Federal Register / Vol. 60, No. 241 / Friday, December 15, 1995 / Rules and Regulations 64325

The PBGC has been notified by the

Social Security Administration that,

under section 230 of the Social Security

Act, $46,500 is the contribution and

benefit base that is to be used to

calculate the PBGC maximum

guaranteeable benefit for 1996.

Accordingly, the formula under section

4022(b)(3)(B) of ERISA and 29 CFR

§ 2621.3(a)(2) is: $750 multiplied by

$46,500/$13,200. Thus, the maximum

monthly benefit guaranteeable by the

PBGC in 1996 is $2,642.05 per month in

the form of a life annuity beginning at

age 65. If a benefit is payable in a

different form or begins at a different

age, the maximum guaranteeable

amount will be the actuarial equivalent

of $2,642.05 per month.

Appendix A to part 2621 lists the

maximum guaranteeable benefit payable

by the PBGC to participants in singleemployer plans that have terminated in

each year from 1974 through 1995. This

amendment updates appendix A for

plans that terminate in 1996.

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

Disclosure to Participants regulation

(part 2627) implements the statutory

notice requirement. This rule amends

Appendix B to the PBGC’s Disclosure to

Participants regulation by adding

information on 1996 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 1996 maximum

guaranteeable benefit amounts for the

public’s knowledge, general notice of

proposed rulemaking is not required.

Moreover, because the 1996 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, 1996, and is not

dependent on the issuance of this

regulation, 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 in 29 CFR Parts 2621

and 2627

Employee benefit plans, Pension

insurance, and Pensions.

In consideration of the foregoing,

parts 2621 and 2627 of subchapter C,

chapter XXVI, title 29, Code of Federal

Regulations are hereby amended as

follows:

PART 2621—LIMITATION ON

GUARANTEED BENEFITS IN SINGLEEMPLOYER PLANS

1. The authority citation for Part 2621

continues to read as follows:

Authority: 29 U.S.C. 1302, 1322, 1322b.

2. Appendix A to part 2621 is

amended by adding a new entry to read

as follows. The introductory text is

reproduced for the convenience of the

reader and remains unchanged.

Appendix A to Part 2621—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 § 2621.3(a)(2) to a

participant in a plan that terminated in

that year:

Year

Maximum

guaranteeable

monthly

benefit

* * * * *

1996 ...................................... 2,642.05

PART 2627—DISCLOSURE TO

PARTICIPANTS

3. The authority citation for Part 2627

continues to read as follows:

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

4. Appendix B to part 2627 is

amended by adding a new entry to read

as follows. The introductory text is

reproduced for the convenience of the

reader and remains unchanged.

Appendix B to Part 2627—Table of Maximum Guaranteed Benefits

If a plan terminates in—

The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the

amount (monthly or annual) listed below:

Age 65 Age 62 Age 60 Age 55

Monthly Annual Monthly Annual Monthly Annual Monthly Annual

1996 .................................. $2,642.05 $31,704.60 $2,087.22 $25,046.64 $1,717.33 $20,607.96 $1,188.92 $14,267.04

Issued at Washington, DC this 11th day of

December, 1995.

Martin Slate,

Executive Director, Pension Benefit Guaranty

Corporation.

[FR Doc. 95–30497 Filed 12–14–95; 8:45 am]

BILLING CODE 7708–01–P

29 CFR Part 2619

Valuation of Plan Benefits in SingleEmployer Plans; Expected Retirement

Age

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: This rule amends the Pension

Benefit Guaranty Corporation’s

regulation on Valuation of Plan Benefits

in Single-Employer Plans (29 CFR Part

2619) by adding a new Table I–96 to

appendix D. Table I–96 applies to any

plan being terminated either in a

distress termination or involuntarily by

the PBGC with a valuation date falling

in 1996, and is used to determine

expected retirement ages for plan

participants. This table is needed in

order to compute the value of early

retirement benefits and, thus, the total

value of benefits under the plan.

EFFECTIVE DATE: January 1, 1996.
64326 Federal Register / Vol. 60, No. 241 / Friday, December 15, 1995 / Rules and Regulations

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). (These are not

toll-free numbers.)

SUPPLEMENTARY INFORMATION: The

regulation of the Pension Benefit

Guaranty Corporation (‘‘PBGC’’) on

Valuation of Plan Benefits in SingleEmployer Plans (29 CFR part 2619) sets

forth the methods for valuing plan

benefits of terminating single-employer

plans covered under Title IV of the

Employee Retirement Income Security

Act of 1974, as amended (‘‘ERISA’’).

Under ERISA section 4041(c), plans

wishing to terminate in a distress

termination must value guaranteed

benefits and benefit liabilities under the

plan using formulas set forth in part

2619, subpart C. (Plans terminating in a

standard termination may, for purposes

of the Standard Termination Notice

filed with PBGC, use these formulas to

value benefit liabilities, although this is

not required.) In addition, when the

PBGC terminates an underfunded plan

involuntarily pursuant to ERISA Section

4042(a), it uses the subpart C formulas

to determine the amount of the plan’s

underfunding.

