Federal Register / Vol. 63, No. 103 / Friday, May 29, 1998 /Rules and Regulations 29353

Dated: May 12, 1998.

Stephen F. Sundlof,

Director, Center for Veterinary Medicine.

[FR Doc. 98–14183 Filed 5–28–98; 8:45 am]

BILLING CODE 4160–01–F

PENSION BENEFIT GUARANTY

CORPORATION

29 CFR Part 4022, 4041, 4050

RIN: 1212–AA87

PBGC Recoupment and

Reimbursement of Benefit

Overpayments and Underpayments

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: The Pension Benefit Guaranty

Corporation is amending its regulation

governing recoupment of benefit

overpayments in trusteed plans to stop

the reduction of monthly benefits under

its actuarial recoupment method once

the amount of the benefit overpayment

is repaid. The amendment also makes

other related changes.

EFFECTIVE DATE: May 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General

Counsel, or James L. Beller, Attorney,

Office of the General Counsel, PBGC,

1200 K Street, NW., Washington, DC

20005–4026, 202–326–4024. (For TTY/

TTD users, call the Federal relay service

toll-free at 1–800–877–8339 and ask to

be connected to 202–326–4024.)

SUPPLEMENTARY INFORMATION: On

December 18, 1997, the PBGC published

a proposed rule in the Federal Register

(62 FR 66319) amending its benefit

payments regulation to provide that

recoupment will cease when the amount

of the overpayment is repaid. The

amendment also gives the PBGC

flexibility to waive recoupment of de

minimis amounts and to accept

repayment ahead of the recoupment

schedule, and modifies the rules

governing calculation of net

overpayments and underpayments.

The PBGC received comments on the

proposed rule from two commenters:

the American Association of Retired

Persons (‘‘AARP’’) and the Association

of Former Pan Am Employees, Inc.

(‘‘AFPAE’’). AARP supported the

proposed regulation and commended

the PBGC for its action. AFPAE, which

also commended the PBGC for

proposing changes, recommended a

number of revisions.

The final regulation follows the

proposed regulation with the following

modifications:

• As requested by AFPAE, the final

rule clarifies that in determining

whether the net overpayment has been

fully repaid, interest on the net

overpayment is disregarded.

• In response to an inquiry in a

pending case in which participants

received both underpayments and

overpayments, the final regulation

provides that the PBGC will always pay

interest on underpayments to the extent

they exceed overpayments. In addition,

for months beginning after May 29,

1998, the PBGC will pay interest at the

applicable federal mid-term rate. For

earlier months, the PBGC will continue

to pay interest using the immediate

annuity rate established for lump sum

valuations.

• Consistent with an AFPAE

suggestion, the final regulation provides

that the PBGC generally will not seek

recovery from the estate of a participant

who dies post-termination. (The existing

regulation precludes recovery from the

estate only for a participant who dies

after the PBGC initiates recoupment.)

• For administrative convenience, the

final regulation provides that the PBGC

will not collect any final partial

monthly installment.

• AFPAE expressed concerns about

the provision allowing repayment ahead

of the recoupment schedule, arguing

that, because the PBGC charges no

interest under the recoupment schedule,

early repayment will never be

advantageous to the participant. The

PBGC will discontinue its current

practice of routinely offering a lump

sum repayment option as part of its

recoupment notice. However, the PBGC

will retain the early repayment option

for those participants who, for whatever

reason, want to eliminate debt. As

suggested by AFPAE, the PBGC intends

to explain to those participants who ask

about the early repayment option that

there may be financial disadvantages to

early repayment.

The PBGC has carefully considered

AFPAE’s other comments and has

decided not to adopt them.

• AFPAE suggested that the PBGC not

seek recoupment from a surviving

beneficiary unless recoupment has been

initiated before the participant’s death.

AFPAE offered no reason why the

PBGC’s recoupment rules should

distinguish in this manner between a

survivorship benefit and the underlying

benefit from which the survivorship

benefit derives. The regulation

minimizes hardship in the case of

recoupment from a survivorship benefit

because the monthly recoupment

amount is reduced in proportion to any

other applicable reduction in the

deceased participant’s benefit (e.g., a

50% reduction under a joint and

survivor annuity) and is generally

capped at 10% of the survivorship

payment.

• AFPAE suggested that the PBGC

eliminate its discretion to recover

overpayments by methods other than

recoupment. The regulation provides

that the PBGC will normally exercise its

discretion only where net benefits paid

exceed plan entitlements (e.g., where a

participant entitled to $1,200 per month

as the full plan benefit and $1,000 per

month under Title IV has received

clearly erroneous payments of $5,000

per month). Any further limitation on

the PBGC’s discretion could result in

unacceptably large losses in particular

cases.

