[Federal Register Volume 83, Number 51 (Thursday, March 15, 2018)]
[Rules and Regulations]
[Pages 11413-11415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05197]
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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 April 2018 and interest assumptions under the
asset allocation regulation for valuation dates in the second quarter
of 2018. 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 April 1, 2018.
FOR FURTHER INFORMATION CONTACT: Hilary Duke ([email protected]),
Assistant General Counsel for Regulatory Affairs, Pension Benefit
Guaranty Corporation, 1200 K Street NW, Washington, DC 20005, 202-326-
4400, ext. 3839. (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.
3839.)
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 website
(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 April 2018 and
[[Page 11414]]
updates the asset allocation interest assumptions for the second
quarter (April through June) of 2018.
The second quarter 2018 interest assumptions under the allocation
regulation will be 2.27 percent for the first 20 years following the
valuation date and 2.59 percent thereafter. In comparison with the
interest assumptions in effect for the first quarter of 2018, these
interest assumptions represent no change in the select period (the
period during which the select rate (the initial rate) applies), a
decrease of 0.12 percent in the select rate, and a decrease of 0.01
percent in the ultimate rate (the final rate).
The April 2018 interest assumptions under the benefit payments
regulation will be 1.00 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 March 2018, these interest assumptions
represent a 0.25 percent increase in the immediate rate and no changes
in i1, i2, or i3.
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 April
2018, 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 294 is added at the end of the
table to read as follows:
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) i i i n n
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* * * * * * *
294..................................................... 4-1-18 5-1-18 1.00 4.00 4.00 4.00 7 8
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0
3. In appendix C to part 4022, Rate Set 294 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
* * * * *
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For plans with a valuation date Immediate Deferred annuities (percent)
Rate set ---------------------------------- annuity rate ------------------------------------------------------------------------------------
On or after Before (percent) i i i n n
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* * * * * * *
294..................................................... 4-1-18 5-1-18 1.00 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, an entry for ``April-June 2018'' 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 i are:
For valuation dates occurring in the month-- -----------------------------------------------------------------------------------------------------
i for t = i for t = i for t =
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* * * * * * *
April-June 2018................................... 0.0227 1-20 0.0259 >20 N/A N/A
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[[Page 11415]]
Issued in Washington, DC.
Deborah Chase Murphy,
Assistant General Counsel, Pension Benefit Guaranty Corporation.
[FR Doc. 2018-05197 Filed 3-14-18; 8:45 am]
BILLING CODE 7709-02-P