[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Rules and Regulations]
[Pages 18268-18269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9600]


=======================================================================
-----------------------------------------------------------------------

PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4044


Allocation of Assets in Single-Employer 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 May 1997.

EFFECTIVE DATE: May 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.
    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 May 1997.
    For annuity benefits, the interest assumptions will be 6.30 percent 
for the first 25 years following the valuation

[[Page 18269]]

date and 5.00 percent thereafter. The annuity interest assumptions 
represent an increase (from those in effect for April 1997) of 0.20 
percent for the first 25 years following the valuation date and are 
otherwise unchanged. For benefits to be paid as lump sums, the interest 
assumptions to be used by the PBGC will be 5.00 percent for the period 
during which a benefit is in pay status, 4.25 percent during the seven-
year period directly preceding the benefit's placement in pay status, 
and 4.00 percent during any other years preceding the benefit's 
placement in pay status. The lump sum interest assumptions represent an 
increase (from those in effect for April 1997) of 0.25 percent for the 
period during which a benefit is in pay status and for the seven years 
directly preceding that period; they 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 May 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 43 
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 i<INF>1, i<INF>2, * * *, and  
  referred to generally as i<INF>t) 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.]              
----------------------------------------------------------------------------------------------------------------
                                                                      The values of i<INF>t are:                     
 For valuation dates occurring in the month--  -----------------------------------------------------------------
                                                    i<INF>t      for t =       i<INF>t      for t =       i<INF>t      for t = 
----------------------------------------------------------------------------------------------------------------
                                                                                                                
*                  *                  *                  *                  *                  *                
                                                        *                                                       
May 1997......................................      .0630       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 <ls-thn-eq> n<INF>1), interest rate i<INF>1 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 n<INF>1 < y <ls-thn-eq> n<INF>1 + n<INF>2), interest rate i<INF>2 shall apply
from the valuation date for a period of y-n<INF>1 years, interest rate i<INF>1 shall apply for the following n<INF>1 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-n<INF>1-n<INF>2), interest rate i<INF>3 shall apply from the valuation date for a period of y--n<INF>1--
     n<INF>2 years, interest rate i<INF>2 shall apply for the following n<INF>2 years, interest rate i<INF>1 shall apply for the    
                   following n<INF>1 years, and thereafter the immediate annuity rate shall apply.]                  
----------------------------------------------------------------------------------------------------------------
                                       For plans with a       Immediate        Deferred annuities  (percent)    
                                        valuation date         annuity   ---------------------------------------
             Rate set             --------------------------     rate                                           
                                   On or after     Before     (percent)     i<INF>1      i<INF>2      i<INF>3      n<INF>1      n<INF>2  
----------------------------------------------------------------------------------------------------------------
                                                                                                                
*                  *                  *                  *                  *                  *                
                                                        *                                                       
43...............................      05-1-97      06-1-97         5.00    4.25    4.00    4.00       7       8
----------------------------------------------------------------------------------------------------------------

    Issued in Washington, D.C., on this 8th day of April 1997.
John Seal,
Acting Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-9600 Filed 4-14-97; 8:45 am]
BILLING CODE 7708-01-P