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Rule2024-11819

Valuation Assumptions and Methods

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Published

June 6, 2024

Effective

July 8, 2024

Issuing agencies

Pension Benefit Guaranty Corporation

Abstract

This final rule updates the interest, mortality, and expense assumptions used to determine the present value of benefits for a single-employer pension plan under subpart B of the Pension Benefit Guaranty Corporation's regulation on Allocation of Assets in Single- Employer Plans, to determine components of mass withdrawal liability for a multiemployer pension plan, and for other purposes.

Full Text

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<title>Federal Register, Volume 89 Issue 110 (Thursday, June 6, 2024)</title>
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[Federal Register Volume 89, Number 110 (Thursday, June 6, 2024)]
[Rules and Regulations]
[Pages 48291-48309]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-11819]

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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4001, 4010, 4022, 4041, 4041A, 4043, 4044, 4050, 4262,
and 4281

RIN 1212-AA55

Valuation Assumptions and Methods

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This final rule updates the interest, mortality, and expense
assumptions used to determine the present value of benefits for a
single-employer pension plan under subpart B of the Pension Benefit
Guaranty Corporation's regulation on Allocation of Assets in Single-
Employer Plans, to determine components of mass withdrawal liability
for a multiemployer pension plan, and for other purposes.

DATES:
Effective date: This rule is effective July 8, 2024.
Applicability date: These amendments apply to calculations where
the valuation date is on or after July 31, 2024.
Incorporation by reference: The incorporation by reference of
certain material listed in this rule is approved by the Director of the
Federal Register as of July 8, 2024.

FOR FURTHER INFORMATION CONTACT: Gregory M. Katz
(<a href="/cdn-cgi/l/email-protection#b4dfd5c0ce9ad3c6d1d3dbc6cdf4c4d6d3d79ad3dbc2"><span class="__cf_email__" data-cfemail="8ae1ebfef0a4edf8efede5f8f3cafae8ede9a4ede5fc">[email&#160;protected]</span></a>), Deputy Assistant General Counsel for
Regulatory Affairs, Office of the General Counsel, Pension Benefit
Guaranty Corporation, 445 12th Street SW, Washington, DC 20024-2101;
202-229-3829. If you are deaf or hard of hearing, or have a speech
disability, please dial 7-1-1 to access telecommunications relay
services.

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose and Authority

This final rule updates the actuarial assumptions used to determine
the present value of a single-employer plan's benefits when it
terminates in a distress or involuntary termination, to determine the
present value of multiemployer plan benefits in certain withdrawal
liability calculations, and for other purposes. Except for conforming
changes and some technical and editorial changes, the final rule is
substantially the same as the proposed rule.
Legal authority for this action comes from section 4002(b)(3) of
the Employee Retirement Income Security Act of 1974 (ERISA), which
authorizes the Pension Benefit Guaranty Corporation (PBGC) to issue
regulations to carry out the purposes of title IV of ERISA, and section
4044 of ERISA (Allocation of Assets). It also comes from section 4001
of ERISA (Definitions); section 4010 of ERISA (Authority to Require
Certain Information); section 4022 of ERISA (Single-Employer Plan
Benefits Guaranteed); section 4041 of ERISA (Termination of Single-
Employer Plans); section 4041A of ERISA (Termination of Multiemployer
Plans); section 4043 of ERISA (Reportable Events); section 4050 of
ERISA (Missing Participants); section 4062 of ERISA (Liability for
Termination of Single-Employer Plans Under a Distress Termination or a
Termination by Corporation); section 4219 of ERISA (Notice, Collection,
Etc., of Withdrawal Liability); section 4262 of ERISA (Special
Financial Assistance by the Corporation); and section 4281 of ERISA
(Benefits Under Certain Terminated Plans).

Major Provisions

This final rule modifies the interest, mortality, and expense
assumptions for valuing benefits under subpart B to PBGC's regulation
on Allocation of Assets in Single-Employer Plans (``benefits valuation
regulation'') (29 CFR part 4044) to:
<bullet> Modernize the interest assumption structure by adopting a
yield curve approach;
<bullet> Enable the use of market interest rates as of the date of
liability measurement (i.e., the valuation date) as the basis for the
interest assumption;
<bullet> Increase transparency by using a procedure based on
publicly available yield curves as of the valuation date;
<bullet> Adopt a more recent mortality table along with a
generational mortality improvement projection; and
<bullet> Simplify the expense assumption.
Because the assumptions for valuing benefits are incorporated by
reference in other regulations, the changes to these assumptions affect
PBGC's regulations on Annual Financial and Actuarial Information
Reporting (29 CFR part 4010); Missing Participants (29 CFR part 4050);
Notice, Collection, and Redetermination of Withdrawal Liability (29 CFR
part 4219); Special Financial Assistance by PBGC (29 CFR part 4262);
Duties of Plan Sponsor Following Mass Withdrawal (29 CFR part 4281);
and other regulations.

Background

The Pension Benefit Guaranty Corporation (PBGC) administers two
insurance programs for private-sector defined benefit pension plans
under title IV of the Employee Retirement Income Security Act of 1974
(ERISA): a single-employer plan termination insurance program and a
multiemployer plan insolvency insurance program. In addition, PBGC
administers a special financial assistance program for eligible
financially distressed multiemployer plans.
Under the single-employer plan termination insurance program,
covered plans that are underfunded may terminate either in a distress
termination under section 4041(c) of ERISA or in an involuntary
termination (one initiated by PBGC) under section 4042 of ERISA. When
such a plan terminates, PBGC typically is appointed statutory trustee
of the plan and becomes responsible for paying benefits in accordance
with the provisions of title IV of ERISA.
Under the multiemployer insurance program, PBGC provides financial

[[Page 48292]]

assistance under section 4261 of ERISA to plans that are insolvent and
unable to pay benefits at the guaranteed level. This financial
assistance is primarily in the form of financial assistance loans, paid
to the plans periodically so that they can pay basic benefits when due.
Additionally, under the special financial assistance program under
section 4262 of ERISA, PBGC provides funding to eligible financially
troubled multiemployer plans upon approval of an application. This
final rule applies to the single-employer program, the multiemployer
program, and the special financial assistance program.
PBGC has identified these amendments as part of its ongoing review
of its regulations to ensure that PBGC provides clear and helpful
guidance and modernizes outdated methodologies.

