Valuation Assumptions and Methods, 56563-56579 [2023-17521]
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Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
460.67 Operator training of government
astronauts without a safety-critical role.
Subpart D—Launch and Reentry With
a Government Astronaut Without a
Safety-Critical Role
§ 460.63
Scope.
This subpart establishes requirements
for operators and applicants whose
licensed or permitted operations involve
government astronauts on board a
vehicle without a safety-critical role.
§ 460.65
Applicability.
This subpart applies to:
(a) An applicant for a license or
permit under this chapter who proposes
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a safety-critical role on board a vehicle.
(b) An operator licensed or permitted
under this chapter who has a
government astronaut without a safetycritical role on board a vehicle.
§ 460.67 Operator training of government
astronauts without a safety-critical role.
An operator must train each
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emergency situations, including smoke,
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Issued under authority provided by 49
U.S.C. 106(f) and 51 U.S.C. Chapter 509
in Washington, DC.
Kelvin B. Coleman,
Associate Administrator, Office of
Commercial Space Transportation.
[FR Doc. 2023–16858 Filed 8–17–23; 8:45 am]
BILLING CODE 4910–13–P
PENSION BENEFIT GUARANTY
CORPORATION
29 CFR Parts 4022, 4044, 4050, 4262
and 4281
RIN 1212–AA55
Valuation Assumptions and Methods
Pension Benefit Guaranty
Corporation.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
update the interest, mortality, and
expense assumptions used to determine
the present value of benefits for a singleemployer 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: Comments must be submitted on
or before October 17, 2023 to be assured
of consideration.
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SUMMARY:
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Comments may be
submitted by any of the following
methods:
• Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
instructions for sending comments.
• Email: reg.comments@pbgc.gov.
Refer to RIN 1212–AA55 in the subject
line.
• Mail or Hand Delivery: Regulatory
Affairs Division, Office of the General
Counsel, Pension Benefit Guaranty
Corporation, 445 12th Street SW,
Washington, DC 20024–2101.
Commenters are strongly encouraged
to submit comments electronically.
Commenters who submit comments on
paper by mail should allow sufficient
time for mailed comments to be
received before the close of the
comment period. All submissions must
include the agency’s name (Pension
Benefit Guaranty Corporation or PBGC),
the title for this rulemaking (Valuation
Assumptions and Methods), and the
Regulation Identifier Number for this
rulemaking (RIN 1212–AA55).
Comments received will be posted
without change to PBGC’s website,
www.pbgc.gov, including any personal
information provided. Do not submit
comments that include any personally
identifiable information or confidential
business information.
Copies of comments may also be
obtained by writing to Disclosure
Division, Office of the General Counsel,
Pension Benefit Guaranty Corporation,
445 12th Street SW, Washington, DC
20024–2101, or calling 202–326–4040
during normal business hours. If you are
deaf or hard of hearing, or have a speech
disability, please dial 7–1–1 to access
telecommunications relay services.
FOR FURTHER INFORMATION CONTACT:
Gregory M. Katz (katz.gregory@
pbgc.gov), Attorney, Regulatory Affairs
Division, 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:
ADDRESSES:
Executive Summary
Purpose and Authority
This proposed rule would update 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.
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56563
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; section
4044 of ERISA (Allocation of Assets);
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 4062 of ERISA (Liability
for Termination of Single-Employer
Plans Under a Distress Termination or a
Termination by Corporation); section
4050 of ERISA (Missing Participants);
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 proposed rule would modify 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:
• Modernize the interest assumption
structure by adopting a yield curve
approach;
• 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;
• Increase transparency by using a
procedure based on publicly available
yield curves as of the valuation date;
• Adopt a more recent mortality table
along with a generational mortality
improvement projection; and
• Simplify the expense assumption.
Because the assumptions for valuing
benefits are incorporated by reference in
other regulations, the changes to these
assumptions would affect PBGC’s
regulations on 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); Annual Financial and
Actuarial Information Reporting (29
CFR part 4010); Missing Participants (29
CFR part 4050); and other regulations.
Background
The Pension Benefit Guaranty
Corporation (PBGC) administers two
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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 certain
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.
Under the multiemployer insurance
program, PBGC provides financial
assistance under section 4261 of ERISA
to plans that are insolvent and thus
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 are able to pay
plan 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 proposed rule applies to both the
single-employer program and the
multiemployer program.
PBGC has identified these proposed
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
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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 privatesector 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 consistent with annuity
market pricing.
These assumptions are also used in
other situations where it is appropriate
for liabilities to be in-line with privatesector 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
assumptions 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), 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
1 Because plan terms, plan demographics, and
annuity providers’ methods vary, no single set of
assumptions could exactly match the value privatesector 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).
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.
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spinoffs comply with section 414(l) of
the Internal Revenue Code (the Code)).3
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 4 of private-sector singlepremium 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.5
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 proposal would improve 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
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.
4 Survey approved under OMB Control Number
1212–0030 (expires July 31, 2024).
5 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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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.
In addition, PBGC seeks to improve
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, PBGC seeks to increase
transparency with respect to its 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.6
For these reasons, PBGC is proposing
to structure 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, the
proposal would incorporate publicly
available bond yield data into the
methodology used to determine the
4044 interest assumption to increase
transparency, and to base the interest
assumption on bond yields as of the
valuation date, or as close as practical
for valuations that are not as of a monthend.
Proposed 4044 Interest Assumption
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Under the proposal, the 4044 interest
assumption would be based on a blend
of two publicly available yield curves
(the ‘‘blended market yield curve’’) and
would be adjusted to the extent
necessary so that the resulting liabilities
align with group annuity prices. The
adjusted blended market yield curve
would consist 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
would be used to discount benefits
expected to be paid more than 30 years
after the valuation date.
6 In the uncommon situation of a mid-month
valuation date, the lag would be reduced
significantly, but not completely eliminated.
7 Available at https://home.treasury.gov/data/
treasury-coupon-issues-and-corporate-bond-yieldcurves/treasury-coupon-issues.
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The blended market yield curve (prior
to adjustment) would be determined as
follows:
• 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).7
• 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).8
• 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.9
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 last day of a month, and for
such calculations, the applicable
blended market yield curve would be
determined using the published TNC
and HQM curves as of the valuation
date. To accommodate other valuation
dates, the proposal 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 would 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 requests comments
on this issue.
As noted above, once the blended
market yield curve is determined, it
would be adjusted so that the resulting
present values align with group annuity
prices. The term ‘‘4044 yield curve’’
would be used to describe the blended
market yield curve after reflecting such
adjustments.
The adjustments, or ‘‘spreads,’’ would
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
would determine the spreads quarterly
based on survey data on pricing of
private-sector group annuities. More
specifically, PBGC would determine a
yield curve that best fits data from those
surveys, given an assumed mortality
table. Next, PBGC would calculate the
differences (‘‘spreads’’) between this
curve and the blended market yield
curve as of the survey date. To smooth
random variation and seasonality effects
before publishing, PBGC would average
the calculated spreads with spreads
from prior periods. PBGC would publish
the spreads (by amending its regulation)
shortly before each quarter begins.10
The spreads for any quarter would be
used to adjust the month-end blended
market yield curves in that quarter. For
example, the first quarter spreads would
be used to adjust the blended market
yield curves as of January 31, February
28,11 and March 31. Because of the
lookback rule, the first quarter spreads
would 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 would be 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 would
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.
The following example illustrates
how the 4044 yield curve would have
been developed for a valuation date on
June 30, 2022, had the proposal been in
effect at that time and assuming the
second quarter spreads for 2022 were as
shown in column D below:
8 Available at https://home.treasury.gov/data/
treasury-coupon-issues-and-corporate-bond-yieldcurve/corporate-bond-yield-curve.
9 The proposal 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, www.pbgc.gov.
10 The previously mentioned white paper would
describe the methodology used to determine the
spreads.
11 February 29 in a leap year.
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Maturity
June 30, 2022,
nominal TNC
treasury
yield curve
(%)
June 30, 2022,
HQM bond
yield curve
(%)
Blended market
yield curve
1⁄3(A) + 2⁄3(B)
(%)
Second quarter
2022 spreads
(%)
Applicable 4044
yield curve *
(C) + (D)
(%)
(A)
(B)
(C)
(D)
(E)
0.5 ................................................
1.0 ................................................
1.5 ................................................
2.0 ................................................
28.5 ..............................................
29.0 ..............................................
29.5 ..............................................
30.0 ..............................................
2.91
2.90
2.90
2.92
3.18
3.17
3.17
3.18
2.84
3.17
3.45
3.65
4.84
4.84
4.83
4.83
2.86
3.08
3.27
3.41
4.29
4.28
4.28
4.28
0.27
0.27
0.26
0.26
¥0.02
¥0.02
¥0.03
¥0.03
3.13
3.35
3.53
3.67
4.27
4.26
4.25
** 4.25
* Because of the lookback rule, valuation dates from July 1, 2022, through July 30, 2022, would also use the June 30, 2022, blended market
yield curve which means they would also use the second quarter spreads. Thus, the 4044 yield curve in column (E) would also be used for those
valuation dates.
** The 4.25% 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 would 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 would create a timing problem.
This proposal would amend the
benefits valuation regulation to
prescribe the use of the 4044 yield curve
and the process to determine it. It would
also amend 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
would show 60 spread adjustments.
Given the proposed methodology,
practitioners would 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 would be specified
in the regulation before the blended
market yield curves are available.) In
addition, to reduce administrative
burden on practitioners, PBGC would
post the 4044 yield curve on its website
at www.pbgc.gov each month shortly
after its underlying data become
available.
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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
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sets of mortality tables: tables for male
and female individuals not receiving a
disability benefit (healthy lives); tables
for male and female participants who
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.’’ 12 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 nonSocial Security disabled participants are
capped at the corresponding rates for
Social Security disabled participants.
These assumptions are described in
appendix A to part 4044.
Reasons for Change
PBGC seeks to ensure that the
assumptions described in the benefits
12 70
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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.’’ 13 PBGC has determined
that it could better achieve consistency
with insurers’ mortality assumptions by
updating the mortality assumptions
under the benefits valuation regulation.
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.’’ 14
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).
13 See 70 FR 72205, 72206 (Dec. 2, 2005) (quoting
58 FR 5128, 5129 (Jan. 19, 1993)).
14 See Pension Comm, American Academy of
Actuaries, Selecting and Documenting Mortality
Assumptions for Pensions 16 (2015), https://
actuary.org/files/Mortality_PN_060515_0.pdf.
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The Internal Revenue Service (IRS)
and the Treasury Department reached
the same conclusions regarding trends
in mortality assumptions. On April 28,
2022, the Treasury Department and the
IRS issued a proposed rule 15 (‘‘IRS
proposal’’) that would amend their
mortality assumptions regulations under
section 430(h)(3) of the Code to provide
a more recent base mortality table with
different rates for annuitants and nonannuitants. Their proposal also provides
that, with limited exception, future
mortality improvements would be
reflected using generational mortality.
The preamble discussion and operative
regulatory provisions on the mortality
assumptions for healthy lives in this
proposal are derived from the IRS
proposal.
Proposed Updated Healthy Lives
Mortality Assumption—Base Mortality
Tables
The base mortality tables PBGC is
proposing are the same as those
proposed by IRS and the Treasury
Department for purposes of section 430
of the Code. As explained in the
preamble to the IRS proposal, those
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’’).16 PBGC agrees with IRS and
the Treasury Department that the Pri2012 Report is the best available study
of the actual mortality experience of
pension plan participants (other than
disabled individuals).17
The tables in the Pri-2012 Report are
gender-distinct and provide separate
non-annuitant and annuitant mortality
rates.18 Unlike the Pri-2012 Report, but
consistent with the IRS proposal, this
proposed 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 would be applied to
determine the present value of benefits
for an annuitant. For a non-annuitant,
the non-annuitant mortality tables
would be applied for the periods before
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15 87
FR 25161.
report is available at https://www.soa.org/
49c106/globalassets/assets/files/resources/
experience-studies/2019/pri-2012-mortality-tablesreport.pdf.
17 87 FR 25163.
18 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 proposal, the
term ‘‘non-annuitant’’ is used.
16 This
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the participant is projected to
commence receiving benefits, and the
annuitant mortality tables would be
used for later periods. For a beneficiary
of a participant, the annuitant mortality
tables would 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.
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 proposal 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.19
Proposed 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 IRS proposal, under
this proposal, those tables would be
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,20 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.
RPEC typically issues updated
mortality improvement rates that reflect
new data for mortality improvement
trends for the general population on an
19 See
87 FR 25163.
available at https://www.soa.org/
4a9de4/globalassets/assets/files/resources/
experience-studies/2021/2021-mp-scale-report.pdf.
20 Report
PO 00000
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56567
annual basis.21 PBGC plans to amend its
regulation periodically to take into
account updated mortality improvement
rates as they become available.
The proposed healthy lives mortality
assumptions would closely align with
the mortality assumptions used by
private-sector insurers. The software
needed to use generational mortality
tables has become 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.
Proposed Updated Disabled Lives
Mortality Assumption
This proposal would provide 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.
However, for individuals that are
eligible for Social Security disability
benefits, the proposal would update 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.’’ 22 The proposed
mortality rates 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 would not include a
mortality improvement scale.
For the reasons discussed above, this
proposal would amend PBGC’s benefits
valuation regulation to replace mortality
tables for healthy lives with mortality
tables from Pri-2012. It would also
replace tables relating to mortality
improvement for healthy lives with
references to generational mortality
improvement projections from the
Mortality Improvement Scale MP–2021
and prescribe their use. It would further
amend 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.
21 RPEC did not issue an updated scale for 2022.
See https://www.soa.org/resources/researchreports/2022/rpec-mortality-improvement/.
22 Nettie J. Barrick-Funk, Soc. Sec. Admin., Social
Security Disability Insurance Program Disabled
Worker Experience Actuarial Study 125, at ix
(2020), https://www.ssa.gov/OACT/NOTES/pdf_
studies/study125.pdf.
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Finally, it would amend the regulation
so that the provisions specifying
assumptions for non-Social Security
disabled lives refer to the healthy lives
mortality assumptions.
Expense Assumption
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Current Assumptions
Certain administrative expenses are
incurred by insurers in connection with
the payment of benefits. These expenses
include establishing plan files,
reviewing plan provisions to determine
benefit entitlements, setting up and
updating records, processing pension
applications, remitting benefits, and
others. Insurers use assumptions about
these expenses to price annuities. To
account for this component of privatesector annuity pricing, the benefits
valuation regulation specifies expense
assumptions.23
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 percent of
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
percent of liabilities above $200,000.
Reasons for Change and Proposed
Updated Expense Assumptions
As discussed above, PBGC attempts to
set its assumptions to match the privatesector 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, PBGC
proposes to simplify the expense
assumptions. PBGC is proposing to set
the expense load assumption at $400
23 Expense
assumptions are sometimes described
as loading assumptions or expense loading
assumptions.
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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 would be updated for
inflation using the Consumer Price
Index (CPI–U) each year. The proposal
would amend PBGC’s benefits valuation
regulation to prescribe these updated
expense assumptions.
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 24 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.25 Under the
current benefits valuation regulation,
the same interest assumption is used for
any valuation date in January. However,
under the proposal, two different
interest assumptions would 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 was left
unchanged, it would be unclear which
4044 yield curve should be used for
benefit determination dates occurring in
a particular calendar year. Thus, PBGC
is proposing to amend the Missing
Participant 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.
Mortality Assumption
PBGC’s Missing Participants
regulation prescribes use of a unisex
version of the benefit valuation
24 The terminating defined benefit plans covered
by PBGC’s Missing Participants Program are singleemployer 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.
25 See definition of ‘‘PBGC missing participants
assumptions’’ in § 4050.102, § 4050.302, and
§ 4050.402.
