65474 Federal Register / Vol. 61, No. 241 / Friday, December 13, 1996 / Rules and Regulations

different form or begins at a different

age, the maximum guaranteeable

amount will be the actuarial equivalent

of $2,761.36 per month.

The appendix to part 4022 lists the

maximum guaranteeable benefit payable

by the PBGC to participants in singleemployer plans that have terminated in

each year from 1974 through 1996. This

amendment updates the appendix for

plans that terminate in 1997.

Section 4011 of ERISA requires plan

administrators of certain underfunded

plans to provide notice to plan

participants and beneficiaries of the

plan’s funding status and the limits of

the PBGC’s guarantee. The PBGC’s

regulation on Disclosure to Participants

(29 CFR Part 4011) implements the

statutory notice requirement. This rule

amends Appendix B to the regulation on

Disclosure to Participants by adding

information on 1997 maximum

guaranteed benefit amounts. Plan

administrators may, subject to the

requirements of that regulation, include

this information in participant notices.

Because the maximum guaranteeable

benefit is determined according to the

formula in section 4022(b)(3)(B) of

ERISA, and these amendments make no

change in its method of calculation but

simply list 1997 maximum

guaranteeable benefit amounts for the

information of the public, general notice

of proposed rulemaking is not required.

Moreover, because the 1997 maximum

guaranteeable benefit is effective, under

the statute, at the time that the Social

Security contribution and benefit base is

effective, i.e., January 1, 1997, and is not

dependent on the issuance of this rule,

the PBGC finds that good cause exists

for making these amendments effective

less than 30 days after publication (5

U.S.C. 553).

The 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

29 CFR Part 4011

Pensions, Reporting and

recordkeeping requirements.

29 CFR Part 4022

Pension insurance, Pensions,

Reporting and recordkeeping

requirements.

In consideration of the foregoing, 29

CFR parts 4011 and 4022 are amended

as follows:

PART 4022—BENEFITS PAYABLE IN

TERMINATED SINGLE-EMPLOYER

PLANS

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.

2. The appendix to part 4022 is

amended by adding a new entry to the

table to read as follows. The

introductory text is reproduced for the

convenience of the reader and remains

unchanged.

Appendix to Part 4022—Maximum

Guaranteeable Monthly Benefit

The following table lists by year the

maximum guaranteeable monthly

benefit payable in the form of a life

annuity commencing at age 65 as

described by § 4022.22(b) to a

participant in a plan that terminated in

that year:

Year

Maximum

guaranteeable

monthly benefit

* * * * *

1997 ....................................... 2,761.36

PART 4011—DISCLOSURE TO

PARTICIPANTS

3. The authority citation for Part 4011

continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3), 1311.

4. Appendix B to part 4011 is

amended by adding a new entry to the

table to read as follows. The

introductory text is reproduced for the

convenience of the reader and remains

unchanged.

APPENDIX B TO PART 4011—TABLE OF MAXIMUM GUARANTEED BENEFITS

If a plan terminates in—

The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the amount

(monthly or annual) listed below:

Age 65 Age 62 Age 60 Age 55

Monthly Annual Monthly Annual Monthly Annual Monthly Annual

* * * * * * *

1997 .................... $2,761.36 $33,136.32 $2,181.47 $26,177.64 $1,794.88 $21,538.56 $1,242.61 $14,911.32

Issued at Washington, D.C., this 10th day

of December, 1996.

Martin Slate,

Executive Director, Pension Benefit Guaranty

Corporation.

[FR Doc. 96–31715 Filed 12–12–96; 8:45 am]

BILLING CODE 7708–01–P

29 CFR Part 4044

Allocation of Assets in SingleEmployer Plans; Interest Assumptions

for Valuing Benefits

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: The Pension Benefit Guaranty

Corporation’s regulation on Allocation

of Assets in Single-Employer Plans

prescribes interest assumptions for

valuing benefits under terminating

single-employer plans. This final rule

amends the regulation to adopt interest

assumptions for plans with valuation

dates in January 1997.

EFFECTIVE DATE: January 1, 1997.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General

Counsel, Office of the General Counsel,

Pension Benefit Guaranty Corporation,

1200 K Street, NW., Washington, DC

20005, 202–326–4024 (202–326–4179

for TTY and TDD).

SUPPLEMENTARY INFORMATION: The

PBGC’s regulation on Allocation of

Assets in Single-Employer Plans (29

CFR part 4044) prescribes actuarial

assumptions for valuing plan benefits of

terminating single-employer plans

covered by title IV of the Employee

Retirement Income Security Act of 1974.

Among the actuarial assumptions

prescribed in part 4044 are interest

assumptions. These interest

assumptions are intended to reflect

current conditions in the financial and

annuity markets.
Federal Register / Vol. 61, No. 241 / Friday, December 13, 1996 / Rules and Regulations 65475

Two sets of interest assumptions are

prescribed, one set for the valuation of

benefits to be paid as annuities and one

set for the valuation of benefits to be

paid as lump sums. This amendment

adds to appendix B to part 4044 the

annuity and lump sum interest

assumptions for valuing benefits in

plans with valuation dates during

January 1997.

For annuity benefits, the interest

assumptions will be 5.80 percent for the

first 25 years following the valuation

date and 5.00 percent thereafter. The

above annuity assumptions (in

comparison with those in effect during

December 1996) reflect a 5-year increase

in the period during which the initial

rate applies (from a period of 20 years

following the valuation date to a period

of 25 years following the valuation

date). The initial rate, in effect during

the 25-year period, represents a decrease

(from the initial rate in effect for

December 1996) of .20 percent. The

ultimate rate, in effect thereafter,

represents an increase of .25 percent

over the previous ultimate rate.