• AFPAE suggested that recoupment

be permitted only if (1) the participant

is notified of the possibility of

recoupment no later than 30 days after

the PBGC makes a final decision to seek

an involuntary termination, and (2)

recoupment begins no more than one

year after the termination date. This

suggestion is impracticable. The PBGC

often encounters significant delays in

obtaining the participant information

needed to provide notice and the benefit

and asset information needed to

complete the complex and timeconsuming process of determining final

benefit entitlements. The PBGC will

continue to provide notice to

participants, and to initiate

recoupments, as soon as possible.

• In response to the provision in the

proposed rule giving the PBGC

discretion to waive de minimis

amounts, AFPAE suggested that the

regulation specify a dollar threshold

under which recoupment is

automatically waived. The PBGC has

decided to retain the discretion

provided in the proposed rule in order

to allow maximum flexibility. After

gaining experience under the de

minimis waiver provision, the PBGC

may decide to specify a fixed dollar

threshold in the regulation.

• AFPAE suggested broadening the

scope of the recoupment and

reimbursement regulation to cover

underpayments made before the plan

termination date. The Title IV singleemployer insurance program does not

cover pre-termination underpayments.

These underpayments represent a claim

on plan assets that are satisfied before

those assets are used to satisfy Title IV

benefits under the allocation rules of

ERISA section 4044 and 29 CFR Part

4044. Thus, to the extent assets are

available, pre-termination

underpayments are fully reimbursed.

AFPAE made several other comments

suggesting revisions to the benefit
29354 Federal Register / Vol. 63, No. 103 / Friday, May 29, 1998 /Rules and Regulations

determination and appeals process.

These comments are beyond the scope

of this rulemaking proceeding.

Applicability of New Rules

The new rules will apply to all initial

determinations that become effective on

or after May 29, 1998. For earlier initial

determinations, if a participant (or

beneficiary) is subject to recoupment

under the actuarial reduction method,

the new rules will apply except that the

PBGC will not redetermine the amount

of the net overpayment or the amount of

the monthly reduction. Thus, for these

cases, the PBGC will stop recoupment

once the amount of the net overpayment

(as previously determined) is repaid. If

the amount of that net overpayment has

been fully repaid prior to May 29, 1998,

the PBGC will stop recoupment effective

as of May 29, 1998.

Example 1. Ms. X is entitled to a

monthly benefit of $500 under Title IV.

For the last 11 years the PBGC has been

recouping $25 each month to repay a

series of overpayments totaling $3,000.

Recoupment will cease as of May 29,

1998 because as of that date Ms. X will

have repaid the overpayments. No

amounts recouped prior to May 29, 1998

will be refunded.

Example 2. Same facts as example 1,

except recoupment began nine years

ago. Recoupment will cease in one year,

i.e., when the full $3,000 is repaid.

Rulemaking Requirements

The PBGC has determined that good

cause exists to make this final rule

effective immediately because the

changes impose requirements only on

the PBGC. See 5 U.S.C. § 553(d)(3).

E.O. 12866 and the Regulatory

Flexibility Act

The Office of Management and Budget

has determined that this final rule is a

‘‘significant regulatory action’’ under

the criteria set forth in Executive Order

12866 and has completed its review of

the final rule under that order.

This rule affects only individuals.

Therefore, the PBGC certifies that, if

adopted, the amendment will not have

a significant economic effect on a

substantial number of small entities.

Accordingly, as provided in section

605(b) of the Regulatory Flexibility Act,

sections 603 and 604 do not apply.

List of Subjects

29 CFR Part 4022, 4041

Pension insurance, Pensions,

Reporting and recordkeeping

requirements.

29 CFR Part 4050

Pensions, Reporting and

recordkeeping requirements.

For the reasons set forth above, the

PBGC amends parts 4022, 4041, and

4050 of 29 CFR chapter XL 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. Section 4022.81 is revised to read

as follows:

§ 4022.81 General rules.

(a) Recoupment of benefit

overpayments. If at any time the PBGC

determines that net benefits paid with

respect to any participant in a PBGCtrusteed plan exceed the total amount to

which the participant (and any

beneficiary) is entitled up to that time

under title IV of ERISA, and the

participant (or beneficiary) is, as of the

termination date, entitled to receive

future benefit payments, the PBGC will

recoup the net overpayment in

accordance with paragraph (c) of this

section and § 4022.82. Notwithstanding

the previous sentence, the PBGC may, in

its discretion, recover overpayments by

methods other than recouping in

accordance with the rules in this

subpart. The PBGC will not normally do

so unless net benefits paid after the

termination date exceed those to which

a participant (and any beneficiary) is

entitled under the terms of the plan

before any reductions under subpart D.