PO 00000
Frm 00023
Fmt 4702
Sfmt 4702
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 the proposal
provides that future mortality
improvements would be reflected using
generational mortality, if the Missing
Participants regulation was 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, PBGC is proposing that
the Missing Participants regulation
would provide that a unisex, static
version of the proposed mortality table
be used for this purpose. More
specifically, PBGC is proposing to
amend 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. These male and female tables used
for this purpose would be identical to
the static mortality tables provided in
the IRS proposal as an alternative for
plans with 500 or fewer participants. As
with the IRS proposal, PBGC intends to
update the static mortality tables for
years after 2023.
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 proposal would
specify 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 proposal), would be moved to
codified text as well. This proposal
would retain the current interest
assumptions in appendix B for reference
(redesignating them as historical rates),
but the other three appendixes would be
removed. The proposal would update
cross-references to the appendixes in
parts 4022, 4044, 4050, 4262, and 4281
so that they refer to the codified text.
Applicability
These amendments would apply to
calculations where the valuation date is
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on or after the effective date of the final
rule.
Incorporation by Reference
Section 4044.53(c)(1)(iii) of the
proposed 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 included 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 ‘‘Proposed 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 https://
www.soa.org/resources/experiencestudies/2021/mortality-improvementscale-mp-2021. 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.
lotter on DSK11XQN23PROD with PROPOSALS1
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
proposed 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 proposed
rule and has concluded that the
proposed changes would have a
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minimal impact on liabilities
determined under PBGC’s regulations.
The proposed updates to the
assumptions under the benefits
valuation regulation would, 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
would 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 would 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.26 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 should be within a few
percentage points of the liability
measurement using the current
methodology, which would result in
only a minor change in withdrawal
liability.
The proposed changes to generational
mortality tables and to a yield-curve
based interest assumption would
impose a small and not significant
administrative burden on plans and
practitioners that do calculations using
the assumptions.
26 Section 4262.16(g) of PBGC’s regulation on
special financial assistance (29 CFR part 4262)
requires, as a condition of receiving special
financial assistance, that the 4044 interest
assumption be used to determine unfunded vested
benefits for purposes of determining withdrawal
liability. For other ongoing plans determining
withdrawal liability, use of the 4044 interest
assumption, either as a standalone assumption or
combined with funding interest assumptions,
represents a valid approach to selecting an interest
assumption to determine withdrawal liability in all
circumstances. (See PBGC’s proposed rule,
Actuarial Assumptions for Determining an
Employer’s Withdrawal Liability, 87 FR 62316.)
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56569
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 proposes
to update 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 27
imposes certain requirements respecting
rules that are subject to the notice-andcomment requirements of section 553(b)
of the Administrative Procedure Act, or
any other law,28 and that are likely to
have a significant economic impact on
a substantial number of small entities.
Unless an agency certifies that a
proposed rule will not, if promulgated,
have a significant economic impact on
a substantial number of small entities,
section 603 of the Regulatory Flexibility
Act requires that the agency present an
initial regulatory flexibility analysis at
the time of the publication of the
proposed 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.29
For purposes of the Regulatory
Flexibility Act requirements with
respect to this proposed rule, PBGC
considers a small entity to be a plan
with fewer than 100 participants.30 This
is substantially the same criterion PBGC
uses in other regulations 31 and is
consistent with certain requirements in
title I of ERISA 32 and the Code,33 as
well as the definition of a small entity
that PBGC and DOL have used for
27 5
U.S.C. 601 et seq.
applicable definition of ‘‘rule’’ is found in
section 601 of the Regulatory Flexibility Act. See 5
U.S.C. 601(2).
29 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.
30 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.
31 See, e.g., special rules for small plans under
part 4007 (Payment of Premiums).
32 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.
33 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.
28 The
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purposes of the Regulatory Flexibility
Act.34
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 proposed 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 35 under the Small
Business Act. PBGC therefore requests
comments on the appropriateness of the
size standard used in evaluating the
impact of its proposed rule on small
entities.
Based on its proposed 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 proposed rule
will not, if promulgated, 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 proposed 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 proposal
without additional administrative
burden, this proposed rule would 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 4022
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
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Employee benefit plans, Incorporation
by reference, Pension insurance,
Pensions.
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 Prohibited Transaction
Exemption Procedures, 76 FR 66637, 66644 (Oct.
27, 2011).
35 See, 13 CFR 121.201.
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Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4262
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4281
Employee benefit plans, Pension
insurance, Reporting and recordkeeping
requirements.
For the reasons stated in the
preamble, PBGC proposes to amend 29
CFR parts 4022, 4044, 4050, 4262, and
4281 as follows:
PART 4022—BENEFITS PAYABLE IN
TERMINATED SINGLE-EMPLOYER
PLANS
1. 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.
§ 4022.63
[Amended]
2. In § 4022.63 removing the words
‘‘the PBGC’’ and adding in their place
the word ‘‘PBGC’’ wherever they appear.
■ 3. Amend § 4022.63 by revising
paragraph (b)(1) to read as follows:
■
§ 4022.63
Estimated asset-funded benefit.
*
*
*
*
*
(b) * * *
(1) An actuarial valuation of the plan
has been performed for a plan year
beginning not more than eighteen
months before the proposed termination
date. If the interest rate used to value
plan liabilities in this valuation
exceeded the applicable valuation
interest rates and factors under
§ 4044.54 of this chapter in effect on the
proposed termination date, the value of
benefits in pay status and the value of
vested benefits not in pay status on the
valuation date must be converted to
PBGC’s valuation rates and factors.
*
*
*
*
*
PART 4044—ALLOCATION OF
ASSETS IN SINGLE-EMPLOYER
PLANS
29 CFR Part 4044
34 See,
29 CFR Part 4050
4. The authority citation for part 4044
continues to read as follows:
■
Authority: 29 U.S.C. 1301(a), 1302(b)(3),
1341, 1344, 1362.
5. Amend § 4044.52 by revising
paragraphs (a) and (d) to read as follows:
■
§ 4044.52
*
PO 00000
*
Valuation of benefits.
*
Frm 00025
*
Fmt 4702
*
Sfmt 4702
(a) Using the mortality assumptions
prescribed by § 4044.53 and the interest
assumptions prescribed by § 4044.54;
*
*
*
*
*
(d) Adding an expense loading charge
determined in accordance with this
paragraph (d) to the total value of
benefits.
(1) Expense Loading charge. The
expense loading charge equals the
applicable inflation multiplier
determined in accordance with
paragraph (d)(2) of this section
multiplied by the sum of—
(i) $400 multiplied by the lesser of the
applicable participant count and 100,
and
(ii) $250 multiplied by the excess, if
any, of the applicable participant count
over 100.
(2) Applicable inflation multiplier.
Except as provided in the next sentence,
the applicable inflation multiplier
equals the value of the CPI–U for
September of the year preceding the
year containing the valuation date
divided by 296.808 (the value of the
CPI–U for September of 2022), but not
less than 1. However, for a valuation
date on any day in January except the
31st, the applicable inflation multiplier
is determined as if the valuation date
were December 31 of the year preceding
the year containing the valuation date.
The term ‘‘CPI–U’’ means the Consumer
Price Index for All Urban Consumers,
not seasonally adjusted as published by
the Bureau of Labor Statistics of the
Department of Labor.
(3) Rounding. Any expense loading
charge determined in accordance with
this paragraph (d) which is not a
multiple of $1.00 is rounded to the
nearest dollar.
■ 6. Amend § 4044.53 by revising
paragraphs (c), (d), and (e) and adding
new paragraph (h) to read as follows:
§ 4044.53
Mortality assumptions.
*
*
*
*
*
(c) Healthy lives—(1) In general. If the
individual is not disabled under
paragraph (f) of this section, the plan
administrator must value the benefit
using generational mortality tables
described in this paragraph (c).
(i) Construction of generational
mortality tables. The generational
mortality tables in this paragraph (c) are
constructed from the base mortality
tables described in paragraph (c)(1)(ii) of
this section and the mortality
improvement rates described in
paragraph (c)(1)(iii) of this section.
(ii) Base mortality tables. The base
mortality tables are set forth in
paragraph (c)(5) of this section. The base
year for those tables is 2012.
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(iii) Mortality improvement rates. The
mortality improvement rates are the
Scale MP–2021 Rates.
(iv) Incorporation by reference. The
Scale MP–2021 Rates, Mortality
Improvement Scale MP–2021 Report,
October 2021, Retirement Plans
Experience Committee of the Society of
Actuaries, is incorporated by reference
into this section with the approval of
the Director of the Federal Register
under 5 U.S.C. 552(a) and 1 CFR part 51.
This incorporation by reference (IBR)
material is available for inspection at
PBGC and at the National Archives and
Records Administration (NARA).
Contact PBGC at: Disclosure Division,
Office of the General Counsel, Pension
Benefit Guaranty Corporation; 445 12th
Street SW, Washington, DC 20024; 202–
326–4040. For information on the
availability of this material at NARA,
visit www.archives.gov/federal-register/
cfr/ibr-locations.html or email
fr.inspection@nara.gov. The material
may be obtained from the Society of
Actuaries at: Society of Actuaries, 475
N. Martingale Rd., Suite 600,
Schaumburg, IL 60173; (847) 706–3500;
https://www.soa.org/resources/
experience-studies/2021/mortalityimprovement-scale-mp-2021.
(2) Application of mortality
improvement rates—
(i) In general. Under the generational
mortality tables described in this
paragraph (c), the probability of an
individual’s death at a particular age in
the future is determined as the
individual’s base mortality rate that
applies at that age (that is, the
applicable mortality rate from the tables
set forth in paragraph (c)(5) of this
section for that age, gender, and status
as an annuitant or a non-annuitant)
multiplied by the cumulative mortality
improvement factor for the individual’s
gender and for that age for the period
from 2012 through the calendar year in
which the individual is projected to
reach the particular age. Paragraph (c)(3)
of this section provides an example that
illustrates how the base mortality tables
in paragraph (c)(5) of this section and
the Scale MP–2021 mortality
improvement rates are combined to
determine projected mortality rates.
(ii) Cumulative mortality
improvement factor. The cumulative
mortality improvement factor for an age
and gender for a period is the product
of the annual mortality improvement
factors for that age and gender for each
year within that period.
56571
(iii) Annual mortality improvement
factor. The annual mortality
improvement factor for an age and
gender for a year is 1 minus the
mortality improvement rate that applies
for that age and gender for that year. If
that annual mortality improvement rate
is greater than 1 (corresponding to a
negative mortality improvement rate),
then the projected mortality rate for that
age and gender for that year is greater
than the projected mortality rate for the
same age and gender for the preceding
year.
(3) Example of calculation using Scale
MP–2021 Rates—
(i) Calculation of mortality rate. The
mortality rate that is applied to male
annuitants who are age 67 in 2023 is
equal to the product of the mortality rate
for 2012 that applied to male annuitants
who were age 67 in 2012 (0.01288) and
the cumulative mortality improvement
factor for age 67 males from 2012 to
2023. The cumulative mortality
improvement factor for age 67 males for
the period from 2012 to 2023 is 0.9919,
and the mortality rate for 2023 for male
annuitants who are age 67 in that year
would be 0.01278, as shown in the
following table.
TABLE 1 TO PARAGRAPH (c)(3)(i)—EXAMPLE MORTALITY RATE CALCULATION
Scale MP–
2021 mortality
improvement
rate
Calendar year
lotter on DSK11XQN23PROD with PROPOSALS1
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
(ii) Probability of survival for an
individual. After the projected mortality
rates are derived for each age for each
year, the rates are used to calculate the
present value of a benefit stream that
depends on the probability of survival
year-by-year. For example, using the
Scale MP–2021 rates, for purposes of
calculating the present value of future
payments in a benefit stream payable for
a male annuitant who is age 67 in 2023,
the probability of survival for the
annuitant is based on the mortality rate
for a male annuitant who is age 67 in
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n/a
0.0052
0.0027
0.0009
(0.0003)
(0.0010)
(0.0016)
(0.0016)
(0.0010)
0.0000
0.0015
0.0033
2023 (0.01278), and the projected
mortality rate for a male annuitant who
will be age 68 in 2024 (0.01378), age 69
in 2025 (0.01489), and so on.
(4) Use of the tables—
(i) Separate tables for annuitants and
non-annuitants. Separate mortality
tables are provided for use for
annuitants and non-annuitants. The
non-annuitant mortality tables are
applied to determine the probability of
survival for a non-annuitant for the
period before the non-annuitant is
projected to commence receiving
PO 00000
Frm 00026
Fmt 4702
Sfmt 4702
Annual
mortality
improvement
factor
(1-mortality
improvement
rate)
n/a
0.9948
0.9973
0.9991
1.0003
1.0010
1.0016
1.0016
1.0010
1.0000
0.9985
0.9967
Cumulative
mortality
improvement
factor
n/a
0.9948
0.9921
0.9912
0.9915
0.9925
0.9941
0.9957
0.9967
0.9967
0.9952
0.9919
Mortality rate
0.01288
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
0.01278
benefits. The annuitant mortality tables
are applied to determine the present
value of benefits for each annuitant. In
addition, the annuitant mortality tables
are applied for each non-annuitant with
respect to each assumed commencement
of benefits for the period beginning with
that assumed commencement. For
purposes of this section, an annuitant
means a plan participant who has
commenced receiving benefits and a
non-annuitant means a plan participant
who has not yet commenced receiving
benefits (for example, an active
E:\FR\FM\18AUP1.SGM
18AUP1
56572
Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
employee or a terminated vested
participant). A participant whose
benefit has partially commenced is
treated as an annuitant for the portion
of the benefit that has commenced and
treated as a non-annuitant for the
balance of the benefit. In addition, 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 with respect to the beneficiary for
the period beginning with each assumed
commencement of benefits for the
beneficiary.
(ii) Examples of calculation using
separate non-annuitant and annuitant
tables. For a 45-year-old active
participant who is projected to
commence receiving an annuity at age
55, benefit liabilities are determined
using the non-annuitant mortality tables
for the period before the participant
attains age 55 and using the annuitant
mortality tables for the period ages 55
and above. Similarly, for a 45-year-old
terminated vested participant who is
projected to commence an annuity at
age 65, benefit liabilities are determined
using the non-annuitant mortality tables
for the period before the participant
attains age 65 and using the annuitant
mortality tables for ages 65 and above.
(5) Base mortality tables. The
following are the base mortality tables.
The base year for these tables is 2012.
TABLE 2 TO PARAGRAPH (c)(5)—HEALTHY LIVES BASE MORTALITY TABLE
Males
Females
Age
lotter on DSK11XQN23PROD with PROPOSALS1
Non-annuitant
0 .......................................................................................................................
1 .......................................................................................................................
2 .......................................................................................................................
3 .......................................................................................................................
4 .......................................................................................................................
5 .......................................................................................................................
6 .......................................................................................................................
7 .......................................................................................................................
8 .......................................................................................................................
9 .......................................................................................................................
10 .....................................................................................................................
11 .....................................................................................................................
12 .....................................................................................................................
13 .....................................................................................................................
14 .....................................................................................................................
15 .....................................................................................................................
16 .....................................................................................................................
17 .....................................................................................................................
18 .....................................................................................................................
19 .....................................................................................................................
20 .....................................................................................................................
21 .....................................................................................................................
22 .....................................................................................................................
23 .....................................................................................................................
24 .....................................................................................................................
25 .....................................................................................................................
26 .....................................................................................................................
27 .....................................................................................................................
28 .....................................................................................................................
29 .....................................................................................................................
30 .....................................................................................................................
31 .....................................................................................................................
32 .....................................................................................................................
33 .....................................................................................................................
34 .....................................................................................................................
35 .....................................................................................................................
36 .....................................................................................................................
37 .....................................................................................................................
38 .....................................................................................................................
39 .....................................................................................................................
40 .....................................................................................................................
41 .....................................................................................................................
42 .....................................................................................................................
43 .....................................................................................................................
44 .....................................................................................................................
45 .....................................................................................................................
46 .....................................................................................................................
47 .....................................................................................................................
48 .....................................................................................................................
49 .....................................................................................................................
50 .....................................................................................................................
51 .....................................................................................................................
52 .....................................................................................................................
53 .....................................................................................................................
