david rigby Posted February 6, 2007 Posted February 6, 2007 Perhaps I've got the sequence wrong, but I thought the issuance of a new mortality table for Current Liability purposes will automatically trigger changes in how we calculate the variable premium liability, and this change should be effective immediately. But I've seen nothing from the PBGC. Anyone? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Calavera Posted February 6, 2007 Posted February 6, 2007 Perhaps I've got the sequence wrong, but I thought the issuance of a new mortality table for Current Liability purposes will automatically trigger changes in how we calculate the variable premium liability, and this change should be effective immediately. But I've seen nothing from the PBGC. Anyone? Since the snapshot date is typically the last day of the prior plan year (12/31/2006), I think the 1983 GAM tables should be used.
Guest DBtech Posted February 6, 2007 Posted February 6, 2007 I believe, with the adoption of the RP-2000 mortality tables, the interest rate used to calculate the VRP is now 100% of the CCR, instead of 85%.
david rigby Posted February 6, 2007 Author Posted February 6, 2007 Yep. I found the cite: ERISA sec. 4006(a)(3)(E)(iii). For CL, don't forget the 10-yr amortization in IRC 412(l)(10). I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
SoCalActuary Posted February 7, 2007 Posted February 7, 2007 The PBGC even acknowledges the change in their instructions. So they have already given permission to use the 100% corporate rate since the IRS mandated the new mortality table for CL. But I would like to see them publicly say so, and also correct their interest rate table for plan years beginning in 2007/
david rigby Posted February 8, 2007 Author Posted February 8, 2007 02/08/07 Federal Register http://a257.g.akamaitech.net/7/257/2422/01...pdf/E7-2087.pdf I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Guest saeissler Posted February 13, 2007 Posted February 13, 2007 FYI - I just spoke to Amy at the PBGC, who was responding to me for Catherine Klion who wrote the PBGC Notice in the Federal Register published February 8 about the change in premium interest rates. Amy said that guidance will be forthcoming in a day or two. Basically a premium payment for the plan year 1/1/2007 to 12/31/2007 which is based on a premium snapshot date of 12/31/2006 will use the old mortality table. It will use the new January 2007 interest rate of 5.75% and will use the market value of assets instead of the actuarial value. She said there is an example of what the new guidance will look like at the PBGC website under Practitioners/Laws and Regulations/Enrolled Actuaries Blue Book/ Year 2000/Question 4.
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