[Federal Register: December 2, 2002 (Volume 67, Number 231)]
[Rules and Regulations]
[Page 71472-71473]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de02-14]
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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 new table that applies to any plan being terminated
either in a distress termination or involuntarily by the PBGC with a
valuation date falling in 2003, and is used to determine expected
retirement ages for plan participants. This table is needed in order to
compute the value of early retirement benefits and, thus, the total
value of benefits under the plan.
EFFECTIVE DATE: January 1, 2003.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005-4026; 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 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 of the Employee Retirement Income
Security Act of 1974. Under ERISA section 4041(c), guaranteed benefits
and benefit liabilities under a plan that is undergoing a distress
termination must be valued in accordance with part 4044, subpart B. In
addition, when the 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), 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 the 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-02 with Table I-
03 in order to provide an updated correlation, appropriate for calendar
year 2003, between the amount of a participant's benefit and the
probability that the participant will elect early retirement. Table I-
03 will be used to value benefits in plans with valuation dates during
calendar year 2003.
The PBGC has determined that notice of and public comment on this
rule are impracticable and contrary to the public interest. Plan
administrators need to be able to estimate accurately the value of plan
benefits as early as possible before initiating the termination
process. For that purpose, if a plan has a valuation date in 2003, the
plan administrator needs the updated table being promulgated in this
rule. Accordingly, the public interest is best served by issuing this
table expeditiously, without an opportunity for notice and comment, to
allow as much time as possible to estimate the value of plan benefits
with the proper table for plans with valuation dates in early 2003.
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 regulation, the Regulatory Flexibility Act of 1980 does not apply
(5 U.S.C. 601(2)).
List of Subjects in 29 CFR Part 4044
Pension insurance, Pensions.
In consideration of the foregoing, 29 CFR part 4044 is amended as
follows:
PART 4044--[AMENDED]
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.
2. Appendix D to part 4044 is amended by removing Table I-02 and
adding in its place Table I-03 to read as follows:
Appendix D to Part 4044--Tables Used To Determine Expected Retirement
Age
[[Page 71473]]
Table I-03.--Selection of Retirement Rate Category
[For plans with valuation dates after December 31, 2002, and before January 1, 2004]
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Participant's Retirement Rate Category is--
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Medium \2\ if monthly benefit High \3\ if
Participant reaches URA in year-- Low \1\ if at URA is monthly
monthly -------------------------------- benefit at URA
benefit at URA is greater
is less than-- From To than--
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2004............................................ 465 465 1,965 1,965
2005............................................ 476 476 2,010 2,010
2006............................................ 487 487 2,059 2,059
2007............................................ 499 499 2,108 2,108
2008............................................ 511 511 2,159 2,159
2009............................................ 523 523 2,210 2,210
2010............................................ 535 535 2,261 2,261
2011............................................ 547 547 2,313 2,313
2012............................................ 560 560 2,366 2,366
2013 or later................................... 573 573 2,421 2,421
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\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.
* * * * *
Issued in Washington, DC, this 25th day of November, 2002.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit
Guaranty Corporation.
[FR Doc. 02-30303 Filed 11-29-02; 8:45 am]
BILLING CODE 7708-01-P