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Frm 00027
Fmt 4702
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0.00650
0.00045
0.00030
0.00022
0.00019
0.00016
0.00014
0.00013
0.00011
0.00009
0.00008
0.00009
0.00013
0.00017
0.00022
0.00028
0.00034
0.00040
0.00046
0.00053
0.00056
0.00056
0.00056
0.00055
0.00055
0.00054
0.00054
0.00054
0.00054
0.00054
0.00055
0.00055
0.00056
0.00058
0.00059
0.00061
0.00063
0.00065
0.00068
0.00071
0.00074
0.00077
0.00081
0.00086
0.00091
0.00097
0.00105
0.00113
0.00123
0.00134
0.00147
0.00161
0.00177
0.00194
Annuitant
0.00650
0.00045
0.00030
0.00022
0.00019
0.00016
0.00014
0.00013
0.00011
0.00009
0.00008
0.00009
0.00013
0.00017
0.00022
0.00028
0.00034
0.00040
0.00046
0.00053
0.00056
0.00056
0.00056
0.00055
0.00055
0.00054
0.00054
0.00054
0.00054
0.00054
0.00055
0.00055
0.00056
0.00058
0.00059
0.00061
0.00063
0.00065
0.00068
0.00071
0.00074
0.00082
0.00099
0.00124
0.00158
0.00200
0.00251
0.00310
0.00378
0.00454
0.00539
0.00544
0.00565
0.00588
E:\FR\FM\18AUP1.SGM
18AUP1
Non-annuitant
0.00544
0.00038
0.00023
0.00018
0.00013
0.00012
0.00011
0.00010
0.00009
0.00009
0.00009
0.00009
0.00010
0.00012
0.00013
0.00013
0.00014
0.00015
0.00015
0.00015
0.00015
0.00015
0.00016
0.00018
0.00019
0.00019
0.00019
0.00020
0.00020
0.00020
0.00021
0.00022
0.00023
0.00025
0.00026
0.00028
0.00031
0.00034
0.00036
0.00040
0.00043
0.00047
0.00051
0.00055
0.00060
0.00065
0.00071
0.00077
0.00083
0.00090
0.00098
0.00107
0.00116
0.00126
Annuitant
0.00544
0.00038
0.00023
0.00018
0.00013
0.00012
0.00011
0.00010
0.00009
0.00009
0.00009
0.00009
0.00010
0.00012
0.00013
0.00013
0.00014
0.00015
0.00015
0.00015
0.00015
0.00015
0.00016
0.00018
0.00019
0.00019
0.00019
0.00020
0.00020
0.00020
0.00021
0.00022
0.00023
0.00025
0.00026
0.00028
0.00031
0.00034
0.00036
0.00040
0.00043
0.00049
0.00061
0.00078
0.00101
0.00130
0.00165
0.00206
0.00252
0.00304
0.00362
0.00426
0.00495
0.00500
56573
Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
TABLE 2 TO PARAGRAPH (c)(5)—HEALTHY LIVES BASE MORTALITY TABLE—Continued
Males
Females
Age
lotter on DSK11XQN23PROD with PROPOSALS1
Non-annuitant
54 .....................................................................................................................
55 .....................................................................................................................
56 .....................................................................................................................
57 .....................................................................................................................
58 .....................................................................................................................
59 .....................................................................................................................
60 .....................................................................................................................
61 .....................................................................................................................
62 .....................................................................................................................
63 .....................................................................................................................
64 .....................................................................................................................
65 .....................................................................................................................
66 .....................................................................................................................
67 .....................................................................................................................
68 .....................................................................................................................
69 .....................................................................................................................
70 .....................................................................................................................
71 .....................................................................................................................
72 .....................................................................................................................
73 .....................................................................................................................
74 .....................................................................................................................
75 .....................................................................................................................
76 .....................................................................................................................
77 .....................................................................................................................
78 .....................................................................................................................
79 .....................................................................................................................
80 .....................................................................................................................
81 .....................................................................................................................
82 .....................................................................................................................
83 .....................................................................................................................
84 .....................................................................................................................
85 .....................................................................................................................
86 .....................................................................................................................
87 .....................................................................................................................
88 .....................................................................................................................
89 .....................................................................................................................
90 .....................................................................................................................
91 .....................................................................................................................
92 .....................................................................................................................
93 .....................................................................................................................
94 .....................................................................................................................
95 .....................................................................................................................
96 .....................................................................................................................
97 .....................................................................................................................
98 .....................................................................................................................
99 .....................................................................................................................
100 ...................................................................................................................
101 ...................................................................................................................
102 ...................................................................................................................
103 ...................................................................................................................
104 ...................................................................................................................
105 ...................................................................................................................
106 ...................................................................................................................
107 ...................................................................................................................
108 ...................................................................................................................
109 ...................................................................................................................
110 ...................................................................................................................
111 ...................................................................................................................
112 ...................................................................................................................
113 ...................................................................................................................
114 ...................................................................................................................
115 ...................................................................................................................
116 ...................................................................................................................
117 ...................................................................................................................
118 ...................................................................................................................
119 ...................................................................................................................
120 ...................................................................................................................
VerDate Sep<11>2014
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Jkt 259001
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Frm 00028
Fmt 4702
Sfmt 4702
0.00213
0.00234
0.00257
0.00281
0.00308
0.00338
0.00369
0.00403
0.00441
0.00481
0.00525
0.00573
0.00636
0.00706
0.00784
0.00870
0.00967
0.01073
0.01192
0.01323
0.01469
0.01632
0.01812
0.02012
0.02234
0.02480
0.02754
0.02989
0.03460
0.04166
0.05108
0.06285
0.07698
0.09346
0.11229
0.13348
0.15703
0.17401
0.19151
0.20936
0.22742
0.24569
0.26415
0.28281
0.30169
0.32077
0.33996
0.35910
0.37794
0.39633
0.41415
0.43131
0.44771
0.46329
0.47800
0.49181
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
Annuitant
0.00616
0.00647
0.00686
0.00728
0.00770
0.00811
0.00848
0.00882
0.00918
0.00960
0.01014
0.01087
0.01178
0.01288
0.01418
0.01564
0.01729
0.01914
0.02121
0.02354
0.02613
0.02905
0.03233
0.03604
0.04026
0.04504
0.05046
0.05657
0.06343
0.07114
0.07977
0.08946
0.10032
0.11248
0.12600
0.14088
0.15703
0.17401
0.19151
0.20936
0.22742
0.24569
0.26415
0.28281
0.30169
0.32077
0.33996
0.35910
0.37794
0.39633
0.41415
0.43131
0.44771
0.46329
0.47800
0.49181
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
E:\FR\FM\18AUP1.SGM
18AUP1
Non-annuitant
0.00137
0.00148
0.00161
0.00175
0.00190
0.00206
0.00224
0.00243
0.00264
0.00287
0.00312
0.00339
0.00380
0.00427
0.00480
0.00540
0.00606
0.00681
0.00765
0.00860
0.00966
0.01085
0.01219
0.01370
0.01539
0.01729
0.01943
0.02134
0.02516
0.03089
0.03853
0.04808
0.05955
0.07293
0.08822
0.10542
0.12453
0.13818
0.15250
0.16737
0.18274
0.19863
0.21509
0.23214
0.24983
0.26814
0.28698
0.30619
0.32549
0.34472
0.36375
0.38243
0.40065
0.41828
0.43522
0.45139
0.46673
0.48120
0.49477
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
Annuitant
0.00512
0.00517
0.00522
0.00528
0.00561
0.00601
0.00643
0.00690
0.00743
0.00796
0.00859
0.00928
0.01003
0.01089
0.01192
0.01309
0.01444
0.01597
0.01770
0.01967
0.02192
0.02445
0.02727
0.03042
0.03391
0.03775
0.04198
0.04663
0.05178
0.05754
0.06401
0.07132
0.07954
0.08879
0.09936
0.11124
0.12453
0.13818
0.15250
0.16737
0.18274
0.19863
0.21509
0.23214
0.24983
0.26814
0.28698
0.30619
0.32549
0.34472
0.36375
0.38243
0.40065
0.41828
0.43522
0.45139
0.46673
0.48120
0.49477
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
56574
Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
(d) Social Security disabled lives. If
the individual is Social Security
disabled under paragraph (f)(1) of this
section, the plan administrator will
value the benefit using the following
table.
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE—Continued
Age
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE
Age
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
Male
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
0.012544
0.007102
0.005859
0.009998
0.008926
0.008533
0.008158
0.008970
0.008433
0.008696
0.009211
0.009362
0.009780
0.010049
0.011093
0.011075
0.010931
0.011890
0.012529
0.012418
0.013234
0.013832
0.014457
0.015830
0.016153
0.016859
0.017464
0.018302
0.019127
0.020380
0.021607
0.023407
0.023956
Female
0.004759
0.006541
0.008035
0.008369
0.009224
0.008144
0.008616
0.008127
0.008318
0.008851
0.008002
0.008694
0.009477
0.009664
0.009417
0.009985
0.010524
0.010648
0.011252
0.011450
0.011448
0.012135
0.012579
0.012619
0.013578
0.014243
0.014520
0.014773
0.015630
0.016131
0.016874
0.017547
0.018198
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
Male
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE—Continued
Female
0.025631
0.026384
0.027277
0.028582
0.030164
0.031262
0.031728
0.033067
0.034230
0.035474
0.036790
0.037772
0.039297
0.039954
0.041069
0.042280
0.039144
0.043862
0.046182
0.048624
0.052077
0.055284
0.058951
0.062301
0.067099
0.071469
0.075068
0.080425
0.085531
0.091585
0.098383
0.104788
0.113110
0.122062
0.131697
0.140430
0.151890
0.165777
0.176875
0.188397
0.019281
0.019413
0.020343
0.020488
0.021316
0.021960
0.021969
0.022897
0.023556
0.024159
0.024958
0.025905
0.027414
0.028394
0.029795
0.030776
0.028230
0.031667
0.033318
0.034728
0.037341
0.039491
0.042134
0.044962
0.047548
0.051148
0.055271
0.059382
0.063489
0.068675
0.074929
0.080536
0.088455
0.094573
0.103589
0.111345
0.122160
0.130844
0.142631
0.156112
Age
89 ......................
90 ......................
91 ......................
92 ......................
93 ......................
94 ......................
95 ......................
96 ......................
97 ......................
98 ......................
99 ......................
100 ....................
101 ....................
102 ....................
103 ....................
104 ....................
105 ....................
106 ....................
107 ....................
108 ....................
109 ....................
110 ....................
111+ ..................
Male
0.206651
0.223252
0.235073
0.249318
0.267740
0.277033
0.284003
0.298740
0.313086
0.328740
0.345177
0.362436
0.380558
0.399586
0.419565
0.440543
0.462571
0.485699
0.509984
0.535483
0.562257
0.590370
1.000000
Female
0.166591
0.182064
0.197059
0.205768
0.225325
0.240441
0.260724
0.281817
0.293156
0.308400
0.324436
0.341307
0.359055
0.377726
0.397368
0.418031
0.439768
0.462636
0.486693
0.512001
0.538626
0.566634
1.000000
(e) Non-Social Security disabled lives.
If the individual is non-Social Security
disabled under paragraph (f)(2) of this
section, the plan administrator will
value the benefit using generational
mortality tables described in paragraph
(c) of this section.
*
*
*
*
*
(h) Missing participants mortality.
The following mortality table is used to
value benefits using ‘‘PBGC missing
participants assumptions’’ under part
4050, subparts A, C, and D of this
chapter.
TABLE 4 TO PARAGRAPH (h)—MISSING PARTICIPANTS MORTALITY TABLE FOR DETERMINATION DATES IN 2023
Unisex
mortality
lotter on DSK11XQN23PROD with PROPOSALS1
Age
0 ....................................................................................
1 ....................................................................................
2 ....................................................................................
3 ....................................................................................
4 ....................................................................................
5 ....................................................................................
6 ....................................................................................
7 ....................................................................................
8 ....................................................................................
9 ....................................................................................
10 ..................................................................................
11 ..................................................................................
12 ..................................................................................
13 ..................................................................................
14 ..................................................................................
15 ..................................................................................
16 ..................................................................................
17 ..................................................................................
18 ..................................................................................
19 ..................................................................................
20 ..................................................................................
21 ..................................................................................
22 ..................................................................................
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0.00210
0.00015
0.00010
0.00008
0.00006
0.00006
0.00005
0.00005
0.00004
0.00004
0.00004
0.00004
0.00005
0.00006
0.00008
0.00009
0.00011
0.00012
0.00014
0.00016
0.00017
0.00017
0.00018
Fmt 4702
Unisex
mortality
Age
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
.................................................................................
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.................................................................................
.................................................................................
.................................................................................
.................................................................................
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E:\FR\FM\18AUP1.SGM
18AUP1
0.00375
0.00447
0.00521
0.00585
0.00667
0.00757
0.00845
0.00940
0.01047
0.01170
0.01310
0.01470
0.01650
0.01859
0.02097
0.02372
0.02686
0.03045
0.03451
0.03935
0.04434
0.05001
0.05641
Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
56575
TABLE 4 TO PARAGRAPH (h)—MISSING PARTICIPANTS MORTALITY TABLE FOR DETERMINATION DATES IN 2023—
Continued
Unisex
mortality
Age
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
■
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
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..................................................................................
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..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
..................................................................................
7. Revise § 4044.54 to read as follows:
lotter on DSK11XQN23PROD with PROPOSALS1
§ 4044.54
Interest assumptions.
(a) General rule. The plan
administrator must use the interest rates
prescribed in this section to value
benefits under § 4044.52.
(b) Interest rate. The interest rate used
to discount an expected benefit payment
is the interest rate from the applicable
4044 yield curve determined under
paragraph (c) of this section for the
maturity point that corresponds to the
period of time from the valuation date
to the date the benefit is expected to be
paid unless that period of time exceeds
30 years. In that case, the interest rate
used is the interest rate that corresponds
to the maturity point at year 30.0. To
address the timing of benefit payments
during a year, reasonable
approximations may be used to value
benefit payments that are expected to be
made during a plan year.
(c) 4044 yield curve. A 4044 yield
curve consists of interest rates (as
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0.00018
0.00019
0.00020
0.00021
0.00022
0.00023
0.00024
0.00026
0.00027
0.00028
0.00031
0.00032
0.00034
0.00037
0.00039
0.00041
0.00043
0.00044
0.00046
0.00048
0.00050
0.00052
0.00054
0.00058
0.00062
0.00066
0.00071
0.00078
0.00086
0.00096
0.00108
0.00121
0.00145
0.00179
0.00208
0.00242
0.00280
0.00325
Age
Unisex
mortality
84 .................................................................................
85 .................................................................................
86 .................................................................................
87 .................................................................................
88 .................................................................................
89 .................................................................................
90 .................................................................................
91 .................................................................................
92 .................................................................................
93 .................................................................................
94 .................................................................................
95 .................................................................................
96 .................................................................................
97 .................................................................................
98 .................................................................................
99 .................................................................................
100 ...............................................................................
101 ...............................................................................
102 ...............................................................................
103 ...............................................................................
104 ...............................................................................
105 ...............................................................................
106 ...............................................................................
107 ...............................................................................
108 ...............................................................................
109 ...............................................................................
110 ...............................................................................
111 ...............................................................................
112 ...............................................................................
113 ...............................................................................
114 ...............................................................................
115 ...............................................................................
116 ...............................................................................
117 ...............................................................................
118 ...............................................................................
119 ...............................................................................
120 ...............................................................................
......................................................................................
0.06367
0.07192
0.08122
0.09169
0.10352
0.11666
0.13111
0.14617
0.16169
0.17758
0.19361
0.20972
0.22694
0.24460
0.26269
0.28131
0.30036
0.31968
0.33909
0.35847
0.37762
0.39610
0.41412
0.43160
0.44820
0.46409
0.47687
0.48520
0.49310
0.49699
0.49818
0.49940
0.49968
0.49983
0.49998
0.50000
1.00000
........................
percentages) that correspond to midyear and whole-year maturity points for
30.0 years. The applicable 4044 yield
curve is the applicable blended market
yield curve determined under
paragraphs (d)(1) and (2) of this section
adjusted in accordance with paragraph
(e)(2) of this section by the applicable
spreads determined under paragraph
(e)(1) of this section.