Purpose of the Assumptions Described in the Benefits Valuation
Regulation

Under the single-employer insurance program, if a pension plan
terminates without enough assets to provide for all benefits either in
a distress termination under section 4041(c) of ERISA or in a plan
termination initiated by PBGC under section 4042 of ERISA, PBGC
typically is appointed statutory trustee of the plan and becomes
responsible for paying benefits in accordance with the provisions of
title IV of ERISA. When this happens, PBGC must determine (1) the
extent to which participants' benefits are funded under the benefits
valuation rules, (2) whether a terminated plan has sufficient assets to
pay guaranteed benefits, and (3) how much a plan sponsor and its
controlled group owe PBGC because of the termination under section 4062
of ERISA. The assumptions described in the benefits valuation
regulation are used to value a plan's benefit liabilities for these
purposes.
In setting the assumptions under the benefits valuation regulation,
PBGC's long-standing policy is to set assumptions that produce
valuations similar to the premium that a private-sector insurance
company would charge for a group annuity contract covering the same
plan benefits.\1\ This policy ensures that for a plan entering PBGC
trusteeship, the plan's benefit liabilities are measured consistently
with annuity market pricing.
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\1\ Because plan terms, plan demographics, and annuity
providers' methods vary, no single set of assumptions could exactly
match the value private-sector annuity providers would assign to
benefits for all terminating plans. Instead, the assumptions are
intended to produce reasonable valuation results on average for the
range of plans terminating in distress or involuntary terminations,
rather than for any particular plan or plan type. See 70 FR 72205,
72205 (Dec. 2, 2005).
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These assumptions are also used in other situations where it is
appropriate for liabilities to be in line with private-sector group
annuity prices. For example, PBGC's regulations on Notice, Collection,
and Redetermination of Withdrawal Liability (29 CFR part 4219) and
Duties of Plan Sponsor Following Mass Withdrawal (29 CFR part 4281)
provide that these assumptions are used to value liabilities for
purposes of determining withdrawn employers' reallocation liability \2\
in the event of a mass withdrawal from a multiemployer plan.
Multiemployer plans that receive special financial assistance under the
regulation on Special Financial Assistance by PBGC (29 CFR part 4262)
must, as a condition of receiving special financial assistance, use the
interest assumption to determine withdrawal liability for a prescribed
period. Additionally, plan sponsors are required to use these
assumptions for certain purposes (e.g., reporting benefit liabilities
in filings required under PBGC's regulation on Annual Financial and
Actuarial Information Reporting (29 CFR part 4010) or determining
certain amounts to transfer to PBGC's Missing Participants Program on
behalf of a missing participant of a terminating defined benefit plan
under PBGC's regulation on Missing Participants (29 CFR part 4050)) and
may use them for other purposes (e.g., to ensure that plan spinoffs
comply with section 414 (l) of the Internal Revenue Code (the
Code)).\3\
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\2\ When a multiemployer plan terminates in a mass withdrawal,
section 4219 of ERISA requires that unfunded vested benefits be
fully allocated among withdrawing employers. The liability assessed
in this process is called reallocation liability.
\3\ The assumptions are deemed reasonable for use in determining
the value of ``benefits on a termination basis'' after a merger or
spinoff under Internal Revenue Service regulations at 26 CFR
1.414(l)-1.
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Proposed Rule

On August 18, 2023, PBGC published a proposed rule \4\ to update
the benefit valuation regulation's interest, mortality, and expense
assumptions. PBGC provided a 60-day comment period and received five
comment letters. Commenters were generally supportive of PBGC's efforts
to make its assumptions more modern and transparent, and made specific
suggestions. A discussion of the provisions of the final rule, the
comment letters, and PBGC's responses follows. Except for conforming
changes and some technical and editorial changes, the final rule is
substantially the same as the proposed rule.
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\4\ 88 FR 56563 (Aug. 18, 2023).
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Interest Assumption

Current Assumption

The benefits valuation regulation contains an interest assumption
for determining the present value of future payments (4044 interest
assumption). Since November 1993, the 4044 interest assumption has been
expressed in a two-component structure known as ``select and ultimate''
in which one interest factor is assumed to be in effect for the first
20 or 25 years from the valuation date, and the other interest factor
is assumed to be in effect thereafter.
To align valuations with the group annuity market, the American
Council of Life Insurers conducts periodic surveys \5\ of private-
sector single-premium nonparticipating group annuity prices for PBGC.
These surveys ask insurers for sample market pricing information
(exclusive of loads for administrative expenses). The select and
ultimate rates are determined such that in combination with the
mortality assumption provided under the benefits valuation regulation,
the resulting liabilities are in line with group annuity prices from
the survey.\6\
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\5\Survey approved under OMB Control Number 1212-0030 (expires
July 31, 2024).
\6\ See 41 FR 48484, 48485 (Nov. 3, 1976). ``PBGC's interest
assumptions have been designed so that, when coupled with the
mortality assumptions found in the regulation, the benefit values
obtained . . . are in line with the industry annuity prices.''
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PBGC publishes the interest assumption in appendix B to part 4044
each quarter, for use in the subsequent quarter. Therefore, the
interest rates used have not been rates observed on the valuation date.

Reasons for Change

This final rule improves upon current methodology in several ways.
Actuarial practice, with the help of technology, has moved toward a
bond yield curve approach where future benefits are discounted to the
valuation date using yields for which the time to maturity equates to
the length of the discounting period. By associating an interest rate
with each specific benefit payment time horizon, using a yield curve
for discounting better represents the present value of future benefits.
As a result, the select and ultimate structure of PBGC's interest
assumption under the benefits valuation regulation has become
increasingly obsolete. A yield curve approach also better reflects the
term structure of the fixed income investments that underlie the price
of group annuities.

[[Page 48293]]

In addition, the rule improves the methodology by eliminating the
lag between when data used to set PBGC's interest assumption are
observed and the interest rate environment on the valuation date.
Eliminating the lag is desirable because the interest rate environment
on the valuation date also impacts the value of the assets that pension
funds invest in, including fixed income investments, equity, and real
estate.
Lastly, the final rule increases transparency with respect to the
process for setting the 4044 interest assumption. The public
availability of month-end bond yield data now makes it possible to
adopt a methodology that would increase transparency and, in almost all
situations, eliminate the lag entirely.\7\
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\7\ In the uncommon situation of a mid-month valuation date, the
lag is reduced significantly, but not completely eliminated.
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For these reasons, PBGC is structuring the 4044 interest assumption
as a yield curve, more closely replicating the actual yields on the
investments backing group annuities, and better reflecting today's
actuarial practice. In addition, this final rule incorporates publicly
available bond yield data into the methodology used to determine the
4044 interest assumption to increase transparency and bases the
interest assumption on bond yields as of the valuation date, or as
close as practical for valuations that are not as of a month-end.

