[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Notices]
[Pages 65718-65719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32733]


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PENSION BENEFIT GUARANTY CORPORATION


Interest Assumption for Determining Variable-Rate Premium; 
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 are derivable 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 home page 
(http://www.pbgc.gov).

DATES: The interest rate for determining the variable-rate premium 
under part 4006 applies to premium payment years beginning in December 
1997. The interest assumptions for performing multiemployer plan 
valuations following mass withdrawal under part 4281 apply to valuation 
dates occurring in January 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, 202-326-4024. 
(For TTY and TDD, call 800-877-8339 and request connection 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 in determining a single-employer plan's variable-
rate premium. The rate is the ``applicable percentage'' (described in 
the statute and the regulation) of the annual yield on 30-year Treasury 
securities for the month preceding the beginning of the plan year for 
which premiums are being paid (the ``premium payment year''). The yield 
figure is reported in Federal Reserve Statistical Releases G.13 and 
H.15.
    For plan years beginning before July 1, 1997, the applicable 
percentage of the 30-year Treasury yield was 80 percent. The Retirement 
Protection Act of 1994 (RPA) amended ERISA section 
4006(a)(3)(E)(iii)(II) to provide that the applicable percentage is 85 
percent for plan years beginning on or after July 1, 1997, through (at 
least) plan years beginning before January 1, 2000.
    However, under section 774(c) of the RPA, the application of the 
amendment is deferred for certain regulated public utility (RPU) plans 
for as long as six months. The applicable percentage for RPU plans will 
therefore remain 80 percent for plan years beginning before

[[Page 65719]]

January 1, 1998. (The rules governing the applicable percentages for 
``partial'' RPU plans are described in Sec. 4006.5(g) of the premium 
rates regulation.)
    For plans for which the applicable percentage is 85 percent, the 
assumed interest rate to be used in determining variable-rate premiums 
for premium payment years beginning in December 1997 is 5.19 percent 
(i.e., 85 percent of the 6.11 percent yield figure for November 1997).
    The following table lists the assumed interest rates to be used in 
determining variable-rate premiums for premium payment years beginning 
between January 1997 and December 1997. The rates for July through 
December 1997 in the table reflect an applicable percentage of 85 
percent and thus apply only to non-RPU plans. However, the rates for 
months before July 1997, which reflect an applicable percentage of 80 
percent, apply to RPU (and ``partial'' RPU) plans as well as to non-RPU 
plans.

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                                                             The assumed
           For premium payment years beginning in              interest 
                                                               rate is  
------------------------------------------------------------------------
January 1997...............................................         5.24
February 1997..............................................         5.46
March 1997.................................................         5.35
April 1997.................................................         5.54
May 1997...................................................         5.67
June 1997..................................................         5.55
July 1997..................................................         5.75
August 1997................................................         5.53
September 1997.............................................         5.59
October 1997...............................................         5.53
November 1997..............................................         5.38
December 1997..............................................         5.19
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    For premium payment years beginning in December 1997, the assumed 
interest rate to be used in determining variable-rate premiums for RPU 
plans (determined using an applicable percentage of 80 percent) is 4.89 
percent. For ``partial'' RPU plans, the assumed interest rates to be 
used in determining variable-rate premiums can be computed by applying 
the rules in Sec. 4006.5(g) of the premium rates regulation. The PBGC's 
premium payment instruction booklet also describes these rules and 
provides a worksheet for computing the assumed rate.

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 January 1998 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 10th day of December 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-32733 Filed 12-12-97; 8:45 am]
BILLING CODE 7708-01-P