate                                 Deferred annuities (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          147            1-1-06           2-1-06             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 for January 2006, as set 
forth below, is added to the table.

Appendix B to Part 4044--Interest Rates Used To Value Benefits

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                                                              The values of t are:
For valuation dates occurring ----------------------------------------------------------------------------------
        in the month--              it        for t =         it        for t =          it           for t =
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
January 2006.................        .5700         1-20        .0475          >20  N/A             N/A.
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    Issued in Washington, DC, on this 12th day of December 2005.
Vincent K. Snowbarger,
Deputy Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 05-24088 Filed 12-14-05; 8:45 am]
BILLING CODE 7708-01-P