Updated 4044 Interest Assumption

The 4044 interest assumption in the final rule is the same as in
the proposed rule. Commenters generally supported the transparency of
the proposed method for determining the interest assumption and how it
better reduces lag from the date data is observed to the valuation
date. Some commenters made suggestions which are discussed in this
section. The new interest assumption is based on a blend of two
publicly available yield curves (the ``blended market yield curve'')
and is adjusted to the extent necessary so that the resulting
liabilities align with group annuity prices. As with the proposed rule,
the final rule's interest assumption consists of interest rates at
maturity points from 0.5 to 30.0 years in half-year increments. The
interest rate for the maturity point at year 30.0 is used to discount
benefits expected to be paid more than 30 years after the valuation
date. One commenter suggested that PBGC use a ``uniform'' interest rate
rather than a yield curve. PBGC did not adopt this suggestion, because,
as discussed in more detail earlier in the preamble, actuarial practice
has moved toward a yield curve approach that better represents the
present value of future benefits.
The process used to determine the interest assumption follows.
First, the blended market yield curve is determined in three steps:
<bullet> Step 1--Obtain rates for maturities 0.5 through 30.0 on
Treasury securities from the Department of the Treasury (Treasury
Department) Nominal Coupon Issues Spot Rates, End of Month yield curve
(TNC Yield Curve).\8\
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\8\ Available at <a href="https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curves/treasury-coupon-issues">https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curves/treasury-coupon-issues</a>.
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<bullet> Step 2--Obtain rates on corporate bonds for maturities 0.5
through 30.0 from the Treasury Department's High Quality Market
Corporate Bond Yield Curve Spot Rates, End of Month yield curve (HQM
Bond Yield Curve).\9\
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\9\ Available at <a href="https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curve/corporate-bond-yield-curve">https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curve/corporate-bond-yield-curve</a>.
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<bullet> Step 3--Combine the rates obtained in steps 1 and 2
weighting each corporate bond rate at two-thirds and each Treasury rate
at one-third.\10\
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\10\ The rule primarily uses yields on investment-grade
corporate bonds when setting its assumptions because such yields are
the most important driver of group annuity prices. A white paper
describing, among other things, additional details about this
weighting is available on PBGC's website, <a href="http://www.pbgc.gov">www.pbgc.gov</a>.
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Rather than weighting corporate bonds at two-thirds and Treasury
rates at one-third for all maturities, one commenter suggested using a
``gliding'' weight that varies over different maturities. The goal
would be to reflect the fact that insurers typically have different
pricing assumptions for immediate and deferred annuities (because of
the higher risk associated with deferred annuities than immediate
annuities). PBGC did not adopt this suggestion because a gliding weight
would introduce substantial unnecessary complexity to the calculation
of the blended market yield curve, and the effect described by the
commenter is accounted for in the adjustment spreads discussed later in
this section.
The yield curves used to develop the blended market yield curve are
based on yields as of the end of each month. In PBGC's experience, most
calculations that use 4044 assumptions use valuation dates as of the
last day of a month, and for such calculations, the applicable blended
market yield curve will be determined using the published TNC and HQM
curves as of the valuation date. To accommodate other valuation dates,
the final rule includes a ``lookback'' rule for valuation dates that
are not as of the end of the month. Under the lookback rule, if the
valuation date is not on the last day of a month, the applicable
blended market yield curve as of the last day of the prior month will
be used. For example, if the valuation date is February 15, 2023, the
applicable blended market yield curve is the blended market yield curve
as of January 31, 2023.
PBGC considered other possible rules for determining the blended
market yield curve for valuation dates that are not the last day of the
month, so that its interest assumption might better reflect the bond
market on the actual valuation date (e.g., a blend of the current and
prior month's blended market yield curves, a requirement to use the
blended market yield curve for the end of the month closest to the
valuation date). However, because most plan terminations occur on the
last day of a month, PBGC concluded that the benefits did not outweigh
the additional complexity. PBGC requested comments on the application
of the proposed interest assumption to valuation dates other than the
last day of the month. One commenter responded that the proposed
methodology is a significant improvement over current methodology.
As noted earlier in this preamble, once the blended market yield
curve is determined, it will be adjusted so that the resulting present
values align with group annuity prices. The term ``4044 yield curve''
is used to describe the blended market yield curve after reflecting
such adjustments. The adjustments, or ``spreads,'' will be in the
format of a curve (i.e., a list of spreads through year 30, each of
which applies to a specific point in the blended market yield curve).
PBGC will determine and publish the spreads quarterly based on survey
data on pricing of private-sector group annuities. More specifically,
for each survey date, PBGC will first determine a yield curve that best
fits data from those surveys, given an assumed mortality table. Next,
PBGC will calculate the differences between this curve and the blended
market yield curve as of the survey date. To smooth random variation
and seasonality effects before publishing, PBGC will average those
differences with the differences calculated from prior survey dates to
determine the spreads that are used to adjust the applicable blended
market yield curve. PBGC will publish the spreads (by amending its
regulation) that are used for adjusting the blended market curve
shortly before each quarter begins.
PBGC received a comment suggesting that PBGC adjust its spreads to
compensate for a recently proposed