(b) Reimbursement of benefit

underpayments. If at any time the PBGC

determines that net benefits paid with

respect to a participant in a PBGCtrusteed plan are less than the amount

to which the participant (and any

beneficiary) is entitled up to that time

under title IV of ERISA, the PBGC will

reimburse the participant or beneficiary

for the net underpayment in accordance

with paragraph (c) of this section and

§ 4022.83.

(c) Amount to be recouped or

reimbursed. In order to determine the

amount to be recouped from, or

reimbursed to, a participant (or

beneficiary), the PBGC will calculate a

monthly account balance for each

month ending after the termination date.

The PBGC will start with a balance of

zero as of the end of the calendar month

ending immediately prior to the

termination date and determine the

account balance as of the end of each

month thereafter as follows:

(1) Debit for overpayments. The PBGC

will subtract from the account balance

the amount of overpayments made in

that month. Only overpayments made

on or after the latest of the proposed

termination date, the termination date,

or, if no notice of intent to terminate

was issued, the date on which

proceedings to terminate the plan are

instituted pursuant to section 4042 of

ERISA will be included.

(2) Credit for underpayments. The

PBGC will add to the account balance

the amount of underpayments made in

that month. Only underpayments made

on or after the termination date will be

included.

(3) Credit for interest on net

underpayments. If at the end of a month

there is a positive account balance (a net

underpayment), the PBGC will add to

the account balance interest thereon for

that month using—

(i) For months after May 1998, the

applicable federal mid-term rate (as

determined by the Secretary of the

Treasury pursuant to section

1274(d)(1)(C)(ii) of the Code) for that

month (or, where the rate for a month

is not available at the time the PBGC

calculates the amount to be recouped or

reimbursed, the most recent month for

which the rate is available) based on

monthly compounding; and

(ii) For May 1998 and earlier months,

the immediate annuity rate established

for lump sum valuations as set forth in

Table II of Appendix B of part 4044 of

this chapter.

(4) No interest on net overpayments.

If at the end of a month, there is a

negative account balance (a net

overpayment), there will be no interest

adjustment for that month.

3. Section 4022.82 is revised to read

as follows:

§ 4022.82 Method of recoupment.

(a) Future benefit reduction. The

PBGC will recoup net overpayments of

benefits by reducing the amount of each

future benefit payment to which the

participant or any beneficiary is entitled

by the fraction determined under

paragraphs (a)(1) and (a)(2) of this

section, except that benefit reduction

will cease when the amount (without

interest) of the net overpayment is

recouped. Notwithstanding the

preceding sentence, the PBGC may

accept repayment ahead of the

recoupment schedule.

(1) Computation. The PBGC will

determine the fractional multiplier by

dividing the amount of the net

overpayment by the present value of the

benefit payable with respect to the

participant under title IV of ERISA. The

PBGC will determine the present value
Federal Register / Vol. 63, No. 103 / Friday, May 29, 1998 /Rules and Regulations 29355

of the benefit to which a participant or

beneficiary is entitled under title IV of

ERISA as of the termination date, using

the PBGC interest rates and factors in

effect on that date. The PBGC may,

however, utilize a different date of

determination if warranted by the facts

and circumstances of a particular case. (2) Limitation on benefit reduction.

Except as provided in paragraph (a)(1)

of this section, the PBGC will reduce

benefits with respect to a participant or

beneficiary by no more than the greater

of—

(i) Ten percent per month; or

(ii) The amount of benefit per month

in excess of the maximum guaranteeable

benefit payable under section

4022(b)(3)(B) of ERISA, determined

without adjustment for age and benefit

form.

(3) PBGC notice to participant or

beneficiary. Before effecting a benefit

reduction pursuant to this paragraph,

the PBGC will notify the participant or

beneficiary in writing of the amount of

the net overpayment and of the amount

of the reduced benefit computed under

this section.

(4) Waiver of de minimis amounts.

The PBGC may, in its discretion, decide

not to recoup net overpayments that it

determines to be de minimis.

(5) Final installment. The PBGC will

cease recoupment one month early if the

amount remaining to be recouped in the

final month is less than the amount of

the monthly reduction. (b) Full repayment through

recoupment. Recoupment under this

section constitutes full repayment of the

net overpayment.