(d) Blended market yield curves. A
blended market yield curve consists of
interest rates (as percentages),
determined as of the last day of a
month, that correspond to mid-year and
whole-year maturity points for 30.0
years.
(1) Applicable blended market yield
curve. The applicable blended market
yield curve is the blended market yield
curve as of the valuation date if the
valuation date is the last day of a month,
otherwise it is the blended market yield
curve as of the last day of the month
before the month containing the
valuation date.
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(2) Determination of blended market
yield curve. The blended market yield
curve is determined by combining the
Department of the Treasury’s TNC
Treasury Yield Curve Spot Rates, End of
Month yield curve (TNC Yield Curve)
with the Department of the Treasury’s
HQM Corporate Bond Yield Curve Spot
Rates, End of Month yield curve (HQM
Bond Yield Curve) in accordance with
this paragraph (d)(2). To determine the
blended market yield curve as of the last
day of a month—
(i) Obtain the rate for each maturity
point from 0.5 to 30.0 from the TNC
Yield Curve for the end of the month
published by the Department of the
Treasury.
(ii) Obtain the rate for each maturity
point from 0.5 to 30.0 from the HQM
Bond Yield Curve for the end of the
month published by the Department of
the Treasury.
(iii) Determine the interest rate for
each maturity point from 0.5 to 30.0 on
the blended market yield curve by
E:\FR\FM\18AUP1.SGM
18AUP1
56576
Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
multiplying the rate determined in
paragraph (d)(2)(i) of this section by
one-third, multiplying the rate
determined in (d)(2)(ii) of this section at
the year by two-thirds, and adding the
products.
(e) Spreads. (1) Applicable spreads.
The applicable spreads for a blended
market yield curve are the spreads set
forth in table 1 to paragraph (e) of this
section for the calendar quarter
containing the date of the blended
market yield curve.
(2) Using spreads to adjust a blended
market yield curve. To adjust a blended
market yield curve (to determine a 4044
yield curve described in paragraph (c) of
this section), add the interest rate for
each maturity point on the blended
market yield curve to the spread
corresponding to that maturity point
from the applicable spreads.
(3) Examples. The following examples
illustrate how to determine the
applicable blended market yield curve
and applicable spreads for a given
valuation date:
(i) Example 1—June 30, 2024,
valuation date. Because the valuation
date is the last day of a month, the
applicable blended market yield curve
determined under paragraph (d)(1) of
this section is the blended market yield
curve as of that date. Because June 30,
2024, is in the second calendar quarter
of 2024, the applicable spreads
determined under paragraph (e)(1) of
this section are the spreads for the
second calendar quarter of 2024.
(ii) Example 2—October 15, 2024,
valuation date. Because the valuation
date is not the last day of a month, the
applicable blended market yield curve
determined under paragraph (d)(1) of
this section is the blended market yield
curve as of the last day of the month
before the month containing the
valuation date, September 30, 2024.
Because September 30, 2024, is in the
third calendar quarter of 2024, the
applicable spreads determined under
paragraph (e)(1) of this section are the
spreads for the third calendar quarter of
2024.
TABLE 1 TO PARAGRAPH (e)—FIRST QUARTER 2023 SPREADS (SAMPLE RATES)
Spread
(percent)
Maturity point
0.5 ........................................................................................
1.0 ........................................................................................
1.5 ........................................................................................
2.0 ........................................................................................
2.5 ........................................................................................
3.0 ........................................................................................
3.5 ........................................................................................
4.0 ........................................................................................
4.5 ........................................................................................
5.0 ........................................................................................
5.5 ........................................................................................
6.0 ........................................................................................
6.5 ........................................................................................
7.0 ........................................................................................
7.5 ........................................................................................
8.0 ........................................................................................
8.5 ........................................................................................
9.0 ........................................................................................
9.5 ........................................................................................
10.0 ......................................................................................
8. Amend § 4044.55 by revising
paragraph (c)(1) to read as follows:
■
§ 4044.55 XRA when a participant must
retire to receive a benefit.
*
*
*
*
(c) Procedure. (1) The plan
administrator shall determine whether a
participant is in the high, medium, or
low retirement rate category using the
applicable Selection of Retirement Rate
Category Table in § 4044.58 of this part,
based on the participant’s benefit
determined under paragraph (b)(1) of
lotter on DSK11XQN23PROD with PROPOSALS1
*
VerDate Sep<11>2014
17:32 Aug 17, 2023
Jkt 259001
Maturity
point
0.27
0.27
0.26
0.26
0.26
0.26
0.26
0.26
0.25
0.25
0.24
0.24
0.23
0.23
0.22
0.22
0.21
0.21
0.20
0.20
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
15.5
16.0
16.5
17.0
17.5
18.0
18.5
19.0
19.5
20.0
this section and the year in which the
participant reaches URA.
*
*
*
*
*
■ 9. Amend § 4044.56 by revising
paragraph (c) to read as follows:
§ 4044.56 XRA when a participant need not
retire to receive a benefit.
*
*
*
*
*
(c) Procedure. Participants in this case
are always assigned to the high
retirement rate category and therefore
the plan administrator shall use Table
II–C (Expected Retirement Ages for
Individuals in the High Category) in
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Fmt 4702
Sfmt 4702
Spread
(percent)
0.19
0.19
0.17
0.17
0.16
0.16
0.14
0.14
0.13
0.13
0.11
0.11
0.10
0.10
0.08
0.08
0.07
0.07
0.05
0.05
Maturity
point
Spread
(percent)
20.5
21.0
21.5
22.0
22.5
23.0
23.5
24.0
24.5
25.0
25.5
26.0
26.5
27.0
27.5
28.0
28.5
29.0
29.5
30.0
0.04
0.04
0.03
0.03
0.02
0.02
0.01
0.01
0.00
0.00
¥0.01
¥0.01
¥0.02
¥0.02
¥0.02
¥0.02
¥0.02
¥0.02
¥0.03
¥0.03
§ 4044.58 of this part to determine the
XRA. The plan administrator shall
determine the XRA from Table II–C by
using the participant’s URA and earliest
retirement age at termination date.
■ 10. Add § 4044.58 to subpart B to read
as follows:
§ 4044.58 Tables used to determine
expected retirement age
The following tables are used for
determining expected retirement age
under §§ 4044.55 through 4044.57 of
this part.
Table 1 to § 4044.58.
E:\FR\FM\18AUP1.SGM
18AUP1
56577
Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
TABLE I–23—SELECTION OF RETIREMENT RATE CATEGORY
[For valuation dates in 20231]
Participant’s retirement rate category is—
Low 2 if
monthly
benefit at
URA is less
than—
If participant reaches URA in year—
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
or later ....................................................................................................
High 4 if
monthly
benefit at
URA is
greater
than—
Medium 3 if monthly benefit at
URA is—
From—
745
762
779
797
816
834
854
873
893
914
To—
745
762
779
797
816
834
854
873
893
914
3,146
3,218
3,292
3,368
3,445
3,524
3,605
3,688
3,773
3,860
3,146
3,218
3,292
3,368
3,445
3,524
3,605
3,688
3,773
3,860
1 Applicable
tables for valuation dates before 2023 are available on PBGC’s website (www.pbgc.gov).
II–A.
3 Table II–B.
4 Table II–C.
2 Table
Table 2 to § 4044.58.
TABLE II–A—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE LOW CATEGORY
Unreduced retirement age
Participant’s earliest retirement age
at valuation date
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
60
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
53
53
54
54
55
56
56
56
57
57
58
58
58
59
59
59
59
59
60
61
53
54
54
55
55
56
57
57
57
58
58
59
59
59
60
60
60
60
60
61
62
63
53
54
55
55
56
56
57
58
58
58
59
59
60
60
60
61
61
61
61
61
62
54
54
55
56
56
57
57
58
58
59
59
60
60
61
61
61
61
62
62
62
62
63
64
65
54
55
55
56
56
57
58
58
59
59
60
60
61
61
61
62
62
62
62
63
63
63
64
66
54
55
55
56
57
57
58
58
59
60
60
61
61
61
62
62
62
63
63
63
63
64
64
65
54
55
55
56
57
57
58
59
59
60
60
61
61
62
62
62
63
63
63
63
63
64
65
65
66
67
54
55
56
56
57
57
58
59
59
60
60
61
61
62
62
62
63
63
63
63
64
65
65
65
66
67
68
54
55
56
56
57
57
58
59
59
60
60
61
61
62
62
62
63
63
63
64
64
65
65
65
66
67
68
69
54
55
56
56
57
57
58
59
59
60
60
61
61
62
62
62
63
63
63
64
64
65
65
65
66
67
68
69
70
54
55
56
56
57
57
58
59
59
60
60
61
61
62
62
62
63
63
63
64
64
65
65
65
66
67
68
69
70
Table 3 to § 4044.58.
lotter on DSK11XQN23PROD with PROPOSALS1
TABLE II–B—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE MEDIUM CATEGORY
Unreduced retirement age
Participant’s earliest retirement age
at valuation date
60
42
43
44
45
46
60
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
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61
49
50
50
51
52
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61
62
49
50
51
51
52
62
63
63
49
50
51
52
52
Sfmt 4702
64
49
50
51
52
53
64
65
65
49
50
51
52
53
E:\FR\FM\18AUP1.SGM
66
66
49
50
51
52
53
67
49
50
51
52
53
18AUP1
67
68
49
50
51
52
53
68
69
49
50
51
52
53
69
70
49
50
51
52
53
70
49
50
51
52
53
56578
Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
TABLE II–B—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE MEDIUM CATEGORY—Continued
Unreduced retirement age
Participant’s earliest retirement age
at valuation date
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
60
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
53
54
54
55
56
56
57
57
58
58
59
59
59
60
61
53
54
55
55
56
57
57
58
58
59
59
60
60
60
61
62
63
53
54
55
56
56
57
58
58
59
59
60
60
61
61
61
62
64
53
54
55
56
57
57
58
59
59
60
60
61
61
62
62
62
63
65
53
54
55
56
57
57
58
59
59
60
61
61
62
62
62
62
63
64
66
54
54
55
56
57
58
58
59
60
60
61
61
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54
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Table 4 to § 4044.58.
TABLE II–C—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE HIGH CATEGORY
Unreduced retirement age
Participant’s earliest retirement age
at valuation date
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lotter on DSK11XQN23PROD with PROPOSALS1
Appendix A to Part 4044—[Removed
and reserved]
■
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■
13. Remove Appendix C.
■
12. Amend Appendix B to part 4044
by revising the heading to read
‘‘Appendix B to Part 4044—Historical
Interest Rates Used to Value Benefits’’.
PART 4050—MISSING PARTICIPANTS
17:32 Aug 17, 2023
Jkt 259001
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14. Remove Appendix D.
15. The authority citation for part
4050 continues to read as follows:
■
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Authority: 29 U.S.C. 1302(b)(3), 1350.
16. Amend § 4050.102 by revising
paragraphs (2), (4), and (7)(i) of the
definition of ‘‘PBGC missing
participants assumptions’’ to read as
follows:
■
Appendix D to Part 4044—[Removed]
Appendix B to Part 4044—[Amended]
VerDate Sep<11>2014
65
Appendix C to Part 4044—[Removed]
11. Remove and reserve Appendix A.
■
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§ 4050.102
Definitions.
*
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Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Proposed Rules
PBGC missing participants
assumptions means the actuarial
assumptions prescribed in §§ 4044.51
through 4044.57 of this chapter with the
following modifications:
*
*
*
*
*
(2) The mortality assumption is the
mortality table in § 4044.53(h) of this
chapter.
*
*
*
*
*
(4) The interest assumption is the
assumption for valuing benefits under
§ 4044.54 of this chapter applicable to
valuations occurring on December 31 of
the calendar year preceding the calendar
year in which the benefit determination
date occurs.
*
*
*
*
*
(7) * * *
(i) In the case of a participant who is
not in pay status and whose normal
retirement date is on or after the benefit
determination date, benefits are
assumed to commence at the XRA,
determined using the high retirement
rate category under Table II–C (Expected
Retirement Ages for Individuals in the
High Category) in § 4044.58 of this
chapter;
*
*
*
*
*
■ 17. Amend § 4050.302 by revising
paragraphs (2), (4), and (7)(i) of the
definition of ‘‘PBGC missing
participants assumptions’’ to read as
follows:
§ 4050.302
Definitions.
lotter on DSK11XQN23PROD with PROPOSALS1
*
*
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PBGC missing participants
assumptions means the actuarial
assumptions prescribed in §§ 4044.51
through 4044.57 of this chapter with the
following modifications:
*
*
*
*
*
(2) The mortality assumption is the
mortality table in § 4044.53(h) of this
chapter.
*
*
*
*
*
(4) The interest assumption is the
assumption for valuing benefits under
§ 4044.54 of this chapter applicable to
valuations occurring on December 31 of
the calendar year preceding the calendar
year in which the benefit determination
date occurs.
*
*
*
*
*
(7) * * *
(i) In the case of a participant who is
not in pay status and whose normal
retirement date is on or after the benefit
determination date, benefits are
assumed to commence at the XRA,
determined using the high retirement
rate category under Table II–C (Expected
Retirement Ages for Individuals in the
High Category) in § 4044.58 of this
chapter;
*
*
*
*
*
VerDate Sep<11>2014
17:32 Aug 17, 2023
Jkt 259001
18. Amend § 4050.402 by revising
paragraphs (2), (4), and (7)(i) of the
definition of ‘‘PBGC missing
participants assumptions’’ to read as
follows:
■
§ 4050.402
Definitions.
*
*
*
*
*
PBGC missing participants
assumptions means the actuarial
assumptions prescribed in §§ 4044.51
through 4044.57 of this chapter with the
following modifications:
*
*
*
*
*
(2) The mortality assumption is the
mortality table in § 4044.53(h) of this
chapter.
*
*
*
*
*
(4) The interest assumption is the
assumption for valuing benefits under
§ 4044.54 of this chapter applicable to
valuations occurring on December 31 of
the calendar year preceding the calendar
year in which the benefit determination
date occurs.
*
*
*
*
*
(7) * * *
(i) In the case of a participant who is
not in pay status and whose normal
retirement date is on or after the benefit
determination date, benefits are
assumed to commence at the XRA,
determined using the high retirement
rate category under Table II–C (Expected
Retirement Ages for Individuals in the
High Category) in § 4044.58 of this
chapter;
*
*
*
*
*
PART 4262—SPECIAL FINANCIAL
ASSISTANCE BY PBGC
19. The authority citation for part
4262 continues to read as follows:
■
Authority: 29 U.S.C. 1302(b)(3), 1432.
§ 4262.16
[Amended]
20. Amend § 4262.16 by removing the
words ‘‘in Appendix B to part 4044’’
wherever it appears and adding in its
place the words ‘‘under § 4044.54’’.
■
PART 4281—DUTIES OF PLAN
SPONSOR FOLLOWING MASS
WITHDRAWAL
21. The authority citation for part
4281 continues to read as follows:
■
Authority: 29 U.S.C. 1302(b)(3), 1341(a),
1399(c)(1)(D), 1431, and 1441.
22. Amend § 4281.13 by revising
paragraphs (a) and (e) to read as follows:
■
§ 4281.13
general.
Benefit valuation methods—in
*
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*
(a) Using the interest assumptions
under § 4044.54 of this chapter;
*
*
*
*
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PO 00000
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56579
(e) Adjusting the values to reflect the
loading for expenses in accordance with
§ 4044.52(d) of this chapter (substituting
the term ‘‘benefits’’ for the term ‘‘benefit
liabilities (as defined in 29 U.S.C.
1301(a)(16))’’).
*
*
*
*
*
Signed in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty
Corporation.
