Valuation Assumptions and Methods, 48291-48309 [2024-11819]
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BILLING CODE 3510–NK–P
PENSION BENEFIT GUARANTY
CORPORATION
29 CFR Parts 4001, 4010, 4022, 4041,
4041A, 4043, 4044, 4050, 4262, and
4281
RIN 1212–AA55
Valuation Assumptions and Methods
Pension Benefit Guaranty
Corporation.
ACTION: Final rule.
AGENCY:
This final rule updates 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.
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SUMMARY:
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DATES:
Effective date: This rule is effective
July 8, 2024.
Applicability date: These
amendments apply to calculations
where the valuation date is on or after
July 31, 2024.
Incorporation by reference: The
incorporation by reference of certain
material listed in this rule is approved
by the Director of the Federal Register
as of July 8, 2024.
FOR FURTHER INFORMATION CONTACT:
Gregory M. Katz (katz.gregory@
pbgc.gov), Deputy Assistant General
Counsel for Regulatory Affairs, Office of
the General Counsel, Pension Benefit
Guaranty Corporation, 445 12th Street
SW, Washington, DC 20024–2101; 202–
229–3829. If you are deaf or hard of
hearing, or have a speech disability,
please dial 7–1–1 to access
telecommunications relay services.
SUPPLEMENTARY INFORMATION:
Executive Summary
Purpose and Authority
This final rule updates the actuarial
assumptions used to determine the
present value of a single-employer
plan’s benefits when it terminates in a
distress or involuntary termination, to
determine the present value of
multiemployer plan benefits in certain
withdrawal liability calculations, and
for other purposes. Except for
conforming changes and some technical
and editorial changes, the final rule is
substantially the same as the proposed
rule.
Legal authority for this action comes
from section 4002(b)(3) of the Employee
Retirement Income Security Act of 1974
(ERISA), which authorizes the Pension
Benefit Guaranty Corporation (PBGC) to
issue regulations to carry out the
purposes of title IV of ERISA, and
section 4044 of ERISA (Allocation of
Assets). It also comes from section 4001
of ERISA (Definitions); section 4010 of
ERISA (Authority to Require Certain
Information); section 4022 of ERISA
(Single-Employer Plan Benefits
Guaranteed); section 4041 of ERISA
(Termination of Single-Employer Plans);
section 4041A of ERISA (Termination of
Multiemployer Plans); section 4043 of
ERISA (Reportable Events); section 4050
of ERISA (Missing Participants); section
4062 of ERISA (Liability for
Termination of Single-Employer Plans
Under a Distress Termination or a
Termination by Corporation); section
4219 of ERISA (Notice, Collection, Etc.,
of Withdrawal Liability); section 4262 of
ERISA (Special Financial Assistance by
the Corporation); and section 4281 of
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48291
ERISA (Benefits Under Certain
Terminated Plans).
Major Provisions
This final rule modifies the interest,
mortality, and expense assumptions for
valuing benefits under subpart B to
PBGC’s regulation on Allocation of
Assets in Single-Employer Plans
(‘‘benefits valuation regulation’’) (29
CFR part 4044) to:
• 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 affect PBGC’s regulations
on Annual Financial and Actuarial
Information Reporting (29 CFR part
4010); Missing Participants (29 CFR part
4050); Notice, Collection, and
Redetermination of Withdrawal
Liability (29 CFR part 4219); Special
Financial Assistance by PBGC (29 CFR
part 4262); Duties of Plan Sponsor
Following Mass Withdrawal (29 CFR
part 4281); and other regulations.
Background
The Pension Benefit Guaranty
Corporation (PBGC) administers two
insurance programs for private-sector
defined benefit pension plans under
title IV of the Employee Retirement
Income Security Act of 1974 (ERISA): a
single-employer plan termination
insurance program and a multiemployer
plan insolvency insurance program. In
addition, PBGC administers a special
financial assistance program for eligible
financially distressed multiemployer
plans.
Under the single-employer plan
termination insurance program, covered
plans that are underfunded may
terminate either in a distress
termination under section 4041(c) of
ERISA or in an involuntary termination
(one initiated by PBGC) under section
4042 of ERISA. When such a plan
terminates, PBGC typically is appointed
statutory trustee of the plan and
becomes responsible for paying benefits
in accordance with the provisions of
title IV of ERISA.
Under the multiemployer insurance
program, PBGC provides financial
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assistance under section 4261 of ERISA
to plans that are insolvent and unable to
pay benefits at the guaranteed level.
This financial assistance is primarily in
the form of financial assistance loans,
paid to the plans periodically so that
they can pay basic benefits when due.
Additionally, under the special
financial assistance program under
section 4262 of ERISA, PBGC provides
funding to eligible financially troubled
multiemployer plans upon approval of
an application. This final rule applies to
the single-employer program, the
multiemployer program, and the special
financial assistance program.
PBGC has identified these
amendments as part of its ongoing
review of its regulations to ensure that
PBGC provides clear and helpful
guidance and modernizes outdated
methodologies.
Purpose of the Assumptions Described
in the Benefits Valuation Regulation
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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 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
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).
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are measured consistently 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
assumption to determine withdrawal
liability for a prescribed period.
Additionally, plan sponsors are required
to use these assumptions for certain
purposes (e.g., reporting benefit
liabilities in filings required under
PBGC’s regulation on Annual Financial
and Actuarial Information Reporting (29
CFR part 4010) or determining certain
amounts to transfer to PBGC’s Missing
Participants Program on behalf of a
missing participant of a terminating
defined benefit plan under PBGC’s
regulation on Missing Participants (29
CFR part 4050)) and may use them for
other purposes (e.g., to ensure that plan
spinoffs comply with section 414 (l) of
the Internal Revenue Code (the Code)).3
Proposed Rule
On August 18, 2023, PBGC published
a proposed rule 4 to update the benefit
valuation regulation’s interest,
mortality, and expense assumptions.
PBGC provided a 60-day comment
period and received five comment
letters. Commenters were generally
supportive of PBGC’s efforts to make its
assumptions more modern and
transparent, and made specific
suggestions. A discussion of the
provisions of the final rule, the
comment letters, and PBGC’s responses
follows. Except for conforming changes
and some technical and editorial
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.
4 88 FR 56563 (Aug. 18, 2023).
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changes, the final rule is substantially
the same as the proposed rule.
Interest Assumption
Current Assumption
The benefits valuation regulation
contains an interest assumption for
determining the present value of future
payments (4044 interest assumption).
Since November 1993, the 4044 interest
assumption has been expressed in a
two-component structure known as
‘‘select and ultimate’’ in which one
interest factor is assumed to be in effect
for the first 20 or 25 years from the
valuation date, and the other interest
factor is assumed to be in effect
thereafter.
To align valuations with the group
annuity market, the American Council
of Life Insurers conducts periodic
surveys 5 of private-sector 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.6
PBGC publishes the interest
assumption in appendix B to part 4044
each quarter, for use in the subsequent
quarter. Therefore, the interest rates
used have not been rates observed on
the valuation date.
Reasons for Change
This final rule improves upon current
methodology in several ways. Actuarial
practice, with the help of technology,
has moved toward a bond yield curve
approach where future benefits are
discounted to the valuation date using
yields for which the time to maturity
equates to the length of the discounting
period. By associating an interest rate
with each specific benefit payment time
horizon, using a yield curve for
discounting better represents the
present value of future benefits. As a
result, the select and ultimate structure
of PBGC’s interest assumption under the
benefits valuation regulation has
become increasingly obsolete. A yield
curve approach also better reflects the
term structure of the fixed income
investments that underlie the price of
group annuities.
5Survey approved under OMB Control Number
1212–0030 (expires July 31, 2024).
6 See 41 FR 48484, 48485 (Nov. 3, 1976). ‘‘PBGC’s
interest assumptions have been designed so that,
when coupled with the mortality assumptions
found in the regulation, the benefit values obtained
. . . are in line with the industry annuity prices.’’
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In addition, the rule improves the
methodology by eliminating the lag
between when data used to set PBGC’s
interest assumption are observed and
the interest rate environment on the
valuation date. Eliminating the lag is
desirable because the interest rate
environment on the valuation date also
impacts the value of the assets that
pension funds invest in, including fixed
income investments, equity, and real
estate.
Lastly, the final rule increases
transparency with respect to the process
for setting the 4044 interest assumption.
The public availability of month-end
bond yield data now makes it possible
to adopt a methodology that would
increase transparency and, in almost all
situations, eliminate the lag entirely.7
For these reasons, PBGC is structuring
the 4044 interest assumption as a yield
curve, more closely replicating the
actual yields on the investments backing
group annuities, and better reflecting
today’s actuarial practice. In addition,
this final rule incorporates publicly
available bond yield data into the
methodology used to determine the
4044 interest assumption to increase
transparency and bases the interest
assumption on bond yields as of the
valuation date, or as close as practical
for valuations that are not as of a monthend.
Updated 4044 Interest Assumption
The 4044 interest assumption in the
final rule is the same as in the proposed
rule. Commenters generally supported
the transparency of the proposed
method for determining the interest
assumption and how it better reduces
lag from the date data is observed to the
valuation date. Some commenters made
suggestions which are discussed in this
section. The new interest assumption is
based on a blend of two publicly
available yield curves (the ‘‘blended
market yield curve’’) and is adjusted to
the extent necessary so that the resulting
liabilities align with group annuity
prices. As with the proposed rule, the
final rule’s interest assumption consists
of interest rates at maturity points from
0.5 to 30.0 years in half-year increments.
The interest rate for the maturity point
at year 30.0 is used to discount benefits
expected to be paid more than 30 years
after the valuation date. One commenter
suggested that PBGC use a ‘‘uniform’’
interest rate rather than a yield curve.
PBGC did not adopt this suggestion,
because, as discussed in more detail
earlier in the preamble, actuarial
7 In the uncommon situation of a mid-month
valuation date, the lag is reduced significantly, but
not completely eliminated.
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practice has moved toward a yield curve
approach that better represents the
present value of future benefits.
The process used to determine the
interest assumption follows. First, the
blended market yield curve is
determined in three steps:
• Step 1—Obtain rates for maturities
0.5 through 30.0 on Treasury securities
from the Department of the Treasury
(Treasury Department) Nominal Coupon
Issues Spot Rates, End of Month yield
curve (TNC Yield Curve).8
• Step 2—Obtain rates on corporate
bonds for maturities 0.5 through 30.0
from the Treasury Department’s High
Quality Market Corporate Bond Yield
Curve Spot Rates, End of Month yield
curve (HQM Bond Yield Curve).9
• Step 3—Combine the rates obtained
in steps 1 and 2 weighting each
corporate bond rate at two-thirds and
each Treasury rate at one-third.10
Rather than weighting corporate
bonds at two-thirds and Treasury rates
at one-third for all maturities, one
commenter suggested using a ‘‘gliding’’
weight that varies over different
maturities. The goal would be to reflect
the fact that insurers typically have
different pricing assumptions for
immediate and deferred annuities
(because of the higher risk associated
with deferred annuities than immediate
annuities). PBGC did not adopt this
suggestion because a gliding weight
would introduce substantial
unnecessary complexity to the
calculation of the blended market yield
curve, and the effect described by the
commenter is accounted for in the
adjustment spreads discussed later in
this section.
