[Federal Register Volume 75, Number 178 (Wednesday, September 15, 2010)]
[Rules and Regulations]
[Pages 55966-55968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22953]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4022 and 4044


Allocation of Assets in Single-Employer Plans; Benefits Payable 
in Terminated Single-Employer Plans; Interest Assumptions for Valuing 
and Paying Benefits

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: Pension Benefit Guaranty Corporation's regulations on 
Allocation of Assets in Single-Employer Plans and Benefits Payable in 
Terminated Single-Employer Plans prescribe interest assumptions for 
valuing and paying

[[Page 55967]]

certain benefits under terminating single-employer plans. This final 
rule amends the asset allocation regulation to adopt interest 
assumptions for plans with valuation dates in the fourth quarter of 
2010 and amends the benefit payments regulation to adopt interest 
assumptions for plans with valuation dates in October 2010. Interest 
assumptions are also published on PBGC's Web site (http://www.pbgc.gov).

DATES: Effective October 1, 2010.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Manager, 
Regulatory and Policy Division, Legislative and Regulatory Department, 
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, 
DC 20005, 202-326-4024. (TTY/TDD users may call the Federal relay 
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4024.)

SUPPLEMENTARY INFORMATION: PBGC's regulations prescribe actuarial 
assumptions--including interest assumptions--for valuing and paying 
plan benefits of terminating single-employer plans covered by title IV 
of the Employee Retirement Income Security Act of 1974. The interest 
assumptions are intended to reflect current conditions in the financial 
and annuity markets.
    These interest assumptions are found in two PBGC regulations: the 
regulation on Allocation of Assets in Single-Employer Plans (29 CFR 
Part 4044) and the regulation on Benefits Payable in Terminated Single-
Employer Plans (29 CFR Part 4022). Assumptions under the asset 
allocation regulation are updated quarterly; assumptions under the 
benefit payments regulation are updated monthly. This final rule 
updates the assumptions under the asset allocation regulation for the 
fourth quarter (October through December) of 2010 and updates the 
assumptions under the benefit payments regulation for October 2010.
    The interest assumptions prescribed under the asset allocation 
regulation (found in Appendix B to Part 4044) are used for the 
valuation of benefits for allocation purposes under ERISA section 4044. 
Two sets of interest assumptions are prescribed under the benefit 
payments regulation: (1) A set for PBGC to use to determine whether a 
benefit is payable as a lump sum and to determine lump-sum amounts to 
be paid by PBGC (found in Appendix B to Part 4022), and (2) a set for 
private-sector pension practitioners to refer to if they wish to use 
lump-sum interest rates determined using PBGC's historical methodology 
(found in Appendix C to Part 4022).
    This amendment (1) adds to Appendix B to Part 4044 the interest 
assumptions for valuing benefits for allocation purposes in plans with 
valuation dates during the fourth quarter (October through December) of 
2010, (2) adds to Appendix B to Part 4022 the interest assumptions for 
PBGC to use for its own lump-sum payments in plans with valuation dates 
during October 2010, and (3) adds to Appendix C to Part 4022 the 
interest assumptions for private-sector pension practitioners to refer 
to if they wish to use lump-sum interest rates determined using PBGC's 
historical methodology for valuation dates during October 2010.
    The interest assumptions that PBGC will use for valuing benefits 
for allocation purposes (set forth in Appendix B to part 4044) will be 
4.48 percent for the first 25 years following the valuation date and 
4.51 percent thereafter. In comparison with the interest assumptions in 
effect for the third quarter of 2010, these interest assumptions 
represent an increase of 5 years in the select period (the period 
during which the select rate (the initial rate) applies), a decrease of 
0.45 percent in the select rate, and a decrease of 0.15 percent in the 
ultimate rate (the final rate).
    The interest assumptions that PBGC will use for its own lump-sum 
payments (set forth in Appendix B to part 4022) will be 1.75 percent 
for the period during which a benefit is in pay status and 4.00 percent 
during any years preceding the benefit's placement in pay status. In 
comparison with the interest assumptions in effect for September 2010, 
these interest assumptions represent a decrease of 0.50 percent in the 
immediate annuity rate and are otherwise unchanged. For private-sector 
payments, the interest assumptions (set forth in Appendix C to part 
4022) will be the same as those used by PBGC for determining and paying 
lump sums (set forth in Appendix B to part 4022).
    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 current market 
conditions as accurately as possible.
    Because of the need to provide immediate guidance for the valuation 
and payment of benefits in plans with valuation dates during October 
2010, PBGC finds that good cause exists for making the assumptions set 
forth in this amendment effective less than 30 days after publication.
    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

29 CFR Part 4022

    Employee benefit plans, Pension insurance, Pensions, Reporting and 
recordkeeping requirements.

29 CFR Part 4044

    Employee benefit plans, Pension insurance, Pensions.

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In consideration of the foregoing, 29 CFR parts 4022 and 4044 are 
amended as follows:

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS

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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.


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2. In appendix B to part 4022, Rate Set 204, as set forth below, is 
added to the table.

Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments

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[[Page 55968]]



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                   For plans with a valuation date     Immediate                                 Deferred annuities (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
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                                                                      * * * * * * *
          204           10-1-10          11-1-10             1.75             4.00             4.00             4.00                7                8
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3. In appendix C to part 4022, Rate Set 204, as set forth below, is 
added to the table.

Appendix C to Part 4022--Lump Sum Interest Rates For Private-Sector 
Payments

* * * * *

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                   For plans with a valuation date     Immediate                                 Deferred annuities (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          204           10-1-10          11-1-10             1.75             4.00             4.00             4.00                7                8
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PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

0
4. The authority citation for part 4044 continues to read as follows:

    Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.


0
5. In appendix B to part 4044, a new entry for October-December 2010, 
as set forth below, is added to the table.

Appendix B to Part 4044--Interest Rates Used to Value Benefits

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                                                             The values of it are:
     For valuation dates     -----------------------------------------------------------------------------------
  occurring in the months--        it          for t =         it          for t =         it          for t =
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                                                  * * * * * * *
October-December 2010.......       0.0448          1-25        0.0451           >25           N/A           N/A
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    Issued in Washington, DC, on this 9th day of September 2010.
Vincent K. Snowbarger,
Deputy Director for Operations, Pension Benefit Guaranty Corporation.
[FR Doc. 2010-22953 Filed 9-14-10; 8:45 am]
BILLING CODE 7709-01-P