[Federal Register: July 15, 2003 (Volume 68, Number 135)]
[Notices]
[Page 41851-41852]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy03-99]
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PENSION BENEFIT GUARANTY CORPORATION
Required Interest Rate Assumption for Determining Variable-Rate
Premium; Interest on Late Premium Payments; Interest on Underpayments
and Overpayments of Single-Employer Plan Termination Liability and
Multiemployer Withdrawal Liability; Interest Assumptions for
Multiemployer Plan Valuations Following Mass Withdrawal
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice of interest rates and assumptions.
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SUMMARY: This notice informs the public of the interest rates and
assumptions to be used under certain Pension Benefit Guaranty
Corporation regulations. These rates and assumptions are published
elsewhere (or can be derived from rates published elsewhere), but are
collected and published in this notice for the convenience of the
public. Interest rates are also published on the PBGC's Web site
(http://www.pbgc.gov).
DATES: The required interest rate for determining the variable-rate
premium under part 4006 applies to premium payment years beginning in
July 2003. The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in August 2003. The interest rates for late premium
payments under part 4007 and for underpayments and overpayments of
single-employer plan termination liability under part 4062 and
multiemployer withdrawal liability under part 4219 apply to interest
accruing during the third quarter (July through September) of 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, 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:
[[Page 41852]]
Variable-Rate Premiums
Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income
Security Act of 1974 (ERISA) and 4006.4(b)(1) of the PBGC's regulation
on Premium Rates (29 CFR part 4006) prescribe use of an assumed
interest rate (the ``required interest rate'') in determining a single-
employer plan's variable-rate premium. The required interest rate is
the ``applicable percentage'' (currently 100 percent) of the annual
yield on 30-year Treasury securities for the month preceding the
beginning of the plan year for which premiums are being paid (the
``premium payment year''). (Although the Treasury Department has ceased
issuing 30-year securities, the Internal Revenue Service announces a
surrogate yield figure each month--based on the 30-year Treasury bond
maturing in February 2031--which the PBGC uses to determine the
required interest rate.)
The required interest rate to be used in determining variable-rate
premiums for premium payment years beginning in July 2003 is 4.37
percent.
The following table lists the required interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between August 2002 and July 2003.
------------------------------------------------------------------------
The
required
For premium payment years beginning in-- interest
rate is--
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August 2002.................................................. 5.39
September 2002............................................... 5.08
October 2002................................................. 4.76
November 2002................................................ 4.93
December 2002................................................ 4.96
January 2003................................................. 4.92
February 2003................................................ 4.94
March 2003................................................... 4.81
April 2003................................................... 4.80
May 2003..................................................... 4.90
June 2003.................................................... 4.53
July 2003.................................................... 4.37
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Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability
Section 4007(b) of ERISA and 4007.7(a) of the PBGC's regulation on
Payment of Premiums (29 CFR part 4007) require the payment of interest
on late premium payments at the rate established under section 6601 of
the Internal Revenue Code. Similarly, 4062.7 of the PBGC's regulation
on Liability for Termination of Single-Employer Plans (29 CFR part
4062) requires that interest be charged or credited at the section 6601
rate on underpayments and overpayments of employer liability under
section 4062 of ERISA. The section 6601 rate is established
periodically (currently quarterly) by the Internal Revenue Service. The
rate applicable to the third quarter (July through September) of 2003,
as announced by the IRS, is 5 percent.
The following table lists the late payment interest rates for
premiums and employer liability for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
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7/1/96....................................... 3/31/98 9
4/1/98....................................... 12/31/98 8
1/1/99....................................... 3/31/99 7
4/1/99....................................... 3/31/00 8
4/1/00....................................... 3/31/01 9
4/1/01....................................... 6/30/01 8
7/1/01....................................... 12/31/01 7
1/1/02....................................... 12/31/02 6
1/1/03....................................... 9/30/03 5
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Underpayments and Overpayments of Multiemployer Withdrawal Liability
Section 4219.32(b) of the PBGC's regulation on Notice, Collection,
and Redetermination of Withdrawal Liability (29 CFR part 4219)
specifies the rate at which a multiemployer plan is to charge or credit
interest on underpayments and overpayments of withdrawal liability
under section 4219 of ERISA unless an applicable plan provision
provides otherwise. For interest accruing during any calendar quarter,
the specified rate is the average quoted prime rate on short-term
commercial loans for the fifteenth day (or the next business day if the
fifteenth day is not a business day) of the month preceding the
beginning of the quarter, as reported by the Board of Governors of the
Federal Reserve System in Statistical Release H.15 (``Selected Interest
Rates''). The rate for the third quarter (July through September) of
2003 (i.e., the rate reported for June 16, 2003) is 4.25 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
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7/1/97........................................ 12/31/98 8.50
1/1/99........................................ 9/30/99 7.75
10/1/99....................................... 12/31/99 8.25
1/1/00........................................ 3/31/00 8.50
4/1/00........................................ 6/30/00 8.75
7/1/00........................................ 3/31/01 9.50
4/1/01........................................ 6/30/01 8.50
7/1/01........................................ 9/30/01 7.00
10/1/01....................................... 12/31/01 6.50
1/1/02........................................ 12/31/02 4.75
1/1/03........................................ 9/30/03 4.25
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Multiemployer Plan Valuations Following Mass Withdrawal
The PBGC's regulation on Duties of Plan Sponsor Following Mass
Withdrawal (29 CFR part 4281) prescribes the use of interest
assumptions under the PBGC's regulation on Allocation of Assets in
Single-Employer Plans (29 CFR part 4044). The interest assumptions
applicable to valuation dates in August 2003 under part 4044 are
contained in an amendment to part 4044 published elsewhere in today's
Federal Register. Tables showing the assumptions applicable to prior
periods are codified in appendix B to 29 CFR part 4044.
Issued in Washington, DC, on this 9th day of July, 2003.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit
Guaranty Corporation.
[FR Doc. 03-17844 Filed 7-14-03; 8:45 am]
BILLING CODE 7708-01-P