The yield curves used to develop the
blended market yield curve are based on
yields as of the end of each month. In
PBGC’s experience, most calculations
that use 4044 assumptions use valuation
dates as of the last day of a month, and
for such calculations, the applicable
blended market yield curve will be
determined using the published TNC
and HQM curves as of the valuation
date. To accommodate other valuation
dates, the final rule includes a
‘‘lookback’’ rule for valuation dates that
are not as of the end of the month.
8 Available at https://home.treasury.gov/data/
treasury-coupon-issues-and-corporate-bond-yieldcurves/treasury-coupon-issues.
9 Available at https://home.treasury.gov/data/
treasury-coupon-issues-and-corporate-bond-yieldcurve/corporate-bond-yield-curve.
10 The rule primarily uses yields on investmentgrade 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.
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48293
Under the lookback rule, if the valuation
date is not on the last day of a month,
the applicable blended market yield
curve as of the last day of the prior
month will be used. For example, if the
valuation date is February 15, 2023, the
applicable blended market yield curve
is the blended market yield curve as of
January 31, 2023.
PBGC considered other possible rules
for determining the blended market
yield curve for valuation dates that are
not the last day of the month, so that its
interest assumption might better reflect
the bond market on the actual valuation
date (e.g., a blend of the current and
prior month’s blended market yield
curves, a requirement to use the blended
market yield curve for the end of the
month closest to the valuation date).
However, because most plan
terminations occur on the last day of a
month, PBGC concluded that the
benefits did not outweigh the additional
complexity. PBGC requested comments
on the application of the proposed
interest assumption to valuation dates
other than the last day of the month.
One commenter responded that the
proposed methodology is a significant
improvement over current methodology.
As noted earlier in this preamble,
once the blended market yield curve is
determined, it will be adjusted so that
the resulting present values align with
group annuity prices. The term ‘‘4044
yield curve’’ is used to describe the
blended market yield curve after
reflecting such adjustments. The
adjustments, or ‘‘spreads,’’ will be in the
format of a curve (i.e., a list of spreads
through year 30, each of which applies
to a specific point in the blended market
yield curve). PBGC will determine and
publish the spreads quarterly based on
survey data on pricing of private-sector
group annuities. More specifically, for
each survey date, PBGC will first
determine a yield curve that best fits
data from those surveys, given an
assumed mortality table. Next, PBGC
will calculate the differences between
this curve and the blended market yield
curve as of the survey date. To smooth
random variation and seasonality effects
before publishing, PBGC will average
those differences with the differences
calculated from prior survey dates to
determine the spreads that are used to
adjust the applicable blended market
yield curve. PBGC will publish the
spreads (by amending its regulation)
that are used for adjusting the blended
market curve shortly before each quarter
begins.
PBGC received a comment suggesting
that PBGC adjust its spreads to
compensate for a recently proposed
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change 11 to the way the Treasury
Department determines its bond yields
to avoid a discontinuity in PBGC’s rates
if the Treasury proposal is finalized.
Because the Treasury Department has
since finalized 12 its proposal, there will
be no discontinuity in PBGC’s rates. For
that reason, there is no need to modify
PBGC’s methodology to accommodate
the changes.
Another commenter made suggestions
for increasing the transparency of the
process for determining spreads such as
adding detail to the white paper and
PBGC’s website. PBGC is pleased to
provide the white paper along with this
final regulation to substantially enhance
the transparency of how PBGC
determines the benefit valuation
regulation’s interest assumption. PBGC
will continue to strive to enhance the
transparency of this process.
The spreads for any quarter are used
to adjust the month-end blended market
yield curves in that quarter. For
example, the first quarter spreads are
used to adjust the blended market yield
curves as of January 31, February 28,13
and March 31. Because of the lookback
rule, the first quarter spreads also apply
to valuation dates occurring April 1
through April 29 because for such dates,
the applicable blended market yield
curve is the curve as of March 31.
(A)
Dec. 31, 2023,
nominal TNC
Treasury yield
curve
(%)
Maturity
(B)
Dec. 31, 2023,
HQM bond
yield curve
(%)
Similarly, the fourth quarter spreads are
used to adjust the blended market yield
curves as of October 31, November 30,
and December 31. Because of the
lookback rule, the fourth quarter spreads
also apply to valuation dates occurring
January 1 through January 30, which use
the blended market yield curve rate
determined as of December 31 from the
prior year.
The following example illustrates
how the 4044 yield curve would have
been developed for a valuation date on
December 31, 2023, had the rule been in
effect at that time and assuming the
fourth quarter spreads for 2023 were as
shown in column D below:
(C)
Blended
market yield
curve
(%)
(D)
Fourth
quarter 2023
spreads
(%)
⁄ (A) + 2⁄3 (B)
(C) + (D)
12
0.5 ................................................
1.0 ................................................
1.5 ................................................
2.0 ................................................
28.5 ..............................................
29.0 ..............................................
29.5 ..............................................
30.0 ..............................................
5.17
4.78
4.46
4.21
4.04
4.04
4.04
4.04
5.29
5.12
4.97
4.84
5.10
5.10
5.10
5.10
(E)
Applicable
4044 yield
curve *
(%)
5.25
5.01
4.80
4.63
4.75
4.75
4.75
4.75
0.36
0.36
0.36
0.36
0.36
0.36
0.37
0.37
5.61
5.37
5.16
4.99
5.11
5.11
5.12
** 5.12
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* Because of the lookback rule, valuation dates from January 1, 2024, through January 30, 2024, would also use the December 31, 2023,
blended market yield curve which means they would also use the fourth quarter spreads. Thus, the 4044 yield curve in column (E) would also be
used for those valuation dates.
** The 5.12% rate would be used for benefits expected to be paid 30 or more years after the valuation date.
Because the yield curves used to
develop the blended market yield curve
are not published until a week or two
after the end of the month, in most
situations (e.g., month-end valuation
dates), the 4044 yield curve will not be
available in advance of the valuation
date. Given the typical situations where
practitioners use 4044 interest
assumptions (e.g., Annual Financial and
Actuarial Information Reporting (4010
reporting)), PBGC does not anticipate
that this will create a timing problem,
and no commenter expressed timing
concerns.
This final rule amends the benefits
valuation regulation to prescribe the use
of the 4044 yield curve and the process
to determine it. It also amends part 4044
to replace the select and ultimate
interest factor table with a table showing
spread adjustments for blended market
yield curves. For each quarter, the table
will show 60 spread adjustments.
Because the spread adjustments for the
third quarter of 2024 (the quarter for
which this rule is first applicable) will
not be determinable until shortly before
11 88
FR 41047 (June 23, 2023).
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the third quarter, those spreads are not
provided in this final rule. PBGC will
issue the third quarter 2024 spread
adjustments when they are available.
Given this methodology, practitioners
will be able to determine the 4044 yield
curve as of the end of any month as
soon as the Treasury Department
publishes the two yield curves
underlying the development of the
blended market yield curve. (The
applicable spreads will be specified in
the regulation before the blended market
yield curves are available.) In addition,
to reduce administrative burden on
practitioners, PBGC will post the 4044
yield curve on its website at
www.pbgc.gov each month shortly after
its underlying data become available. In
addition to posting the 4044 yield curve,
one commenter suggested that PBGC
should post a single interest rate
‘‘index’’ to provide a readily comparable
measure of annuity market pricing and
to assist multiemployer plans that
receive SFA in determining withdrawal
liability payment schedules. PBGC did
not adopt this suggestion because cash
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flows vary from plan to plan, and no
single index rate would be
representative of all plans. PBGC agrees
with the commenter that actuaries for
plans that receive SFA will be able to
determine withdrawal liability payment
schedules using the 4044 yield curve
and notes that actuaries will be able to
set up a spreadsheet to do the
calculation without much difficulty. To
illustrate how the calculation may be
done, before the effective date of the
final rule, PBGC will post an example
on its website at www.pbgc.gov.
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
13 February
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are disabled under a plan provision that
does not require eligibility for Social
Security disability benefits (non-Social
Security disabled); and tables for male
and female participants who are
disabled under a plan provision
requiring eligibility for Social Security
disability benefits (Social Security
disabled).
For healthy lives, the mortality tables
are based on the GAM–94 Basic Table
with mortality improvements projected
forward to the year of valuation plus 10
years using the mortality improvement
Scale AA, a static mortality
improvement projection. A static
mortality projection ‘‘project[s] the [base
mortality] table for a specified number
of years and use[s] the resulting table
without further projection.’’ 14 For
Social Security disabled participants,
the regulation uses the Mortality Tables
for Disabilities Occurring in Plan Years
Beginning After December 31, 1994,
from IRS Rev. Rul. 96–7 (1996–1 C.B.
59). For non-Social Security disabled
participants, the benefits valuation
regulation uses the healthy lives
mortality rates for an individual 3 years
older (i.e., the table is set forward by 3
years). In addition, to prevent the rates
at older ages from exceeding the rates
for Social Security disabled
participants, the mortality rates for 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
valuation regulation, in the aggregate,
produce annuity valuations similar to
those produced by private-sector
insurers. To do so, PBGC attempts to
keep its ‘‘assumptions in line with those
of private-sector insurers, and to modify
its mortality assumptions whenever it is
necessary to do so to achieve
consistency with the private insurer
assumptions.’’ 15 PBGC determined that
it could better achieve consistency with
insurers’ mortality assumptions by
updating the mortality assumptions
under the benefits valuation regulation.
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
14 70
FR 72205 at 72206 (Dec. 2, 2005).
15 See 70 FR 72205, 72206 (Dec. 2, 2005) (quoting
58 FR 5128, 5129 (Jan. 19, 1993)).
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in mortality rates. In addition to
achieving better consistency with
insurers’ assumptions, over the past
decade, generational mortality tables
have become widely accepted as best
practice in the actuarial community.
With such projections, actuaries can
‘‘theoretically more accurately replicate
the anticipated pattern of improvement
in mortality rates.’’ 16
PBGC’s review also indicates that
insurers typically use more recent base
mortality tables than the GAM–94 Basic
Table. Similarly, it has also become
clear that the industry recognizes and
distinguishes between mortality for
annuitants (i.e., individuals receiving
benefits) and non-annuitants (i.e.,
terminated vested and active
participants).
IRS and Treasury Rulemaking
The Internal Revenue Service (IRS)
and the Treasury Department reached
the same conclusions regarding trends
in mortality assumptions. On April 28,
2022, they issued a proposed rule (IRS
proposal) 17 to amend their mortality
assumptions regulations under section
430(h)(3) of the Code. PBGC derived its
preamble discussion and operative
regulatory provisions for its healthy
lives mortality assumptions from the
IRS proposal. On October 20, 2023, IRS
and Treasury finalized their
regulation.18
Updated Healthy Lives Mortality
Assumption—Base Mortality Tables
This final rule adopts the proposed
healthy lives base mortality tables. The
tables are derived from the tables set
forth in the Pri-2012 Private Retirement
Plans Mortality Tables Report published
by the Retirement Plan Experience
Committee (RPEC) of the Society of
Actuaries (SOA) in 2019 (Pri-2012
Report).19 PBGC agrees with IRS and the
Treasury Department that the Pri-2012
Report is the best available study of the
actual mortality experience of pension
plan participants (other than disabled
individuals).20
The tables in the Pri-2012 Report are
gender-distinct and provide separate
non-annuitant and annuitant mortality
rates.21 Consistent with PBGC’s
16 See Pension Comm, American Academy of
Actuaries, Selecting and Documenting Mortality
Assumptions for Pensions (2015), https://
actuary.org/files/Mortality_PN_060515_0.pdf.