For benefits to be paid as lump sums,

the interest assumptions to be used by

the PBGC will be 4.50 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. The lump sum interest

assumptions represent a decrease (from

those in effect for December 1996) of .25

percent for the period during which a

benefit is in pay status and are

otherwise unchanged.

The 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, as

accurately as possible, current market

conditions.

Because of the need to provide

immediate guidance for the valuation of

benefits in plans with valuation dates

during January 1997, the PBGC finds

that good cause exists for making the

assumptions set forth in this

amendment effective less than 30 days

after publication.

The 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 in 29 CFR Part 4044

Pension insurance, Pensions.

In consideration of the foregoing, 29

CFR part 4044 is amended as follows:

PART 4044—[AMENDED]

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.

2. In appendix B, a new entry is

added to Table I, and Rate Set 39 is

added to Table II, as set forth below.

The introductory text of each table is

republished for the convenience of the

reader and remains unchanged.

Appendix B to Part 4044—Interest Rates Used to Value Annuities and Lump Sums

TABLE I.—[ANNUITY VALUATIONS]

[This table sets forth, for each indicated calendar month, the interest rates (denoted by i1, i2, * * *, and referred to generally as it) assumed to be

in effect between specified anniversaries of a valuation date that occurs within that calendar month; those anniversaries are specified in the

columns adjacent to the rates. The last listed rate is assumed to be in effect after the last listed anniversary date]

For valuation dates occurring in the month—

The values of it are:

it for t= it for t= it for t=

* * * * * * *

January 1997 ..................................................................... .0580 1–25 .0500 >25 N/A N/A

TABLE II.—[LUMP SUM VALUATIONS]

[In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status on the valuation date, the immediate annuity rate shall apply; (2) For benefits for which the deferral period is y years (where y is an integer and 0 < y ≤ n1), interest rate i1 shall

apply from the valuation date for a period of y years, and thereafter the immediate annuity rate shall apply; (3) For benefits for which the deferral period is y years (where y is an integer and n1 < y ≤ n1 + n2), interest rate i2 shall apply from the valuation date for a period of y—n1

years, interest rate i1 shall apply for the following n1 years, and thereafter the immediate annuity rate shall apply; (4) For benefits for which

the deferral period is y years (where y is an integer and y > n1 + n2), interest rate i3 shall apply from the valuation date for a period of y—

n1—n2 years, interest rate i2 shall apply for the following n2 years, interest rate i1 shall apply for the following n1 years, and thereafter the immediate annuity rate shall apply]

Rate set

For plans with a valuation

date Immediate

annuity rate

(percent)

Deferred annuities (percent)

On or after Before i1 i2 i3 n1 n2

* * * * * * *

39 01–1–97 02–1–97 4.50 4.00 4.00 4.00 7 8
65476 Federal Register / Vol. 61, No. 241 / Friday, December 13, 1996 / Rules and Regulations

Issued in Washington, DC, on this 10th day

of December 1996.

Martin Slate,

Executive Director, Pension Benefit Guaranty

Corporation.

[FR Doc. 96–31714 Filed 12–12–96; 8:45 am]

BILLING CODE 7708–01–P

29 CFR Part 4044

Allocation of Assets in SingleEmployer Plans; Valuation of Benefits

and Assets; Expected Retirement Age

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: This rule amends the Pension

Benefit Guaranty Corporation’s

regulation on Allocation of Assets in

Single-Employer Plans by substituting

new Table I–97 in place of existing

Table I–96 in appendix D. Table I–97

applies to any plan being terminated

either in a distress termination or

involuntarily by the PBGC with a

valuation date falling in 1997, and is

used to determine expected retirement

ages for plan participants. This table is

needed in order to compute the value of

early retirement benefits and, thus, the

total value of benefits under the plan.

EFFECTIVE DATE: January 1, 1997.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General

Counsel, Office of the General Counsel,

Pension Benefit Guaranty Corporation,

1200 K Street, NW., Washington, DC

20005–4026; 202–326–4024 (202–326–

4179 for TTY and TDD).

SUPPLEMENTARY INFORMATION: The

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 of the Employee

Retirement Income Security Act of 1974.

Under ERISA section 4041(c), plans

wishing to terminate in a distress

termination must value guaranteed

benefits and benefit liabilities under the

plan in accordance with part 4044,

subpart B. In addition, when the 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 § 4044.51(b), 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–96 with Table I–97 in

order to provide an updated correlation,

appropriate for calendar year 1997,

between the amount of a participant’s

benefit and the probability that the

participant will elect early retirement.

Table I–97 will be used to value benefits

in plans with valuation dates during

calendar year 1997.

The 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 1997, 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 1997. Moreover, because

of the need to provide immediate

guidance for the valuation of benefits

under such plans, and because no

adjustment by ongoing plans is required

by this amendment, the PBGC finds that

good cause exists for making this

amendment to the regulation effective

less than 30 days after publication.

The 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—[AMENDED]

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.

2. Appendix D to part 4044 is

amended by removing Table I–96 and

adding in its place Table I–97 to read as

follows:

Appendix D to Part 4044—Tables Used

to Determine Expected Retirement Age

TABLE I–97—SELECTION OF RETIREMENT RATE CATEGORY

[For Plans with valuation dates after December 31, 1996, and before January 1, 1998]

Participant reaches URA in year—

Participant’s Retirement Rate Category is—

Low 1 if

monthly benefit at URA is

less than—

Medium 2 if monthly benefit at

URA is

High 3 if

monthly benefit at URA is

From To greater than—

1998 .................................................................................................................. 409 409 1,723 1,723

1999 .................................................................................................................. 421 421 1,771 1,771