82 FR 60308 - Allocation of Assets in Single-Employer Plans; Valuation of Benefits and Assets; Expected Retirement Age

PENSION BENEFIT GUARANTY CORPORATION

Federal Register Volume 82, Issue 243 (December 20, 2017)

This rule amends the Pension Benefit Guaranty Corporation's regulation on Allocation of Assets in Single-Employer Plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2018. This table is needed to compute the value of early retirement benefits and, thus, the total value of benefits under a plan.

[Federal Register Volume 82, Number 243 (Wednesday, December 20, 2017)]
[Rules and Regulations]
[Pages 60308-60309]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27361]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4044


Allocation of Assets in Single-Employer Plans; Valuation of 
Benefits and Assets; Expected Retirement Age

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This rule amends the Pension Benefit Guaranty Corporation's 
regulation on Allocation of Assets in Single-Employer Plans by 
substituting a new table for determining expected retirement ages for 
participants in pension plans undergoing distress or involuntary 
termination with valuation dates falling in 2018. This table is needed 
to compute the value of early retirement benefits and, thus, the total 
value of benefits under a plan.

DATES: This rule is effective January 1, 2018.

FOR FURTHER INFORMATION CONTACT: Hilary Duke ([email protected]), 
Attorney, Regulatory Affairs Division, Office of the General Counsel, 
Pension Benefit Guaranty Corporation, 1200 K Street NW, Washington, DC 
20005, 202-326-4400 ext. 3839. (TTY/TDD users may call the Federal 
relay service toll-free at 1-800-877-8339 and ask to be connected to 
202-326-4400 ext. 3839.)

SUPPLEMENTARY INFORMATION: The Pension Benefit Guaranty Corporation 
(PBGC) administers the pension plan termination insurance program under 
Title IV of the Employee Retirement Income Security Act of 1974 
(ERISA). PBGC's regulation on Allocation of Assets in Single-Employer 
Plans (29 CFR part 4044) sets forth (in subpart B) the methods for 
valuing plan benefits of terminating single-employer plans covered 
under Title IV. Guaranteed benefits and benefit liabilities under a 
plan that is undergoing a distress termination must be valued in 
accordance with subpart B of part 4044. In addition, when PBGC 
terminates an underfunded plan involuntarily pursuant to ERISA section 
4042(a), it uses the subpart B valuation rules to determine the amount 
of the plan's underfunding.
    Under Sec.  4044.51(b) of the asset allocation regulation, early 
retirement benefits are valued based on the annuity starting date, if a 
retirement date has been selected, or the expected retirement age, if 
the annuity starting date is not known on the valuation date. Sections 
4044.55 through 4044.57 set forth rules for determining the expected 
retirement ages for plan participants entitled to early retirement 
benefits. Appendix D of part 4044 contains tables to be used in 
determining the expected early retirement ages.
    Table I in appendix D (Selection of Retirement Rate Category) is 
used to determine whether a participant has a low, medium, or high 
probability of retiring early. The determination is based on the year a 
participant would reach ``unreduced retirement age'' (i.e., the earlier 
of the normal retirement age or the age at which an unreduced benefit 
is first payable) and the participant's monthly benefit at unreduced 
retirement age. The table applies only to plans with valuation dates in 
the current year and is updated annually by PBGC to reflect changes in 
the cost of living, etc.
    Tables II-A, II-B, and II-C (Expected Retirement Ages for 
Individuals in the Low, Medium, and High Categories respectively) are 
used to determine the expected retirement age after the probability of 
early retirement has been determined using Table I. These tables 
establish, by probability category, the expected retirement age based 
on both the earliest age a participant could retire under the plan and 
the unreduced retirement age. This expected retirement age is used to 
compute the value of the early retirement benefit and, thus, the total 
value of benefits under the plan.
    This document amends appendix D to replace Table I-17 with Table I-
18 to provide an updated correlation, appropriate for calendar year 
2018, between the amount of a participant's benefit and the probability 
that the participant will elect early retirement. Table I-18 will be 
used to value benefits in plans with valuation dates during calendar 
year 2018.
    PBGC has determined that notice of, and public comment on, this 
rule are impracticable and contrary to the public interest. Plan 
administrators need to be able to estimate accurately the value of plan 
benefits as early as possible before initiating the termination 
process. For that purpose, if a plan has a valuation date in 2018, the 
plan administrator needs the updated table being promulgated in this 
rule. Accordingly, PBGC finds that the public interest is best served 
by issuing this table expeditiously, without an opportunity for notice 
and comment, and that good cause exists for making the table set forth 
in this amendment effective less than 30 days after publication to 
allow as much time as possible to estimate the value of plan benefits 
with the proper table for plans with valuation dates in early 2018.
    PBGC has determined that this action is not a ``significant 
regulatory action'' under the criteria set forth in Executive Order 
12866 and Executive Order 13771.
    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 in 29 CFR Part 4044

    Employee benefit plans, Pension insurance.

    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. Appendix D to part 4044 is amended by removing Table I-17 and adding 
in its place Table I-18 to read as follows:

Appendix D to Part 4044--Tables Used To Determine Expected Retirement 
Age

[[Page 60309]]



                                Table I-18--Selection of Retirement Rate Category
              [For plans with valuation dates after December 31, 2017, and before January 1, 2019]
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                                                            Participant's Retirement Rate Category is--
                                                 ---------------------------------------------------------------
                                                    Low \1\ if     Medium \2\ if monthly benefit    High \3\ if
      If participant reaches URA in year--            monthly               at URA is--               monthly
                                                    benefit at   --------------------------------   benefit at
                                                   URA is  less                                       URA is
                                                      than--          From--           To--       greater than--
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2019............................................             647             647           2,734           2,734
2020............................................             662             662           2,797           2,797
2021............................................             678             678           2,862           2,862
2022............................................             693             693           2,927           2,927
2023............................................             709             709           2,995           2,995
2024............................................             725             725           3,064           3,064
2025............................................             742             742           3,134           3,134
2026............................................             759             759           3,206           3,206
2027............................................             777             777           3,280           3,280
2028 or later...................................             794             794           3,355           3,355
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\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.

* * * * *

    Issued in Washington, DC, by:
Daniel S. Liebman,
Acting Assistant General Counsel for Regulatory Affairs, Pension 
Benefit Guaranty Corporation.
[FR Doc. 2017-27361 Filed 12-19-17; 8:45 am]
 BILLING CODE 7709-02-P