17 87 FR 25161 (April 28, 2022).
18 88 FR 72357 (Oct. 20, 2023).
19 This report is available at https://www.soa.org/
49c106/globalassets/assets/files/resources/
experience-studies/2019/pri-2012-mortality-tablesreport.pdf.
20 87 FR 25161, 25163.
21 The Pri-2012 Report refers to non-annuitant
rates as ‘‘employee’’ rates. However, because those
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48295
proposed rule, this final rule does not
provide separate tables for annuitants
who are retirees and annuitants who are
contingent beneficiaries. Rather, it
provides annuitant mortality tables that
combine the mortality experience of
retirees and contingent beneficiaries.
The annuitant mortality tables are used
to determine the present value of
benefits for an annuitant. For a nonannuitant, the non-annuitant mortality
tables are used for the periods before the
participant is projected to commence
receiving benefits, and the annuitant
mortality tables are used for later
periods. For a beneficiary of a
participant, the annuitant mortality
tables apply for the period beginning
with each assumed commencement of
benefits for the participant. If the
participant has died (or to the extent the
participant is assumed to die before
commencing benefits), the annuitant
mortality tables apply for the
beneficiary for the period beginning
with each assumed commencement of
benefits for the beneficiary.
These base tables generally have the
same mortality rates as the employee
and non-disabled annuitant mortality
rates that were released by RPEC in
connection with the Pri-2012 Report.
However, the base tables provided in
this rule also include rates for certain
situations that were not included in the
base tables in the Pri-2012 Report (i.e.
non-annuitant mortality rates for ages
below age 18 and above age 80 and
annuitant mortality rates for ages below
age 50). The preamble to the IRS
proposal describes the methodology that
was used to develop those additional
rates.22
Several commenters made suggestions
for the regulation’s base mortality table.
One commenter recommended multifactor mortality tables because,
according to the commenter, they better
match insurer practice and they more
precisely predict mortality by using
multiple data fields to capture the
diversity of pension plan mortality by
analyzing the characteristics of the
individuals in those pension plans.
Multi-factor mortality is an evolving
area, which PBGC intends to study and
monitor as PBGC continues to review
ways to improve the regulation’s
prescribed assumptions in the future.
Another commenter suggested
prescribing use of the Society of
Actuaries’ RP–2014 Mortality Table
instead of Pri-2012. This final rule does
not adopt RP–2014 because, as
rates also apply to former employees prior to benefit
commencement, for purposes of this final rule, the
term ‘‘non-annuitant’’ is used.
22 See 87 FR 25161, 25163.
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discussed earlier in this preamble,
PBGC believes (and one commenter
agreed) that Pri-2012 is the best
available study of the actual mortality
experience of pension plan participants.
Pri-2012 is also based on more recent
mortality experience than RP–2014
(which is based on an experience study
for the years 2004–2008).
PBGC received a few comments about
the feasibility of using the 4044 interest
assumption with a different mortality
assumption for calculations other than
those for which the use of both
assumptions is required. For example,
one commenter noted that because of
the way the 4044 yield curve will be
determined (i.e., using a current and
representative mortality assumption to
determine the spreads), PBGC’s
discount rate spot yield curve will stand
on its own as a reasonable assumption
for multiple purposes and suggested
that for certain purposes, such as
multiemployer withdrawal liability, the
use of a ‘‘blue collar’’ mortality table
‘‘may better reflect the underlying
demographics of the pension plan being
valued.’’
While it is true that, when used
together, the 4044 interest and mortality
assumptions are designed to result in
liabilities that are similar to what a
private-sector insurance company
would charge for a group annuity
contract, PBGC agrees that it may be
reasonable to use the interest
assumption with a different mortality
assumption for situations where the use
of both assumptions is not required
(assuming the mortality assumption
reflects plan demographics).
With respect to the comment on
withdrawal liability, in general, PBGC
does not mandate use of the 4044
mortality assumption to determine
withdrawal liability. However, as
discussed earlier in this preamble, both
the prescribed interest and mortality
assumptions must be used to determine
reallocation liability in the event of a
mass withdrawal. In consideration of
the comment, PBGC intends to review
the assumptions and methods required
for such calculations for possible
inclusion in a future rulemaking project.
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Updated Healthy Lives Mortality
Assumption—Mortality Improvements
The base tables described above have
a base year of 2012 (the central year of
the experience study used to develop
the mortality tables in the Pri-2012
Report). Like the proposed rule, the base
tables are used to develop the mortality
tables for future years using Scale MP–
2021 Rates (the mortality improvement
scale in the Mortality Improvement
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Scale MP–2021 Report,23 which was
published by the RPEC in October
2021). That mortality improvement
scale was developed using the same
underlying methodology used to
develop RPEC’s earlier mortality
improvement scales but reflects
historical population data through 2019
and the change to the RPEC-selected
assumptions for the long-term rate of
mortality improvement that was first
incorporated in the Mortality
Improvement Scale MP–2020 Report.
Although IRS and Treasury also
proposed using Scale MP–2021 for
future years, their final rule provides for
a slightly different improvement
projection. Because PBGC seeks to
match insurance company assumptions
and has no indication that changes
similar to those finalized by IRS and
Treasury would more closely match
insurance company assumptions, PBGC
is finalizing its mortality improvement
scale as proposed. PBGC will continue
to monitor and consider new mortality
trend data, including updated mortality
improvement scales issued by RPEC,
and intends to amend its regulation to
account for new data when appropriate.
The updated healthy lives mortality
assumptions closely align with the
mortality assumptions used by privatesector insurers. The software needed to
use generational mortality tables is
widely used and is often used for other
business needs such as financial
accounting. Using modern actuarial
software, the new assumptions should
be no more difficult to apply.
Updated Disabled Lives Mortality
Assumption
As with the proposed rule, this final
rule provides that the healthy lives
mortality assumptions (base table and
improvement projections) be used for
disabled individuals that are not eligible
for Social Security disability benefits.
For individuals that are eligible for
Social Security disability benefits, as
with the proposed rule, the final rule
updates the mortality assumptions to
reflect more recent mortality experience
by using tables published in the Social
Security Disability Insurance Program
Disabled Worker Experience Actuarial
Study 125, a study providing ‘‘extensive
information on recent actual [Social
Security Disability Insurance] disabled
worker experience.’’ 24 The mortality
23 Report available at https://www.soa.org/
4a9de4/globalassets/assets/files/resources/
experience-studies/2021/2021-mp-scale-report.pdf.
24 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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rates for Social Security disabled
participants comprise two tables: Table
12 for Social Security disabled
participants age 75 and younger, and
Table 7C for Social Security disabled
participants age 76 and older. As with
the current mortality assumptions for
individuals that are eligible for Social
Security disability benefits, the updated
assumptions do not include a mortality
improvement scale.
For the reasons discussed earlier, this
final rule amends PBGC’s benefits
valuation regulation to replace mortality
tables for healthy lives with mortality
tables from the Pri-2012 Report. It also
replaces tables relating to mortality
improvement for healthy lives with
references to generational mortality
improvement projections from the
Mortality Improvement Scale MP–2021
and prescribes their use. It further
amends PBGC’s benefits valuation
regulation to replace tables relating to
mortality for Social Security disabled
participants with tables derived from
Social Security Actuarial Study 125.
Finally, it amends the regulation so that
the provisions specifying assumptions
for non-Social Security disabled lives
refer to the healthy lives mortality
assumptions.
Expense Assumption
Current Assumptions
Certain administrative expenses are
incurred by insurers in connection with
the payment of benefits. These expenses
are for such things as establishing plan
files, reviewing plan provisions to
determine benefit entitlements, setting
up and updating records, processing
pension applications, and remitting
benefit payments. Insurers use
assumptions about these expenses to
price annuities. To account for this
component of private-sector annuity
pricing, the benefits valuation
regulation specifies expense
assumptions.25
Currently, these expense assumptions
are based in part on the total present
value of plan benefits. They are
intended to recognize that the
computation of benefit valuations
entails certain expenses that are roughly
proportional to the number of
participants in a plan, and that private
insurers’ expenses, expressed as a
percentage of liabilities, are somewhat
lower for larger plans. For the expenses
proportional to the number of plan
participants, the benefits valuation
regulation assumes a cost of $200 per
participant. In addition, a percentage of
25 Expense assumptions are sometimes described
as loading assumptions or expense loading
assumptions.
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liabilities is added to the assumed
expense amount for all plans in a way
that accounts for the efficiency
advantage of larger plans. That
percentage is 5 percent of liabilities up
to $200,000, plus a smaller, variable
percentage of liabilities above $200,000.
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Reasons for Change and 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, as with the
proposed rule, this final rule simplifies
the expense assumptions. This rule sets
the expense load assumption at $400
per participant for the first 100
participants and $250 for each
participant over 100. PBGC concluded
these amounts were reasonable based on
a review of per-participant charges
included in group annuity contracts for
terminating plans provided to PBGC as
part of the standard termination process.
These amounts will be updated for
inflation using the Consumer Price
Index (CPI–U) each year. The rule
amends PBGC’s benefits valuation
regulation to prescribe these updated
expense assumptions.
PBGC received two comments on the
proposed expense assumptions. One
commenter suggested breaking down
the expense assumptions between
deferred and immediate annuities
because expenses on deferred annuities
are higher than on immediate annuities.
Though PBGC agrees that deferred and
immediate annuities have different
expense levels, because expenses are
such a small component of valuations,
capturing this difference is not worth
complicating the assumption. Another
commenter said PBGC should prescribe
a lower expense assumption, yielding
expenses between 1.5 percent and 1.8
percent. The prescribed expense
assumption is a dollar amount per
participant and will generally result in
assumed expenses below 1.5 percent of
liability.
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Conforming Changes to the Missing
Participants Regulation
Interest Assumption
PBGC’s Missing Participants
regulation (29 CFR part 4050) provides
that the interest assumption used to
determine certain amounts to be
transferred on behalf of a missing
participant from a terminating defined
benefit plan 26 to PBGC’s Missing
Participants Program is the interest
assumption under PBGC’s benefits
valuation regulation applicable to
valuations occurring in January of the
calendar year in which the benefit
determination date occurs.27 Under the
current benefits valuation regulation,
the same interest assumption is used for
any valuation date in January. However,
under this final rule, two different
interest assumptions apply to valuation
dates in January (i.e., the 4044 yield
curve as of December 31 applies for
valuation dates occurring January 1
through January 30 and the 4044 yield
curve as of January 31 applies for a
January 31 valuation date). If the
Missing Participants regulation were left
unchanged, it would be unclear which
4044 yield curve should be used for
benefit determination dates occurring in
a particular calendar year. Thus, like the
proposed rule, this final rule amends
the Missing Participants regulation to
prescribe the use of the 4044 yield curve
applicable to valuations occurring on
December 31 of the year preceding the
calendar year in which the benefit
determination date occurs. However,
there is no 4044 yield curve applicable
to valuations occurring on December 31,
2023. Consequentially, for benefit
determination dates to which this rule
applies in 2024, a transition rule
prescribes the use of the 4044 yield
curve applicable to valuations occurring
on July 31, 2024.
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
26 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.
27 See definition of ‘‘PBGC missing participants
assumptions’’ in 29 CFR 4050.102, 4050.302, and
4050.402.
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48297
Participants Program. Doing the
required calculation based on the
current mortality assumption is
relatively straightforward.