§ 4022.83. [Amended]

4. Section 4022.83 is amended by

removing the reference to § 4022.81(d)

and adding, in its place, a reference to

§ 4022.81(c).

PART 4041—TERMINATION OF

SINGLE-EMPLOYER PLANS

5. The authority citation for part 4041

continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3), 1341,

1344, 1350.

§ 4041.42 [Amended]

6. Section 4041.42(d)(2) is amended

by removing the reference to

§ 4022.81(d) and adding, in its place, a

reference to § 4022.81(c)(3).

PART 4050—MISSING PARTICIPANTS

7. The authority citation for part 4050

continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3), 1350.

§ 4050.2 [Amended]

8. The definition of ‘‘Designated

benefit interest rate’’ in Section 4050.2,

is amended by removing the reference to

§ 4022.81(d) and adding, in its place, a

reference to § 4022.81(c).

Issued in Washington, DC, this 27th day of

May, 1998.

Alexis M. Herman

Chairman, Board of Directors Pension Benefit

Guaranty Corporation.

Issued on the date set forth above pursuant

to a resolution of the Board of Directors

authorizing its Chairman to issue this final

rule.

James J. Keightley

Secretary, Board of Directors Pension Benefit

Guaranty Corporation.

[FR Doc. 98–14448 Filed 5–28–98; 8:45 am]

BILLING CODE 7708–01–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 660

[Docket No. 980415098–5098–8098–01; I.D.

031998A]

Fisheries Off West Coast States and in

the Western Pacific; Western Pacific

Crustacean Fisheries; Vessel

Monitoring System; Harvest Guideline;

Closed Season; Correction

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Final rule; correction.

SUMMARY: This document corrects a rule

published in the Federal Register on

April 27, 1998. The regulations

implemented three management

measures governing the crustacean

fisheries in the exclusive economic zone

around Hawaii.

DATES: Effective May 27, 1998.

FOR FURTHER INFORMATION CONTACT:

Alvin Katekaru, NMFS, 808–973–2985.

SUPPLEMENTARY INFORMATION: In the

classification section of the final rule

published on April 27, 1998 (63 FR

20539),

NMFS inadvertently omitted a word

at the end of the third paragraph. Also,

when NMFS revised the definition for

Crustacean Permit Area I VMS Subarea

in § 660.12, NMFS inadvertently put a

comma at the end of the definition.

Correction of Publication

The publication on April 27, 1998 (63

FR 20539) [I.D. 031998A], FR Doc. 98–

11017, is corrected as follows:

On page 20540 in the second column,

in the third paragraph under

Classification, the word ‘‘not’’ should be

inserted before the word ‘‘applicable’’.

§ 660.12 [Corrected]

On page 20540, in § 660.12, in the

definition of ‘‘Crustaceans Permit Area

I VMS Subarea’’, in the third column, on

the last line, the comma at the end of

the definition should be removed and

replaced with a period.

Authority: 16 U.S.C. 1801 et seq.

Dated: May 22, 1998.

David L. Evans,

Deputy Assistant Administrator for Fisheries,

National Marine Fisheries Service.

[FR Doc. 98–14249 Filed 5–28–98; 8:45 am]

BILLING CODE 3510–22–F

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 678

[I.D. 051998A]

Atlantic Shark Fisheries; Quota

Adjustment

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Quota adjustment.

SUMMARY: NMFS announces that the

landings of large coastal sharks in the

Atlantic Ocean, Gulf of Mexico, and

Caribbean Sea totaled 684.8 metric tons

(mt) during the first semiannual 1998

season. Because this constitutes an

overharvest of 42 mt, the second

semiannual 1998 quota is reduced

accordingly.

DATES: Effective May 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Margo Schulze or Karyl Brewster-Geisz

at 301–713–2347; or Buck Sutter at 813–

570–5324.

SUPPLEMENTARY INFORMATION: The

Atlantic Ocean, Gulf of Mexico, and

Caribbean Sea shark fisheries are

managed by NMFS according to the

Fishery Management Plan (FMP) for

Atlantic Sharks prepared by NMFS

under authority of the MagnusonStevens Fishery Conservation and

Management Act (16 U.S.C. 1801 et

seq.). Fishing by U.S. vessels is

governed by regulations implementing

the FMP at 50 CFR part 678.

Section 678.24(b) of the regulations

provides for two semi-annual quotas of

642 mt of large coastal sharks to be

harvested from the Atlantic Ocean, Gulf

of Mexico, and Caribbean Sea waters by