Allocation of Assets in Single-Employer Plans; Valuation of Benefits and Assets; Expected Retirement Age

CourtPension Benefit Guaranty Corporation
Citation86 FR 68560
Record Number2021-26234
Publication Date03 December 2021
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
                

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