However, because this final rule
provides that future mortality
improvements will be reflected using
generational mortality, if the Missing
Participants regulation were left
unchanged, practitioners would need to
create, and use, a unisex version of a
generational mortality table, which
would be somewhat cumbersome and
complicated. To alleviate the
complication, as with the proposed rule,
PBGC is amending the Missing
Participants regulation to provide that a
unisex, static version of the mortality
table be used for this purpose. More
specifically, PBGC is amending the
portion of the definition of ‘‘PBGC
missing participants assumptions’’
related to mortality to use a 50/50 blend
of static male and female mortality
combined tables reflecting nonannuitant and annuitant mortality rates.
The proposed rule stated that these male
and female tables would be identical to
the static mortality tables proposed by
IRS and Treasury as an alternative for
plans with 500 or fewer participants.
Though this final rule does not change
the methodology for determining the
missing participants static mortality
tables, the tables will not be identical to
the IRS and Treasury small plan tables
because of changes to improvement
projection that IRS and Treasury
finalized. This final rule includes the
static mortality table for 2024 valuations
to which this rule applies. PBGC
intends to amend the regulation
annually to provide static mortality
tables reflecting mortality
improvements.
Other Housekeeping Changes
As previously discussed, the interest,
mortality, and expense assumptions are
specified in appendixes to part 4044. To
better align with Office of the Federal
Register guidance, this final rule
specifies the updated assumptions
within the codified text of part 4044
instead. The expected retirement age
assumptions, which are also used in
present value of benefit calculations
under part 4044 (but not modified by
this rule), are moved to codified text as
well. This final rule retains the current
interest assumptions in appendix B for
reference, but the other three
appendixes are removed. The final rule
updates cross-references to the
appendixes throughout PBGC’s
regulations so that they refer to the
codified text. Compared to the proposed
rule, the final rule updates additional
cross references in PBGC’s regulations
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to reflect the new location of the
expected retirement age assumptions.
Applicability and Transition
One commenter suggested providing a
transition period for the regulated
community to adapt to the new format
of the assumptions and that PBGC
continue publishing select and ultimate
interest rates for a period of time for
third-party use. The amendments apply
to calculations where the valuation date
is on or after July 31, 2024, giving
adequate time to those that need it.
However, PBGC will not continue to
publish select and ultimate rates. As
described earlier in the preamble, the
select and ultimate methodology is
outmoded.
Incorporation by Reference
Section 4044.53(c)(1)(iii) of the final
regulation provides that the mortality
improvement rates used to construct the
generational mortality tables to be used
are the Scale MP–2021 Rates which are
described in the Mortality Improvement
Scale MP–2021 Report. The Office of the
Federal Register (OFR) has regulations
concerning incorporation by reference. 1
CFR part 51. These regulations require
that agencies must discuss in the
preamble to a rule or proposed rule the
way in which materials that the agency
incorporates by reference are reasonably
available to interested persons, and how
interested parties can obtain the
materials. 1 CFR 51.5(b).
The Scale MP–2021 Rates and the
Mortality Improvement Scale MP–2021
Report are described in this preamble
under the heading ‘‘Updated healthy
lives mortality assumption—mortality
improvements’’ in the ‘‘Mortality
Assumption’’ section of this preamble.
The Mortality Improvement Scale MP–
2021 Report was issued by the
Retirement Plans Experience Committee
of the Society of Actuaries in October of
2021 and is available to the public for
free viewing online on the Society of
Actuary’s website at 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.
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Executive Orders 12866 and 13563
The Office of Management and Budget
(OMB) has determined that this rule is
not a ‘‘significant regulatory action’’
under Executive Order 12866.
Accordingly, OMB has not reviewed the
final rule under Executive Order 12866.
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Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity).
Although this is not a significant
regulatory action under Executive Order
12866, PBGC has examined the
economic implications of this final rule
and has concluded that the rule’s
changes will have a minimal impact on
liabilities determined under PBGC’s
regulations.
The updates to the assumptions under
the benefits valuation regulation will,
on average, produce benefit liabilities
that are very close to the valuations
produced by the current assumptions.
The results for any particular benefit
valuation, however, could be different
as a result of adopting an interest rate
methodology based on market rates (i.e.,
eliminating the lag between when data
used to set the interest assumption are
observed and the interest rate
environment on the valuation date).
The impact on liabilities resulting
from eliminating the above-noted lag
will not be biased in favor of higher or
lower benefit liabilities. Also, the
impact should be fairly small (i.e.,
within a few percentage points) unless
market rates on the valuation date are
significantly different from what PBGC
would have used to determine the 4044
interest assumption absent this change
(i.e., had the lag not been eliminated).
PBGC’s analysis indicates that,
ignoring the impact of the interest rate
timing difference described in the prior
paragraph, the impact will also be
relatively small in situations where the
updated 4044 interest assumption is
used, but not the updated 4044
mortality assumption. For example, this
might be the case with respect to certain
withdrawal liability calculations. For
plans using the 4044 interest
assumption but not the 4044 mortality
assumption to determine withdrawal
liability, the updated assumptions will
generally result in lower benefit
liabilities, but liability measurements
should be within a few percentage
points of liability measurements using
the current methodology. Thus, the
change will result in only a minor
change in withdrawal liability.
The changes to generational mortality
tables and to a yield-curve based
interest assumption impose a small and
not significant administrative burden on
plans and practitioners that do
calculations using the assumptions.
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Section 6 of Executive Order 13563
requires agencies to rethink existing
regulations by periodically reviewing
their regulatory programs for rules that
‘‘may be outmoded, ineffective,
insufficient, or excessively
burdensome.’’ These rules should be
modified, streamlined, expanded, or
repealed as appropriate. PBGC is
updating certain outmoded assumptions
in its benefits valuation regulation
consistent with the principles for review
under E.O. 13563.
Regulatory Flexibility Act
The Regulatory Flexibility Act 28
imposes certain requirements respecting
rules that are subject to the notice-andcomment requirements of section 553(b)
of the Administrative Procedure Act, or
any other law,29 and that are likely to
have a significant economic impact on
a substantial number of small entities.
Unless an agency certifies that a final
rule is not likely to have a significant
economic impact on a substantial
number of small entities, section 604 of
the Regulatory Flexibility Act requires
that the agency present a final
regulatory flexibility analysis at the time
of the publication of the final rule
describing the impact of the rule on
small entities and seek public comment
on such impact. Small entities include
small businesses, organizations, and
governmental jurisdictions.30
For purposes of the Regulatory
Flexibility Act requirements with
respect to this final rule, PBGC
considers a small entity to be a plan
with fewer than 100 participants.31 This
is substantially the same criterion PBGC
uses in other regulations 32 and is
consistent with certain requirements in
title I of ERISA 33 and the Code,34 as
well as the definition of a small entity
that PBGC and the Department of Labor
28 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).
30 The applicable definitions of ‘‘small business,’’
‘‘small organization,’’ and ‘‘small governmental
jurisdiction’’ are found in section 601 of the
Regulatory Flexibility Act. See 5 U.S.C. 601.
31 PBGC consulted with the Small Business
Administration’s Office of Advocacy before making
this determination. Memorandum received from the
U.S. Small Business Administration, Office of
Advocacy on March 9, 2021.
32 See, e.g., special rules for small plans under
part 4007 (Payment of Premiums).
33 See, e.g., section 104(a)(2) of ERISA, which
permits the Secretary of Labor to prescribe
simplified annual reports for pension plans that
cover fewer than 100 participants.
34 See, e.g., section 430(g)(2)(B) of the Code,
which permits plans with 100 or fewer participants
to use valuation dates other than the first day of the
plan year.
29 The
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(DOL) have used for purposes of the
Regulatory Flexibility Act.35
Further, while some large employers
operate small plans along with larger
ones, in general, most small plans are
maintained by small employers. Thus,
PBGC believes that assessing the impact
of the final rule on small plans is an
appropriate substitute for evaluating the
effect on small entities. The definition
of small entity considered appropriate
for this purpose differs, however, from
a definition of small business based on
size standards promulgated by the Small
Business Administration 36 under the
Small Business Act. PBGC therefore
requested comments on the
appropriateness of the size standard
used in evaluating the impact of the
amendments in the final rule on small
entities. PBGC received no comments on
this point.
Based on its definition of small entity,
PBGC certifies under Section 605(b) of
the Regulatory Flexibility Act (5 U.S.C.
601 et seq.) that the amendments in this
final rule will not have a significant
economic impact on a substantial
number of small entities. As explained
earlier in this preamble, the
assumptions will continue to produce
valuations that align with group annuity
prices. Because of this, PBGC does not
expect the assumptions to have a
significant economic impact on a
substantial number of entities of any
size. Similarly, because technology
improvements allow even small plans
(and their service providers) to apply
the more complicated interest and
mortality assumptions of this rule
without additional administrative
burden, this final rule will not increase
administrative costs on these entities.
Accordingly, as provided in Section 605
of the Regulatory Flexibility Act,
sections 603 and 604 do not apply.
29 CFR Part 4022
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4041A
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
lotter on DSK11XQN23PROD with RULES1
Jkt 262001
*
*
Interest ..........
*
Decrements
• Retirement
*
29 CFR Part 4044
Employee benefit plans, Incorporation
by reference, Pension insurance,
Pensions.
29 CFR Part 4050
*
* * *
*
§ 4044.54.
*
*
*
*
*
*
§§ 4044.55 through
4044.58.
*
*
*
*
*
*
*
*
PART 4022—BENEFITS PAYABLE IN
TERMINATED SINGLE-EMPLOYER
PLANS
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
■
29 CFR Part 4262
Authority: 29 U.S.C. 1302, 1322, 1322b,
1341(c)(3)(D), and 1344.
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 amends 29 CFR parts
4001, 4010, 4022, 4041, 4041A, 4043,
4044, 4050, 4262, and 4281 as follows:
PART 4001—TERMINOLOGY
1. The authority citation for part 4001
continues to read as follows:
■
Authority: 29 U.S.C. 1301, 1302(b)(3).
[Amended]
PART 4010—BENEFITS PAYABLE IN
TERMINATED SINGLE-EMPLOYER
PLANS
3. The authority citation for part 4010
continues to read as follows:
■
16:29 Jun 05, 2024
Assumptions:
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4001
VerDate Sep<11>2014
*
*
2. Amend § 4001.2 in the definition of
Expected retirement age (XRA) by
removing ‘‘§§ 4044.55 through 4044.57’’
and adding in its place ‘‘§§ 4044.55
through 4044.58’’.
35 See, e.g., PBGC’s proposed rule on Reportable
Events and Certain Other Notification
Requirements, 78 FR 20039, 20057 (April 3, 2013)
and DOL’s final rule on Procedures Governing the
Filing and Processing of Prohibited Transaction
Exemption Applications, 89 FR 4662, 4690 (Jan. 24,
2024).
36 See, 13 CFR 121.201.
Plan actuarial information.
*
*
(d) * * *
(2) * * *
(ii) * * *
TABLE 1 TO PARAGRAPH (d)(2)(ii)
29 CFR Part 4043
■
Pension insurance, Pensions,
Reporting and recordkeeping
requirements.
*
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
§ 4001.2
29 CFR Part 4010
§ 4010.8
29 CFR Part 4041
List of Subjects
Employee benefit plans, Pension
insurance, Pensions.
revising the entry for ‘‘Retirement’’ to
read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1310.