Under § 2619.46, early retirement

benefits are valued based on the annuity

starting date, if a retirement date has

been selected, or the expected

retirement age, if the annuity starting

date is not known on the valuation date.

Subpart D of part 2619 sets forth rules

for determining the expected retirement

ages for plan participants entitled to

early retirement benefits. Appendices D

and E of part 2619 contain tables and

examples to be used in determining the

expected early retirement ages.

There are two sets of tables in

appendix D. The first set, Selection of

Retirement Rate Category (I–79 through

I–95), is used to determine whether a

participant has a low, medium, or high

probability of retiring early. The second

set of tables, Expected Retirement Ages

for Individuals in the Low/Medium/

High Categories (II–A, II–B, and II–C), is

used to determine the expected

retirement age after the probability of

early retirement has been determined.

The first set of tables determines the

probability of early retirement based on

the year a participant would reach

normal retirement age and the

participant’s monthly benefit at normal

retirement age. The second set of tables

establishes, by probability category, the

expected retirement age based on both

the earliest age a participant could retire

under the plan and the normal

retirement age under the plan. This

expected retirement age is used to

compute the value of the early

retirement benefit and, thus, the total

value of benefits under the plan.

Tables I–79 through I–95 in appendix

D establish retirement rate categories for

the calendar years 1979 through 1995.

The table for each year applies only to

plans with valuation dates in that year.

The PBGC updates these tables annually

to reflect changes in the cost of living,

etc. This document amends appendix D

to add Table I–96 in order to provide an

updated correlation, appropriate for

calendar year 1996, between the amount

of a participant’s benefit and the

probability that the participant will

elect early retirement. Table I–96 will be

used to value benefits in plans with

valuation dates that occur during

calendar year 1996.

The PBGC has determined that notice

of and public comment on this rule are

impracticable and contrary to the public

interest. Plan administrators need to be

able to estimate accurately the value of

plan benefits as early as possible before

initiating the termination process. For

that purpose, if a plan has a valuation

date in 1996, the plan administrator

needs the updated table being

promulgated in this rule. Accordingly,

the public interest is best served by

issuing this table expeditiously, without

an opportunity for notice and comment,

to allow as much time as possible to

estimate the value of plan benefits with

the proper table for plans with valuation

dates in early 1996. Moreover, because

of the need to provide immediate

guidance for the valuation of benefits

under such plans, and because no

adjustment by ongoing plans is required

by this amendment, the PBGC finds that

good cause exists for making this

amendment to the regulation 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

regulation, the Regulatory Flexibility

Act of 1980 does not apply (5 U.S.C.

601(2)).

List of Subjects in 29 CFR Part 2619

Employee benefit plans, Pension

insurance, Pensions.

In consideration of the foregoing,

appendix D to part 2619 of subchapter

C of chapter XXVI of title 29, Code of

Federal Regulations, is hereby amended

as follows:

PART 2619—[AMENDED]

1. The authority citation for part 2619

continues to read as follows:

Authority: 29 U.S.C. 1301(a), 1302(b)(3),

1341, 1344, 1362.

2. Appendix D to part 2619 is

amended by adding Table I–96 as

follows:

Appendix D—Tables Used To

Determine Expected Retirement Age

* * * * *

TABLE I–96.—SELECTION OF RETIREMENT RATE CATEGORY

[For Plans with valuation dates after December 31, 1995, and before January 1, 1997]

Participant reaches NRA in year—

Participant’s retirement rate category is— High 3 if

monthly

benefit at

NRA is

greater

than—

Low1 if

monthly

benefit at

NRA is less

than—

Medium 2 if monthly benefit

at NRA is

From To

1997 ................................................................................................................................. 400 400 1,684 1,684

1998 ................................................................................................................................. 413 413 1,738 1,738

1999 ................................................................................................................................. 426 426 1,794 1,794

2000 ................................................................................................................................. 440 440 1,850 1,850

2001 ................................................................................................................................. 453 453 1,907 1,907

2002 ................................................................................................................................. 467 467 1,966 1,966

2003 ................................................................................................................................. 482 482 2,027 2,027

2004 ................................................................................................................................. 497 497 2,090 2,090

2005 ................................................................................................................................. 512 512 2,155 2,155
Federal Register / Vol. 60, No. 241 / Friday, December 15, 1995 / Rules and Regulations 64327

TABLE I–96.—SELECTION OF RETIREMENT RATE CATEGORY—Continued

[For Plans with valuation dates after December 31, 1995, and before January 1, 1997]

Participant reaches NRA in year—

Participant’s retirement rate category is— High 3 if

monthly

benefit at

NRA is

greater

than—

Low1 if

monthly

benefit at

NRA is less

than—

Medium 2 if monthly benefit

at NRA is

From To

2006 or later ..................................................................................................................... 528 528 2,221 2,221

1Table II–A.