[[Page 48294]]

change \11\ to the way the Treasury Department determines its bond
yields to avoid a discontinuity in PBGC's rates if the Treasury
proposal is finalized. Because the Treasury Department has since
finalized \12\ its proposal, there will be no discontinuity in PBGC's
rates. For that reason, there is no need to modify PBGC's methodology
to accommodate the changes.
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\11\ 88 FR 41047 (June 23, 2023).
\12\ 89 FR 2127 (Jan. 12, 2024).
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Another commenter made suggestions for increasing the transparency
of the process for determining spreads such as adding detail to the
white paper and PBGC's website. PBGC is pleased to provide the white
paper along with this final regulation to substantially enhance the
transparency of how PBGC determines the benefit valuation regulation's
interest assumption. PBGC will continue to strive to enhance the
transparency of this process.
The spreads for any quarter are used to adjust the month-end
blended market yield curves in that quarter. For example, the first
quarter spreads are used to adjust the blended market yield curves as
of January 31, February 28,\13\ and March 31. Because of the lookback
rule, the first quarter spreads also apply to valuation dates occurring
April 1 through April 29 because for such dates, the applicable blended
market yield curve is the curve as of March 31. Similarly, the fourth
quarter spreads are used to adjust the blended market yield curves as
of October 31, November 30, and December 31. Because of the lookback
rule, the fourth quarter spreads also apply to valuation dates
occurring January 1 through January 30, which use the blended market
yield curve rate determined as of December 31 from the prior year.
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\13\ February 29 in a leap year.
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The following example illustrates how the 4044 yield curve would
have been developed for a valuation date on December 31, 2023, had the
rule been in effect at that time and assuming the fourth quarter
spreads for 2023 were as shown in column D below:

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(A) Dec. 31, 2023,
nominal TNC (B) Dec. 31, 2023, (C) Blended market (D) Fourth quarter (E) Applicable
Maturity Treasury yield HQM bond yield yield curve (%) 2023 spreads (%) 4044 yield curve *
curve (%) curve (%) (%)
\1/2\ (A) + \2/3\ (C) + (D)
(B)
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0.5................................................. 5.17 5.29 5.25 0.36 5.61
1.0................................................. 4.78 5.12 5.01 0.36 5.37
1.5................................................. 4.46 4.97 4.80 0.36 5.16
2.0................................................. 4.21 4.84 4.63 0.36 4.99
28.5................................................ 4.04 5.10 4.75 0.36 5.11
29.0................................................ 4.04 5.10 4.75 0.36 5.11
29.5................................................ 4.04 5.10 4.75 0.37 5.12
30.0................................................ 4.04 5.10 4.75 0.37 ** 5.12
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* Because of the lookback rule, valuation dates from January 1, 2024, through January 30, 2024, would also use the December 31, 2023, blended market
yield curve which means they would also use the fourth quarter spreads. Thus, the 4044 yield curve in column (E) would also be used for those
valuation dates.
** The 5.12% rate would be used for benefits expected to be paid 30 or more years after the valuation date.

Because the yield curves used to develop the blended market yield
curve are not published until a week or two after the end of the month,
in most situations (e.g., month-end valuation dates), the 4044 yield
curve will not be available in advance of the valuation date. Given the
typical situations where practitioners use 4044 interest assumptions
(e.g., Annual Financial and Actuarial Information Reporting (4010
reporting)), PBGC does not anticipate that this will create a timing
problem, and no commenter expressed timing concerns.
This final rule amends the benefits valuation regulation to
prescribe the use of the 4044 yield curve and the process to determine
it. It also amends part 4044 to replace the select and ultimate
interest factor table with a table showing spread adjustments for
blended market yield curves. For each quarter, the table will show 60
spread adjustments. Because the spread adjustments for the third
quarter of 2024 (the quarter for which this rule is first applicable)
will not be determinable until shortly before the third quarter, those
spreads are not provided in this final rule. PBGC will issue the third
quarter 2024 spread adjustments when they are available.
Given this methodology, practitioners will be able to determine the
4044 yield curve as of the end of any month as soon as the Treasury
Department publishes the two yield curves underlying the development of
the blended market yield curve. (The applicable spreads will be
specified in the regulation before the blended market yield curves are
available.) In addition, to reduce administrative burden on
practitioners, PBGC will post the 4044 yield curve on its website at
<a href="http://www.pbgc.gov">www.pbgc.gov</a> each month shortly after its underlying data become
available. In addition to posting the 4044 yield curve, one commenter
suggested that PBGC should post a single interest rate ``index'' to
provide a readily comparable measure of annuity market pricing and to
assist multiemployer plans that receive SFA in determining withdrawal
liability payment schedules. PBGC did not adopt this suggestion because
cash flows vary from plan to plan, and no single index rate would be
representative of all plans. PBGC agrees with the commenter that
actuaries for plans that receive SFA will be able to determine
withdrawal liability payment schedules using the 4044 yield curve and
notes that actuaries will be able to set up a spreadsheet to do the
calculation without much difficulty. To illustrate how the calculation
may be done, before the effective date of the final rule, PBGC will
post an example on its website at <a href="http://www.pbgc.gov">www.pbgc.gov</a>.

Mortality Assumption

Current Assumptions

The mortality assumptions prescribed by the benefits valuation
regulation relate to the probabilities that a participant (or
beneficiary) will survive to each expected benefit payment date. The
regulation currently prescribes six sets of mortality tables: tables
for male and female individuals not receiving a disability benefit
(healthy lives); tables for male and female participants who

[[Page 48295]]

are disabled under a plan provision that does not require eligibility
for Social Security disability benefits (non-Social Security disabled);
and tables for male and female participants who are disabled under a
plan provision requiring eligibility for Social Security disability
benefits (Social Security disabled).
For healthy lives, the mortality tables are based on the GAM-94
Basic Table with mortality improvements projected forward to the year
of valuation plus 10 years using the mortality improvement Scale AA, a
static mortality improvement projection. A static mortality projection
``project[s] the [base mortality] table for a specified number of years
and use[s] the resulting table without further projection.'' \14\ For
Social Security disabled participants, the regulation uses the
Mortality Tables for Disabilities Occurring in Plan Years Beginning
After December 31, 1994, from IRS Rev. Rul. 96-7 (1996-1 C.B. 59). For
non-Social Security disabled participants, the benefits valuation
regulation uses the healthy lives mortality rates for an individual 3
years older (i.e., the table is set forward by 3 years). In addition,
to prevent the rates at older ages from exceeding the rates for Social
Security disabled participants, the mortality rates for non-Social
Security disabled participants are capped at the corresponding rates
for Social Security disabled participants. These assumptions are
described in appendix A to part 4044.
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\14\ 70 FR 72205 at 72206 (Dec. 2, 2005).
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Reasons for Change