4. Amend § 4010.8 in table 1 to
paragraph (d)(2)(ii) under
‘‘Assumptions’’ by revising the entry for
‘‘Interest’’ and under ‘‘Decrements’’ by
■
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Fmt 4700
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5. The authority citation for part 4022
continues to read as follows:
6. Amend § 4022.63 in paragraphs (b)
introductory text by:
■ a. Removing the words ‘‘the PBGC’’
and adding in their place the word
‘‘PBGC’’ wherever they appear; and
■ b. Revising paragraph (b)(1).
The revision reads 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 4041—TERMINATION OF
SINGLE-EMPLOYER PLANS
7. The authority citation for part 4041
continues to read as follows:
■
Authority: 29 U.S.C. 1302(b)(3), 1341,
1344, 1350.
§ 4041.49
[Amended]
8. Amend § 4041.49 in paragraph
(b)(1)(ii) by removing ‘‘§§ 4044.41
■
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06JNR1
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through 4044.57’’ and adding in its
place ‘‘§§ 4044.41 through 4044.58’’.
■
18. Amend § 4044.52 by revising
paragraphs (a) and (d) to read as follows:
PART 4041A—TERMINATION OF
MULTIEMPLOYER PLANS
§ 4044.52
9. The authority citation for part
4041A continues to read as follows:
■
Authority: 29 U.S.C. 1302(b)(3), 1341a,
1431, 1441.
§ 4041A.43
[Amended]
10. Amend § 4041A.43 in paragraph
(b)(1) by removing ‘‘§§ 4044.41 through
4044.57’’ and adding in its place
‘‘§§ 4044.41 through 4044.58’’.
■
PART 4043—REPORTABLE EVENTS
AND CERTAIN OTHER NOTIFICATION
REQUIREMENTS
11. The authority citation for part
4043 continues to read as follows:
■
Authority: 29 U.S.C. 1083(k), 1302(b)(3),
1343.
§ 4043.65
[Amended]
12. Amend § 4043.65 in paragraphs
(b)(3) and (4) by removing ‘‘§§ 4044.51
through 4044.57’’ and adding in its
place ‘‘§§ 4044.51 through 4044.58’’
wherever it occurs.
■
PART 4044—ALLOCATION OF
ASSETS IN SINGLE-EMPLOYER
PLANS
13. The authority citation for part
4044 continues to read as follows:
■
Authority: 29 U.S.C. 1301(a), 1302(b)(3),
1341, 1344, 1362.
§ 4044.1
[Amended]
14. Amend § 4044.1 in the second
sentence of paragraph (b)(1) by
removing ‘‘Sections 4044.51 through
4044.57’’ and adding in its place
‘‘Sections 4044.51 through 4044.58’’ and
by removing ‘‘(§§ 4044.55 through
4044.57)’’ and adding in its place
‘‘(§§ 4044.55 through 4044.58)’’.
■
§ 4044.2
[Amended]
15. Amend § 4044.2 in paragraph (d)
introductory text by removing
‘‘§§ 4044.55 through 4044.57’’ and
adding in its place ‘‘§§ 4044.55 through
4044.58’’.
■
§ 4044.41
[Amended]
16. Amend § 4044.41 in paragraphs
(a)(1) and (2) by removing ‘‘§§ 4044.51
through 4044.57’’ and adding in its
place ‘‘§§ 4044.51 through 4044.58’’.
lotter on DSK11XQN23PROD with RULES1
■
§ 4044.51
[Amended]
17. Amend § 4044.51 in paragraph
(b)(2)(i) by removing ‘‘§§ 4044.55
through 4044.57’’ and adding in its
place ‘‘§§ 4044.55 through 4044.58’’.
■
VerDate Sep<11>2014
16:29 Jun 05, 2024
Jkt 262001
Valuation of benefits.
*
*
*
*
*
(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) Four hundred dollars ($400)
multiplied by the lesser of the
applicable participant count and 100,
and
(ii) Two hundred-fifty dollars ($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.
■ 19. Amend § 4044.53 by revising
paragraphs (c), (d), and (e) and adding
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
PO 00000
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Fmt 4700
Sfmt 4700
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.
(iii) Mortality improvement rates. The
mortality improvement rates are the
Scale MP–2021 Rates described in the
Mortality Improvement Scale MP–2021
Report.
(iv) Incorporation by reference. The
Mortality Improvement Scale MP–2021
Report, October 2021 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/federalregister/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 nonannuitant) 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.
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Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
(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 2024 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
48301
mortality improvement factor for age 67
males from 2012 to 2024. The
cumulative mortality improvement
factor for age 67 males for the period
from 2012 to 2024 is 0.9867, and the
mortality rate for 2024 for male
annuitants who are age 67 in that year
would be 0.01271, as shown in the
following table.
TABLE 1 TO PARAGRAPH (c)(3)(i)—EXAMPLE MORTALITY RATE CALCULATION
Calendar year
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
(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 2024,
the probability of survival for the
annuitant is based on the mortality rate
for a male annuitant who is age 67 in
2024 (0.01271), and the projected
mortality rate for a male annuitant who
will be age 68 in 2025 (0.01369), age 69
in 2026 (0.01478), and so on.
(4) Use of the tables—(i) Separate
tables for annuitants and nonannuitants. Separate mortality tables are
provided for use for annuitants and nonannuitants. The non-annuitant mortality
tables are applied to determine the
probability of survival for a nonannuitant for the period before the nonannuitant is projected to commence
receiving benefits. The annuitant
lotter on DSK11XQN23PROD with RULES1
Annual mortality
improvement
factor
(1-mortality
improvement
rate)
Scale MP–2021
mortality
improvement
rate
n/a
0.0052
0.0027
0.0009
(0.0003)
(0.0010)
(0.0016)
(0.0016)
(0.0010)
0.0000
0.0015
0.0033
0.0052
Cumulative
mortality
improvement
factor
n/a
0.9948
0.9973
0.9991
1.0003
1.0010
1.0016
1.0016
1.0010
1.0000
0.9985
0.9967
0.9948
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
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
n/a
0.9948
0.9921
0.9912
0.9915
0.9925
0.9941
0.9957
0.9967
0.9967
0.9952
0.9919
0.9867
Mortality rate
0.01288
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
0.01271
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
0 .......................................................................................
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I
0.00650 I
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Annuitant
Non-annuitant
I
0.00544 I
0.00650
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0.00544
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TABLE 2 TO PARAGRAPH (c)(5)—HEALTHY LIVES BASE MORTALITY TABLE—Continued
Males
Females
Age
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Non-annuitant
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 .....................................................................................
54 .....................................................................................
55 .....................................................................................
56 .....................................................................................
57 .....................................................................................
58 .....................................................................................
59 .....................................................................................
60 .....................................................................................
61 .....................................................................................
62 .....................................................................................
63 .....................................................................................
64 .....................................................................................
65 .....................................................................................
66 .....................................................................................
67 .....................................................................................
68 .....................................................................................
69 .....................................................................................
70 .....................................................................................
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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
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
Fmt 4700
Sfmt 4700
Annuitant
Non-annuitant
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
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
E:\FR\FM\06JNR1.SGM
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
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
06JNR1
Annuitant
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
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
Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
48303
TABLE 2 TO PARAGRAPH (c)(5)—HEALTHY LIVES BASE MORTALITY TABLE—Continued
Males
Females
Age
Non-annuitant
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 ...................................................................................
lotter on DSK11XQN23PROD with RULES1
(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
16 ......................
17 ......................
VerDate Sep<11>2014
0.012544
0.007102
16:29 Jun 05, 2024
Female
0.004759
0.006541
Jkt 262001
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
0.01914
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
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE—Continued
Age
18
19
20
21
22
23
24
25
26
27
PO 00000
Male
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
Frm 00047
0.005859
0.009998
0.008926
0.008533
0.008158
0.008970
0.008433
0.008696
0.009211
0.009362
Fmt 4700
Sfmt 4700
Non-annuitant
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
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
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE—Continued
Female
0.008035
0.008369
0.009224
0.008144
0.008616
0.008127
0.008318
0.008851
0.008002
0.008694
Annuitant
Age
28
29
30
31
32
33
34
35
36
37
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
E:\FR\FM\06JNR1.SGM
06JNR1
Male
0.009780
0.010049
0.011093
0.011075
0.010931
0.011890
0.012529
0.012418
0.013234
0.013832
Female
0.009477
0.009664
0.009417
0.009985
0.010524
0.010648
0.011252
0.011450
0.011448
0.012135
48304
Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE—Continued
Age
38
39
40
41
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
Male
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
0.014457
0.015830
0.016153
0.016859
0.017464
0.018302
0.019127
0.020380
0.021607
0.023407
0.023956
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
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE—Continued
Female
0.012579
0.012619
0.013578
0.014243
0.014520
0.014773
0.015630
0.016131
0.016874
0.017547
0.018198
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
Age
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
Male
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
......................
TABLE 3 TO PARAGRAPH (d)—SOCIAL
SECURITY DISABLED LIVES MORTALITY TABLE—Continued
Female
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
0.206651
0.223252
0.235073
0.249318
0.267740
0.277033
0.284003
0.298740
0.313086
0.328740
0.345177
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
0.166591
0.182064
0.197059
0.205768
0.225325
0.240441
0.260724
0.281817
0.293156
0.308400
0.324436
Age
100 ....................
101 ....................
102 ....................
103 ....................
104 ....................
105 ....................
106 ....................
107 ....................
108 ....................
109 ....................
110 ....................
111+ ..................
Male
Female
0.362436
0.380558
0.399586
0.419565
0.440543
0.462571
0.485699
0.509984
0.535483
0.562257
0.590370
1.000000
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 2024
lotter on DSK11XQN23PROD with RULES1
Age
Unisex mortality
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 ..........................................................................
VerDate Sep<11>2014
16:29 Jun 05, 2024
Jkt 262001
PO 00000
0.00207
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
0.00010
0.00012
0.00014
0.00016
0.00016
0.00017
0.00017
0.00018
0.00019
0.00020
0.00021
0.00022
0.00023
0.00023
0.00025
0.00026
0.00028
0.00030
Frm 00048
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Age
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
Unisex mortality
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
.........................................................................
Sfmt 4700
E:\FR\FM\06JNR1.SGM
06JNR1
0.00370
0.00441
0.00514
0.00577
0.00658
0.00748
0.00834
0.00928
0.01034
0.01155
0.01294
0.01452
0.01631
0.01837
0.02073
0.02345
0.02656
0.03012
0.03417
0.03899
0.04395
0.04959
0.05595
0.06317
0.07138
0.08063
0.09107
0.10286
0.11596
0.13036
0.14540
0.16090
0.17679
0.19284
Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
48305
TABLE 4 TO PARAGRAPH (h)—MISSING PARTICIPANTS MORTALITY TABLE FOR DETERMINATION DATES IN 2024—
Continued
Age
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
■
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
20. Add § 4044.54 to read as follows:
§ 4044.54
lotter on DSK11XQN23PROD with RULES1
Unisex mortality
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
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.
VerDate Sep<11>2014
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Jkt 262001
0.00032
0.00034
0.00036
0.00038
0.00040
0.00043
0.00044
0.00046
0.00048
0.00049
0.00052
0.00054
0.00058
0.00061
0.00065
0.00070
0.00076
0.00085
0.00095
0.00106
0.00120
0.00143
0.00177
0.00205
0.00239
0.00276
0.00321
Age
Unisex mortality
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 .......................................................................
..............................................................................
