[Federal Register Volume 72, Number 71 (Friday, April 13, 2007)]
[Notices]
[Pages 18693-18694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-7097]


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PENSION BENEFIT GUARANTY CORPORATION


Required Interest Rate Assumption for Determining Variable-Rate 
Premium for Single-Employer Plans; 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 
April 2007. The interest assumptions for performing multiemployer plan 
valuations following mass withdrawal under part 4281 apply to valuation 
dates occurring in May 2007. 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 second quarter (April through June) of 2007.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Manager, 
Regulatory and Policy Division, 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. Pursuant to the Pension 
Protection Act of 2006, for premium payment years beginning in 2006 or 
2007, the required interest rate is the ``applicable percentage'' 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 (the ``premium payment year'').
    On February 2, 2007 (at 72 FR 4955), the Internal Revenue Service 
(IRS) published final regulations containing updated mortality tables 
for determining current liability under section 412(l)(7) of the Code 
and section 302(d)(7) of ERISA for plan years beginning on or after 
January 1, 2007. As a result, in accordance with section 
4006(a)(3)(E)(iii)(II) of ERISA, the ``applicable percentage'' to be 
used in determining the required interest rate for plan years beginning 
in 2007 is 100 percent.
    The required interest rate to be used in determining variable-rate 
premiums for premium payment years beginning in April 2007 is 5.84 
percent (i.e., 100 percent of the 5.84 percent composite corporate bond 
rate for March 2007 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 May 2006 and April 2007.

------------------------------------------------------------------------
                                                                 The
                                                               required
          For premium payment years beginning in:              interest
                                                               rate is:
------------------------------------------------------------------------
May 2006...................................................         5.25
June 2006..................................................         5.35
July 2006..................................................         5.36
August 2006................................................         5.36
September 2006.............................................         5.19
October 2006...............................................         5.06
November 2006..............................................         5.05
December 2006..............................................         4.90
January 2007...............................................         5.75
February 2007..............................................         5.89
March 2007.................................................         5.85
April 2007.................................................         5.84
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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 second quarter (April 
through June) of 2007, as announced by the IRS, is 8 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)
------------------------------------------------------------------------
4/1/01........................................      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
4/1/05........................................      9/30/05            6
10/1/05.......................................      6/30/06            7
7/1/06........................................      6/30/07            8
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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

[[Page 18694]]

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 second quarter (April 
through June) of 2007 (i.e., the rate reported for March 15, 2007) is 
8.25 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                     From                         Through        rate
                                                              (percent)
------------------------------------------------------------------------
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
4/1/06........................................      6/30/06         7.50
7/1/06........................................      9/30/06         8.00
10/1/06.......................................      6/30/07         8.25
------------------------------------------------------------------------

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 May 2007 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 April 2007.
Vincent K. Snowbarger,
Interim Director, Pension Benefit Guaranty Corporation.
[FR Doc. E7-7097 Filed 4-12-07; 8:45 am]
BILLING CODE 7709-01-P