Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Paying Benefits
Federal Register, Volume 80 Issue 240 (Tuesday, December 15, 2015)
Federal Register Volume 80, Number 240 (Tuesday, December 15, 2015)
Rules and Regulations
Pages 77569-77570
From the Federal Register Online via the Government Publishing Office www.gpo.gov
FR Doc No: 2015-31568
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4022
Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Paying Benefits
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: This final rule amends the Pension Benefit Guaranty Corporation's regulation on Benefits Payable in Terminated Single-
Employer Plans to prescribe interest assumptions under the regulation for valuation dates in January 2016. The interest assumptions are used for paying benefits under terminating single-employer plans covered by the pension insurance system administered by PBGC. As discussed below, PBGC will publish a separate final rule document dealing with interest assumptions under its regulation on Allocation of Assets in Single-
Employer Plans for the first quarter of 2016.
DATES: Effective January 1, 2016.
FOR FURTHER INFORMATION CONTACT: Catherine B. Klion (Klion.Catherine@pbgc.gov), Assistant General Counsel for Regulatory Affairs, 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: PBGC's regulation on Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) prescribes actuarial assumptions--including interest assumptions--for paying plan benefits under terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions in the regulation are also published on PBGC's Web site (http://www.pbgc.gov).
PBGC uses the interest assumptions in Appendix B to Part 4022 to determine whether a benefit is payable as a lump sum and to determine the amount to pay. Appendix C to Part 4022 contains interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology. Currently, the rates in Appendices B and C of the benefit payment regulation are the same.
The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for January 2016.\1\
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\1\ Appendix B to PBGC's regulation on Allocation of Assets in Single-Employer Plans (29 CFR part 4044) prescribes interest assumptions for valuing benefits under terminating covered single-
employer plans for purposes of allocation of assets under ERISA section 4044. Those assumptions are updated quarterly.
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PBGC normally updates the assumptions under the benefit payments regulation for January at the same time as PBGC updates assumptions for the first quarter of the year under its regulation on Allocation of Assets in Single-Employer Plans (29 CFR part 4044) in a single rulemaking document. Because of delays in obtaining data used in setting assumptions under Part 4044 for the first quarter of 2016, PBGC is publishing two separate rulemaking documents to update the benefit payments regulation for January 2016 and the allocation regulation for the first quarter of 2016.
The January 2016 interest assumptions under the benefit payments regulation will be 1.25 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. In comparison with the interest assumptions in effect for December 2015, these interest assumptions are unchanged.
PBGC has determined that notice and public comment on this amendment are
Page 77570
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 current market conditions as accurately as possible.
Because of the need to provide immediate guidance for the payment of benefits under plans with valuation dates during January 2016, 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 in 29 CFR Part 4022
Employee benefit plans, Pension insurance, Pensions, Reporting and recordkeeping requirements.
In consideration of the foregoing, 29 CFR part 4022 is amended as follows:
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
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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.
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2. In appendix B to part 4022, Rate Set 267, as set forth below, is added to the table.
Appendix B to Part 4022--Lump Sum Interest Rates For PBGC Payments
* * * * *
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For plans with a valuation Deferred annuities (percent)
date Immediate ---------------------------------------------------------------------
Rate set ---------------------------- annuity rate
On or after Before (percent) i1 i2 i3 n1 n2
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* * * * * * *
267..................................... 1-1-16 2-1-16 1.25 4.00 4.00 4.00 7 8
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3. In appendix C to part 4022, Rate Set 267, as set forth below, is added to the table.
Appendix C to Part 4022--Lump Sum Interest Rates for Private-Sector Payments
* * * * *
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For plans with a valuation Deferred annuities (percent)
date Immediate ---------------------------------------------------------------------
Rate set ---------------------------- annuity rate
On or after Before (percent) i1 i2 i3 n1 n2
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* * * * * * *
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267..................................... 1-1-16 2-1-16 1.25 4.00 4.00 4.00 7 8
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Issued in Washington, DC, on this 9th day of December, 2015.
Judith Starr,
General Counsel, Pension Benefit Guaranty Corporation.
FR Doc. 2015-31568 Filed 12-14-15; 8:45 am
BILLING CODE 7709-02-P