0.20898
0.22620
0.24386
0.26196
0.28059
0.29960
0.31891
0.33825
0.35757
0.37670
0.39521
0.41327
0.43080
0.44743
0.46339
0.47628
0.48468
0.49268
0.49666
0.49795
0.49928
0.49960
0.49978
0.49995
0.50000
1.00000
................................
(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
PO 00000
Frm 00049
Fmt 4700
Sfmt 4700
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
multiplying the rate determined in
paragraph (d)(2)(i) of this section by
one-third, multiplying the rate
determined in paragraph (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 this paragraph (e) for
the calendar quarter containing the date
of the blended market yield curve.
(2) Using spreads to adjust a blended
market yield curve. The 4044 yield
curve described in paragraph (c) of this
section is determined by adjusting the
blended market yield curve. This
adjustment is made by adding 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—August 31, 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
E:\FR\FM\06JNR1.SGM
06JNR1
48306
Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
this section is the blended market yield
curve as of that date. Because August
31, 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.
(ii) Example 2—November 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, October 31, 2024.
Because October 31, 2024, is in the
fourth calendar quarter of 2024, the
applicable spreads determined under
paragraph (e)(1) of this section are the
spreads for the fourth calendar quarter
of 2024.
TABLE 1 TO PARAGRAPH (e)—SPREADS
Third quarter 2024 spreads
Maturity point
Spread
(percent)
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 .......................................
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
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
Spread
(percent)
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
year in which the participant reaches
URA.
*
*
*
*
*
21. Amend § 4044.55 by revising
paragraph (c)(1) to read as follows:
■
§ 4044.55 XRA when a participant must
retire to receive a benefit.
*
Maturity
point
22. Amend § 4044.56 by revising
paragraph (c) to read as follows:
■
*
*
*
*
(c) * * *
(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, based on the
participant’s benefit determined under
paragraph (b)(1) of this section and the
§ 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
Maturity
point
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
Spread
(percent)
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
§ 4044.58 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.
■ 23. Add § 4044.58 before the center
heading ‘‘Non-Trusteed Plans’’ 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.
Table 1 to § 4044.58
TABLE I–24—SELECTION OF RETIREMENT RATE CATEGORY
[For valuation dates in 2024 1]
Participant’s retirement rate category is—
Low 2 if monthly
benefit at URA
is less than—
lotter on DSK11XQN23PROD with RULES1
If participant reaches URA in year—
2025
2026
2027
2028
2029
2030
2031
2032
2033
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
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From—
802
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839
859
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941
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802
821
839
859
879
899
919
941
962
E:\FR\FM\06JNR1.SGM
3,388
3,466
3,546
3,627
3,711
3,796
3,883
3,973
4,064
06JNR1
High 4 if monthly
benefit at URA
is greater than—
3,388
3,466
3,546
3,627
3,711
3,796
3,883
3,973
4,064
48307
Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
TABLE I–24—SELECTION OF RETIREMENT RATE CATEGORY—Continued
[For valuation dates in 2024 1]
Participant’s retirement rate category is—
2034 or later ....................................................................
1 Applicable
Medium 3 if monthly benefit at URA is—
Low 2 if monthly
benefit at URA
is less than—
If participant reaches URA in year—
From—
High 4 if monthly
benefit at URA
is greater than—
To—
984
984
4,157
4,157
tables for valuation dates before 2024 are available on PBGC’s website (www.pbgc.gov).
2 Table
II–A.
II–B.
4 Table II–C.
3 Table
Table 2 to § 4044.58
TABLE II–A—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE LOW CATEGORY
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
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
Unreduced retirement age
60
61
62
63
64
65
66
67
68
69
53
53
54
54
55
56
56
56
57
57
58
58
58
59
59
59
59
59
60
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
53
54
54
55
55
56
57
57
57
58
58
59
59
59
60
60
60
60
60
61
..........
..........
..........
..........
..........
..........
..........
..........
..........
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
..........
..........
..........
..........
..........
..........
..........
54
55
55
56
56
57
58
58
59
59
60
60
61
61
61
62
62
62
62
63
63
63
64
..........
..........
..........
..........
..........
..........
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
..........
..........
..........
..........
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
..........
..........
..........
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
..........
..........
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
TABLE II–B—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE MEDIUM CATEGORY
lotter on DSK11XQN23PROD with RULES1
Participant’s earliest retirement age at valuation
date
42
43
44
45
46
47
48
49
50
51
52
53
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
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60
49
50
50
51
52
53
54
54
55
56
56
57
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50
51
51
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50
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58
65
49
50
51
52
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54
54
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58
58
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66
49
50
51
52
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54
54
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58
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49
50
51
52
53
54
54
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57
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58
68
49
50
51
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53
54
54
55
56
57
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58
69
49
50
51
52
53
54
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56
57
58
58
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49
50
51
52
53
54
54
55
56
57
58
58
48308
Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
TABLE II–B—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE MEDIUM CATEGORY—Continued
Unreduced retirement age
Participant’s earliest retirement age at valuation
date
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
60
61
62
63
64
65
66
67
68
69
57
58
58
59
59
59
60
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
58
58
59
59
60
60
60
61
..........
..........
..........
..........
..........
..........
..........
..........
..........
58
59
59
60
60
61
61
61
62
..........
..........
..........
..........
..........
..........
..........
..........
59
59
60
60
61
61
62
62
62
63
..........
..........
..........
..........
..........
..........
..........
59
59
60
61
61
62
62
62
62
63
64
..........
..........
..........
..........
..........
..........
59
60
60
61
61
62
62
63
63
64
64
65
..........
..........
..........
..........
..........
59
60
60
61
61
62
62
63
63
64
64
65
66
..........
..........
..........
..........
59
60
60
61
61
62
62
63
63
64
64
65
66
67
..........
..........
..........
59
60
60
61
61
62
62
63
63
64
64
65
66
67
68
..........
..........
59
60
60
61
61
62
62
63
63
64
64
65
66
67
68
69
..........
70
59
60
60
61
61
62
62
63
63
64
64
65
66
67
68
69
70
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
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
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
Appendix A to Part 4044—[Removed
and Reserved]
61
62
63
64
65
66
67
68
69
46
47
48
49
50
51
52
53
54
54
55
56
57
57
58
58
59
59
60
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
46
47
48
49
50
51
52
53
54
55
55
56
57
58
58
59
59
60
60
61
..........
..........
..........
..........
..........
..........
..........
..........
..........
46
47
48
49
50
51
52
53
54
55
56
56
57
58
59
59
60
60
61
61
62
..........
..........
..........
..........
..........
..........
..........
..........
46
47
48
49
50
51
52
53
54
55
56
57
57
58
59
60
60
61
61
62
62
63
..........
..........
..........
..........
..........
..........
..........
46
47
48
49
50
51
52
53
54
55
56
57
57
58
59
60
60
61
61
62
62
63
64
..........
..........
..........
..........
..........
..........
47
47
48
49
50
51
52
53
54
55
56
57
58
58
59
60
60
61
62
62
62
63
64
65
..........
..........
..........
..........
..........
47
47
48
49
50
51
52
53
54
55
56
57
58
58
59
60
61
61
62
62
62
64
64
65
66
..........
..........
..........
..........
47
47
48
49
50
51
52
53
54
55
56
57
58
58
59
60
61
61
62
62
62
64
64
65
66
67
..........
..........
..........
47
47
48
49
50
51
52
53
54
55
56
57
58
58
59
60
61
61
62
62
62
64
64
65
66
67
68
..........
..........
47
47
48
49
50
51
52
53
54
55
56
57
58
58
59
60
61
61
62
62
62
64
64
65
66
67
68
69
..........
Appendix D to Part 4044—[Removed]
■
lotter on DSK11XQN23PROD with RULES1
60
26. Remove appendix D to part 4044.
24. Remove and reserve appendix A to
part 4044.
PART 4050—MISSING PARTICIPANTS
Appendix C to Part 4044—[Removed]
■
■
■
25. Remove appendix C to part 4044.
27. The authority citation for part
4050 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1350.
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47
47
48
49
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51
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54
55
56
57
58
58
59
60
61
61
62
62
62
64
64
65
66
67
68
69
70
28. Amend § 4050.102 by revising the
introductory text and paragraphs (2), (4),
(7) introductory text, and (7)(i) to the
definition of PBGC missing participants
assumptions to read as follows:
■
§ 4050.102
Definitions.
*
*
*
*
*
PBGC missing participants
assumptions means the actuarial
E:\FR\FM\06JNR1.SGM
06JNR1
Federal Register / Vol. 89, No. 110 / Thursday, June 6, 2024 / Rules and Regulations
assumptions prescribed in §§ 4044.51
through 4044.58 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. However, for benefit
determination dates July 31 through
December 31 of 2024, the interest
assumption is the assumption for
valuing benefits under § 4044.54 of this
chapter applicable to valuations
occurring on July 31, 2024.
*
*
*
*
*
(7) Notwithstanding the expected
retirement age (XRA) assumptions in
§§ 4044.55 through 4044.58 of this
chapter—
(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;
*
*
*
*
*
■ 29. Amend § 4050.302 by revising the
introductory text and paragraphs (2), (4),
(7) introductory text, and (7)(i) of the
definition of PBGC missing participants
assumptions to read as follows:
§ 4050.302
Definitions.
lotter on DSK11XQN23PROD with RULES1
*
*
*
*
*
PBGC missing participants
assumptions means the actuarial
assumptions prescribed in §§ 4044.51
through 4044.58 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. However, for benefit
determination dates July 31 through
December 31 of 2024, the interest
assumption is the assumption for
valuing benefits under § 4044.54 of this
VerDate Sep<11>2014
16:29 Jun 05, 2024
Jkt 262001
chapter applicable to valuations
occurring on July 31, 2024.
*
*
*
*
*
(7) Notwithstanding the expected
retirement age (XRA) assumptions in
§§ 4044.55 through 4044.58 of this
chapter—
(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;
*
*
*
*
*
30. Amend § 4050.402 by revising the
introductory text and paragraphs (2), (4),
(7) introductory text, 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 4044.58 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. However, for benefit
determination dates July 31 through
December 31 of 2024, the interest
assumption is the assumption for
valuing benefits under § 4044.54 of this
chapter applicable to valuations
occurring on July 31, 2024.
*
*
*
*
*
(7) Notwithstanding the expected
retirement age (XRA) assumptions in
§§ 4044.55 through 4044.58 of this
chapter—
(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;
*
*
*
*
*
PO 00000
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48309
PART 4262—SPECIAL FINANCIAL
ASSISTANCE BY PBGC
31. The authority citation for part
4262 continues to read as follows:
■
Authority: 29 U.S.C. 1302(b)(3), 1432.
§ 4262.16
[Amended]
32. Amend § 4262.16 in paragraphs
(f)(3)(iv), (g)(1) introductory text, and
(h)(1)(ii) by removing the words ‘‘in
appendix B to part 4044’’ and adding in
its place the words ‘‘under § 4044.54’’.
■
PART 4281—DUTIES OF PLAN
SPONSOR FOLLOWING MASS
WITHDRAWAL
33. 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.
34. Amend § 4281.13 by revising
paragraphs (a) and (e) to read as follows:
■
§ 4281.13
general.
Benefit valuation methods—in
*
*
*
*
*
(a) Using the interest assumptions
under § 4044.54 of this chapter;
*
*
*
*
*
(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.
Ann Y. Orr,
Acting Director, Pension Benefit Guaranty
Corporation.
