[Federal Register: December 2, 2002 (Volume 67, Number 231)]
[Rules and Regulations]
[Page 71470-71472]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de02-13]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4011 and 4022
Disclosure to Participants; Benefits Payable in Terminated
Single-Employer Plans
AGENCY: Pension Benefit Guaranty Corporation.
[[Page 71471]]
ACTION: Final rule.
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SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's
regulation on Benefits Payable in Terminated Single-Employer Plans by
adding the maximum guaranteeable pension benefit that may be paid by
the PBGC with respect to a plan participant in a single-employer
pension plan that terminates in 2003. This rule also amends the PBGC's
regulation on Disclosure to Participants by adding information on 2003
maximum guaranteed benefit amounts. The amendment is necessary because
the maximum guarantee amount changes each year, based on changes in the
contribution and benefit base under section 230 of the Social Security
Act. The effect of the amendment is to advise plan participants and
beneficiaries of the increased maximum guarantee amount for 2003.
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: Section 4022(b) of the Employee Retirement
Income Security Act of 1974 provides for certain limitations on
benefits guaranteed by the PBGC in terminating single-employer pension
plans covered under Title IV of ERISA. One of the limitations, set
forth in section 4022(b)(3)(B), is a dollar ceiling on the amount of
the monthly benefit that may be paid to a plan participant (in the form
of a life annuity beginning at age 65) by the PBGC. The ceiling is
equal to ``$750 multiplied by a fraction, the numerator of which is the
contribution and benefit base (determined under section 230 of the
Social Security Act) in effect at the time the plan terminates and the
denominator of which is such contribution and benefit base in effect in
calendar year 1974 [$13,200].'' This formula is also set forth in Sec.
4022.22(b) of the PBGC's regulation on Benefits Payable in Terminated
Single-Employer Plans (29 CFR part 4022). Appendix D to part 4022
lists, for each year beginning with 1974, the maximum guaranteeable
benefit payable by the PBGC to participants in single-employer plans
that have terminated in that year.
Section 230(d) of the Social Security Act (42 U.S.C. 430(d))
provides special rules for determining the contribution and benefit
base for purposes of ERISA section 4022(b)(3)(B). Each year the Social
Security Administration determines, and notifies the PBGC of, the
contribution and benefit base to be used by the PBGC under these
provisions, and the PBGC publishes an amendment to Appendix D to Part
4022 to add the guarantee limit for the coming year.
The PBGC has been notified by the Social Security Administration
that, under section 230 of the Social Security Act, $64,500 is the
contribution and benefit base that is to be used to calculate the PBGC
maximum guaranteeable benefit for 2003. Accordingly, the formula under
section 4022(b)(3)(B) of ERISA and 29 CFR Sec. 4022.22(b) is: $750
multiplied by $64,500/$13,200. Thus, the maximum monthly benefit
guaranteeable by the PBGC in 2003 is $3,664.77 per month in the form of
a life annuity beginning at age 65. This amendment updates Appendix D
to Part 4022 to add this maximum guaranteeable amount for plans that
terminate in 2003. (If a benefit is payable in a different form or
begins at a different age, the maximum guaranteeable amount is the
actuarial equivalent of $3,664.77 per month.)
Section 4011 of ERISA requires plan administrators of certain
underfunded plans to provide notice to plan participants and
beneficiaries of the plan's funding status and the limits of the PBGC's
guarantee. The PBGC's regulation on Disclosure to Participants (29 CFR
Part 4011) implements the statutory notice requirement. This rule
amends Appendix B to the regulation on Disclosure to Participants by
adding information on 2003 maximum guaranteed benefit amounts. Plan
administrators may, subject to the requirements of that regulation,
include this information in participant notices.
General notice of proposed rulemaking is unnecessary. The maximum
guaranteeable benefit is determined according to the formula in section
4022(b)(3)(B) of ERISA, and these amendments make no change in its
method of calculation but simply list 2003 maximum guaranteeable
benefit amounts for the information of the public.
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
29 CFR Part 4011
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
29 CFR Part 4022
Pension insurance, Pensions, Reporting and recordkeeping
requirements.
In consideration of the foregoing, 29 CFR parts 4011 and 4022 are
amended as follows:
PART 4011--DISCLOSURE TO PARTICIPANTS
1. The authority citation for Part 4011 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1311.
2. Appendix B to part 4011 is amended by adding a new entry in
numerical order to the table to read as follows.
Appendix B to Part 4011--Table of Maximum Guaranteed Benefits
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The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the
amount (monthly or annual) listed below:
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If a plan terminates in-- Age 65 Age 62 Age 60 Age 55
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Monthly Annual Monthly Annual Monthly Annual Monthly Annual
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* * * * * * *
2003.................................... $3,664.77 $43,977.24 $2,895.17 $34,742.04 $2,382.10 $28,585.20 $1,649.15 $19,789.80
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[[Page 71472]]
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PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
3. 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.
4. Appendix D to part 4022 is amended by adding a new entry to the
table to read as follows. The introductory text is reproduced for the
convenience of the reader and remains unchanged.
Appendix D to Part 4022--Maximum Guaranteeable Monthly Benefits
[The following table lists by year the maximum guaranteeable monthly
benefit payable in the form of a life annuity commencing at age 65 as
described by Sec. 4022.22(b) to a participant in a plan that
terminated in that year:]
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Maximum guaranteeable monthly
Year benefit
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* * * * *
2003..................................... 3,664.77
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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. 02-30304 Filed 11-29-02; 8:45 am]
BILLING CODE 7708-01-P