30-Year Rate Suspension

[mwyatt]

Just saw this morning in RIA Pension & Benefit Weekly:

As a result of the suspension of the 30-year bond, Treasury will no longer supply the Federal Reserve Board with an estimate of the 30-year constant maturity yield, which is used by defined benefit plans to figure funding needs and lump-sum distribution amounts, and is published in the H-15 Selected Interest Rates Release.

What's the next step here?

[FAPInJax]

The latest is that they are supposed to be developing some kind of blended rate from other sources. I vaguely remember seeing something about it being release today???

We are all waiting for the release and Congress has been informed of the problem (but are reluctant (yeah right) to do anything)

[Guest Brian4]

The statistics, including the interpolated 30 year rate, are available at the following web site. The IRS periodically issues the interest rate range for current liability calculations. We can watch and see if they use these rates, and watch for other guidance for other purposes that reference 30 year rates.

http://www.treas.gov/domfin/statistics.htm

[Chester]

I went to the website and noticed there is no published rate for 30 year Treasuries. For those of us who don't want to fiddle with extrapolation factors, what is the monthly 30 year Treasury rate? (couldn't the government just calculate this factor for us instead of making us do the work--I would not have great comfort that I calculated the rate correctly).

[Guest meggie]

I spoke to Fred Pietrangeli (1-202-622-1876) at the Treasury and he told me that we can "calculate" the 30 yr treasury by adding the Extrapolation Factor" to the long term average yield (for over 25 yrs). For example, the site posted a 25 yr avg rate of 5.58% on 2/19/2002. The estimated 30 yr rate on 2/19/2002 is 5.58%+(-.01%) or 5.57%. As simple as this method sounds- I hesitate using "my" calculated rate as "the" 30 yr rate. Waiting for direction from the IRS on this one.

[AndyH]

ASPA sent an email to members yesterday saying that the methodology was under reconsideration and that the February rates would be issued in about 2 weeks; thereafter the rates should be released more timely.