[Federal Register Volume 60, Number 241 (Friday, December 15, 1995)]
[Rules and Regulations]
[Pages 64325-64327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30495]



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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 2619


Valuation of Plan Benefits in Single-Employer Plans; Expected 
Retirement Age

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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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.


[[Page 64326]]

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 
Single-Employer 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 Sec. 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]              
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                                                                  Participant's retirement rate                 
                                                                          category is--              High \3\ if
                                                             ---------------------------------------   monthly  
                                                               Low\1\ if     Medium \2\ if monthly    benefit at
              Participant reaches NRA in year--                 monthly        benefit at NRA is        NRA is  
                                                               benefit at --------------------------   greater  
                                                              NRA is less                               than--  
                                                                 than--        From          To                 
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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

[[Page 64327]]
                                                                                                                
2006 or later...............................................          528          528        2,221       2,221 
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\1\ Table II-A.                                                                                                 
\2\ Table II-B.                                                                                                 
\3\ Table 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]
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