Allocation of Assets in Single-Employer Plans; Valuation of Benefits and Assets; Expected Retirement Age
| Published date | 03 December 2021 |
| Record Number | 2021-26234 |
| Section | Rules and Regulations |
| Court | Pension Benefit Guaranty Corporation |
Federal Register, Volume 86 Issue 230 (Friday, December 3, 2021)
[Federal Register Volume 86, Number 230 (Friday, December 3, 2021)]
[Rules and Regulations]
[Pages 68560-68562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26234]
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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.
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SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's
regulation on Allocation of Assets in Single-Employer Plans by
substituting a
[[Page 68561]]
new table for determining expected retirement ages for participants in
pension plans undergoing distress or involuntary termination with
valuation dates falling in 2022. This table is needed to compute the
value of early retirement benefits and, thus, the total value of
benefits under a plan.
DATES: This rule is effective January 1, 2022.
FOR FURTHER INFORMATION CONTACT: Hilary Duke ([email protected]),
Assistant General Counsel for Regulatory Affairs, Office of the General
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street NW,
Washington, DC 20005, 202-229-3839. (TTY users may call the Federal
relay service toll-free at 1-800-877-8339 and ask to be connected to
202-229-3839.)
SUPPLEMENTARY INFORMATION: The 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 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-21 with Table I-
22 to provide an updated correlation, appropriate for calendar year
2022, between the amount of a participant's benefit and the probability
that the participant will elect early retirement. Table I-22 will be
used to value benefits in plans with valuation dates during calendar
year 2022.
PBGC has determined that notice of, and public comment on, this
rule are impracticable, unnecessary, and contrary to the public
interest. PBGC's update of appendix D for calendar year 2022 is
routine. If a plan has a valuation date in 2022, the plan administrator
needs the updated table being promulgated in this rule to value
benefits. Accordingly, PBGC finds that the public interest is best
served by issuing this table expeditiously, without an opportunity for
notice and comment, and that good cause exists for making the table set
forth in this amendment effective less than 30 days after publication
to allow the use of the proper table to estimate the value of plan
benefits for plans with valuation dates in early 2022.
PBGC has determined that this action is not a ``significant
regulatory action'' under the criteria set forth in Executive Order
12866 and Executive Order 13771.
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
Employee benefit plans, Pension insurance.
In consideration of the foregoing, 29 CFR part 4044 is amended as
follows:
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
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-21 and adding
in its place Table I-22 to read as follows:
Appendix D to Part 4044--Tables Used To Determine Expected Retirement
Age
Table I-22--Selection of Retirement Rate Category
[For valuation dates in 2022 \1\]
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Participant's retirement rate category is--
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Medium \3\ if monthly benefit High \4\ if
If participant reaches URA in year-- Low \2\ if monthly at URA is-- monthly benefit at
benefit at URA is -------------------------------- URA is greater
less than-- From-- To-- than--
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2023.................................... 691 691 2,919 2,919
2024.................................... 706 706 2,984 2,984
2025.................................... 723 723 3,052 3,052
2026.................................... 739 739 3,122 3,122
2027.................................... 756 756 3,194 3,194
2028.................................... 774 774 3,268 3,268
2029.................................... 791 791 3,343 3,343
2030.................................... 810 810 3,420 3,420
2031.................................... 828 828 3,498 3,498
[[Page 68562]]
2032 or later........................... 847 847 3,579 3,579
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\1\ Applicable tables for valuation dates before 2022 are available on PBGC's website (www.pbgc.gov).
\2\ Table II-A.
\3\ Table II-B.
\4\ Table II-C.
* * * * *
Issued in Washington, DC.
Hilary Duke,
Assistant General Counsel for Regulatory Affairs, Pension Benefit
Guaranty Corporation.
[FR Doc. 2021-26234 Filed 12-2-21; 8:45 am]
BILLING CODE 7709-02-P
