[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Rules and Regulations]
[Pages 65607-65608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32732]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4011 and 4022


Disclosure to Participants; Benefits Payable in Terminated 
Single-Employer Plans

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This rule amends the appendix to the Pension Benefit Guaranty 
Corporation's regulation on Benefits Payable in Terminated Single-
Employer Plans by adding the maximum guaranteeable pension benefit that 
may be paid by the PBGC with respect to a plan participant in a single-
employer pension plan that terminates in 1998. This rule also amends 
Appendix B to the PBGC's regulation on Disclosure to Participants by 
adding information on 1998 maximum guaranteed benefit amounts. The 
amendment is necessary because the maximum guarantee amount changes 
each year, based on changes in the contribution and benefit base under 
section 230 of the Social Security Act. The effect of the amendment is 
to advise plan participants and beneficiaries of the increased maximum 
guarantee amount for 1998.

EFFECTIVE DATE: January 1, 1998.

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: Section 4022(b) of the Employee Retirement 
Income Security Act of 1974 provides for certain limitations on 
benefits guaranteed by the PBGC in terminating single-employer pension 
plans covered under Title IV of ERISA. One of the limitations, set 
forth in section 4022(b)(3)(B), is a dollar ceiling on the amount of 
the monthly benefit that may be paid to a plan participant (in the form 
of a life annuity beginning at age 65) by the PBGC. The ceiling is 
equal to ``$750 multiplied by a fraction, the numerator of which is the 
contribution and benefit base (determined under section 230 of the 
Social Security Act) in effect at the time the plan terminates and the 
denominator of which is such contribution and benefit base in effect in 
calendar year 1974 [$13,200]''. This formula is also set forth in 
Sec. 4022.22(b) of the PBGC's regulation on Benefits Payable in 
Terminated Single-Employer Plans (29 CFR Part 4022). The appendix to 
Part 4022 lists, for each year beginning with 1974, the maximum 
guaranteeable benefit payable by the PBGC to participants in single-
employer plans that have terminated in that year.
    Section 230(d) of the Social Security Act (42 U.S.C. 430(d)) 
provides special rules for determining the contribution and benefit 
base for purposes of ERISA section 4022(b)(3)(B). Each year the Social 
Security Administration determines, and notifies the PBGC of,

[[Page 65608]]

the contribution and benefit base to be used by the PBGC under these 
provisions, and the PBGC publishes an amendment to the appendix to Part 
4022 to add the guarantee limit for the coming year. (The PBGC's 
general practice has been to issue the amendments on or about December 
15 of each year, at the same time it issues interest updates for other 
regulations. However, the information needed for the guarantee limit 
amendments is typically available earlier than the information for the 
interest updates. The PBGC intends in the future to publish its annual 
guarantee limit amendments earlier than December 15.)
    The PBGC has been notified by the Social Security Administration 
that, under section 230 of the Social Security Act, $50,700 is the 
contribution and benefit base that is to be used to calculate the PBGC 
maximum guaranteeable benefit for 1998. Accordingly, the formula under 
section 4022(b)(3)(B) of ERISA and 29 CFR Sec. 4022.22(b) is: $750 
multiplied by $50,700/$13,200. Thus, the maximum monthly benefit 
guaranteeable by the PBGC in 1998 is $2,880.68 per month in the form of 
a life annuity beginning at age 65. This amendment updates the appendix 
to Part 4022 to add this maximum guaranteeable amount for plans that 
terminate in 1998. (If a benefit is payable in a different form or 
begins at a different age, the maximum guaranteeable amount is the 
actuarial equivalent of $2,880.68 per month.)
    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 1998 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 1998 
maximum guaranteeable benefit amounts for the information of the 
public, general notice of proposed rulemaking is not required. 
Moreover, because the 1998 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, 1998, 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 4011--DISCLOSURE TO PARTICIPANTS

    1. The authority citation for Part 4011 continues to read as 
follows:

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

    2. 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                                                                 
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                                                              The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the amount (monthly or   
                                                                                                                   annual) listed below:                                                        
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                If a plan terminates in--                              Age 65                            Age 62                            Age 60                            Age 55             
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                                                              Monthly           Annual          Monthly           Annual          Monthly           Annual          Monthly           Annual    
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                                       *                  *                  *                  *                  *                  *                  *                                      
1998....................................................       $2,880.68       $34,568.16        $2,275.74       $27,308.88        $1,872.44       $22,469.28        $1,296.31       $15,555.72 
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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 Sec.  4022.22(b) to a participant in a plan that terminated
                              in that year]                             
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                                                  Maximum guaranteeable 
                      Year                           monthly benefit    
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                  *        *        *        *        *                 
1998...........................................                 2,880.68
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    Issued at Washington, D.C., this 10th day of December, 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-32732 Filed 12-12-97; 8:45 am]
BILLING CODE 7708-01-P