[FR Doc. 2024–11819 Filed 6–5–24; 8:45 am]
BILLING CODE 7709–02–P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 542
Publication of the List of Areas of
Northeast and Northwest Syria in
Which Activities Are Authorized by 31
CFR 542.533
Office of Foreign Assets
Control, Treasury.
ACTION: Publication of a list of areas of
northwest and northeast Syria in which
activities are authorized by a general
license in the Syrian Sanctions
Regulations.
AGENCY:
The Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is publishing a list of
areas of northeast and northwest Syria
SUMMARY:
E:\FR\FM\06JNR1.SGM
06JNR1
]]>Agencies
[Federal Register Volume 89, Number 110 (Thursday, June 6, 2024)]
[Rules and Regulations]
[Pages 48291-48309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11819]
=======================================================================
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4001, 4010, 4022, 4041, 4041A, 4043, 4044, 4050, 4262,
and 4281
RIN 1212-AA55
Valuation Assumptions and Methods
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: This final rule updates the interest, mortality, and expense
assumptions used to determine the present value of benefits for a
single-employer pension plan under subpart B of the Pension Benefit
Guaranty Corporation's regulation on Allocation of Assets in Single-
Employer Plans, to determine components of mass withdrawal liability
for a multiemployer pension plan, and for other purposes.
DATES:
Effective date: This rule is effective July 8, 2024.
Applicability date: These amendments apply to calculations where
the valuation date is on or after July 31, 2024.
Incorporation by reference: The incorporation by reference of
certain material listed in this rule is approved by the Director of the
Federal Register as of July 8, 2024.
FOR FURTHER INFORMATION CONTACT: Gregory M. Katz
([email protected]), Deputy Assistant General Counsel for
Regulatory Affairs, Office of the General Counsel, Pension Benefit
Guaranty Corporation, 445 12th Street SW, Washington, DC 20024-2101;
202-229-3829. If you are deaf or hard of hearing, or have a speech
disability, please dial 7-1-1 to access telecommunications relay
services.
SUPPLEMENTARY INFORMATION:
Executive Summary
Purpose and Authority
This final rule updates the actuarial assumptions used to determine
the present value of a single-employer plan's benefits when it
terminates in a distress or involuntary termination, to determine the
present value of multiemployer plan benefits in certain withdrawal
liability calculations, and for other purposes. Except for conforming
changes and some technical and editorial changes, the final rule is
substantially the same as the proposed rule.
Legal authority for this action comes from section 4002(b)(3) of
the Employee Retirement Income Security Act of 1974 (ERISA), which
authorizes the Pension Benefit Guaranty Corporation (PBGC) to issue
regulations to carry out the purposes of title IV of ERISA, and section
4044 of ERISA (Allocation of Assets). It also comes from section 4001
of ERISA (Definitions); section 4010 of ERISA (Authority to Require
Certain Information); section 4022 of ERISA (Single-Employer Plan
Benefits Guaranteed); section 4041 of ERISA (Termination of Single-
Employer Plans); section 4041A of ERISA (Termination of Multiemployer
Plans); section 4043 of ERISA (Reportable Events); section 4050 of
ERISA (Missing Participants); section 4062 of ERISA (Liability for
Termination of Single-Employer Plans Under a Distress Termination or a
Termination by Corporation); section 4219 of ERISA (Notice, Collection,
Etc., of Withdrawal Liability); section 4262 of ERISA (Special
Financial Assistance by the Corporation); and section 4281 of ERISA
(Benefits Under Certain Terminated Plans).
Major Provisions
This final rule modifies the interest, mortality, and expense
assumptions for valuing benefits under subpart B to PBGC's regulation
on Allocation of Assets in Single-Employer Plans (``benefits valuation
regulation'') (29 CFR part 4044) to:
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 affect
PBGC's regulations on Annual Financial and Actuarial Information
Reporting (29 CFR part 4010); Missing Participants (29 CFR part 4050);
Notice, Collection, and Redetermination of Withdrawal Liability (29 CFR
part 4219); Special Financial Assistance by PBGC (29 CFR part 4262);
Duties of Plan Sponsor Following Mass Withdrawal (29 CFR part 4281);
and other regulations.
Background
The Pension Benefit Guaranty Corporation (PBGC) administers two
insurance programs for private-sector defined benefit pension plans
under title IV of the Employee Retirement Income Security Act of 1974
(ERISA): a single-employer plan termination insurance program and a
multiemployer plan insolvency insurance program. In addition, PBGC
administers a special financial assistance program for eligible
financially distressed multiemployer plans.
Under the single-employer plan termination insurance program,
covered plans that are underfunded may terminate either in a distress
termination under section 4041(c) of ERISA or in an involuntary
termination (one initiated by PBGC) under section 4042 of ERISA. When
such a plan terminates, PBGC typically is appointed statutory trustee
of the plan and becomes responsible for paying benefits in accordance
with the provisions of title IV of ERISA.
Under the multiemployer insurance program, PBGC provides financial
[[Page 48292]]
assistance under section 4261 of ERISA to plans that are insolvent and
unable to pay benefits at the guaranteed level. This financial
assistance is primarily in the form of financial assistance loans, paid
to the plans periodically so that they can pay basic benefits when due.
Additionally, under the special financial assistance program under
section 4262 of ERISA, PBGC provides funding to eligible financially
troubled multiemployer plans upon approval of an application. This
final rule applies to the single-employer program, the multiemployer
program, and the special financial assistance program.
PBGC has identified these amendments as part of its ongoing review
of its regulations to ensure that PBGC provides clear and helpful
guidance and modernizes outdated methodologies.
Purpose of the Assumptions Described in the Benefits Valuation
Regulation
Under the single-employer insurance program, if a pension plan
terminates without enough assets to provide for all benefits either in
a distress termination under section 4041(c) of ERISA or in a plan
termination initiated by PBGC under section 4042 of ERISA, PBGC
typically is appointed statutory trustee of the plan and becomes
responsible for paying benefits in accordance with the provisions of
title IV of ERISA. When this happens, PBGC must determine (1) the
extent to which participants' benefits are funded under the benefits
valuation rules, (2) whether a terminated plan has sufficient assets to
pay guaranteed benefits, and (3) how much a plan sponsor and its
controlled group owe PBGC because of the termination under section 4062
of ERISA. The assumptions described in the benefits valuation
regulation are used to value a plan's benefit liabilities for these
purposes.
In setting the assumptions under the benefits valuation regulation,
PBGC's long-standing policy is to set assumptions that produce
valuations similar to the premium that a private-sector insurance
company would charge for a group annuity contract covering the same
plan benefits.\1\ This policy ensures that for a plan entering PBGC
trusteeship, the plan's benefit liabilities are measured consistently
with annuity market pricing.
---------------------------------------------------------------------------
\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 assumption to determine withdrawal liability for a prescribed
period. Additionally, plan sponsors are required to use these
assumptions for certain purposes (e.g., reporting benefit liabilities
in filings required under PBGC's regulation on Annual Financial and
Actuarial Information Reporting (29 CFR part 4010) or determining
certain amounts to transfer to PBGC's Missing Participants Program on
behalf of a missing participant of a terminating defined benefit plan
under PBGC's regulation on Missing Participants (29 CFR part 4050)) and
may use them for other purposes (e.g., to ensure that plan spinoffs
comply with section 414 (l) of the Internal Revenue Code (the
Code)).\3\
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\2\ When a multiemployer plan terminates in a mass withdrawal,
section 4219 of ERISA requires that unfunded vested benefits be
fully allocated among withdrawing employers. The liability assessed
in this process is called reallocation liability.
\3\ The assumptions are deemed reasonable for use in determining
the value of ``benefits on a termination basis'' after a merger or
spinoff under Internal Revenue Service regulations at 26 CFR
1.414(l)-1.
---------------------------------------------------------------------------
Proposed Rule
On August 18, 2023, PBGC published a proposed rule \4\ to update
the benefit valuation regulation's interest, mortality, and expense
assumptions. PBGC provided a 60-day comment period and received five
comment letters. Commenters were generally supportive of PBGC's efforts
to make its assumptions more modern and transparent, and made specific
suggestions. A discussion of the provisions of the final rule, the
comment letters, and PBGC's responses follows. Except for conforming
changes and some technical and editorial changes, the final rule is
substantially the same as the proposed rule.
---------------------------------------------------------------------------
\4\ 88 FR 56563 (Aug. 18, 2023).
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Interest Assumption
Current Assumption
The benefits valuation regulation contains an interest assumption
for determining the present value of future payments (4044 interest
assumption). Since November 1993, the 4044 interest assumption has been
expressed in a two-component structure known as ``select and ultimate''
in which one interest factor is assumed to be in effect for the first
20 or 25 years from the valuation date, and the other interest factor
is assumed to be in effect thereafter.
To align valuations with the group annuity market, the American
Council of Life Insurers conducts periodic surveys \5\ of private-
sector single-premium nonparticipating group annuity prices for PBGC.
These surveys ask insurers for sample market pricing information
(exclusive of loads for administrative expenses). The select and
ultimate rates are determined such that in combination with the
mortality assumption provided under the benefits valuation regulation,
the resulting liabilities are in line with group annuity prices from
the survey.\6\
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\5\Survey approved under OMB Control Number 1212-0030 (expires
July 31, 2024).
\6\ See 41 FR 48484, 48485 (Nov. 3, 1976). ``PBGC's interest
assumptions have been designed so that, when coupled with the
mortality assumptions found in the regulation, the benefit values
obtained . . . are in line with the industry annuity prices.''
---------------------------------------------------------------------------
PBGC publishes the interest assumption in appendix B to part 4044
each quarter, for use in the subsequent quarter. Therefore, the
interest rates used have not been rates observed on the valuation date.
Reasons for Change
This final rule improves upon current methodology in several ways.
Actuarial practice, with the help of technology, has moved toward a
bond yield curve approach where future benefits are discounted to the
valuation date using yields for which the time to maturity equates to
the length of the discounting period. By associating an interest rate
with each specific benefit payment time horizon, using a yield curve
for discounting better represents the present value of future benefits.
As a result, the select and ultimate structure of PBGC's interest
assumption under the benefits valuation regulation has become
increasingly obsolete. A yield curve approach also better reflects the
term structure of the fixed income investments that underlie the price
of group annuities.
[[Page 48293]]
In addition, the rule improves the methodology by eliminating the
lag between when data used to set PBGC's interest assumption are
observed and the interest rate environment on the valuation date.
Eliminating the lag is desirable because the interest rate environment
on the valuation date also impacts the value of the assets that pension
funds invest in, including fixed income investments, equity, and real
estate.
Lastly, the final rule increases transparency with respect to the
process for setting the 4044 interest assumption. The public
availability of month-end bond yield data now makes it possible to
adopt a methodology that would increase transparency and, in almost all
situations, eliminate the lag entirely.\7\
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\7\ In the uncommon situation of a mid-month valuation date, the
lag is reduced significantly, but not completely eliminated.
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For these reasons, PBGC is structuring the 4044 interest assumption
as a yield curve, more closely replicating the actual yields on the
investments backing group annuities, and better reflecting today's
actuarial practice. In addition, this final rule incorporates publicly
available bond yield data into the methodology used to determine the
4044 interest assumption to increase transparency and bases the
interest assumption on bond yields as of the valuation date, or as
close as practical for valuations that are not as of a month-end.
