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[Federal Register: October 16, 2008 (Volume 73, Number 201)]
[Rules and Regulations]
[Page 61352-61354]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16oc08-10]

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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4022 and 4044


Benefits Payable in Terminated Single-Employer Plans; Allocation
of Assets in Single-Employer Plans; Interest Assumptions for Valuing
and Paying Benefits

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: The Pension Benefit Guaranty Corporation's regulations on
Benefits Payable in Terminated Single-Employer Plans and Allocation of
Assets in Single-Employer Plans prescribe interest assumptions for
valuing and paying benefits under terminating single-employer plans.
This final rule amends the regulations to adopt interest assumptions
for plans with valuation dates in November 2008. Interest assumptions
are also published on the PBGC's Web site (http://www.pbgc.gov).

DATES: Effective November 1, 2008.

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Manager,
Regulatory and Policy Division, Legislative and Regulatory Department,
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: The PBGC's regulations prescribe actuarial
assumptions--including interest

[[Page 61353]]

assumptions--for valuing and paying plan benefits of terminating
single-employer plans covered by title IV of the Employee Retirement
Income Security Act of 1974. The interest assumptions are intended to
reflect current conditions in the financial and annuity markets.
    Three sets of interest assumptions are prescribed: (1) A set for
the valuation of benefits for allocation purposes under section 4044
(found in Appendix B to Part 4044), (2) a set for the PBGC to use to
determine whether a benefit is payable as a lump sum and to determine
lump-sum amounts to be paid by the PBGC (found in Appendix B to Part
4022), and (3) a set for private-sector pension practitioners to refer
to if they wish to use lump-sum interest rates determined using the
PBGC's historical methodology (found in Appendix C to Part 4022).
    This amendment (1) adds to Appendix B to Part 4044 the interest
assumptions for valuing benefits for allocation purposes in plans with
valuation dates during November 2008, (2) adds to Appendix B to Part
4022 the interest assumptions for the PBGC to use for its own lump-sum
payments in plans with valuation dates during November 2008, and (3)
adds to Appendix C to Part 4022 the interest assumptions for private-
sector pension practitioners to refer to if they wish to use lump-sum
interest rates determined using the PBGC's historical methodology for
valuation dates during November 2008.
    For valuation of benefits for allocation purposes, the interest
assumptions that the PBGC will use (set forth in Appendix B to part
4044) will be 7.09 percent for the first 20 years following the
valuation date and 6.16 percent thereafter. These interest assumptions
represent an increase (from those in effect for October 2008) of 0.91
percent for the first 20 years following the valuation date and 0.91
percent for all years thereafter.
    The interest assumptions that the PBGC will use for its own lump-
sum payments (set forth in Appendix B to part 4022) will be 3.75
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. These interest assumptions represent an increase (from those in
effect for October 2008) of 0.50 percent in the immediate annuity rate
and are otherwise unchanged. For private-sector payments, the interest
assumptions (set forth in Appendix C to part 4022) will be the same as
those used by the PBGC for determining and paying lump sums (set forth
in Appendix B to part 4022).
    The PBGC has determined that notice and public comment on this
amendment are 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 valuation
and payment of benefits in plans with valuation dates during November
2008, the PBGC finds that good cause exists for making the assumptions
set forth in this amendment effective less than 30 days after
publication.
    The 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

29 CFR Part 4022

    Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.

29 CFR Part 4044

    Employee benefit plans, Pension insurance, Pensions.

0
In consideration of the foregoing, 29 CFR parts 4022 and 4044 are
amended as follows:

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS

0
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.
0
2. In appendix B to part 4022, Rate Set 181, 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 date     Immediate                                Deferred annuities  (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                      * * * * * * *
          181           11-1-08          12-1-08             3.75             4.00             4.00             4.00                7                8
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3. In appendix C to part 4022, Rate Set 181, 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 date     Immediate                                Deferred annuities  (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i1               i2               i3               n1               n2
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                      * * * * * * *
          181           11-1-08          12-1-08             3.75             4.00             4.00             4.00                7                8
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[[Page 61354]]

PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

0
4. 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
5. In appendix B to part 4044, a new entry for November 2008, as set
forth below, is added to the table.

Appendix B to Part 4044--Interest Rates Used To Value Benefits

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                                                             The values of it are:
     For valuation dates     -----------------------------------------------------------------------------------
  occurring in the month--         it          for t =         it          for t =         it          for t =
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
November 2008...............        .0709          1-20         .0616           >20           N/A           N/A
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    Issued in Washington, DC, on this 9th day of October 2008.
Vincent K. Snowbarger,
Deputy Director for Operations,Pension Benefit Guaranty Corporation.
 [FR Doc. E8-24651 Filed 10-15-08; 8:45 am]

BILLING CODE 7709-01-P