Allocation of Assets in Single-Employer Plans; Interest Assumptions for Valuing Benefits

PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4044

Allocation of Assets in Single-Employer Plans; Interest

Assumptions for Valuing Benefits

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: The Pension Benefit Guaranty Corporation's regulation on

Allocation of Assets in Single-Employer Plans prescribes interest

assumptions for valuing benefits under terminating single-employer

plans. This final rule amends the regulation to adopt interest

assumptions for plans with valuation dates in June 1999. Interest

assumptions are also published on the PBGC's web site (http://

www.pbgc.gov).

EFFECTIVE DATE: June 1, 1999.

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.

(For TTY/TDD users, call the Federal relay service toll-free at 1-800-

877-8339 and ask to be connected to 202-326-4024.)

SUPPLEMENTARY INFORMATION: The PBGC's regulation on Allocation of

Assets in Single-Employer Plans (29 CFR part 4044) prescribes actuarial

assumptions for valuing plan benefits of terminating single-employer

plans covered by title IV of the Employee Retirement Income Security

Act of 1974.

Among the actuarial assumptions prescribed in part 4044 are

interest assumptions. These interest assumptions are intended to

reflect current conditions in the financial and annuity markets.

Two sets of interest assumptions are prescribed, one set for the

valuation of benefits to be paid as annuities and one set for the

valuation of benefits to be paid as lump sums. This amendment adds to

appendix B to part 4044 the annuity and lump sum interest assumptions

for valuing benefits in plans with valuation dates during June 1999.

For annuity benefits, the interest assumptions will be 5.70 percent

for the first 20 years following the valuation date and 5.25 percent

thereafter. For benefits to be paid as lump sums, the interest

assumptions to be used by the PBGC will be 4.25 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. These annuity

and lump sum interest assumptions are unchanged from those in effect

for May 1999.

The 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, as accurately

as possible, current market conditions.

Because of the need to provide immediate guidance for the valuation

of benefits in plans with valuation dates during June 1999, the PBGC

finds that good cause exists for making the assumptions set forth in

this amendment 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 amendment, the Regulatory Flexibility Act of 1980 does not apply.

See 5 U.S.C. 601(2).

[[Page 26288]]

List of Subjects in 29 CFR Part 4044

Pension insurance, Pensions.

In consideration of the foregoing, 29 CFR part 4044 is amended as

follows:

PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

1. The authority citation for part 4044 continues to read as

follows:

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

2. In appendix B, a new entry is added to Table I, and Rate Set 68

is added to Table II, as set forth below. The introductory text of each

table is republished for the convenience of the reader and remains

unchanged.

Appendix B to Part 4044--Interest Rates Used to Value Annuities and

Lump Sums

Table I.--Annuity Valuations

[This table sets forth, for each indicated calendar month, the interest rates (denoted by i1, i2, * * * , and

referred to generally as it) assumed to be in effect between specified anniversaries of a valuation date that

occurs within that calendar month; those anniversaries are specified in the columns adjacent to the rates. The

last listed rate is assumed to be in effect after the last listed anniversary date.]

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The values of it are:

For valuation dates occurring ----------------------------------------------------------------------------------

in the month-- it for t = it for t = it for t =

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* * * * * *

*

June 1999.................... .0570 1-20 .0525 >20 N/A N/A

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Table II.--Lump Sum Valuations

[In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status on the valuation date, the immediate

annuity rate shall apply; (2) For benefits for which the deferral period is y years (where y is an integer and 0 n1), interest rate i1

shall apply from the valuation date for a period of y years, and thereafter the immediate annuity rate shall apply; (3) For benefits for which the

deferral period is y years (where y is an integer and n1 n1 + n2), interest rate i2 shall apply from the valuation date for a period of

y-n1 years, interest rate i1 shall apply for the following n1 years, and thereafter the immediate annuity rate shall apply; (4) For benefits for which

the deferral period is y years (where y is an integer and y > n1+n2), interest rate i3 shall apply from the valuation date for a period of y-n1-n2

years, interest rate i2 shall apply for the following n2 years, interest rate i1 shall apply for the following n1 years, and thereafter the immediate

annuity rate shall apply.]

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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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* * * * * * *

68 06-1-99 07-1-99 4.25 4.00 4.00 4.00 7 8

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Issued in Washington, DC, on this 10th day of May 1999.

David M. Strauss,

Executive Director, Pension Benefit Guaranty Corporation.

[FR Doc. 99-12175 Filed 5-13-99; 8:45 am]

BILLING CODE 7708-01-P