[FR Doc. 2023–17521 Filed 8–17–23; 8:45 am]
BILLING CODE 7709–02–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 54
[WC Docket Nos. 10–90, 14–58, 09–197, 16–
271; RM 11868; FCC 23–60; FR ID 162168]
Connect America Fund: A National
Broadband Plan for Our Future HighCost Universal Service Support; ETC
Annual Reports and Certifications;
Telecommunications Carriers Eligible
To Receive Universal Service Support;
Connect America Fund—Alaska Plan;
Expanding Broadband Service
Through the ACAM Program
Federal Communications
Commission.
ACTION: Proposed rule.
AGENCY:
In this document, the Federal
Communications Commission (FCC or
Commission) seeks comment on how to
address the immediate needs of legacy
rate-of return support mechanisms,
while balancing the Commission’s
objectives of maintaining its
commitment to supporting broadband at
evolving levels of service and also
avoiding unnecessary duplication of
support in light of other available
funding programs.
DATES: Comments are due on or before
September 18, 2023, and reply
comments are due on or before October
2, 2023.
ADDRESSES: You may submit comments,
identified by WC Docket Nos. 10–90,
14–58, 09–197 and 16–271, by any of
the following methods:
• Electronic Filers: Comments may be
filed electronically using the internet by
accessing the ECFS: www.fcc.gov/ecfs.
• Paper Filers: Parties who choose to
file by paper must file an original and
one copy of each filing.
Æ Filings can be sent by commercial
overnight courier, or by first-class or
overnight U.S. Postal Service mail. All
filings must be addressed to the
Commission’s Secretary, Office of the
SUMMARY:
E:\FR\FM\18AUP1.SGM
18AUP1
]]>Agencies
[Federal Register Volume 88, Number 159 (Friday, August 18, 2023)]
[Proposed Rules]
[Pages 56563-56579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17521]
=======================================================================
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4022, 4044, 4050, 4262 and 4281
RIN 1212-AA55
Valuation Assumptions and Methods
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would update 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: Comments must be submitted on or before October 17, 2023 to be
assured of consideration.
ADDRESSES: Comments may be submitted by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for sending comments.
Email: [email protected]. Refer to RIN 1212-AA55 in
the subject line.
Mail or Hand Delivery: Regulatory Affairs Division, Office
of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th
Street SW, Washington, DC 20024-2101.
Commenters are strongly encouraged to submit comments
electronically. Commenters who submit comments on paper by mail should
allow sufficient time for mailed comments to be received before the
close of the comment period. All submissions must include the agency's
name (Pension Benefit Guaranty Corporation or PBGC), the title for this
rulemaking (Valuation Assumptions and Methods), and the Regulation
Identifier Number for this rulemaking (RIN 1212-AA55). Comments
received will be posted without change to PBGC's website, www.pbgc.gov,
including any personal information provided. Do not submit comments
that include any personally identifiable information or confidential
business information.
Copies of comments may also be obtained by writing to Disclosure
Division, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 445 12th Street SW, Washington, DC 20024-2101, or calling
202-326-4040 during normal business hours. If you are deaf or hard of
hearing, or have a speech disability, please dial 7-1-1 to access
telecommunications relay services.
FOR FURTHER INFORMATION CONTACT: Gregory M. Katz
([email protected]), Attorney, Regulatory Affairs Division, 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 proposed rule would update 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.
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; section
4044 of ERISA (Allocation of Assets); 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 4062 of ERISA (Liability for Termination of Single-Employer
Plans Under a Distress Termination or a Termination by Corporation);
section 4050 of ERISA (Missing Participants); 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 proposed rule would modify 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:
Modernize the interest assumption structure by adopting a
yield curve approach;
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;
Increase transparency by using a procedure based on
publicly available yield curves as of the valuation date;
Adopt a more recent mortality table along with a
generational mortality improvement projection; and
Simplify the expense assumption.
Because the assumptions for valuing benefits are incorporated by
reference in other regulations, the changes to these assumptions would
affect PBGC's regulations on 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); Annual Financial and Actuarial
Information Reporting (29 CFR part 4010); Missing Participants (29 CFR
part 4050); and other regulations.
Background
The Pension Benefit Guaranty Corporation (PBGC) administers two
[[Page 56564]]
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 certain
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.
Under the multiemployer insurance program, PBGC provides financial
assistance under section 4261 of ERISA to plans that are insolvent and
thus 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 are able to pay plan 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 proposed rule applies to both the single-employer
program and the multiemployer program.
PBGC has identified these proposed 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 consistent
with annuity market pricing.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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 assumptions 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), 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 \4\ 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.\5\
---------------------------------------------------------------------------
\4\ Survey approved under OMB Control Number 1212-0030 (expires
July 31, 2024).
\5\ 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.''
---------------------------------------------------------------------------
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 proposal would improve 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
[[Page 56565]]
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.
In addition, PBGC seeks to improve 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, PBGC seeks to increase transparency with respect to its
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.\6\
---------------------------------------------------------------------------
\6\ In the uncommon situation of a mid-month valuation date, the
lag would be reduced significantly, but not completely eliminated.
---------------------------------------------------------------------------
For these reasons, PBGC is proposing to structure 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, the proposal would incorporate
publicly available bond yield data into the methodology used to
determine the 4044 interest assumption to increase transparency, and to
base 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.
Proposed 4044 Interest Assumption
Under the proposal, the 4044 interest assumption would be based on
a blend of two publicly available yield curves (the ``blended market
yield curve'') and would be adjusted to the extent necessary so that
the resulting liabilities align with group annuity prices. The adjusted
blended market yield curve would consist 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 would be used to discount
benefits expected to be paid more than 30 years after the valuation
date.
The blended market yield curve (prior to adjustment) would be
determined as follows:
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).\7\
---------------------------------------------------------------------------
\7\ Available at https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curves/treasury-coupon-issues.
---------------------------------------------------------------------------
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).\8\
---------------------------------------------------------------------------
\8\ Available at https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curve/corporate-bond-yield-curve.
---------------------------------------------------------------------------
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.\9\
---------------------------------------------------------------------------
\9\ The proposal 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, www.pbgc.gov.
---------------------------------------------------------------------------
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 last
day of a month, and for such calculations, the applicable blended
market yield curve would be determined using the published TNC and HQM
curves as of the valuation date. To accommodate other valuation dates,
the proposal 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 would
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 requests comments on this issue.
As noted above, once the blended market yield curve is determined,
it would be adjusted so that the resulting present values align with
group annuity prices. The term ``4044 yield curve'' would be used to
describe the blended market yield curve after reflecting such
adjustments.
The adjustments, or ``spreads,'' would 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 would determine
the spreads quarterly based on survey data on pricing of private-sector
group annuities. More specifically, PBGC would determine a yield curve
that best fits data from those surveys, given an assumed mortality
table. Next, PBGC would calculate the differences (``spreads'') between
this curve and the blended market yield curve as of the survey date. To
smooth random variation and seasonality effects before publishing, PBGC
would average the calculated spreads with spreads from prior periods.
PBGC would publish the spreads (by amending its regulation) shortly
before each quarter begins.\10\
---------------------------------------------------------------------------
\10\ The previously mentioned white paper would describe the
methodology used to determine the spreads.
---------------------------------------------------------------------------
The spreads for any quarter would be used to adjust the month-end
blended market yield curves in that quarter. For example, the first
quarter spreads would be used to adjust the blended market yield curves
as of January 31, February 28,\11\ and March 31. Because of the
lookback rule, the first quarter spreads would 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 would be 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 would
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.
---------------------------------------------------------------------------
\11\ February 29 in a leap year.
---------------------------------------------------------------------------
The following example illustrates how the 4044 yield curve would
have been developed for a valuation date on June 30, 2022, had the
proposal been in effect at that time and assuming the second quarter
spreads for 2022 were as shown in column D below:
[[Page 56566]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
June 30, 2022, Blended market
nominal TNC June 30, 2022, HQM yield curve \1/ Second quarter Applicable 4044
Maturity treasury yield bond yield curve 3\(A) + \2/3\(B) 2022 spreads (%) yield curve * (C)
curve (%) (%) (%) + (D) (%)
(A) (B) (C) (D) (E)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.5................................................. 2.91 2.84 2.86 0.27 3.13
1.0................................................. 2.90 3.17 3.08 0.27 3.35
1.5................................................. 2.90 3.45 3.27 0.26 3.53
2.0................................................. 2.92 3.65 3.41 0.26 3.67
28.5................................................ 3.18 4.84 4.29 -0.02 4.27
29.0................................................ 3.17 4.84 4.28 -0.02 4.26
29.5................................................ 3.17 4.83 4.28 -0.03 4.25
30.0................................................ 3.18 4.83 4.28 -0.03 ** 4.25
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Because of the lookback rule, valuation dates from July 1, 2022, through July 30, 2022, would also use the June 30, 2022, blended market yield curve
which means they would also use the second quarter spreads. Thus, the 4044 yield curve in column (E) would also be used for those valuation dates.
** The 4.25% 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 would 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 would create a
timing problem.
This proposal would amend the benefits valuation regulation to
prescribe the use of the 4044 yield curve and the process to determine
it. It would also amend 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 would show 60
spread adjustments.
Given the proposed methodology, practitioners would 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
would be specified in the regulation before the blended market yield
curves are available.) In addition, to reduce administrative burden on
practitioners, PBGC would post the 4044 yield curve on its website at
www.pbgc.gov each month shortly after its underlying data become
available.
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 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.'' \12\ 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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\12\ 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.'' \13\ PBGC has 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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\13\ See 70 FR 72205, 72206 (Dec. 2, 2005) (quoting 58 FR 5128,
5129 (Jan. 19, 1993)).
---------------------------------------------------------------------------
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.'' \14\
---------------------------------------------------------------------------
\14\ See Pension Comm, American Academy of Actuaries, Selecting
and Documenting Mortality Assumptions for Pensions 16 (2015),
https://actuary.org/files/Mortality_PN_060515_0.pdf.
---------------------------------------------------------------------------
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).
[[Page 56567]]
The Internal Revenue Service (IRS) and the Treasury Department
reached the same conclusions regarding trends in mortality assumptions.
On April 28, 2022, the Treasury Department and the IRS issued a
proposed rule \15\ (``IRS proposal'') that would amend their mortality
assumptions regulations under section 430(h)(3) of the Code to provide
a more recent base mortality table with different rates for annuitants
and non-annuitants. Their proposal also provides that, with limited
exception, future mortality improvements would be reflected using
generational mortality. The preamble discussion and operative
regulatory provisions on the mortality assumptions for healthy lives in
this proposal are derived from the IRS proposal.
---------------------------------------------------------------------------
\15\ 87 FR 25161.
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Proposed Updated Healthy Lives Mortality Assumption--Base Mortality
Tables
The base mortality tables PBGC is proposing are the same as those
proposed by IRS and the Treasury Department for purposes of section 430
of the Code. As explained in the preamble to the IRS proposal, those
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'').\16\ 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).\17\
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\16\ This report is available at https://www.soa.org/49c106/globalassets/assets/files/resources/experience-studies/2019/pri-2012-mortality-tables-report.pdf.
\17\ 87 FR 25163.
---------------------------------------------------------------------------
The tables in the Pri-2012 Report are gender-distinct and provide
separate non-annuitant and annuitant mortality rates.\18\ Unlike the
Pri-2012 Report, but consistent with the IRS proposal, this proposed
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
would be applied to determine the present value of benefits for an
annuitant. For a non-annuitant, the non-annuitant mortality tables
would be applied for the periods before the participant is projected to
commence receiving benefits, and the annuitant mortality tables would
be used for later periods. For a beneficiary of a participant, the
annuitant mortality tables would 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.
---------------------------------------------------------------------------
\18\ 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
proposal, the term ``non-annuitant'' is used.
---------------------------------------------------------------------------
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 proposal 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.\19\
---------------------------------------------------------------------------
\19\ See 87 FR 25163.
---------------------------------------------------------------------------
Proposed 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 IRS proposal, under this
proposal, those tables would be 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,\20\ 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.
---------------------------------------------------------------------------
\20\ Report available at https://www.soa.org/4a9de4/globalassets/assets/files/resources/experience-studies/2021/2021-mp-scale-report.pdf.
---------------------------------------------------------------------------
RPEC typically issues updated mortality improvement rates that
reflect new data for mortality improvement trends for the general
population on an annual basis.\21\ PBGC plans to amend its regulation
periodically to take into account updated mortality improvement rates
as they become available.
---------------------------------------------------------------------------
\21\ RPEC did not issue an updated scale for 2022. See https://www.soa.org/resources/research-reports/2022/rpec-mortality-improvement/.
---------------------------------------------------------------------------
The proposed healthy lives mortality assumptions would closely
align with the mortality assumptions used by private-sector insurers.
The software needed to use generational mortality tables has become
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.
Proposed Updated Disabled Lives Mortality Assumption
This proposal would provide 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. However, for individuals that are eligible for
Social Security disability benefits, the proposal would update 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.'' \22\ The proposed
mortality rates 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 would not include
a mortality improvement scale.
---------------------------------------------------------------------------
\22\ Nettie J. Barrick-Funk, Soc. Sec. Admin., Social Security
Disability Insurance Program Disabled Worker Experience Actuarial
Study 125, at ix (2020), https://www.ssa.gov/OACT/NOTES/pdf_studies/study125.pdf.
---------------------------------------------------------------------------
For the reasons discussed above, this proposal would amend PBGC's
benefits valuation regulation to replace mortality tables for healthy
lives with mortality tables from Pri-2012. It would also replace tables
relating to mortality improvement for healthy lives with references to
generational mortality improvement projections from the Mortality
Improvement Scale MP-2021 and prescribe their use. It would further
amend 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.
[[Page 56568]]
Finally, it would amend 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 include
establishing plan files, reviewing plan provisions to determine benefit
entitlements, setting up and updating records, processing pension
applications, remitting benefits, and others. 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.\23\
---------------------------------------------------------------------------
\23\ Expense assumptions are sometimes described as loading
assumptions or expense loading assumptions.
---------------------------------------------------------------------------
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 percent of
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 percent of liabilities above $200,000.
Reasons for Change and Proposed 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, PBGC proposes to
simplify the expense assumptions. PBGC is proposing to set 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 would be
updated for inflation using the Consumer Price Index (CPI-U) each year.
The proposal would amend PBGC's benefits valuation regulation to
prescribe these updated expense assumptions.
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 \24\ 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.\25\ Under the current
benefits valuation regulation, the same interest assumption is used for
any valuation date in January. However, under the proposal, two
different interest assumptions would 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 was left unchanged, it would be
unclear which 4044 yield curve should be used for benefit determination
dates occurring in a particular calendar year. Thus, PBGC is proposing
to amend the Missing Participant 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.
---------------------------------------------------------------------------
\24\ 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, Sec. 4050.301, and Sec. 4050.401.
\25\ See definition of ``PBGC missing participants assumptions''
in Sec. 4050.102, Sec. 4050.302, and Sec. 4050.402.
---------------------------------------------------------------------------
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 the proposal provides that future mortality
improvements would be reflected using generational mortality, if the
Missing Participants regulation was 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, PBGC is proposing that the Missing Participants
regulation would provide that a unisex, static version of the proposed
mortality table be used for this purpose. More specifically, PBGC is
proposing to amend 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. These male and female tables
used for this purpose would be identical to the static mortality tables
provided in the IRS proposal as an alternative for plans with 500 or
fewer participants. As with the IRS proposal, PBGC intends to update
the static mortality tables for years after 2023.
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 proposal would
specify 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 proposal), would be moved to codified text as well.
This proposal would retain the current interest assumptions in appendix
B for reference (redesignating them as historical rates), but the other
three appendixes would be removed. The proposal would update cross-
references to the appendixes in parts 4022, 4044, 4050, 4262, and 4281
so that they refer to the codified text.
Applicability
These amendments would apply to calculations where the valuation
date is
[[Page 56569]]
on or after the effective date of the final rule.
Incorporation by Reference
Section 4044.53(c)(1)(iii) of the proposed 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
included 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 ``Proposed
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 https://www.soa.org/resources/experience-studies/2021/mortality-improvement-scale-mp-2021. 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 proposed 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 proposed rule and has concluded that the proposed changes would
have a minimal impact on liabilities determined under PBGC's
regulations.
