Allocation of Assets in Single-Employer Plans:

Federal Register: December 1, 2010 (Volume 75, Number 230)

Rules and Regulations

Page 74622-74623

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr01de10-6

PENSION BENEFIT GUARANTY CORPORATION 29 CFR Part 4044

Allocation of Assets in Single-Employer Plans; Valuation of

Benefits and Assets; Expected Retirement Age

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

SUMMARY: This rule amends Pension Benefit Guaranty Corporation's regulation on Allocation of Assets in Single-Employer Plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2011. This table is needed in order to compute the value of early retirement benefits and, thus, the total value of benefits under a plan.

DATES: Effective Date: January 1, 2011.

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: Pension Benefit Guaranty Corporation (PBGC) administers the pension plan termination insurance program under Title

IV of the Employee Retirement Income Security Act of 1974 (ERISA).

PBGC's regulation on Allocation of Assets in Single-Employer Plans (29

CFR part 4044) sets forth (in subpart B) the methods for valuing plan benefits of terminating single-employer plans covered under Title IV.

Guaranteed benefits and benefit liabilities under a plan that is undergoing a distress termination must be valued in accordance with subpart B of part 4044. In addition, when PBGC terminates an underfunded plan involuntarily pursuant to ERISA section 4042(a), it uses the subpart B valuation rules to determine the amount of the plan's underfunding.

Under Sec. 4044.51(b) of the asset allocation regulation, 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. Sections 4044.55 through 4044.57 set forth rules for determining the expected retirement ages for plan participants entitled to early retirement benefits. Appendix D of part 4044 contains tables to be used in determining the expected early retirement ages.

Table I in appendix D (Selection of Retirement Rate Category) is used to determine whether a participant has a low, medium, or high probability of retiring early. The determination is based on the year a participant would reach ``unreduced retirement age'' (i.e., the earlier of the normal retirement age or the age at which an unreduced benefit is first payable) and the participant's monthly benefit at unreduced retirement age. The table applies only to plans with valuation dates in the current year and is updated annually by the PBGC to reflect changes in the cost of living, etc.

Tables II-A, II-B, and II-C (Expected Retirement Ages for

Individuals in the Low, Medium, and High Categories respectively) are used to determine the expected retirement age after the probability of early retirement has been determined using Table I. These tables establish, by probability category, the expected retirement age based on both the earliest age a participant could retire under the plan and the unreduced retirement age. 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.

This document amends appendix D to replace Table I-10 with Table I- 11 in order to provide an updated correlation, appropriate for calendar year 2011, between the amount of a participant's benefit and the probability that the participant will elect early retirement. Table I- 11 will be used to value benefits in plans with valuation dates during calendar year 2011.

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 2011, 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 2011.

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 4044

Pension insurance, Pensions. 0

In consideration of the foregoing, 29 CFR part 4044 is amended as follows: 0 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. 0 2. Appendix D to part 4044 is amended by removing Table I-10 and adding in its place Table I-11 To read as follows:

Appendix D to Part 4044--Tables Used To Determine Expected Retirement

Age

Page 74623

Table I-11--Selection of Retirement Rate Category

For plans with valuation dates after December 31, 2010, and before January 1, 2012

Participant's retirement rate category is--

If participant reaches URA in year--

Low \1\ if

Medium \2\ if monthly benefit at URA

High \3\ if monthly benefit

is--

monthly benefit at URA is less -------------------------------------- at URA is greater than--

From--

To--

than--

2012................................

568

568

2,400

2,400 2013................................

579

579

2,448

2,448 2014................................

591

591

2,497

2,497 2015................................

602

602

2,547

2,547 2016................................

614

614

2,598

2,598 2017................................

627

627

2,652

2,652 2018................................

640

640

2,708

2,708 2019................................

654

654

2,765

2,765 2020................................

668

668

2,823

2,823 2021 or later.......................

682

682

2,882

2,882

\1\ Table II-A.

\2\ Table II-B.

\3\ Table II-C.

* * * * *

Issued in Washington, DC, this 29th day of November 2010.

Vincent K. Snowbarger,

Deputy Director for Operations, Pension Benefit Guaranty Corporation.

FR Doc. 2010-30301 Filed 11-30-10; 8:45 am

BILLING CODE 7709-01-P