[Federal Register Volume 72, Number 8 (Friday, January 12, 2007)]
[Notices]
[Pages 1564-1565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-337]


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PENSION BENEFIT GUARANTY CORPORATION


Required Interest Rate Assumption for Determining Variable-Rate 
Premium for Single-Employer Plans; Interest on Late Premium Payments; 
Interest on Underpayments and Overpayments of Single-Employer Plan 
Termination Liability and Multiemployer Withdrawal Liability; Interest 
Assumptions for Multiemployer Plan Valuations Following Mass Withdrawal

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of interest rates and assumptions.

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SUMMARY: This notice informs the public of the interest rates and 
assumptions to be used under certain Pension Benefit Guaranty 
Corporation regulations. These rates and assumptions are published 
elsewhere (or can be derived from rates published elsewhere), but are 
collected and published in this notice for the convenience of the 
public. Interest rates are also published on the PBGC's Web site 
(http://www.pbgc.gov).

DATES: The required interest rate for determining the variable-rate 
premium under part 4006 applies to premium payment years beginning in 
January 2007. The interest assumptions for performing multiemployer 
plan valuations following mass withdrawal under part 4281 apply to 
valuation dates occurring in February 2007. The interest rates for late 
premium payments under part 4007 and for underpayments and overpayments 
of single-employer plan termination liability under part 4062 and 
multiemployer withdrawal liability under part 4219 apply to interest 
accruing during the first quarter (January through March) of 2007.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, 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:

Variable-Rate Premiums

    Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income 
Security Act of 1974 (ERISA) and Sec.  4006.4(b)(1) of the PBGC's 
regulation on Premium Rates (29 CFR part 4006) prescribe use of an 
assumed interest rate (the ``required interest rate'') in determining a 
single-employer plan's variable-rate premium. Pursuant to the Pension 
Protection Act of 2006, for premium payment years beginning in 2006 or 
2007, the required interest rate is the ``applicable percentage'' 
(currently 85 percent) of the annual rate of interest determined by the 
Secretary of the Treasury on amounts invested conservatively in long-
term investment grade corporate bonds for the month preceding the 
beginning of the plan year for which premiums are being paid (the 
``premium payment year''). Thus, the required interest rate to be used 
in determining variable-rate premiums for premium payment years 
beginning in January 2007 is 4.89 percent (i.e., 85 percent of the 5.75 
percent composite corporate bond rate for December 2006 as determined 
by the Treasury).
    On December 2, 2005, the Internal Revenue Service published 
proposed regulations containing updated mortality tables for 
determining current liability under section 412(l)(7) of the Code and 
section 302(d)(7) of ERISA for plan years beginning on or after January 
1, 2007, http://www.irs.gov/pub/irs-regs/12498805.pdf. If these 
regulations are finalized and effective for plan years beginning on or 
after January 1, 2007, the required interest rate to be used in 
determining variable-rate premiums would be 100 percent (instead of 85 
percent) of the composite corporate bond rate. If the required interest 
rate for premium payment years beginning in January 2007 changes, the 
PBGC will promptly publish a Federal Register notice with the new rate.
    The following table lists the required interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between February 2006 and January 2007.

------------------------------------------------------------------------
                                                           The required
        For premium  payment years beginning in:           interest rate
                                                                is:
------------------------------------------------------------------------
February 2006...........................................            4.80
March 2006..............................................            4.87
April 2006..............................................            5.01
May 2006................................................            5.25
June 2006...............................................            5.35
July 2006...............................................            5.36
August 2006.............................................            5.36
September 2006..........................................            5.19
October 2006............................................            5.06
November 2006...........................................            5.05
December 2006...........................................            4.90
January 2007............................................            4.89
------------------------------------------------------------------------

Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability

    Section 4007(b) of ERISA and Sec.  4007.7(a) of the PBGC's 
regulation on Payment of Premiums (29 CFR part 4007) require the 
payment of interest on late premium payments at the rate established 
under section 6601 of the Internal Revenue Code. Similarly, Sec.  
4062.7 of the PBGC's regulation on Liability for Termination of Single-
Employer Plans (29 CFR part 4062) requires that interest be charged or 
credited at the section 6601 rate on underpayments and overpayments of 
employer liability under section 4062 of ERISA. The section 6601 rate 
is established periodically (currently quarterly) by the Internal 
Revenue Service. The rate applicable to the first quarter (January 
through March) of 2007, as announced by the IRS, is 8 percent.
    The following table lists the late payment interest rates for 
premiums and employer liability for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                    From--                       Through--       rate
                                                              (percent)
------------------------------------------------------------------------
4/1/00........................................      3/31/01            9
4/1/01........................................      6/30/01            8
7/1/01........................................     12/31/01            7
1/1/02........................................     12/31/02            6
1/1/03........................................      9/30/03            5
10/1/03.......................................      3/31/04            4
4/1/04........................................      6/30/04            5
7/1/04........................................      9/30/04            4
10/1/04.......................................      3/31/05            5
4/1/05........................................      9/30/05            6
10/1/05.......................................      6/30/06            7
7/1/06........................................      3/31/07            8
------------------------------------------------------------------------

Underpayments and Overpayments of Multiemployer Withdrawal Liability

    Section 4219.32(b) of the PBGC's regulation on Notice, Collection, 
and Redetermination of Withdrawal Liability (29 CFR part 4219) 
specifies the rate at which a multiemployer plan is to charge or credit 
interest on underpayments and overpayments of withdrawal liability 
under section 4219 of ERISA unless an applicable plan provision 
provides otherwise. For interest accruing during any calendar quarter, 
the specified rate is the average quoted prime rate on short-term 
commercial loans for the fifteenth day (or the next business day if the 
fifteenth day is not a business day) of the month preceding the 
beginning of the quarter, as reported by the Board of Governors of the 
Federal Reserve System in Statistical Release H.15 (``Selected Interest 
Rates''). The rate for the first

[[Page 1565]]

quarter (January through March) of 2007 (i.e., the rate reported for 
December 15, 2006) is 8.25 percent.
    The following table lists the withdrawal liability underpayment and 
overpayment interest rates for the specified time periods:

------------------------------------------------------------------------
                                                               Interest
                    From--                       Through--       rate
                                                              (percent)
------------------------------------------------------------------------
7/1/00........................................      3/31/01         9.50
4/1/01........................................      6/30/01         8.50
7/1/01........................................      9/30/01         7.00
10/1/01.......................................     12/31/01         6.50
1/1/02........................................     12/31/02         4.75
1/1/03........................................      9/30/03         4.25
10/1/03.......................................      9/30/04         4.00
10/1/04.......................................     12/31/04         4.50
1/1/05........................................      3/31/05         5.25
4/1/05........................................      6/30/05         5.50
7/1/05........................................      9/30/05         6.00
10/1/05.......................................     12/31/05         6.50
1/1/06........................................      3/31/06         7.25
4/1/06........................................      6/30/06         7.50
7/1/06........................................      9/30/06         8.00
10/1/06.......................................      3/31/07         8.25
------------------------------------------------------------------------

Multiemployer Plan Valuations Following Mass Withdrawal

    The PBGC's regulation on Duties of Plan Sponsor Following Mass 
Withdrawal (29 CFR part 4281) prescribes the use of interest 
assumptions under the PBGC's regulation on Allocation of Assets in 
Single-Employer Plans (29 CFR part 4044). The interest assumptions 
applicable to valuation dates in February 2007 under part 4044 are 
contained in an amendment to part 4044 published elsewhere in today's 
Federal Register. Tables showing the assumptions applicable to prior 
periods are codified in appendix B to 29 CFR part 4044.

    Issued in Washington, DC, on this 9th day of January 2007.
Vincent K. Snowbarger,
Interim Director, Pension Benefit Guaranty Corporation.
 [FR Doc. E7-337 Filed 1-11-07; 8:45 am]
BILLING CODE 7709-01-P