[Federal Register Volume 76, Number 241 (Thursday, December 15, 2011)]
[Rules and Regulations]
[Pages 77900-77901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32184]



[[Page 77900]]

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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4022 and 4044


Allocation of Assets in Single-Employer Plans; Benefits Payable 
in Terminated Single-Employer Plans; Interest Assumptions for Valuing 
and Paying Benefits

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This final rule amends the Pension Benefit Guaranty 
Corporation's regulations on Benefits Payable in Terminated Single-
Employer Plans and Allocation of Assets in Single-Employer Plans to 
prescribe interest assumptions under the benefit payments regulation 
for valuation dates in January 2012 and interest assumptions under the 
asset allocation regulation for valuation dates in the first quarter of 
2012. The interest assumptions are used for valuing and paying benefits 
under terminating single-employer plans covered by the pension 
insurance system administered by PBGC.

DATES: Effective January 1, 2012.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion 
([email protected]), 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: PBGC's regulations on Allocation of Assets 
in Single-Employer Plans (29 CFR Part 4044) and Benefits Payable in 
Terminated Single-Employer Plans (29 CFR Part 4022) prescribe actuarial 
assumptions--including interest assumptions--for valuing and paying 
plan benefits under terminating single-employer plans covered by title 
IV of the Employee Retirement Income Security Act of 1974. The interest 
assumptions in the regulations are also published on PBGC's Web site 
(http://www.pbgc.gov).
    The interest assumptions in Appendix B to Part 4044 are used to 
value benefits for allocation purposes under ERISA section 4044. PBGC 
uses the interest assumptions in Appendix B to Part 4022 to determine 
whether a benefit is payable as a lump sum and to determine the amount 
to pay. Appendix C to Part 4022 contains interest assumptions for 
private-sector pension practitioners to refer to if they wish to use 
lump-sum interest rates determined using PBGC's historical methodology. 
Currently, the rates in Appendices B and C of the benefit payment 
regulation are the same.
    The interest assumptions are intended to reflect current conditions 
in the financial and annuity markets. Assumptions under the asset 
allocation regulation are updated quarterly; assumptions under the 
benefit payments regulation are updated monthly. This final rule 
updates the benefit payments interest assumptions for January 2012 and 
updates the asset allocation interest assumptions for the first quarter 
(January through March) of 2012.
    The first quarter 2012 interest assumptions under the allocation 
regulation will be 3.74 percent for the first 20 years following the 
valuation date and 3.70 percent thereafter. In comparison with the 
interest assumptions in effect for the fourth quarter of 2011, these 
interest assumptions represent no change in the select period (the 
period during which the select rate (the initial rate) applies), a 
decrease of 0.33 percent in the select rate, and a decrease of 0.58 
percent in the ultimate rate (the final rate).
    The January 2012 interest assumptions under the benefit payments 
regulation will be 1.25 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. In comparison with the interest 
assumptions in effect for December 2011, these interest assumptions 
represent a decrease of 0.25 percent in the immediate annuity rate and 
are otherwise unchanged.
    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 current market 
conditions as accurately as possible.
    Because of the need to provide immediate guidance for the valuation 
and payment of benefits under plans with valuation dates during January 
2012, PBGC finds that good cause exists for making the assumptions set 
forth in this amendment effective less than 30 days after publication.
    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.

    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 219, 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
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                                                                      * * * * * * *
          219            1-1-12           2-1-12             1.25             4.00             4.00             4.00                7                8
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[[Page 77901]]


0
3. In appendix C to part 4022, Rate Set 219, as set forth below, is 
added to the table.

Appendix C to Part 4022--Lump Sum Interest Rates for Private-Sector 
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
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          219            1-1-12           2-1-12             1.25             4.00             4.00             4.00                7                8
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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-March 2012, 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 it are:
     For valuation dates     -----------------------------------------------------------------------------------
  occurring in the month--         it          for t =         it          for t =         it          for t =
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                                                  * * * * * * *
January-March 2012..........       0.0374          1-20        0.0370           >20           N/A           N/A
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    Issued in Washington, DC, on this 8th day of December 2011.
Laricke Blanchard,
Deputy Director for Policy, Pension Benefit Guaranty Corporation.
[FR Doc. 2011-32184 Filed 12-14-11; 8:45 am]
BILLING CODE 7709-01-P