[Federal Register Volume 79, Number 230 (Monday, December 1, 2014)]
[Rules and Regulations]
[Pages 71019-71020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28216]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4044


Allocation of Assets in Single-Employer Plans; Valuation of 
Benefits and Assets; Expected Retirement Age

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's 
regulation on Allocation of Assets in Single-Employer Plans by 
substituting a new table for determining expected retirement ages for 
participants in pension plans undergoing distress or involuntary 
termination with valuation dates falling in 2015. This table is needed 
in order to compute the value of early retirement benefits and, thus, 
the total value of benefits under a plan.

DATES: Effective Date: January 1, 2015.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion 
([email protected]), Assistant General Counsel for Regulatory 
Affairs, 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 Pension Benefit Guaranty Corporation 
(PBGC) administers the pension plan termination insurance program under 
Title IV of the Employee Retirement Income Security Act of 1974 
(ERISA). PBGC's regulation on Allocation of Assets in Single-Employer 
Plans (29 CFR part 4044) sets forth (in subpart B) the methods for 
valuing plan benefits of terminating single-employer plans covered 
under Title IV. Guaranteed benefits and benefit liabilities under a 
plan that is undergoing a distress termination must be valued in 
accordance with subpart B of part 4044. In addition, when PBGC 
terminates an underfunded plan involuntarily pursuant to ERISA section 
4042(a), it uses the subpart B valuation rules to determine the amount 
of the plan's underfunding.
    Under Sec.  4044.51(b) of the asset allocation regulation, early 
retirement benefits are valued based on the annuity starting date, if a 
retirement date has been selected, or the expected retirement age, if 
the annuity starting date is not known on the valuation date. Sections 
4044.55 through 4044.57 set forth rules for determining the expected 
retirement ages for plan participants entitled to early retirement 
benefits. Appendix D of part 4044 contains tables to be used in 
determining the expected early retirement ages.
    Table I in appendix D (Selection of Retirement Rate Category) is 
used to determine whether a participant has a low, medium, or high 
probability of retiring early. The determination is based on the year a 
participant would reach ``unreduced retirement age'' (i.e., the earlier 
of the normal retirement age or the age at which an unreduced benefit 
is first payable) and the participant's monthly benefit at unreduced 
retirement age. The table applies only to plans with valuation dates in 
the current year and is updated annually by the PBGC to reflect changes 
in the cost of living, etc.
    Tables II-A, II-B, and II-C (Expected Retirement Ages for 
Individuals in the Low, Medium, and High Categories respectively) are 
used to determine the expected retirement age after the probability of 
early retirement has been determined using Table I. These tables 
establish, by probability category, the expected retirement age based 
on both the earliest age a participant could retire under the plan and 
the unreduced retirement age. This expected retirement age is used to 
compute the value of the early retirement benefit and, thus, the total 
value of benefits under the plan.
    This document amends appendix D to replace Table I-14 with Table I-
15 in order to provide an updated correlation, appropriate for calendar 
year 2015, between the amount of a participant's benefit and the 
probability that the participant will elect early retirement. Table I-
15 will be used to value benefits in plans with valuation dates during 
calendar year 2015.
    PBGC has determined that notice of, and public comment on, this 
rule are impracticable and contrary to the public interest. Plan 
administrators need to be able to estimate accurately the value of plan 
benefits as early as possible before initiating the termination 
process. For that purpose, if a plan has a valuation date in 2015, the 
plan administrator needs the updated table being promulgated in this 
rule. Accordingly, the public interest is best served by issuing this 
table expeditiously, without an opportunity for notice and comment, to 
allow as much time as possible to estimate the value of plan benefits 
with the proper table for plans with valuation dates in early 2015.
    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 regulation, the Regulatory Flexibility Act of 1980 does not apply 
(5 U.S.C. 601(2)).

List of Subjects in 29 CFR Part 4044

    Pension insurance, Pensions.

    In consideration of the foregoing, 29 CFR part 4044 is amended as 
follows:

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

0
1. 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
2. Appendix D to part 4044 is amended by removing Table I-14 and adding 
in its place Table I-15 to read as follows:
Appendix D to Part 4044--Tables Used to Determine Expected Retirement 
Age

                                Table I-15--Selection of Retirement Rate Category
              [For Plans with valuation dates after December 31, 2014, and before January 1, 2016]
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                                                            Participant's retirement rate category is--
                                                 ---------------------------------------------------------------
                                                    Low \1\ if     Medium \2\ if monthly benefit    High \3\ if
      If participant reaches URA in year--            monthly               at URA is--               monthly
                                                  benefit at URA -------------------------------- benefit at URA
                                                   is less than--                                   is greater
                                                                      From--           To--           than--
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2016............................................             618             618           2,610           2,610

[[Page 71020]]

 
2017............................................             631             631           2,667           2,667
2018............................................             646             646           2,728           2,728
2019............................................             661             661           2,791           2,791
2020............................................             676             676           2,855           2,855
2021............................................             691             691           2,921           2,921
2022............................................             707             707           2,988           2,988
2023............................................             724             724           3,057           3,057
2024............................................             740             740           3,127           3,127
2025 or later...................................             757             757           3,199           3,199
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\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.

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    Issued in Washington, DC, this 24th day of November, 2014.
Judith Starr,
General Counsel, Pension Benefit Guaranty Corporation.
[FR Doc. 2014-28216 Filed 11-28-14; 8:45 am]
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