PBGC seeks to ensure that the assumptions described in the benefits
valuation regulation, in the aggregate, produce annuity valuations
similar to those produced by private-sector insurers. To do so, PBGC
attempts to keep its ``assumptions in line with those of private-sector
insurers, and to modify its mortality assumptions whenever it is
necessary to do so to achieve consistency with the private insurer
assumptions.'' \15\ PBGC determined that it could better achieve
consistency with insurers' mortality assumptions by updating the
mortality assumptions under the benefits valuation regulation.
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\15\ See 70 FR 72205, 72206 (Dec. 2, 2005) (quoting 58 FR 5128,
5129 (Jan. 19, 1993)).
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PBGC's review of insurance industry practice indicates that
insurers use fully generational mortality tables rather than the
simpler static mortality tables used in the current regulation.
Generational mortality tables are a series of mortality tables, one for
each year of birth, each of which fully reflects projected trends in
mortality rates. In addition to achieving better consistency with
insurers' assumptions, over the past decade, generational mortality
tables have become widely accepted as best practice in the actuarial
community. With such projections, actuaries can ``theoretically more
accurately replicate the anticipated pattern of improvement in
mortality rates.'' \16\
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\16\ See Pension Comm, American Academy of Actuaries, Selecting
and Documenting Mortality Assumptions for Pensions (2015), <a href="https://actuary.org/files/Mortality_PN_060515_0.pdf">https://actuary.org/files/Mortality_PN_060515_0.pdf</a>.
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PBGC's review also indicates that insurers typically use more
recent base mortality tables than the GAM-94 Basic Table. Similarly, it
has also become clear that the industry recognizes and distinguishes
between mortality for annuitants (i.e., individuals receiving benefits)
and non-annuitants (i.e., terminated vested and active participants).

IRS and Treasury Rulemaking

The Internal Revenue Service (IRS) and the Treasury Department
reached the same conclusions regarding trends in mortality assumptions.
On April 28, 2022, they issued a proposed rule (IRS proposal) \17\ to
amend their mortality assumptions regulations under section 430(h)(3)
of the Code. PBGC derived its preamble discussion and operative
regulatory provisions for its healthy lives mortality assumptions from
the IRS proposal. On October 20, 2023, IRS and Treasury finalized their
regulation.\18\
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\17\ 87 FR 25161 (April 28, 2022).
\18\ 88 FR 72357 (Oct. 20, 2023).
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Updated Healthy Lives Mortality Assumption--Base Mortality Tables

This final rule adopts the proposed healthy lives base mortality
tables. The tables are derived from the tables set forth in the Pri-
2012 Private Retirement Plans Mortality Tables Report published by the
Retirement Plan Experience Committee (RPEC) of the Society of Actuaries
(SOA) in 2019 (Pri-2012 Report).\19\ PBGC agrees with IRS and the
Treasury Department that the Pri-2012 Report is the best available
study of the actual mortality experience of pension plan participants
(other than disabled individuals).\20\
---------------------------------------------------------------------------

\19\ This report is available at <a href="https://www.soa.org/49c106/globalassets/assets/files/resources/experience-studies/2019/pri-2012-mortality-tables-report.pdf">https://www.soa.org/49c106/globalassets/assets/files/resources/experience-studies/2019/pri-2012-mortality-tables-report.pdf</a>.
\20\ 87 FR 25161, 25163.
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The tables in the Pri-2012 Report are gender-distinct and provide
separate non-annuitant and annuitant mortality rates.\21\ Consistent
with PBGC's proposed rule, this final rule does not provide separate
tables for annuitants who are retirees and annuitants who are
contingent beneficiaries. Rather, it provides annuitant mortality
tables that combine the mortality experience of retirees and contingent
beneficiaries. The annuitant mortality tables are used to determine the
present value of benefits for an annuitant. For a non-annuitant, the
non-annuitant mortality tables are used for the periods before the
participant is projected to commence receiving benefits, and the
annuitant mortality tables are used for later periods. For a
beneficiary of a participant, the annuitant mortality tables apply for
the period beginning with each assumed commencement of benefits for the
participant. If the participant has died (or to the extent the
participant is assumed to die before commencing benefits), the
annuitant mortality tables apply for the beneficiary for the period
beginning with each assumed commencement of benefits for the
beneficiary.
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\21\ The Pri-2012 Report refers to non-annuitant rates as
``employee'' rates. However, because those rates also apply to
former employees prior to benefit commencement, for purposes of this
final rule, the term ``non-annuitant'' is used.
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These base tables generally have the same mortality rates as the
employee and non-disabled annuitant mortality rates that were released
by RPEC in connection with the Pri-2012 Report. However, the base
tables provided in this rule also include rates for certain situations
that were not included in the base tables in the Pri-2012 Report (i.e.
non-annuitant mortality rates for ages below age 18 and above age 80
and annuitant mortality rates for ages below age 50). The preamble to
the IRS proposal describes the methodology that was used to develop
those additional rates.\22\
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\22\ See 87 FR 25161, 25163.
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Several commenters made suggestions for the regulation's base
mortality table. One commenter recommended multi-factor mortality
tables because, according to the commenter, they better match insurer
practice and they more precisely predict mortality by using multiple
data fields to capture the diversity of pension plan mortality by
analyzing the characteristics of the individuals in those pension
plans. Multi-factor mortality is an evolving area, which PBGC intends
to study and monitor as PBGC continues to review ways to improve the
regulation's prescribed assumptions in the future. Another commenter
suggested prescribing use of the Society of Actuaries' RP-2014
Mortality Table instead of Pri-2012. This final rule does not adopt RP-
2014 because, as

[[Page 48296]]

discussed earlier in this preamble, PBGC believes (and one commenter
agreed) that Pri-2012 is the best available study of the actual
mortality experience of pension plan participants. Pri-2012 is also
based on more recent mortality experience than RP-2014 (which is based
on an experience study for the years 2004-2008).
PBGC received a few comments about the feasibility of using the
4044 interest assumption with a different mortality assumption for
calculations other than those for which the use of both assumptions is
required. For example, one commenter noted that because of the way the
4044 yield curve will be determined (i.e., using a current and
representative mortality assumption to determine the spreads), PBGC's
discount rate spot yield curve will stand on its own as a reasonable
assumption for multiple purposes and suggested that for certain
purposes, such as multiemployer withdrawal liability, the use of a
``blue collar'' mortality table ``may better reflect the underlying
demographics of the pension plan being valued.''
While it is true that, when used together, the 4044 interest and
mortality assumptions are designed to result in liabilities that are
similar to what a private-sector insurance company would charge for a
group annuity contract, PBGC agrees that it may be reasonable to use
the interest assumption with a different mortality assumption for
situations where the use of both assumptions is not required (assuming
the mortality assumption reflects plan demographics).
With respect to the comment on withdrawal liability, in general,
PBGC does not mandate use of the 4044 mortality assumption to determine
withdrawal liability. However, as discussed earlier in this preamble,
both the prescribed interest and mortality assumptions must be used to
determine reallocation liability in the event of a mass withdrawal. In
consideration of the comment, PBGC intends to review the assumptions
and methods required for such calculations for possible inclusion in a
future rulemaking project.

