[Federal Register Volume 71, Number 9 (Friday, January 13, 2006)]
[Notices]
[Pages 2277-2278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-328]


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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 
January 2006. The interest assumptions for performing multiemployer 
plan valuations following mass withdrawal under part 4281 apply to 
valuation dates occurring in February 2006. 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 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:

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''). (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 January 2006 is 3.95 percent (i.e., 85 percent of the 4.65 percent 
Treasury Securities Rate for December 2005).
    The Pension Funding Equity Act of 2004 (``PFEA'')--under which the 
required interest rate is 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--applies only for premium payment years beginning in 2004 or 
2005. Congress is considering legislation that would extend the PFEA 
rate for one more year. If legislation that changes the rules for 
determining the required interest rate for plan years beginning in 
January 2006 is adopted, the PBGC will promptly publish a Federal 
Register notice with the new rate.
    The following table lists the required interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between February 2005 and January 2006.

------------------------------------------------------------------------
                                                          The required
        For premium payment years beginning in:           interest rate
                                                               is:
------------------------------------------------------------------------
February 2005.........................................              4.66
March 2005............................................              4.56
April 2005............................................              4.78
May 2005..............................................              4.72
June 2005.............................................              4.60
July 2005.............................................              4.47
August 2005...........................................              4.56
September 2005........................................              4.61
October 2005..........................................              4.62
November 2005.........................................              4.83
December 2005.........................................              4.91
January 2006..........................................              3.95
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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 2006, as announced by the IRS, is 7 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)
------------------------------------------------------------------------
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

[[Page 2278]]

 
10/1/04.......................................      3/31/05            5
4/1/05........................................      9/30/05            6
10/1/05.......................................      3/31/06            7
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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 
2006 (i.e., the rate reported for December 15, 2005) is 7.25 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                     From                         Through        rate
                                                              (percent)
------------------------------------------------------------------------
1/1/00........................................      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
4/1/05........................................      6/30/05         5.50
7/1/05........................................      9/30/05         6.00
10/1/05.......................................     12/31/05         6.50
1/1/06........................................      3/31/06         7.25
------------------------------------------------------------------------

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 2006 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 January 2006.
Vincent K. Snowbarger,
Deputy Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 06-328 Filed 1-12-06; 8:45 am]
BILLING CODE 7708-01-P