The proposed updates to the assumptions under the benefits
valuation regulation would, 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 would 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
would 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.\26\ 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 should be within a few percentage points
of the liability measurement using the current methodology, which would
result in only a minor change in withdrawal liability.
---------------------------------------------------------------------------
\26\ Section 4262.16(g) of PBGC's regulation on special
financial assistance (29 CFR part 4262) requires, as a condition of
receiving special financial assistance, that the 4044 interest
assumption be used to determine unfunded vested benefits for
purposes of determining withdrawal liability. For other ongoing
plans determining withdrawal liability, use of the 4044 interest
assumption, either as a standalone assumption or combined with
funding interest assumptions, represents a valid approach to
selecting an interest assumption to determine withdrawal liability
in all circumstances. (See PBGC's proposed rule, Actuarial
Assumptions for Determining an Employer's Withdrawal Liability, 87
FR 62316.)
---------------------------------------------------------------------------
The proposed changes to generational mortality tables and to a
yield-curve based interest assumption would 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 proposes to
update 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 \27\ 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,\28\ and that are likely to have a significant economic
impact on a substantial number of small entities. Unless an agency
certifies that a proposed rule will not, if promulgated, have a
significant economic impact on a substantial number of small entities,
section 603 of the Regulatory Flexibility Act requires that the agency
present an initial regulatory flexibility analysis at the time of the
publication of the proposed 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.\29\
---------------------------------------------------------------------------
\27\ 5 U.S.C. 601 et seq.
\28\ The applicable definition of ``rule'' is found in section
601 of the Regulatory Flexibility Act. See 5 U.S.C. 601(2).
\29\ 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.
---------------------------------------------------------------------------
For purposes of the Regulatory Flexibility Act requirements with
respect to this proposed rule, PBGC considers a small entity to be a
plan with fewer than 100 participants.\30\ This is substantially the
same criterion PBGC uses in other regulations \31\ and is consistent
with certain requirements in title I of ERISA \32\ and the Code,\33\ as
well as the definition of a small entity that PBGC and DOL have used
for
[[Page 56570]]
purposes of the Regulatory Flexibility Act.\34\
---------------------------------------------------------------------------
\30\ 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.
\31\ See, e.g., special rules for small plans under part 4007
(Payment of Premiums).
\32\ 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.
\33\ 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.
\34\ 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 Prohibited Transaction Exemption
Procedures, 76 FR 66637, 66644 (Oct. 27, 2011).
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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
proposed 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 \35\ under the Small Business Act. PBGC
therefore requests comments on the appropriateness of the size standard
used in evaluating the impact of its proposed rule on small entities.
---------------------------------------------------------------------------
\35\ See, 13 CFR 121.201.
---------------------------------------------------------------------------
Based on its proposed 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 proposed rule will not, if
promulgated, 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 proposed
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
proposal without additional administrative burden, this proposed rule
would 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 4022
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4044
Employee benefit plans, Incorporation by reference, Pension
insurance, Pensions.
29 CFR Part 4050
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4262
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4281
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
For the reasons stated in the preamble, PBGC proposes to amend 29
CFR parts 4022, 4044, 4050, 4262, and 4281 as follows:
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
0
1. 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.
Sec. 4022.63 [Amended]
0
2. In Sec. 4022.63 removing the words ``the PBGC'' and adding in their
place the word ``PBGC'' wherever they appear.
0
3. Amend Sec. 4022.63 by revising paragraph (b)(1) to read as follows:
Sec. 4022.63 Estimated asset-funded benefit.
* * * * *
(b) * * *
(1) An actuarial valuation of the plan has been performed for a
plan year beginning not more than eighteen months before the proposed
termination date. If the interest rate used to value plan liabilities
in this valuation exceeded the applicable valuation interest rates and
factors under Sec. 4044.54 of this chapter in effect on the proposed
termination date, the value of benefits in pay status and the value of
vested benefits not in pay status on the valuation date must be
converted to PBGC's valuation rates and factors.
* * * * *
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
0
4. 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
5. Amend Sec. 4044.52 by revising paragraphs (a) and (d) to read as
follows:
Sec. 4044.52 Valuation of benefits.
* * * * *
(a) Using the mortality assumptions prescribed by Sec. 4044.53 and
the interest assumptions prescribed by Sec. 4044.54;
* * * * *
(d) Adding an expense loading charge determined in accordance with
this paragraph (d) to the total value of benefits.
(1) Expense Loading charge. The expense loading charge equals the
applicable inflation multiplier determined in accordance with paragraph
(d)(2) of this section multiplied by the sum of--
(i) $400 multiplied by the lesser of the applicable participant
count and 100, and
(ii) $250 multiplied by the excess, if any, of the applicable
participant count over 100.
(2) Applicable inflation multiplier. Except as provided in the next
sentence, the applicable inflation multiplier equals the value of the
CPI-U for September of the year preceding the year containing the
valuation date divided by 296.808 (the value of the CPI-U for September
of 2022), but not less than 1. However, for a valuation date on any day
in January except the 31st, the applicable inflation multiplier is
determined as if the valuation date were December 31 of the year
preceding the year containing the valuation date. The term ``CPI-U''
means the Consumer Price Index for All Urban Consumers, not seasonally
adjusted as published by the Bureau of Labor Statistics of the
Department of Labor.
(3) Rounding. Any expense loading charge determined in accordance
with this paragraph (d) which is not a multiple of $1.00 is rounded to
the nearest dollar.
0
6. Amend Sec. 4044.53 by revising paragraphs (c), (d), and (e) and
adding new paragraph (h) to read as follows:
Sec. 4044.53 Mortality assumptions.
* * * * *
(c) Healthy lives--(1) In general. If the individual is not
disabled under paragraph (f) of this section, the plan administrator
must value the benefit using generational mortality tables described in
this paragraph (c).
(i) Construction of generational mortality tables. The generational
mortality tables in this paragraph (c) are constructed from the base
mortality tables described in paragraph (c)(1)(ii) of this section and
the mortality improvement rates described in paragraph (c)(1)(iii) of
this section.
(ii) Base mortality tables. The base mortality tables are set forth
in paragraph (c)(5) of this section. The base year for those tables is
2012.
[[Page 56571]]
(iii) Mortality improvement rates. The mortality improvement rates
are the Scale MP-2021 Rates.
(iv) Incorporation by reference. The Scale MP-2021 Rates, Mortality
Improvement Scale MP-2021 Report, October 2021, Retirement Plans
Experience Committee of the Society of Actuaries, is incorporated by
reference into this section with the approval of the Director of the
Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. This
incorporation by reference (IBR) material is available for inspection
at PBGC and at the National Archives and Records Administration (NARA).
Contact PBGC at: Disclosure Division, Office of the General Counsel,
Pension Benefit Guaranty Corporation; 445 12th Street SW, Washington,
DC 20024; 202-326-4040. For information on the availability of this
material at NARA, visit www.archives.gov/federal-register/cfr/ibr-locations.html or email [email protected]. The material may be
obtained from the Society of Actuaries at: Society of Actuaries, 475 N.
Martingale Rd., Suite 600, Schaumburg, IL 60173; (847) 706-3500;
https://www.soa.org/resources/experience-studies/2021/mortality-improvement-scale-mp-2021.
(2) Application of mortality improvement rates--
(i) In general. Under the generational mortality tables described
in this paragraph (c), the probability of an individual's death at a
particular age in the future is determined as the individual's base
mortality rate that applies at that age (that is, the applicable
mortality rate from the tables set forth in paragraph (c)(5) of this
section for that age, gender, and status as an annuitant or a non-
annuitant) multiplied by the cumulative mortality improvement factor
for the individual's gender and for that age for the period from 2012
through the calendar year in which the individual is projected to reach
the particular age. Paragraph (c)(3) of this section provides an
example that illustrates how the base mortality tables in paragraph
(c)(5) of this section and the Scale MP-2021 mortality improvement
rates are combined to determine projected mortality rates.
(ii) Cumulative mortality improvement factor. The cumulative
mortality improvement factor for an age and gender for a period is the
product of the annual mortality improvement factors for that age and
gender for each year within that period.
(iii) Annual mortality improvement factor. The annual mortality
improvement factor for an age and gender for a year is 1 minus the
mortality improvement rate that applies for that age and gender for
that year. If that annual mortality improvement rate is greater than 1
(corresponding to a negative mortality improvement rate), then the
projected mortality rate for that age and gender for that year is
greater than the projected mortality rate for the same age and gender
for the preceding year.
(3) Example of calculation using Scale MP-2021 Rates--
(i) Calculation of mortality rate. The mortality rate that is
applied to male annuitants who are age 67 in 2023 is equal to the
product of the mortality rate for 2012 that applied to male annuitants
who were age 67 in 2012 (0.01288) and the cumulative mortality
improvement factor for age 67 males from 2012 to 2023. The cumulative
mortality improvement factor for age 67 males for the period from 2012
to 2023 is 0.9919, and the mortality rate for 2023 for male annuitants
who are age 67 in that year would be 0.01278, as shown in the following
table.
Table 1 to Paragraph (c)(3)(i)--Example Mortality Rate Calculation
----------------------------------------------------------------------------------------------------------------
Annual
mortality
Scale MP-2021 improvement Cumulative
Calendar year mortality factor (1- mortality Mortality rate
improvement mortality improvement
rate improvement factor
rate)
----------------------------------------------------------------------------------------------------------------
2012............................................ n/a n/a n/a 0.01288
2013............................................ 0.0052 0.9948 0.9948 ..............
2014............................................ 0.0027 0.9973 0.9921 ..............
2015............................................ 0.0009 0.9991 0.9912 ..............
2016............................................ (0.0003) 1.0003 0.9915 ..............
2017............................................ (0.0010) 1.0010 0.9925 ..............
2018............................................ (0.0016) 1.0016 0.9941 ..............
2019............................................ (0.0016) 1.0016 0.9957 ..............
2020............................................ (0.0010) 1.0010 0.9967 ..............
2021............................................ 0.0000 1.0000 0.9967 ..............
2022............................................ 0.0015 0.9985 0.9952 ..............
2023............................................ 0.0033 0.9967 0.9919 0.01278
----------------------------------------------------------------------------------------------------------------
(ii) Probability of survival for an individual. After the projected
mortality rates are derived for each age for each year, the rates are
used to calculate the present value of a benefit stream that depends on
the probability of survival year-by-year. For example, using the Scale
MP-2021 rates, for purposes of calculating the present value of future
payments in a benefit stream payable for a male annuitant who is age 67
in 2023, the probability of survival for the annuitant is based on the
mortality rate for a male annuitant who is age 67 in 2023 (0.01278),
and the projected mortality rate for a male annuitant who will be age
68 in 2024 (0.01378), age 69 in 2025 (0.01489), and so on.
(4) Use of the tables--
(i) Separate tables for annuitants and non-annuitants. Separate
mortality tables are provided for use for annuitants and non-
annuitants. The non-annuitant mortality tables are applied to determine
the probability of survival for a non-annuitant for the period before
the non-annuitant is projected to commence receiving benefits. The
annuitant mortality tables are applied to determine the present value
of benefits for each annuitant. In addition, the annuitant mortality
tables are applied for each non-annuitant with respect to each assumed
commencement of benefits for the period beginning with that assumed
commencement. For purposes of this section, an annuitant means a plan
participant who has commenced receiving benefits and a non-annuitant
means a plan participant who has not yet commenced receiving benefits
(for example, an active
[[Page 56572]]
employee or a terminated vested participant). A participant whose
benefit has partially commenced is treated as an annuitant for the
portion of the benefit that has commenced and treated as a non-
annuitant for the balance of the benefit. In addition, 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 with respect to the beneficiary for
the period beginning with each assumed commencement of benefits for the
beneficiary.
(ii) Examples of calculation using separate non-annuitant and
annuitant tables. For a 45-year-old active participant who is projected
to commence receiving an annuity at age 55, benefit liabilities are
determined using the non-annuitant mortality tables for the period
before the participant attains age 55 and using the annuitant mortality
tables for the period ages 55 and above. Similarly, for a 45-year-old
terminated vested participant who is projected to commence an annuity
at age 65, benefit liabilities are determined using the non-annuitant
mortality tables for the period before the participant attains age 65
and using the annuitant mortality tables for ages 65 and above.
(5) Base mortality tables. The following are the base mortality
tables. The base year for these tables is 2012.