Updated Healthy Lives Mortality Assumption--Mortality Improvements

The base tables described above have a base year of 2012 (the
central year of the experience study used to develop the mortality
tables in the Pri-2012 Report). Like the proposed rule, the base tables
are used to develop the mortality tables for future years using Scale
MP-2021 Rates (the mortality improvement scale in the Mortality
Improvement Scale MP-2021 Report,\23\ which was published by the RPEC
in October 2021). That mortality improvement scale was developed using
the same underlying methodology used to develop RPEC's earlier
mortality improvement scales but reflects historical population data
through 2019 and the change to the RPEC-selected assumptions for the
long-term rate of mortality improvement that was first incorporated in
the Mortality Improvement Scale MP-2020 Report.
---------------------------------------------------------------------------

\23\ Report available at <a href="https://www.soa.org/4a9de4/globalassets/assets/files/resources/experience-studies/2021/2021-mp-scale-report.pdf">https://www.soa.org/4a9de4/globalassets/assets/files/resources/experience-studies/2021/2021-mp-scale-report.pdf</a>.
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Although IRS and Treasury also proposed using Scale MP-2021 for
future years, their final rule provides for a slightly different
improvement projection. Because PBGC seeks to match insurance company
assumptions and has no indication that changes similar to those
finalized by IRS and Treasury would more closely match insurance
company assumptions, PBGC is finalizing its mortality improvement scale
as proposed. PBGC will continue to monitor and consider new mortality
trend data, including updated mortality improvement scales issued by
RPEC, and intends to amend its regulation to account for new data when
appropriate. The updated healthy lives mortality assumptions closely
align with the mortality assumptions used by private-sector insurers.
The software needed to use generational mortality tables is widely used
and is often used for other business needs such as financial
accounting. Using modern actuarial software, the new assumptions should
be no more difficult to apply.

Updated Disabled Lives Mortality Assumption

As with the proposed rule, this final rule provides that the
healthy lives mortality assumptions (base table and improvement
projections) be used for disabled individuals that are not eligible for
Social Security disability benefits. For individuals that are eligible
for Social Security disability benefits, as with the proposed rule, the
final rule updates the mortality assumptions to reflect more recent
mortality experience by using tables published in the Social Security
Disability Insurance Program Disabled Worker Experience Actuarial Study
125, a study providing ``extensive information on recent actual [Social
Security Disability Insurance] disabled worker experience.'' \24\ The
mortality rates for Social Security disabled participants comprise two
tables: Table 12 for Social Security disabled participants age 75 and
younger, and Table 7C for Social Security disabled participants age 76
and older. As with the current mortality assumptions for individuals
that are eligible for Social Security disability benefits, the updated
assumptions do not include a mortality improvement scale.
---------------------------------------------------------------------------

\24\ Nettie J. Barrick-Funk, Soc. Sec. Admin., Social Security
Disability Insurance Program Disabled Worker Experience Actuarial
Study 125, at ix (2020), <a href="https://www.ssa.gov/OACT/NOTES/pdf_studies/study125.pdf">https://www.ssa.gov/OACT/NOTES/pdf_studies/study125.pdf</a>.
---------------------------------------------------------------------------

For the reasons discussed earlier, this final rule amends PBGC's
benefits valuation regulation to replace mortality tables for healthy
lives with mortality tables from the Pri-2012 Report. It also replaces
tables relating to mortality improvement for healthy lives with
references to generational mortality improvement projections from the
Mortality Improvement Scale MP-2021 and prescribes their use. It
further amends PBGC's benefits valuation regulation to replace tables
relating to mortality for Social Security disabled participants with
tables derived from Social Security Actuarial Study 125. Finally, it
amends the regulation so that the provisions specifying assumptions for
non-Social Security disabled lives refer to the healthy lives mortality
assumptions.

Expense Assumption

Current Assumptions

Certain administrative expenses are incurred by insurers in
connection with the payment of benefits. These expenses are for such
things as establishing plan files, reviewing plan provisions to
determine benefit entitlements, setting up and updating records,
processing pension applications, and remitting benefit payments.
Insurers use assumptions about these expenses to price annuities. To
account for this component of private-sector annuity pricing, the
benefits valuation regulation specifies expense assumptions.\25\
---------------------------------------------------------------------------

\25\ Expense assumptions are sometimes described as loading
assumptions or expense loading assumptions.
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Currently, these expense assumptions are based in part on the total
present value of plan benefits. They are intended to recognize that the
computation of benefit valuations entails certain expenses that are
roughly proportional to the number of participants in a plan, and that
private insurers' expenses, expressed as a percentage of liabilities,
are somewhat lower for larger plans. For the expenses proportional to
the number of plan participants, the benefits valuation regulation
assumes a cost of $200 per participant. In addition, a percentage of

[[Page 48297]]

liabilities is added to the assumed expense amount for all plans in a
way that accounts for the efficiency advantage of larger plans. That
percentage is 5 percent of liabilities up to $200,000, plus a smaller,
variable percentage of liabilities above $200,000.

Reasons for Change and Updated Expense Assumptions

As discussed above, PBGC attempts to set its assumptions to match
the private-sector annuity market. PBGC has determined that simple per-
participant loads are the most common structure for explicitly charging
for administrative expenses and that insurers' expense assumptions
account for a very small portion of the total cost of a group annuity.
PBGC's current multi-tiered expense assumptions are too complicated
given expense assumptions' small share of annuity pricing and the
simple structure insurers typically use. Thus, as with the proposed
rule, this final rule simplifies the expense assumptions. This rule
sets the expense load assumption at $400 per participant for the first
100 participants and $250 for each participant over 100. PBGC concluded
these amounts were reasonable based on a review of per-participant
charges included in group annuity contracts for terminating plans
provided to PBGC as part of the standard termination process. These
amounts will be updated for inflation using the Consumer Price Index
(CPI-U) each year. The rule amends PBGC's benefits valuation regulation
to prescribe these updated expense assumptions.
PBGC received two comments on the proposed expense assumptions. One
commenter suggested breaking down the expense assumptions between
deferred and immediate annuities because expenses on deferred annuities
are higher than on immediate annuities. Though PBGC agrees that
deferred and immediate annuities have different expense levels, because
expenses are such a small component of valuations, capturing this
difference is not worth complicating the assumption. Another commenter
said PBGC should prescribe a lower expense assumption, yielding
expenses between 1.5 percent and 1.8 percent. The prescribed expense
assumption is a dollar amount per participant and will generally result
in assumed expenses below 1.5 percent of liability.

