[Federal Register Volume 84, Number 178 (Friday, September 13, 2019)]
[Rules and Regulations]
[Pages 48272-48274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19838]


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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 certain interest assumptions under the benefit payments 
regulation for plans with valuation dates in October 2019 and interest 
assumptions under the asset allocation regulation for plans with 
valuation dates in the fourth quarter of 2019. These interest 
assumptions are used for valuing benefits and paying certain benefits 
under terminating single-employer plans covered by the pension

[[Page 48273]]

insurance system administered by PBGC.

DATES: Effective October 1, 2019.

FOR FURTHER INFORMATION CONTACT: Gregory Katz ([email protected]), 
Attorney, Regulatory Affairs Division, Pension Benefit Guaranty 
Corporation, 1200 K Street NW, Washington, DC 20005, 202-326-4400, ext. 
3829. (TTY users may call the Federal relay service toll free at 1-800-
877-8339 and ask to be connected to 202-326-4400, ext. 3829.)

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 (ERISA). The 
interest assumptions in the regulations are also published on PBGC's 
website (https://www.pbgc.gov).

Lump Sum Interest Assumption

    PBGC uses the interest assumptions in appendix B to part 4022 
(``Lump Sum Interest Rates for PBGC Payments'') to determine whether a 
benefit is payable as a lump sum and to determine the amount to pay as 
a lump sum. Because some private-sector pension plans use these 
interest rates to determine lump sum amounts payable to plan 
participants (if the resulting lump sum is larger than the amount 
required under section 417(e)(3) of the Internal Revenue Code and 
section 205(g)(3) of ERISA), these rates are also provided in appendix 
C to part 4022 (``Lump Sum Interest Rates for Private-Sector 
Payments'').
    This final rule updates appendices B and C of the benefit payments 
regulation to provide the rates for October 2019 measurement dates.
    The October 2019 lump sum interest assumptions will be 0.00 percent 
for the period during which a benefit is (or is assumed to be) 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 September 2019, these assumptions represent a decrease of 
0.50 percent in the immediate rate and are otherwise unchanged.

Valuation/Asset Allocation Interest Assumptions

    PBGC uses the interest assumptions in appendix B to part 4044 
(``Interest Rates Used to Value Benefits'') to value benefits for 
allocation purposes under section 4044 of ERISA, and some private-
sector pension plans use them to determine benefit liabilities 
reportable under section 4044 of ERISA and for other purposes. The 
fourth quarter 2019 interest assumptions will be 2.53 percent for the 
first 25 years following the valuation date and 2.53 percent 
thereafter. In comparison with the interest assumptions in effect for 
the third quarter of 2019, these interest assumptions represent no 
change in the select period (the period during which the select rate 
(the initial rate) applies), a decrease of 0.39 percent in the select 
rate, and a decrease of 0.54 percent in the ultimate rate (the final 
rate).

Need for Immediate Guidance

    PBGC updates appendix B of the asset allocation regulation each 
quarter and appendices B and C of the benefit payments regulation each 
month. 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 issue new interest assumptions promptly 
so that they are available to value benefits and, for plans that rely 
on our publication of them each month or each quarter, to calculate 
lump sum benefit amounts.
    Because of the need to provide immediate guidance for the valuation 
and payment of benefits under plans with valuation dates during October 
2019, 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 312 is added at the end of the 
table to read as follows:

Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments

* * * * *

--------------------------------------------------------------------------------------------------------------------------------------------------------
                   For plans with a valuation date     Immediate                                 Deferred annuities (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          312           10-1-19          11-1-19             0.00             4.00             4.00             4.00                7                8
--------------------------------------------------------------------------------------------------------------------------------------------------------


0
3. In appendix C to part 4022, Rate Set 312 is added at the end of the 
table to read as follows:

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

* * * * *

[[Page 48274]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                   For plans with a valuation date     Immediate                                 Deferred annuities (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          312           10-1-19          11-1-19             0.00             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, an entry for ``October-December 2019'' 
is added at the end of the table to read as follows:

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 =
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
October-December 2019.............................          0.0253             1-25           0.0253              >25              N/A              N/A
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    Issued in Washington, DC.
Hilary Duke,
Assistant General Counsel, Pension Benefit Guaranty Corporation.
[FR Doc. 2019-19838 Filed 9-12-19; 8:45 am]
 BILLING CODE 7709-02-P