Rule2024-21359
Allocation of Assets in Single-Employer Plans; Interest Assumptions for Valuing Benefits
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 19, 2024
Effective
October 31, 2024
Issuing agencies
Pension Benefit Guaranty Corporation
Abstract
This final rule amends the Pension Benefit Guaranty Corporation's regulation on Allocation of Assets in Single-Employer Plans to prescribe the spreads component of the interest assumption under the asset allocation regulation for plans with valuation dates of October 31, 2024-January 30, 2025. These interest assumptions are used for valuing benefits under terminating single-employer plans and for other purposes.
Full Text
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<title>Federal Register, Volume 89 Issue 182 (Thursday, September 19, 2024)</title>
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[Federal Register Volume 89, Number 182 (Thursday, September 19, 2024)]
[Rules and Regulations]
[Pages 76730-76731]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-21359]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4044
Allocation of Assets in Single-Employer Plans; Interest
Assumptions for Valuing Benefits
AGENCY: Pension Benefit Guaranty Corporation (PBGC).
ACTION: Final rule.
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SUMMARY: This final rule amends the Pension Benefit Guaranty
Corporation's regulation on Allocation of Assets in Single-Employer
Plans to prescribe the spreads component of the interest assumption
under the asset allocation regulation for plans with valuation dates of
October 31, 2024-January 30, 2025. These interest assumptions are used
for valuing benefits under terminating single-employer plans and for
other purposes.
DATES: Effective October 31, 2024.
FOR FURTHER INFORMATION CONTACT: Monica O'Donnell
(<a href="/cdn-cgi/l/email-protection#325d565d5c5c575e5e1c5f5d5c5b515372425055511c555d44"><span class="__cf_email__" data-cfemail="1a757e7574747f76763477757473797b5a6a787d79347d756c">[email protected]</span></a>), Attorney, Office of the General Counsel,
Pension Benefit Guaranty Corporation, 445 12th Street SW, Washington,
DC 20024-2101, 202-229-8706. 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: PBGC's regulation on Allocation of Assets in
Single-Employer Plans (29 CFR part 4044) prescribes actuarial
assumptions--including an interest assumption--for valuing benefits
under terminating single-employer plans covered by title IV of the
Employee Retirement Income Security Act of 1974 (ERISA). The interest
assumption is also posted on PBGC's website (<a href="http://www.pbgc.gov">www.pbgc.gov</a>).
PBGC uses the interest assumption in Sec. 4044.54 to determine the
present value of annuities in an involuntary or distress termination of
a single-employer plan under the asset allocation regulation. The
assumptions in part 4044 of PBGC's regulations are also used in other
situations where it is appropriate for liabilities to align 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
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 some, or all of
these assumptions for specified 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)).
On June 6, 2024, PBGC issued a final rule at 89 FR 48291 that
changes the structure of the interest assumption for valuation dates on
or after July 31, 2024, from the select and ultimate approach to
[[Page 76731]]
a yield curve approach. As described in the June 6 final rule, this
``4044 yield curve,'' is based on a blend of two publicly available
bond yield curves that is adjusted to the extent necessary so that the
resulting liabilities align with group annuity prices. The adjustments
are referred to as ``spreads.'' PBGC determines and publishes spreads
quarterly based on survey data on pricing of private-sector group
annuities. As noted in the preamble to the June 6 rule, 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, practitioners
are able to determine the 4044 yield curve as of the end of any month
using the publicly available bond yield curves and the spreads
specified in the regulation.
This rule amends the regulation to specify the spreads used to
determine the 4044 yield curve as of the last days of October,
November, and December of 2024, (i.e., the ``fourth quarter 2024
spreads'').
Need for Immediate Guidance
PBGC has determined that notice of, and public comment on, this
rule are impracticable, unnecessary, and contrary to the public
interest. PBGC routinely updates the spreads component of the interest
assumption in the asset allocation regulation so that the 4044 yield
curve may be determined as soon as the underlying bond yield curves
become available. These amendments are merely technical; they ensure
that use of PBGC's interest assumption continues to yield liabilities
in line with group annuity prices. Accordingly, PBGC finds that the
public interest is best served by issuing this rule expeditiously,
without an opportunity for notice and comment, and that good cause
exists for making the assumptions set forth in this amendment effective
less than 30 days after publication.
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 amendment, the Regulatory Flexibility Act of 1980 does not apply.
See 5 U.S.C. 601(2).
List of Subjects in 29 CFR Part 4044
Employee benefit plans, Pension insurance, Pensions.
In consideration of the foregoing, 29 CFR part 4044 is amended as
follows:
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
0
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.
0
2. In Sec. 4044.54, revise table 1 to paragraph (e) to read as
follows:
Sec. 4044.54 Interest assumptions.
* * * * *
(e) * * *
Table 1 to Paragraph (e)--Spreads
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Third quarter 2024 Fourth quarter 2024
Maturity point spreads (percent) spreads (percent)
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0.5 0.38 0.33
1.0 0.38 0.33
1.5 0.37 0.33
2.0 0.37 0.33
2.5 0.37 0.33
3.0 0.37 0.33
3.5 0.37 0.33
4.0 0.37 0.33
4.5 0.37 0.33
5.0 0.37 0.33
5.5 0.37 0.32
6.0 0.37 0.32
6.5 0.37 0.32
7.0 0.37 0.32
7.5 0.37 0.32
8.0 0.37 0.32
8.5 0.37 0.32
9.0 0.37 0.32
9.5 0.36 0.32
10.0 0.36 0.32
10.5 0.36 0.32
11.0 0.36 0.32
11.5 0.36 0.32
12.0 0.36 0.32
12.5 0.36 0.32
13.0 0.36 0.32
13.5 0.35 0.31
14.0 0.35 0.31
14.5 0.35 0.31
15.0 0.35 0.31
15.5 0.35 0.31
16.0 0.35 0.31
16.5 0.34 0.31
17.0 0.34 0.31
17.5 0.34 0.31
18.0 0.34 0.31
18.5 0.34 0.31
19.0 0.34 0.31
19.5 0.34 0.30
20.0 0.34 0.30
20.5 0.33 0.30
21.0 0.33 0.30
21.5 0.33 0.30
22.0 0.33 0.30
22.5 0.33 0.30
23.0 0.33 0.30
23.5 0.33 0.30
24.0 0.33 0.30
24.5 0.33 0.30
25.0 0.33 0.30
25.5 0.33 0.30
26.0 0.33 0.30
26.5 0.32 0.30
27.0 0.32 0.30
27.5 0.32 0.30
28.0 0.32 0.30
29.0 0.32 0.30
29.5 0.32 0.30
30.0 0.32 0.30
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Issued in Washington, DC.
Hilary Duke,
Assistant General Counsel for Regulatory Affairs, Pension Benefit
Guaranty Corporation.
[FR Doc. 2024-21359 Filed 9-18-24; 8:45 am]
BILLING CODE 7709-02-P
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