Table 2 to Paragraph (c)(5)--Healthy Lives Base Mortality Table
----------------------------------------------------------------------------------------------------------------
Males Females
Age ---------------------------------------------------------------
Non-annuitant Annuitant Non-annuitant Annuitant
----------------------------------------------------------------------------------------------------------------
0............................................... 0.00650 0.00650 0.00544 0.00544
1............................................... 0.00045 0.00045 0.00038 0.00038
2............................................... 0.00030 0.00030 0.00023 0.00023
3............................................... 0.00022 0.00022 0.00018 0.00018
4............................................... 0.00019 0.00019 0.00013 0.00013
5............................................... 0.00016 0.00016 0.00012 0.00012
6............................................... 0.00014 0.00014 0.00011 0.00011
7............................................... 0.00013 0.00013 0.00010 0.00010
8............................................... 0.00011 0.00011 0.00009 0.00009
9............................................... 0.00009 0.00009 0.00009 0.00009
10.............................................. 0.00008 0.00008 0.00009 0.00009
11.............................................. 0.00009 0.00009 0.00009 0.00009
12.............................................. 0.00013 0.00013 0.00010 0.00010
13.............................................. 0.00017 0.00017 0.00012 0.00012
14.............................................. 0.00022 0.00022 0.00013 0.00013
15.............................................. 0.00028 0.00028 0.00013 0.00013
16.............................................. 0.00034 0.00034 0.00014 0.00014
17.............................................. 0.00040 0.00040 0.00015 0.00015
18.............................................. 0.00046 0.00046 0.00015 0.00015
19.............................................. 0.00053 0.00053 0.00015 0.00015
20.............................................. 0.00056 0.00056 0.00015 0.00015
21.............................................. 0.00056 0.00056 0.00015 0.00015
22.............................................. 0.00056 0.00056 0.00016 0.00016
23.............................................. 0.00055 0.00055 0.00018 0.00018
24.............................................. 0.00055 0.00055 0.00019 0.00019
25.............................................. 0.00054 0.00054 0.00019 0.00019
26.............................................. 0.00054 0.00054 0.00019 0.00019
27.............................................. 0.00054 0.00054 0.00020 0.00020
28.............................................. 0.00054 0.00054 0.00020 0.00020
29.............................................. 0.00054 0.00054 0.00020 0.00020
30.............................................. 0.00055 0.00055 0.00021 0.00021
31.............................................. 0.00055 0.00055 0.00022 0.00022
32.............................................. 0.00056 0.00056 0.00023 0.00023
33.............................................. 0.00058 0.00058 0.00025 0.00025
34.............................................. 0.00059 0.00059 0.00026 0.00026
35.............................................. 0.00061 0.00061 0.00028 0.00028
36.............................................. 0.00063 0.00063 0.00031 0.00031
37.............................................. 0.00065 0.00065 0.00034 0.00034
38.............................................. 0.00068 0.00068 0.00036 0.00036
39.............................................. 0.00071 0.00071 0.00040 0.00040
40.............................................. 0.00074 0.00074 0.00043 0.00043
41.............................................. 0.00077 0.00082 0.00047 0.00049
42.............................................. 0.00081 0.00099 0.00051 0.00061
43.............................................. 0.00086 0.00124 0.00055 0.00078
44.............................................. 0.00091 0.00158 0.00060 0.00101
45.............................................. 0.00097 0.00200 0.00065 0.00130
46.............................................. 0.00105 0.00251 0.00071 0.00165
47.............................................. 0.00113 0.00310 0.00077 0.00206
48.............................................. 0.00123 0.00378 0.00083 0.00252
49.............................................. 0.00134 0.00454 0.00090 0.00304
50.............................................. 0.00147 0.00539 0.00098 0.00362
51.............................................. 0.00161 0.00544 0.00107 0.00426
52.............................................. 0.00177 0.00565 0.00116 0.00495
53.............................................. 0.00194 0.00588 0.00126 0.00500
[[Page 56573]]
54.............................................. 0.00213 0.00616 0.00137 0.00512
55.............................................. 0.00234 0.00647 0.00148 0.00517
56.............................................. 0.00257 0.00686 0.00161 0.00522
57.............................................. 0.00281 0.00728 0.00175 0.00528
58.............................................. 0.00308 0.00770 0.00190 0.00561
59.............................................. 0.00338 0.00811 0.00206 0.00601
60.............................................. 0.00369 0.00848 0.00224 0.00643
61.............................................. 0.00403 0.00882 0.00243 0.00690
62.............................................. 0.00441 0.00918 0.00264 0.00743
63.............................................. 0.00481 0.00960 0.00287 0.00796
64.............................................. 0.00525 0.01014 0.00312 0.00859
65.............................................. 0.00573 0.01087 0.00339 0.00928
66.............................................. 0.00636 0.01178 0.00380 0.01003
67.............................................. 0.00706 0.01288 0.00427 0.01089
68.............................................. 0.00784 0.01418 0.00480 0.01192
69.............................................. 0.00870 0.01564 0.00540 0.01309
70.............................................. 0.00967 0.01729 0.00606 0.01444
71.............................................. 0.01073 0.01914 0.00681 0.01597
72.............................................. 0.01192 0.02121 0.00765 0.01770
73.............................................. 0.01323 0.02354 0.00860 0.01967
74.............................................. 0.01469 0.02613 0.00966 0.02192
75.............................................. 0.01632 0.02905 0.01085 0.02445
76.............................................. 0.01812 0.03233 0.01219 0.02727
77.............................................. 0.02012 0.03604 0.01370 0.03042
78.............................................. 0.02234 0.04026 0.01539 0.03391
79.............................................. 0.02480 0.04504 0.01729 0.03775
80.............................................. 0.02754 0.05046 0.01943 0.04198
81.............................................. 0.02989 0.05657 0.02134 0.04663
82.............................................. 0.03460 0.06343 0.02516 0.05178
83.............................................. 0.04166 0.07114 0.03089 0.05754
84.............................................. 0.05108 0.07977 0.03853 0.06401
85.............................................. 0.06285 0.08946 0.04808 0.07132
86.............................................. 0.07698 0.10032 0.05955 0.07954
87.............................................. 0.09346 0.11248 0.07293 0.08879
88.............................................. 0.11229 0.12600 0.08822 0.09936
89.............................................. 0.13348 0.14088 0.10542 0.11124
90.............................................. 0.15703 0.15703 0.12453 0.12453
91.............................................. 0.17401 0.17401 0.13818 0.13818
92.............................................. 0.19151 0.19151 0.15250 0.15250
93.............................................. 0.20936 0.20936 0.16737 0.16737
94.............................................. 0.22742 0.22742 0.18274 0.18274
95.............................................. 0.24569 0.24569 0.19863 0.19863
96.............................................. 0.26415 0.26415 0.21509 0.21509
97.............................................. 0.28281 0.28281 0.23214 0.23214
98.............................................. 0.30169 0.30169 0.24983 0.24983
99.............................................. 0.32077 0.32077 0.26814 0.26814
100............................................. 0.33996 0.33996 0.28698 0.28698
101............................................. 0.35910 0.35910 0.30619 0.30619
102............................................. 0.37794 0.37794 0.32549 0.32549
103............................................. 0.39633 0.39633 0.34472 0.34472
104............................................. 0.41415 0.41415 0.36375 0.36375
105............................................. 0.43131 0.43131 0.38243 0.38243
106............................................. 0.44771 0.44771 0.40065 0.40065
107............................................. 0.46329 0.46329 0.41828 0.41828
108............................................. 0.47800 0.47800 0.43522 0.43522
109............................................. 0.49181 0.49181 0.45139 0.45139
110............................................. 0.50000 0.50000 0.46673 0.46673
111............................................. 0.50000 0.50000 0.48120 0.48120
112............................................. 0.50000 0.50000 0.49477 0.49477
113............................................. 0.50000 0.50000 0.50000 0.50000
114............................................. 0.50000 0.50000 0.50000 0.50000
115............................................. 0.50000 0.50000 0.50000 0.50000
116............................................. 0.50000 0.50000 0.50000 0.50000
117............................................. 0.50000 0.50000 0.50000 0.50000
118............................................. 0.50000 0.50000 0.50000 0.50000
119............................................. 0.50000 0.50000 0.50000 0.50000
120............................................. 1.00000 1.00000 1.00000 1.00000
----------------------------------------------------------------------------------------------------------------
[[Page 56574]]
(d) Social Security disabled lives. If the individual is Social
Security disabled under paragraph (f)(1) of this section, the plan
administrator will value the benefit using the following table.
Table 3 to Paragraph (d)--Social Security Disabled Lives Mortality Table
------------------------------------------------------------------------
Age Male Female
------------------------------------------------------------------------
16............................................ 0.012544 0.004759
17............................................ 0.007102 0.006541
18............................................ 0.005859 0.008035
19............................................ 0.009998 0.008369
20............................................ 0.008926 0.009224
21............................................ 0.008533 0.008144
22............................................ 0.008158 0.008616
23............................................ 0.008970 0.008127
24............................................ 0.008433 0.008318
25............................................ 0.008696 0.008851
26............................................ 0.009211 0.008002
27............................................ 0.009362 0.008694
28............................................ 0.009780 0.009477
29............................................ 0.010049 0.009664
30............................................ 0.011093 0.009417
31............................................ 0.011075 0.009985
32............................................ 0.010931 0.010524
33............................................ 0.011890 0.010648
34............................................ 0.012529 0.011252
35............................................ 0.012418 0.011450
36............................................ 0.013234 0.011448
37............................................ 0.013832 0.012135
38............................................ 0.014457 0.012579
39............................................ 0.015830 0.012619
40............................................ 0.016153 0.013578
41............................................ 0.016859 0.014243
42............................................ 0.017464 0.014520
43............................................ 0.018302 0.014773
44............................................ 0.019127 0.015630
45............................................ 0.020380 0.016131
46............................................ 0.021607 0.016874
47............................................ 0.023407 0.017547
48............................................ 0.023956 0.018198
49............................................ 0.025631 0.019281
50............................................ 0.026384 0.019413
51............................................ 0.027277 0.020343
52............................................ 0.028582 0.020488
53............................................ 0.030164 0.021316
54............................................ 0.031262 0.021960
55............................................ 0.031728 0.021969
56............................................ 0.033067 0.022897
57............................................ 0.034230 0.023556
58............................................ 0.035474 0.024159
59............................................ 0.036790 0.024958
60............................................ 0.037772 0.025905
61............................................ 0.039297 0.027414
62............................................ 0.039954 0.028394
63............................................ 0.041069 0.029795
64............................................ 0.042280 0.030776
65............................................ 0.039144 0.028230
66............................................ 0.043862 0.031667
67............................................ 0.046182 0.033318
68............................................ 0.048624 0.034728
69............................................ 0.052077 0.037341
70............................................ 0.055284 0.039491
71............................................ 0.058951 0.042134
72............................................ 0.062301 0.044962
73............................................ 0.067099 0.047548
74............................................ 0.071469 0.051148
75............................................ 0.075068 0.055271
76............................................ 0.080425 0.059382
77............................................ 0.085531 0.063489
78............................................ 0.091585 0.068675
79............................................ 0.098383 0.074929
80............................................ 0.104788 0.080536
81............................................ 0.113110 0.088455
82............................................ 0.122062 0.094573
83............................................ 0.131697 0.103589
84............................................ 0.140430 0.111345
85............................................ 0.151890 0.122160
86............................................ 0.165777 0.130844
87............................................ 0.176875 0.142631
88............................................ 0.188397 0.156112
89............................................ 0.206651 0.166591
90............................................ 0.223252 0.182064
91............................................ 0.235073 0.197059
92............................................ 0.249318 0.205768
93............................................ 0.267740 0.225325
94............................................ 0.277033 0.240441
95............................................ 0.284003 0.260724
96............................................ 0.298740 0.281817
97............................................ 0.313086 0.293156
98............................................ 0.328740 0.308400
99............................................ 0.345177 0.324436
100........................................... 0.362436 0.341307
101........................................... 0.380558 0.359055
102........................................... 0.399586 0.377726
103........................................... 0.419565 0.397368
104........................................... 0.440543 0.418031
105........................................... 0.462571 0.439768
106........................................... 0.485699 0.462636
107........................................... 0.509984 0.486693
108........................................... 0.535483 0.512001
109........................................... 0.562257 0.538626
110........................................... 0.590370 0.566634
111+.......................................... 1.000000 1.000000
------------------------------------------------------------------------
(e) Non-Social Security disabled lives. If the individual is non-
Social Security disabled under paragraph (f)(2) of this section, the
plan administrator will value the benefit using generational mortality
tables described in paragraph (c) of this section.
* * * * *
(h) Missing participants mortality. The following mortality table
is used to value benefits using ``PBGC missing participants
assumptions'' under part 4050, subparts A, C, and D of this chapter.
Table 4 to Paragraph (h)--Missing Participants Mortality Table for Determination Dates in 2023
----------------------------------------------------------------------------------------------------------------
Unisex Unisex
Age mortality Age mortality
----------------------------------------------------------------------------------------------------------------
0............................................ 0.00210 61.............................. 0.00375
1............................................ 0.00015 62.............................. 0.00447
2............................................ 0.00010 63.............................. 0.00521
3............................................ 0.00008 64.............................. 0.00585
4............................................ 0.00006 65.............................. 0.00667
5............................................ 0.00006 66.............................. 0.00757
6............................................ 0.00005 67.............................. 0.00845
7............................................ 0.00005 68.............................. 0.00940
8............................................ 0.00004 69.............................. 0.01047
9............................................ 0.00004 70.............................. 0.01170
10........................................... 0.00004 71.............................. 0.01310
11........................................... 0.00004 72.............................. 0.01470
12........................................... 0.00005 73.............................. 0.01650
13........................................... 0.00006 74.............................. 0.01859
14........................................... 0.00008 75.............................. 0.02097
15........................................... 0.00009 76.............................. 0.02372
16........................................... 0.00011 77.............................. 0.02686
17........................................... 0.00012 78.............................. 0.03045
18........................................... 0.00014 79.............................. 0.03451
19........................................... 0.00016 80.............................. 0.03935
20........................................... 0.00017 81.............................. 0.04434
21........................................... 0.00017 82.............................. 0.05001
22........................................... 0.00018 83.............................. 0.05641
[[Page 56575]]
23........................................... 0.00018 84.............................. 0.06367
24........................................... 0.00019 85.............................. 0.07192
25........................................... 0.00020 86.............................. 0.08122
26........................................... 0.00021 87.............................. 0.09169
27........................................... 0.00022 88.............................. 0.10352
28........................................... 0.00023 89.............................. 0.11666
29........................................... 0.00024 90.............................. 0.13111
30........................................... 0.00026 91.............................. 0.14617
31........................................... 0.00027 92.............................. 0.16169
32........................................... 0.00028 93.............................. 0.17758
33........................................... 0.00031 94.............................. 0.19361
34........................................... 0.00032 95.............................. 0.20972
35........................................... 0.00034 96.............................. 0.22694
36........................................... 0.00037 97.............................. 0.24460
37........................................... 0.00039 98.............................. 0.26269
38........................................... 0.00041 99.............................. 0.28131
39........................................... 0.00043 100............................. 0.30036
40........................................... 0.00044 101............................. 0.31968
41........................................... 0.00046 102............................. 0.33909
42........................................... 0.00048 103............................. 0.35847
43........................................... 0.00050 104............................. 0.37762
44........................................... 0.00052 105............................. 0.39610
45........................................... 0.00054 106............................. 0.41412
46........................................... 0.00058 107............................. 0.43160
47........................................... 0.00062 108............................. 0.44820
48........................................... 0.00066 109............................. 0.46409
49........................................... 0.00071 110............................. 0.47687
50........................................... 0.00078 111............................. 0.48520
51........................................... 0.00086 112............................. 0.49310
52........................................... 0.00096 113............................. 0.49699
53........................................... 0.00108 114............................. 0.49818
54........................................... 0.00121 115............................. 0.49940
55........................................... 0.00145 116............................. 0.49968
56........................................... 0.00179 117............................. 0.49983
57........................................... 0.00208 118............................. 0.49998
58........................................... 0.00242 119............................. 0.50000
59........................................... 0.00280 120............................. 1.00000
60........................................... 0.00325 ................................ ..............
----------------------------------------------------------------------------------------------------------------
0
7. Revise Sec. 4044.54 to read as follows:
Sec. 4044.54 Interest assumptions.
(a) General rule. The plan administrator must use the interest
rates prescribed in this section to value benefits under Sec. 4044.52.
(b) Interest rate. The interest rate used to discount an expected
benefit payment is the interest rate from the applicable 4044 yield
curve determined under paragraph (c) of this section for the maturity
point that corresponds to the period of time from the valuation date to
the date the benefit is expected to be paid unless that period of time
exceeds 30 years. In that case, the interest rate used is the interest
rate that corresponds to the maturity point at year 30.0. To address
the timing of benefit payments during a year, reasonable approximations
may be used to value benefit payments that are expected to be made
during a plan year.
(c) 4044 yield curve. A 4044 yield curve consists of interest rates
(as percentages) that correspond to mid-year and whole-year maturity
points for 30.0 years. The applicable 4044 yield curve is the
applicable blended market yield curve determined under paragraphs
(d)(1) and (2) of this section adjusted in accordance with paragraph
(e)(2) of this section by the applicable spreads determined under
paragraph (e)(1) of this section.
(d) Blended market yield curves. A blended market yield curve
consists of interest rates (as percentages), determined as of the last
day of a month, that correspond to mid-year and whole-year maturity
points for 30.0 years.
(1) Applicable blended market yield curve. The applicable blended
market yield curve is the blended market yield curve as of the
valuation date if the valuation date is the last day of a month,
otherwise it is the blended market yield curve as of the last day of
the month before the month containing the valuation date.
(2) Determination of blended market yield curve. The blended market
yield curve is determined by combining the Department of the Treasury's
TNC Treasury Yield Curve Spot Rates, End of Month yield curve (TNC
Yield Curve) with the Department of the Treasury's HQM Corporate Bond
Yield Curve Spot Rates, End of Month yield curve (HQM Bond Yield Curve)
in accordance with this paragraph (d)(2). To determine the blended
market yield curve as of the last day of a month--
(i) Obtain the rate for each maturity point from 0.5 to 30.0 from
the TNC Yield Curve for the end of the month published by the
Department of the Treasury.
(ii) Obtain the rate for each maturity point from 0.5 to 30.0 from
the HQM Bond Yield Curve for the end of the month published by the
Department of the Treasury.
(iii) Determine the interest rate for each maturity point from 0.5
to 30.0 on the blended market yield curve by
[[Page 56576]]
multiplying the rate determined in paragraph (d)(2)(i) of this section
by one-third, multiplying the rate determined in (d)(2)(ii) of this
section at the year by two-thirds, and adding the products.
(e) Spreads. (1) Applicable spreads. The applicable spreads for a
blended market yield curve are the spreads set forth in table 1 to
paragraph (e) of this section for the calendar quarter containing the
date of the blended market yield curve.
(2) Using spreads to adjust a blended market yield curve. To adjust
a blended market yield curve (to determine a 4044 yield curve described
in paragraph (c) of this section), add the interest rate for each
maturity point on the blended market yield curve to the spread
corresponding to that maturity point from the applicable spreads.
(3) Examples. The following examples illustrate how to determine
the applicable blended market yield curve and applicable spreads for a
given valuation date:
(i) Example 1--June 30, 2024, valuation date. Because the valuation
date is the last day of a month, the applicable blended market yield
curve determined under paragraph (d)(1) of this section is the blended
market yield curve as of that date. Because June 30, 2024, is in the
second calendar quarter of 2024, the applicable spreads determined
under paragraph (e)(1) of this section are the spreads for the second
calendar quarter of 2024.