Conforming Changes to the Missing Participants Regulation

Interest Assumption

PBGC's Missing Participants regulation (29 CFR part 4050) provides
that the interest assumption used to determine certain amounts to be
transferred on behalf of a missing participant from a terminating
defined benefit plan \26\ to PBGC's Missing Participants Program is the
interest assumption under PBGC's benefits valuation regulation
applicable to valuations occurring in January of the calendar year in
which the benefit determination date occurs.\27\ Under the current
benefits valuation regulation, the same interest assumption is used for
any valuation date in January. However, under this final rule, two
different interest assumptions apply to valuation dates in January
(i.e., the 4044 yield curve as of December 31 applies for valuation
dates occurring January 1 through January 30 and the 4044 yield curve
as of January 31 applies for a January 31 valuation date). If the
Missing Participants regulation were left unchanged, it would be
unclear which 4044 yield curve should be used for benefit determination
dates occurring in a particular calendar year. Thus, like the proposed
rule, this final rule amends the Missing Participants regulation to
prescribe the use of the 4044 yield curve applicable to valuations
occurring on December 31 of the year preceding the calendar year in
which the benefit determination date occurs. However, there is no 4044
yield curve applicable to valuations occurring on December 31, 2023.
Consequentially, for benefit determination dates to which this rule
applies in 2024, a transition rule prescribes the use of the 4044 yield
curve applicable to valuations occurring on July 31, 2024.
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\26\ The terminating defined benefit plans covered by PBGC's
Missing Participants Program are single-employer and multiemployer
pension plans covered by title IV of ERISA, and small professional
service employer plans not covered by title IV of ERISA. See 29 CFR
4050.101, 4050.301, and 4050.401.
\27\ See definition of ``PBGC missing participants assumptions''
in 29 CFR 4050.102, 4050.302, and 4050.402.
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Mortality Assumption

PBGC's Missing Participants regulation prescribes use of a unisex
version of the benefit valuation regulation's mortality assumption for
healthy lives (i.e., a 50/50 blend of the male and female mortality
tables) to determine certain amounts to be transferred on behalf of a
missing participant from a terminating defined benefit plan to PBGC's
Missing Participants Program. Doing the required calculation based on
the current mortality assumption is relatively straightforward.
However, because this final rule provides that future mortality
improvements will be reflected using generational mortality, if the
Missing Participants regulation were left unchanged, practitioners
would need to create, and use, a unisex version of a generational
mortality table, which would be somewhat cumbersome and complicated. To
alleviate the complication, as with the proposed rule, PBGC is amending
the Missing Participants regulation to provide that a unisex, static
version of the mortality table be used for this purpose. More
specifically, PBGC is amending the portion of the definition of ``PBGC
missing participants assumptions'' related to mortality to use a 50/50
blend of static male and female mortality combined tables reflecting
non-annuitant and annuitant mortality rates. The proposed rule stated
that these male and female tables would be identical to the static
mortality tables proposed by IRS and Treasury as an alternative for
plans with 500 or fewer participants. Though this final rule does not
change the methodology for determining the missing participants static
mortality tables, the tables will not be identical to the IRS and
Treasury small plan tables because of changes to improvement projection
that IRS and Treasury finalized. This final rule includes the static
mortality table for 2024 valuations to which this rule applies. PBGC
intends to amend the regulation annually to provide static mortality
tables reflecting mortality improvements.

Other Housekeeping Changes

As previously discussed, the interest, mortality, and expense
assumptions are specified in appendixes to part 4044. To better align
with Office of the Federal Register guidance, this final rule specifies
the updated assumptions within the codified text of part 4044 instead.
The expected retirement age assumptions, which are also used in present
value of benefit calculations under part 4044 (but not modified by this
rule), are moved to codified text as well. This final rule retains the
current interest assumptions in appendix B for reference, but the other
three appendixes are removed. The final rule updates cross-references
to the appendixes throughout PBGC's regulations so that they refer to
the codified text. Compared to the proposed rule, the final rule
updates additional cross references in PBGC's regulations

[[Page 48298]]

to reflect the new location of the expected retirement age assumptions.

Applicability and Transition

One commenter suggested providing a transition period for the
regulated community to adapt to the new format of the assumptions and
that PBGC continue publishing select and ultimate interest rates for a
period of time for third-party use. The amendments apply to
calculations where the valuation date is on or after July 31, 2024,
giving adequate time to those that need it. However, PBGC will not
continue to publish select and ultimate rates. As described earlier in
the preamble, the select and ultimate methodology is outmoded.

Incorporation by Reference

Section 4044.53(c)(1)(iii) of the final regulation provides that
the mortality improvement rates used to construct the generational
mortality tables to be used are the Scale MP-2021 Rates which are
described in the Mortality Improvement Scale MP-2021 Report. The Office
of the Federal Register (OFR) has regulations concerning incorporation
by reference. 1 CFR part 51. These regulations require that agencies
must discuss in the preamble to a rule or proposed rule the way in
which materials that the agency incorporates by reference are
reasonably available to interested persons, and how interested parties
can obtain the materials. 1 CFR 51.5(b).
The Scale MP-2021 Rates and the Mortality Improvement Scale MP-2021
Report are described in this preamble under the heading ``Updated
healthy lives mortality assumption--mortality improvements'' in the
``Mortality Assumption'' section of this preamble. The Mortality
Improvement Scale MP-2021 Report was issued by the Retirement Plans
Experience Committee of the Society of Actuaries in October of 2021 and
is available to the public for free viewing online on the Society of
Actuary's website at <a href="https://www.soa.org/resources/experience-studies/2021/mortality-improvement-scale-mp-2021">https://www.soa.org/resources/experience-studies/2021/mortality-improvement-scale-mp-2021</a>. The Scale MP-2021 Rates
consist of tables of mortality improvement rates by age, sex, and year
that are used to project future mortality improvements on the base
mortality table.

