[Federal Register: April 15, 2005 (Volume 70, Number 72)]
[Notices]
[Page 19974-19975]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ap05-89]
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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
[[Page 19975]]
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
April 2005. The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in May 2005. 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 second quarter (April through June) of 2005.
FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Attorney,
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:
Variable-Rate Premiums
Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income
Security Act of 1974 (ERISA) and Sec. 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. Pursuant to the Pension
Funding Equity Act of 2004, for premium payment years beginning in 2004
or 2005, the required interest rate is the ``applicable percentage''
(currently 85 percent) of the annual rate of interest determined by the
Secretary of the Treasury on amounts invested conservatively in long-
term investment grade corporate bonds for the month preceding the
beginning of the plan year for which premiums are being paid. Thus, the
required interest rate to be used in determining variable-rate premiums
for premium payment years beginning in April 2005 is 4.78 percent
(i.e., 85 percent of the 5.62 percent composite corporate bond rate for
March 2005 as determined by the Treasury).
The following table lists the required interest rates to be used in
determining variable-rate premiums for premium payment years beginning
between May 2004 and April 2005.
------------------------------------------------------------------------
The
required
For premium payment years beginning in: interest
rate is:
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May 2004.................................................... 4.98
June 2004................................................... 5.26
July 2004................................................... 5.25
August 2004................................................. 5.10
September 2004.............................................. 4.95
October 2004................................................ 4.79
November 2004............................................... 4.73
December 2004............................................... 4.75
January 2005................................................ 4.73
February 2005............................................... 4.66
March 2005.................................................. 4.56
April 2005.................................................. 4.78
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Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability
Section 4007(b) of ERISA and Sec. 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, Sec.
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 second quarter (April
through June) of 2005, as announced by the IRS, is 6 percent.
The following table lists the late payment interest rates for
premiums and employer liability for the specified time periods:
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Interest
From-- Through-- rate
(percent)
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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
10/1/03......................................... 3/31/04 4
4/1/04.......................................... 6/30/04 5
7/1/04.......................................... 9/30/04 4
10/1/04......................................... 3/31/05 5
4/1/05.......................................... 6/30/05 6
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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 second quarter (April through June) of 2005
(i.e., the rate reported for March 15, 2005) is 5.50 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
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Interest
From-- Through-- rate
(percent)
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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
10/1/03......................................... 9/30/04 4.00
10/1/04......................................... 12/31/04 4.50
1/1/05.......................................... 3/31/05 5.25
4/1/05.......................................... 6/30/05 5.50
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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 May 2005 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 11th day of April 2005.
Vincent K. Snowbarger,
Deputy Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 05-7550 Filed 4-14-05; 8:45 am]
BILLING CODE 7708-01-P