(ii) Example 2--October 15, 2024, valuation date. Because the
valuation date is not the last day of a month, the applicable blended
market yield curve determined under paragraph (d)(1) of this section is
the blended market yield curve as of the last day of the month before
the month containing the valuation date, September 30, 2024. Because
September 30, 2024, is in the third calendar quarter of 2024, the
applicable spreads determined under paragraph (e)(1) of this section
are the spreads for the third calendar quarter of 2024.
Table 1 To Paragraph (e)--First Quarter 2023 Spreads (Sample Rates)
----------------------------------------------------------------------------------------------------------------
Spread Spread Spread
Maturity point (percent) Maturity point (percent) Maturity point (percent)
----------------------------------------------------------------------------------------------------------------
0.5............................. 0.27 10.5 0.19 20.5 0.04
1.0............................. 0.27 11.0 0.19 21.0 0.04
1.5............................. 0.26 11.5 0.17 21.5 0.03
2.0............................. 0.26 12.0 0.17 22.0 0.03
2.5............................. 0.26 12.5 0.16 22.5 0.02
3.0............................. 0.26 13.0 0.16 23.0 0.02
3.5............................. 0.26 13.5 0.14 23.5 0.01
4.0............................. 0.26 14.0 0.14 24.0 0.01
4.5............................. 0.25 14.5 0.13 24.5 0.00
5.0............................. 0.25 15.0 0.13 25.0 0.00
5.5............................. 0.24 15.5 0.11 25.5 -0.01
6.0............................. 0.24 16.0 0.11 26.0 -0.01
6.5............................. 0.23 16.5 0.10 26.5 -0.02
7.0............................. 0.23 17.0 0.10 27.0 -0.02
7.5............................. 0.22 17.5 0.08 27.5 -0.02
8.0............................. 0.22 18.0 0.08 28.0 -0.02
8.5............................. 0.21 18.5 0.07 28.5 -0.02
9.0............................. 0.21 19.0 0.07 29.0 -0.02
9.5............................. 0.20 19.5 0.05 29.5 -0.03
10.0............................ 0.20 20.0 0.05 30.0 -0.03
----------------------------------------------------------------------------------------------------------------
0
8. Amend Sec. 4044.55 by revising paragraph (c)(1) to read as follows:
Sec. 4044.55 XRA when a participant must retire to receive a
benefit.
* * * * *
(c) Procedure. (1) The plan administrator shall determine whether a
participant is in the high, medium, or low retirement rate category
using the applicable Selection of Retirement Rate Category Table in
Sec. 4044.58 of this part, based on the participant's benefit
determined under paragraph (b)(1) of this section and the year in which
the participant reaches URA.
* * * * *
0
9. Amend Sec. 4044.56 by revising paragraph (c) to read as follows:
Sec. 4044.56 XRA when a participant need not retire to receive a
benefit.
* * * * *
(c) Procedure. Participants in this case are always assigned to the
high retirement rate category and therefore the plan administrator
shall use Table II-C (Expected Retirement Ages for Individuals in the
High Category) in Sec. 4044.58 of this part to determine the XRA. The
plan administrator shall determine the XRA from Table II-C by using the
participant's URA and earliest retirement age at termination date.
0
10. Add Sec. 4044.58 to subpart B to read as follows:
Sec. 4044.58 Tables used to determine expected retirement age
The following tables are used for determining expected retirement
age under Sec. Sec. 4044.55 through 4044.57 of this part.
Table 1 to Sec. 4044.58.
[[Page 56577]]
Table I-23--Selection of Retirement Rate Category
[For valuation dates in 2023\1\]
----------------------------------------------------------------------------------------------------------------
Participant's retirement rate category is--
------------------------------------------------ High \4\ if
Low \2\ if Medium \3\ if monthly benefit monthly
If participant reaches URA in year-- monthly at URA is-- benefit at URA
benefit at URA -------------------------------- is greater
is less than-- From-- To-- than--
----------------------------------------------------------------------------------------------------------------
2024............................................ 745 745 3,146 3,146
2025............................................ 762 762 3,218 3,218
2026............................................ 779 779 3,292 3,292
2027............................................ 797 797 3,368 3,368
2028............................................ 816 816 3,445 3,445
2029............................................ 834 834 3,524 3,524
2030............................................ 854 854 3,605 3,605
2031............................................ 873 873 3,688 3,688
2032............................................ 893 893 3,773 3,773
2033 or later................................... 914 914 3,860 3,860
----------------------------------------------------------------------------------------------------------------
\1\ Applicable tables for valuation dates before 2023 are available on PBGC's website (www.pbgc.gov).
\2\ Table II-A.
\3\ Table II-B.
\4\ Table II-C.
Table 2 to Sec. 4044.58.
Table II-A--Expected Retirement Ages for Individuals in the Low Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unreduced retirement age
Participant's earliest retirement age at valuation date ---------------------------------------------------------------------------------------
60 61 62 63 64 65 66 67 68 69 70
--------------------------------------------------------------------------------------------------------------------------------------------------------
42.............................................................. 53 53 53 54 54 54 54 54 54 54 54
43.............................................................. 53 54 54 54 55 55 55 55 55 55 55
44.............................................................. 54 54 55 55 55 55 55 56 56 56 56
45.............................................................. 54 55 55 56 56 56 56 56 56 56 56
46.............................................................. 55 55 56 56 56 57 57 57 57 57 57
47.............................................................. 56 56 56 57 57 57 57 57 57 57 57
48.............................................................. 56 57 57 57 58 58 58 58 58 58 58
49.............................................................. 56 57 58 58 58 58 59 59 59 59 59
50.............................................................. 57 57 58 58 59 59 59 59 59 59 59
51.............................................................. 57 58 58 59 59 60 60 60 60 60 60
52.............................................................. 58 58 59 59 60 60 60 60 60 60 60
53.............................................................. 58 59 59 60 60 61 61 61 61 61 61
54.............................................................. 58 59 60 60 61 61 61 61 61 61 61
55.............................................................. 59 59 60 61 61 61 62 62 62 62 62
56.............................................................. 59 60 60 61 61 62 62 62 62 62 62
57.............................................................. 59 60 61 61 62 62 62 62 62 62 62
58.............................................................. 59 60 61 61 62 62 63 63 63 63 63
59.............................................................. 59 60 61 62 62 63 63 63 63 63 63
60.............................................................. 60 60 61 62 62 63 63 63 63 63 63
61.............................................................. 61 61 62 63 63 63 63 64 64 64
62.............................................................. 62 62 63 63 63 64 64 64 64
63.............................................................. 63 63 64 64 65 65 65 65
64.............................................................. 64 64 65 65 65 65 65
65.............................................................. 65 65 65 65 65 65
66.............................................................. 66 66 66 66 66
67.............................................................. 67 67 67 67
68.............................................................. 68 68 68
69.............................................................. 69 69
70.............................................................. 70
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 3 to Sec. 4044.58.
Table II-B--Expected Retirement Ages for Individuals in the Medium Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unreduced retirement age
Participant's earliest retirement age at valuation date ---------------------------------------------------------------------------------------
60 61 62 63 64 65 66 67 68 69 70
--------------------------------------------------------------------------------------------------------------------------------------------------------
60.............................................................. 61 62 63 64 65 66 67 68 69 70
42.............................................................. 49 49 49 49 49 49 49 49 49 49 49
43.............................................................. 50 50 50 50 50 50 50 50 50 50 50
44.............................................................. 50 51 51 51 51 51 51 51 51 51 51
45.............................................................. 51 51 52 52 52 52 52 52 52 52 52
46.............................................................. 52 52 52 53 53 53 53 53 53 53 53
[[Page 56578]]
47.............................................................. 53 53 53 53 53 54 54 54 54 54 54
48.............................................................. 54 54 54 54 54 54 54 54 54 54 54
49.............................................................. 54 55 55 55 55 55 55 55 55 55 55
50.............................................................. 55 55 56 56 56 56 56 56 56 56 56
51.............................................................. 56 56 56 57 57 57 57 57 57 57 57
52.............................................................. 56 57 57 57 57 58 58 58 58 58 58
53.............................................................. 57 57 58 58 58 58 58 58 58 58 58
54.............................................................. 57 58 58 59 59 59 59 59 59 59 59
55.............................................................. 58 58 59 59 59 60 60 60 60 60 60
56.............................................................. 58 59 59 60 60 60 60 60 60 60 60
57.............................................................. 59 59 60 60 61 61 61 61 61 61 61
58.............................................................. 59 60 60 61 61 61 61 61 61 61 61
59.............................................................. 59 60 61 61 62 62 62 62 62 62 62
60.............................................................. 60 60 61 62 62 62 62 62 62 62 62
61.............................................................. 61 61 62 62 63 63 63 63 63 63
62.............................................................. 62 62 62 63 63 63 63 63 63
63.............................................................. 63 63 64 64 64 64 64 64
64.............................................................. 64 64 64 64 64 64 64
65.............................................................. 65 65 65 65 65 65
66.............................................................. 66 66 66 66 66
67.............................................................. 67 67 67 67
68.............................................................. 68 68 68
69.............................................................. 69 69
70.............................................................. 70
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 4 to Sec. 4044.58.
Table II-C--Expected Retirement Ages for Individuals in the High Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unreduced retirement age
Participant's earliest retirement age at valuation date ---------------------------------------------------------------------------------------
60 61 62 63 64 65 66 67 68 69 70
--------------------------------------------------------------------------------------------------------------------------------------------------------
42.............................................................. 46 46 46 46 46 47 47 47 47 47 47
43.............................................................. 47 47 47 47 47 47 47 47 47 47 47
44.............................................................. 48 48 48 48 48 48 48 48 48 48 48
45.............................................................. 49 49 49 49 49 49 49 49 49 49 49
46.............................................................. 50 50 50 50 50 50 50 50 50 50 50
47.............................................................. 51 51 51 51 51 51 51 51 51 51 51
48.............................................................. 52 52 52 52 52 52 52 52 52 52 52
49.............................................................. 53 53 53 53 53 53 53 53 53 53 53
50.............................................................. 54 54 54 54 54 54 54 54 54 54 54
51.............................................................. 54 55 55 55 55 55 55 55 55 55 55
52.............................................................. 55 55 56 56 56 56 56 56 56 56 56
53.............................................................. 56 56 56 57 57 57 57 57 57 57 57
54.............................................................. 57 57 57 57 57 58 58 58 58 58 58
55.............................................................. 57 58 58 58 58 58 58 58 58 58 58
56.............................................................. 58 58 59 59 59 59 59 59 59 59 59
57.............................................................. 58 59 59 60 60 60 60 60 60 60 60
58.............................................................. 59 59 60 60 60 60 61 61 61 61 61
59.............................................................. 59 60 60 61 61 61 61 61 61 61 61
60.............................................................. 60 60 61 61 61 62 62 62 62 62 62
61.............................................................. 61 61 62 62 62 62 62 62 62 62
62.............................................................. 62 62 62 62 62 62 62 62 62
63.............................................................. 63 63 63 64 64 64 64 64
64.............................................................. 64 64 64 64 64 64 64
65.............................................................. 65 65 65 65 65 65
66.............................................................. 66 66 66 66 66
67.............................................................. 67 67 67 67
68.............................................................. 68 68 68
69.............................................................. 69 69
70.............................................................. 70
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appendix A to Part 4044--[Removed and reserved]
0
11. Remove and reserve Appendix A.
Appendix B to Part 4044--[Amended]
0
12. Amend Appendix B to part 4044 by revising the heading to read
``Appendix B to Part 4044--Historical Interest Rates Used to Value
Benefits''.
Appendix C to Part 4044--[Removed]
0
13. Remove Appendix C.
Appendix D to Part 4044--[Removed]
0
14. Remove Appendix D.
PART 4050--MISSING PARTICIPANTS
0
15. The authority citation for part 4050 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1350.
0
16. Amend Sec. 4050.102 by revising paragraphs (2), (4), and (7)(i) of
the definition of ``PBGC missing participants assumptions'' to read as
follows:
Sec. 4050.102 Definitions.
* * * * *
[[Page 56579]]
PBGC missing participants assumptions means the actuarial
assumptions prescribed in Sec. Sec. 4044.51 through 4044.57 of this
chapter with the following modifications:
* * * * *
(2) The mortality assumption is the mortality table in Sec.
4044.53(h) of this chapter.
* * * * *
(4) The interest assumption is the assumption for valuing benefits
under Sec. 4044.54 of this chapter applicable to valuations occurring
on December 31 of the calendar year preceding the calendar year in
which the benefit determination date occurs.
* * * * *
(7) * * *
(i) In the case of a participant who is not in pay status and whose
normal retirement date is on or after the benefit determination date,
benefits are assumed to commence at the XRA, determined using the high
retirement rate category under Table II-C (Expected Retirement Ages for
Individuals in the High Category) in Sec. 4044.58 of this chapter;
* * * * *
0
17. Amend Sec. 4050.302 by revising paragraphs (2), (4), and (7)(i) of
the definition of ``PBGC missing participants assumptions'' to read as
follows:
Sec. 4050.302 Definitions.
* * * * *
PBGC missing participants assumptions means the actuarial
assumptions prescribed in Sec. Sec. 4044.51 through 4044.57 of this
chapter with the following modifications:
* * * * *
(2) The mortality assumption is the mortality table in Sec.
4044.53(h) of this chapter.
* * * * *
(4) The interest assumption is the assumption for valuing benefits
under Sec. 4044.54 of this chapter applicable to valuations occurring
on December 31 of the calendar year preceding the calendar year in
which the benefit determination date occurs.
* * * * *
(7) * * *
(i) In the case of a participant who is not in pay status and whose
normal retirement date is on or after the benefit determination date,
benefits are assumed to commence at the XRA, determined using the high
retirement rate category under Table II-C (Expected Retirement Ages for
Individuals in the High Category) in Sec. 4044.58 of this chapter;
* * * * *
0
18. Amend Sec. 4050.402 by revising paragraphs (2), (4), and (7)(i) of
the definition of ``PBGC missing participants assumptions'' to read as
follows:
Sec. 4050.402 Definitions.
* * * * *
PBGC missing participants assumptions means the actuarial
assumptions prescribed in Sec. Sec. 4044.51 through 4044.57 of this
chapter with the following modifications:
* * * * *
(2) The mortality assumption is the mortality table in Sec.
4044.53(h) of this chapter.
* * * * *
(4) The interest assumption is the assumption for valuing benefits
under Sec. 4044.54 of this chapter applicable to valuations occurring
on December 31 of the calendar year preceding the calendar year in
which the benefit determination date occurs.
* * * * *
(7) * * *
(i) In the case of a participant who is not in pay status and whose
normal retirement date is on or after the benefit determination date,
benefits are assumed to commence at the XRA, determined using the high
retirement rate category under Table II-C (Expected Retirement Ages for
Individuals in the High Category) in Sec. 4044.58 of this chapter;
* * * * *
PART 4262--SPECIAL FINANCIAL ASSISTANCE BY PBGC
0
19. The authority citation for part 4262 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1432.
Sec. 4262.16 [Amended]
0
20. Amend Sec. 4262.16 by removing the words ``in Appendix B to part
4044'' wherever it appears and adding in its place the words ``under
Sec. 4044.54''.
PART 4281--DUTIES OF PLAN SPONSOR FOLLOWING MASS WITHDRAWAL
0
21. The authority citation for part 4281 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1341(a), 1399(c)(1)(D), 1431,
and 1441.
0
22. Amend Sec. 4281.13 by revising paragraphs (a) and (e) to read as
follows:
Sec. 4281.13 Benefit valuation methods--in general.
* * * * *
(a) Using the interest assumptions under Sec. 4044.54 of this
chapter;
* * * * *
(e) Adjusting the values to reflect the loading for expenses in
accordance with Sec. 4044.52(d) of this chapter (substituting the term
``benefits'' for the term ``benefit liabilities (as defined in 29
U.S.C. 1301(a)(16))'').
* * * * *
Signed in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2023-17521 Filed 8-17-23; 8:45 am]
BILLING CODE 7709-02-P