2Table II–B.

3Table II–C.

Issued at Washington, DC this 11th day of

December, 1995.

Martin Slate,

Executive Director, Pension Benefit Guaranty

Corporation.

[FR Doc. 95–30495 Filed 12–14–95; 8:45 am]

BILLING CODE 7708–01–P

29 CFR Parts 2619 and 2676

Valuation of Plan Benefits in SingleEmployer Plans; Valuation of Plan

Benefits and Plan Assets Following

Mass Withdrawal; Amendments

Adopting Additional PBGC Rates

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: This final rule amends the

Pension Benefit Guaranty Corporation’s

(‘‘PBGC’s’’) regulations on Valuation of

Plan Benefits in Single-Employer Plans

and Valuation of Plan Benefits and Plan

Assets Following Mass Withdrawal. The

former regulation contains the interest

assumptions that the PBGC uses to

value benefits under terminating singleemployer plans. The latter regulation

contains the interest assumptions for

valuations of multiemployer plans that

have undergone mass withdrawal. The

amendments set out in this final rule

adopt the interest assumptions

applicable to single-employer plans

with termination dates in January 1996,

and to multiemployer plans with

valuation dates in January 1996. The

effect of these amendments is to advise

the public of the adoption of these

assumptions.

EFFECTIVE DATE: January 1, 1996.

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). (These are not tollfree numbers.)

SUPPLEMENTARY INFORMATION: This rule

adopts the January 1996 interest

assumptions to be used under the

Pension Benefit Guaranty Corporation’s

(‘‘PBGC’s’’) regulations on Valuation of

Plan Benefits in Single-Employer Plans

(29 CFR part 2619, the ‘‘single-employer

regulation’’) and Valuation of Plan

Benefits and Plan Assets Following

Mass Withdrawal (29 CFR part 2676, the

‘‘multiemployer regulation’’).

Part 2619 sets forth the methods for

valuing plan benefits of terminating

single-employer plans covered under

title IV of the Employee Retirement

Income Security Act of 1974, as

amended (‘‘ERISA’’). Under ERISA

section 4041(c), all single-employer

plans wishing to terminate in a distress

termination must value guaranteed

benefits and ‘‘benefit liabilities,’’ i.e., all

benefits provided under the plan as of

the plan termination date, using the

formulas set forth in part 2619, subpart

C. (Plans terminating in a standard

termination may, for purposes of the

Standard Termination Notice filed with

PBGC, use these formulas to value

benefit liabilities, although this is not

required.) In addition, when the PBGC

terminates an underfunded plan

involuntarily pursuant to ERISA section

4042(a), it uses the subpart C formulas

to determine the amount of the plan’s

underfunding. Part 2676 prescribes

rules for valuing benefits and certain

assets of multiemployer plans under

sections 4219(c)(1)(D) and 4281(b) of

ERISA.

Appendix B to part 2619 sets forth the

interest rates and factors under the

single-employer regulation. Appendix B

to part 2676 sets forth the interest rates

and factors under the multiemployer

regulation. Because these rates and

factors are intended to reflect current

conditions in the financial and annuity

markets, it is necessary to update the

rates and factors periodically.

The PBGC issues two sets of interest

rates and factors, one set to be used for

the valuation of benefits to be paid as

annuities and one set for the valuation

of benefits to be paid as lump sums. The

same assumptions apply to terminating

single-employer plans and to

multiemployer plans that have

undergone a mass withdrawal. This

amendment adds to appendix B to parts

2619 and 2676 sets of interest rates and

factors for valuing benefits in singleemployer plans that have termination

dates during January 1996 and

multiemployer plans that have

undergone mass withdrawal and have

valuation dates during January 1996.

For annuity benefits, the interest rates

will be 5.60% for the first 20 years

following the valuation date and 4.75%

thereafter. For benefits to be paid as

lump sums, the interest assumptions to

be used by the PBGC will be 4.50% for

the period during which benefits are in

pay status, and 4.0% during all years

preceding the benefit’s placement in pay

status. The above annuity interest

assumptions represent a decrease (from

those in effect for December 1995) of .40

percent for the first 20 years following

the valuation date and of 1.00 percent

thereafter. The lump sum interest

assumptions are unchanged (from those

in effect for December 1995).

Generally, the interest rates and

factors under these regulations are in

effect for at least one month. However,

the PBGC publishes its interest

assumptions each month regardless of

whether they represent a change from

the previous month’s assumptions. The

assumptions normally will be published

in the Federal Register by the 15th of

the preceding month or as close to that

date as circumstances permit.

The PBGC has determined that notice

and public comment on these

amendments are impracticable and

contrary to the public interest. This

finding is based on the need to

determine and issue new interest rates

and factors promptly so that the rates

and factors can reflect, as accurately as

possible, current market conditions.

Because of the need to provide

immediate guidance for the valuation of

benefits in single-employer plans whose