[Federal Register Volume 85, Number 53 (Wednesday, March 18, 2020)]
[Rules and Regulations]
[Pages 15376-15377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05545]
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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 (PBGC).
ACTION: Final rule.
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SUMMARY: This final rule amends the Pension Benefit Guaranty
Corporation's regulations on Benefits Payable in Terminated Single-
Employer Plans and Allocation of Assets in Single-Employer Plans to
prescribe certain interest assumptions under the benefit payments
regulation for plans with valuation dates in April 2020 and interest
assumptions under the asset allocation regulation for plans with
valuation dates in the second quarter of 2020. These interest
assumptions are used for valuing benefits and paying certain benefits
under terminating single-employer plans covered by the pension
insurance system administered by PBGC.
DATES: Effective April 1, 2020.
FOR FURTHER INFORMATION CONTACT: Gregory Katz ([email protected]),
Attorney, Regulatory Affairs Division, Pension Benefit Guaranty
Corporation, 1200 K Street NW, Washington, DC 20005, 202-326-4400, ext.
3829. (TTY users may call the Federal relay service toll free at 1-800-
877-8339 and ask to be connected to 202-326-4400, ext. 3829.)
SUPPLEMENTARY INFORMATION: PBGC's regulations on Allocation of Assets
in Single-Employer Plans (29 CFR part 4044) and Benefits Payable in
Terminated Single-Employer Plans (29 CFR part 4022) prescribe actuarial
assumptions--including interest assumptions--for valuing and paying
plan benefits under terminating single-employer plans covered by title
IV of the Employee Retirement Income Security Act of 1974 (ERISA). The
interest assumptions in the regulations are also published on PBGC's
website (https://www.pbgc.gov).
Lump Sum Interest Assumption
PBGC uses the interest assumptions in appendix B to part 4022
(``Lump Sum Interest Rates for PBGC Payments'') to determine whether a
benefit is payable as a lump sum and to determine the amount to pay as
a lump sum. Because some private-sector pension plans use these
interest rates to determine lump sum amounts payable to plan
participants (if the resulting lump sum is larger than the amount
required under section 417(e)(3) of the Internal Revenue Code and
section 205(g)(3) of ERISA), these rates are also provided in appendix
C to part 4022 (``Lump Sum Interest Rates for Private-Sector
Payments'').
This final rule updates appendices B and C of the benefit payments
regulation to provide the rates for April 2020 measurement dates.
The April 2020 lump sum interest assumptions will be 0.00 percent
for the period during which a benefit is (or is assumed to be) 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 March 2020, these assumptions represent no change in the
immediate rate and are otherwise unchanged.
Valuation/Asset Allocation Interest Assumptions
PBGC uses the interest assumptions in appendix B to part 4044
(``Interest Rates Used to Value Benefits'') to value benefits for
allocation purposes under section 4044 of ERISA, and some private-
sector pension plans use them to determine benefit liabilities
reportable under section 4044 of ERISA and for other purposes. The
second quarter 2020 interest assumptions will be 2.11 percent for the
first 20 years following the valuation date and 1.92 percent
thereafter. In comparison with the interest assumptions in effect for
the first quarter of 2020, these interest assumptions represent a
decrease of 5 years in the select period (the period during which the
select rate (the initial rate) applies), a decrease of 0.01 percent in
the select rate, and a decrease of 0.34 percent in the ultimate rate
(the final rate).
Need for Immediate Guidance
PBGC updates appendix B of the asset allocation regulation each
quarter and appendices B and C of the benefit payments regulation each
month. 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 issue new interest assumptions promptly
so that they are available to value benefits and, for plans that rely
on our publication of them each month or
[[Page 15377]]
each quarter, to calculate lump sum benefit amounts.
Because of the need to provide immediate guidance for the valuation
and payment of benefits under plans with valuation dates during April
2020, 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.
In consideration of the foregoing, 29 CFR parts 4022 and 4044 are
amended as follows:
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
0
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.
0
2. In appendix B to part 4022, Rate Set 318 is added at the end of the
table to read as follows:
Appendix B to Part 4022--Lump Sum Interest Rates For PBGC Payments
* * * * *
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For plans with a valuation date Immediate Deferred annuities (percent)
Rate set ---------------------------------- annuity rate ------------------------------------------------------------------------------------
On or after Before (percent) i i i n n
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
318 4-1-20 5-1-20 0.00 4.00 4.00 4.00 7 8
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0
3. In appendix C to part 4022, Rate Set 318 is added at the end of the
table to read as follows:
Appendix C to Part 4022--Lump Sum Interest Rates For Private-Sector
Payments
* * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
For plans with a valuation date Immediate Deferred annuities (percent)
Rate set ---------------------------------- annuity rate ------------------------------------------------------------------------------------
On or after Before (percent) i i i n n
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
318 4-1-20 5-1-20 0.00 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, an entry for ``April--June 2020'' is
added at the end of the table to read as follows:
Appendix B to Part 4044--Interest Rates Used to Value Benefits
* * * * *
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The values of i are:
For valuation dates occurring in the month-- -----------------------------------------------------------------------------------------------
i for t = i for t = i for t =
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* * * * * * *
April-June 2020......................................... 0.0211 1-20 0.0192 >20 N/A N/A
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Issued in Washington, DC, by:
Hilary Duke,
Assistant General Counsel, Pension Benefit Guaranty Corporation.
[FR Doc. 2020-05545 Filed 3-17-20; 8:45 am]
BILLING CODE 7709-02-P