Executive Orders 12866 and 13563

The Office of Management and Budget (OMB) has determined that this
rule is not a ``significant regulatory action'' under Executive Order
12866. Accordingly, OMB has not reviewed the final rule under Executive
Order 12866.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity).
Although this is not a significant regulatory action under
Executive Order 12866, PBGC has examined the economic implications of
this final rule and has concluded that the rule's changes will have a
minimal impact on liabilities determined under PBGC's regulations.
The updates to the assumptions under the benefits valuation
regulation will, on average, produce benefit liabilities that are very
close to the valuations produced by the current assumptions. The
results for any particular benefit valuation, however, could be
different as a result of adopting an interest rate methodology based on
market rates (i.e., eliminating the lag between when data used to set
the interest assumption are observed and the interest rate environment
on the valuation date).
The impact on liabilities resulting from eliminating the above-
noted lag will not be biased in favor of higher or lower benefit
liabilities. Also, the impact should be fairly small (i.e., within a
few percentage points) unless market rates on the valuation date are
significantly different from what PBGC would have used to determine the
4044 interest assumption absent this change (i.e., had the lag not been
eliminated).
PBGC's analysis indicates that, ignoring the impact of the interest
rate timing difference described in the prior paragraph, the impact
will also be relatively small in situations where the updated 4044
interest assumption is used, but not the updated 4044 mortality
assumption. For example, this might be the case with respect to certain
withdrawal liability calculations. For plans using the 4044 interest
assumption but not the 4044 mortality assumption to determine
withdrawal liability, the updated assumptions will generally result in
lower benefit liabilities, but liability measurements should be within
a few percentage points of liability measurements using the current
methodology. Thus, the change will result in only a minor change in
withdrawal liability.
The changes to generational mortality tables and to a yield-curve
based interest assumption impose a small and not significant
administrative burden on plans and practitioners that do calculations
using the assumptions.
Section 6 of Executive Order 13563 requires agencies to rethink
existing regulations by periodically reviewing their regulatory
programs for rules that ``may be outmoded, ineffective, insufficient,
or excessively burdensome.'' These rules should be modified,
streamlined, expanded, or repealed as appropriate. PBGC is updating
certain outmoded assumptions in its benefits valuation regulation
consistent with the principles for review under E.O. 13563.

Regulatory Flexibility Act

The Regulatory Flexibility Act \28\ imposes certain requirements
respecting rules that are subject to the notice-and-comment
requirements of section 553(b) of the Administrative Procedure Act, or
any other law,\29\ and that are likely to have a significant economic
impact on a substantial number of small entities. Unless an agency
certifies that a final rule is not likely to have a significant
economic impact on a substantial number of small entities, section 604
of the Regulatory Flexibility Act requires that the agency present a
final regulatory flexibility analysis at the time of the publication of
the final rule describing the impact of the rule on small entities and
seek public comment on such impact. Small entities include small
businesses, organizations, and governmental jurisdictions.\30\
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\28\ 5 U.S.C. 601 et seq.
\29\ The applicable definition of ``rule'' is found in section
601 of the Regulatory Flexibility Act. See 5 U.S.C. 601(2).
\30\ The applicable definitions of ``small business,'' ``small
organization,'' and ``small governmental jurisdiction'' are found in
section 601 of the Regulatory Flexibility Act. See 5 U.S.C. 601.
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For purposes of the Regulatory Flexibility Act requirements with
respect to this final rule, PBGC considers a small entity to be a plan
with fewer than 100 participants.\31\ This is substantially the same
criterion PBGC uses in other regulations \32\ and is consistent with
certain requirements in title I of ERISA \33\ and the Code,\34\ as well
as the definition of a small entity that PBGC and the Department of
Labor

[[Page 48299]]

(DOL) have used for purposes of the Regulatory Flexibility Act.\35\
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\31\ PBGC consulted with the Small Business Administration's
Office of Advocacy before making this determination. Memorandum
received from the U.S. Small Business Administration, Office of
Advocacy on March 9, 2021.
\32\ See, e.g., special rules for small plans under part 4007
(Payment of Premiums).
\33\ See, e.g., section 104(a)(2) of ERISA, which permits the
Secretary of Labor to prescribe simplified annual reports for
pension plans that cover fewer than 100 participants.
\34\ See, e.g., section 430(g)(2)(B) of the Code, which permits
plans with 100 or fewer participants to use valuation dates other
than the first day of the plan year.
\35\ See, e.g., PBGC's proposed rule on Reportable Events and
Certain Other Notification Requirements, 78 FR 20039, 20057 (April
3, 2013) and DOL's final rule on Procedures Governing the Filing and
Processing of Prohibited Transaction Exemption Applications, 89 FR
4662, 4690 (Jan. 24, 2024).
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Further, while some large employers operate small plans along with
larger ones, in general, most small plans are maintained by small
employers. Thus, PBGC believes that assessing the impact of the final
rule on small plans is an appropriate substitute for evaluating the
effect on small entities. The definition of small entity considered
appropriate for this purpose differs, however, from a definition of
small business based on size standards promulgated by the Small
Business Administration \36\ under the Small Business Act. PBGC
therefore requested comments on the appropriateness of the size
standard used in evaluating the impact of the amendments in the final
rule on small entities. PBGC received no comments on this point.
---------------------------------------------------------------------------

\36\ See, 13 CFR 121.201.
---------------------------------------------------------------------------

Based on its definition of small entity, PBGC certifies under
Section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
that the amendments in this final rule will not have a significant
economic impact on a substantial number of small entities. As explained
earlier in this preamble, the assumptions will continue to produce
valuations that align with group annuity prices. Because of this, PBGC
does not expect the assumptions to have a significant economic impact
on a substantial number of entities of any size. Similarly, because
technology improvements allow even small plans (and their service
providers) to apply the more complicated interest and mortality
assumptions of this rule without additional administrative burden, this
final rule will not increase administrative costs on these entities.
Accordingly, as provided in Section 605 of the Regulatory Flexibility
Act, sections 603 and 604 do not apply.

List of Subjects

29 CFR Part 4001

Employee benefit plans, Pension insurance, Pensions.

29 CFR Part 4010

Pension insurance, Pensions, Reporting and recordkeeping
requirements.

29 CFR Part 4022