Updated 4044 Interest Assumption
The 4044 interest assumption in the final rule is the same as in
the proposed rule. Commenters generally supported the transparency of
the proposed method for determining the interest assumption and how it
better reduces lag from the date data is observed to the valuation
date. Some commenters made suggestions which are discussed in this
section. The new interest assumption is based on a blend of two
publicly available yield curves (the ``blended market yield curve'')
and is adjusted to the extent necessary so that the resulting
liabilities align with group annuity prices. As with the proposed rule,
the final rule's interest assumption consists of interest rates at
maturity points from 0.5 to 30.0 years in half-year increments. The
interest rate for the maturity point at year 30.0 is used to discount
benefits expected to be paid more than 30 years after the valuation
date. One commenter suggested that PBGC use a ``uniform'' interest rate
rather than a yield curve. PBGC did not adopt this suggestion, because,
as discussed in more detail earlier in the preamble, actuarial practice
has moved toward a yield curve approach that better represents the
present value of future benefits.
The process used to determine the interest assumption follows.
First, the blended market yield curve is determined in three steps:
Step 1--Obtain rates for maturities 0.5 through 30.0 on
Treasury securities from the Department of the Treasury (Treasury
Department) Nominal Coupon Issues Spot Rates, End of Month yield curve
(TNC Yield Curve).\8\
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\8\ Available at 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).\9\
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\9\ Available at https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curve/corporate-bond-yield-curve.
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Step 3--Combine the rates obtained in steps 1 and 2
weighting each corporate bond rate at two-thirds and each Treasury rate
at one-third.\10\
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\10\ The rule primarily uses yields on investment-grade
corporate bonds when setting its assumptions because such yields are
the most important driver of group annuity prices. A white paper
describing, among other things, additional details about this
weighting is available on PBGC's website, www.pbgc.gov.
---------------------------------------------------------------------------
Rather than weighting corporate bonds at two-thirds and Treasury
rates at one-third for all maturities, one commenter suggested using a
``gliding'' weight that varies over different maturities. The goal
would be to reflect the fact that insurers typically have different
pricing assumptions for immediate and deferred annuities (because of
the higher risk associated with deferred annuities than immediate
annuities). PBGC did not adopt this suggestion because a gliding weight
would introduce substantial unnecessary complexity to the calculation
of the blended market yield curve, and the effect described by the
commenter is accounted for in the adjustment spreads discussed later in
this section.
The yield curves used to develop the blended market yield curve are
based on yields as of the end of each month. In PBGC's experience, most
calculations that use 4044 assumptions use valuation dates as of the
last day of a month, and for such calculations, the applicable blended
market yield curve will be determined using the published TNC and HQM
curves as of the valuation date. To accommodate other valuation dates,
the final rule includes a ``lookback'' rule for valuation dates that
are not as of the end of the month. Under the lookback rule, if the
valuation date is not on the last day of a month, the applicable
blended market yield curve as of the last day of the prior month will
be used. For example, if the valuation date is February 15, 2023, the
applicable blended market yield curve is the blended market yield curve
as of January 31, 2023.
PBGC considered other possible rules for determining the blended
market yield curve for valuation dates that are not the last day of the
month, so that its interest assumption might better reflect the bond
market on the actual valuation date (e.g., a blend of the current and
prior month's blended market yield curves, a requirement to use the
blended market yield curve for the end of the month closest to the
valuation date). However, because most plan terminations occur on the
last day of a month, PBGC concluded that the benefits did not outweigh
the additional complexity. PBGC requested comments on the application
of the proposed interest assumption to valuation dates other than the
last day of the month. One commenter responded that the proposed
methodology is a significant improvement over current methodology.
As noted earlier in this preamble, once the blended market yield
curve is determined, it will be adjusted so that the resulting present
values align with group annuity prices. The term ``4044 yield curve''
is used to describe the blended market yield curve after reflecting
such adjustments. The adjustments, or ``spreads,'' will be in the
format of a curve (i.e., a list of spreads through year 30, each of
which applies to a specific point in the blended market yield curve).
PBGC will determine and publish the spreads quarterly based on survey
data on pricing of private-sector group annuities. More specifically,
for each survey date, PBGC will first determine a yield curve that best
fits data from those surveys, given an assumed mortality table. Next,
PBGC will calculate the differences between this curve and the blended
market yield curve as of the survey date. To smooth random variation
and seasonality effects before publishing, PBGC will average those
differences with the differences calculated from prior survey dates to
determine the spreads that are used to adjust the applicable blended
market yield curve. PBGC will publish the spreads (by amending its
regulation) that are used for adjusting the blended market curve
shortly before each quarter begins.
PBGC received a comment suggesting that PBGC adjust its spreads to
compensate for a recently proposed
[[Page 48294]]
change \11\ to the way the Treasury Department determines its bond
yields to avoid a discontinuity in PBGC's rates if the Treasury
proposal is finalized. Because the Treasury Department has since
finalized \12\ its proposal, there will be no discontinuity in PBGC's
rates. For that reason, there is no need to modify PBGC's methodology
to accommodate the changes.
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\11\ 88 FR 41047 (June 23, 2023).
\12\ 89 FR 2127 (Jan. 12, 2024).
---------------------------------------------------------------------------
Another commenter made suggestions for increasing the transparency
of the process for determining spreads such as adding detail to the
white paper and PBGC's website. PBGC is pleased to provide the white
paper along with this final regulation to substantially enhance the
transparency of how PBGC determines the benefit valuation regulation's
interest assumption. PBGC will continue to strive to enhance the
transparency of this process.
The spreads for any quarter are used to adjust the month-end
blended market yield curves in that quarter. For example, the first
quarter spreads are used to adjust the blended market yield curves as
of January 31, February 28,\13\ and March 31. Because of the lookback
rule, the first quarter spreads also apply to valuation dates occurring
April 1 through April 29 because for such dates, the applicable blended
market yield curve is the curve as of March 31. Similarly, the fourth
quarter spreads are used to adjust the blended market yield curves as
of October 31, November 30, and December 31. Because of the lookback
rule, the fourth quarter spreads also apply to valuation dates
occurring January 1 through January 30, which use the blended market
yield curve rate determined as of December 31 from the prior year.
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\13\ February 29 in a leap year.
---------------------------------------------------------------------------
The following example illustrates how the 4044 yield curve would
have been developed for a valuation date on December 31, 2023, had the
rule been in effect at that time and assuming the fourth quarter
spreads for 2023 were as shown in column D below:
--------------------------------------------------------------------------------------------------------------------------------------------------------
(A) Dec. 31, 2023,
nominal TNC (B) Dec. 31, 2023, (C) Blended market (D) Fourth quarter (E) Applicable
Maturity Treasury yield HQM bond yield yield curve (%) 2023 spreads (%) 4044 yield curve *
curve (%) curve (%) (%)
\1/2\ (A) + \2/3\ (C) + (D)
(B)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.5................................................. 5.17 5.29 5.25 0.36 5.61
1.0................................................. 4.78 5.12 5.01 0.36 5.37
1.5................................................. 4.46 4.97 4.80 0.36 5.16
2.0................................................. 4.21 4.84 4.63 0.36 4.99
28.5................................................ 4.04 5.10 4.75 0.36 5.11
29.0................................................ 4.04 5.10 4.75 0.36 5.11
29.5................................................ 4.04 5.10 4.75 0.37 5.12
30.0................................................ 4.04 5.10 4.75 0.37 ** 5.12
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Because of the lookback rule, valuation dates from January 1, 2024, through January 30, 2024, would also use the December 31, 2023, blended market
yield curve which means they would also use the fourth quarter spreads. Thus, the 4044 yield curve in column (E) would also be used for those
valuation dates.
** The 5.12% rate would be used for benefits expected to be paid 30 or more years after the valuation date.
Because the yield curves used to develop the blended market yield
curve are not published until a week or two after the end of the month,
in most situations (e.g., month-end valuation dates), the 4044 yield
curve will not be available in advance of the valuation date. Given the
typical situations where practitioners use 4044 interest assumptions
(e.g., Annual Financial and Actuarial Information Reporting (4010
reporting)), PBGC does not anticipate that this will create a timing
problem, and no commenter expressed timing concerns.
This final rule amends the benefits valuation regulation to
prescribe the use of the 4044 yield curve and the process to determine
it. It also amends part 4044 to replace the select and ultimate
interest factor table with a table showing spread adjustments for
blended market yield curves. For each quarter, the table will show 60
spread adjustments. Because the spread adjustments for the third
quarter of 2024 (the quarter for which this rule is first applicable)
will not be determinable until shortly before the third quarter, those
spreads are not provided in this final rule. PBGC will issue the third
quarter 2024 spread adjustments when they are available.
Given this methodology, practitioners will be able to determine the
4044 yield curve as of the end of any month as soon as the Treasury
Department publishes the two yield curves underlying the development of
the blended market yield curve. (The applicable spreads will be
specified in the regulation before the blended market yield curves are
available.) In addition, to reduce administrative burden on
practitioners, PBGC will post the 4044 yield curve on its website at
www.pbgc.gov each month shortly after its underlying data become
available. In addition to posting the 4044 yield curve, one commenter
suggested that PBGC should post a single interest rate ``index'' to
provide a readily comparable measure of annuity market pricing and to
assist multiemployer plans that receive SFA in determining withdrawal
liability payment schedules. PBGC did not adopt this suggestion because
cash flows vary from plan to plan, and no single index rate would be
representative of all plans. PBGC agrees with the commenter that
actuaries for plans that receive SFA will be able to determine
withdrawal liability payment schedules using the 4044 yield curve and
notes that actuaries will be able to set up a spreadsheet to do the
calculation without much difficulty. To illustrate how the calculation
may be done, before the effective date of the final rule, PBGC will
post an example on its website at www.pbgc.gov.
Mortality Assumption
Current Assumptions
The mortality assumptions prescribed by the benefits valuation
regulation relate to the probabilities that a participant (or
beneficiary) will survive to each expected benefit payment date. The
regulation currently prescribes six sets of mortality tables: tables
for male and female individuals not receiving a disability benefit
(healthy lives); tables for male and female participants who
[[Page 48295]]
are disabled under a plan provision that does not require eligibility
for Social Security disability benefits (non-Social Security disabled);
and tables for male and female participants who are disabled under a
plan provision requiring eligibility for Social Security disability
benefits (Social Security disabled).
For healthy lives, the mortality tables are based on the GAM-94
Basic Table with mortality improvements projected forward to the year
of valuation plus 10 years using the mortality improvement Scale AA, a
static mortality improvement projection. A static mortality projection
``project[s] the [base mortality] table for a specified number of years
and use[s] the resulting table without further projection.'' \14\ For
Social Security disabled participants, the regulation uses the
Mortality Tables for Disabilities Occurring in Plan Years Beginning
After December 31, 1994, from IRS Rev. Rul. 96-7 (1996-1 C.B. 59). For
non-Social Security disabled participants, the benefits valuation
regulation uses the healthy lives mortality rates for an individual 3
years older (i.e., the table is set forward by 3 years). In addition,
to prevent the rates at older ages from exceeding the rates for Social
Security disabled participants, the mortality rates for non-Social
Security disabled participants are capped at the corresponding rates
for Social Security disabled participants. These assumptions are
described in appendix A to part 4044.
---------------------------------------------------------------------------
\14\ 70 FR 72205 at 72206 (Dec. 2, 2005).
---------------------------------------------------------------------------
Reasons for Change
PBGC seeks to ensure that the assumptions described in the benefits
valuation regulation, in the aggregate, produce annuity valuations
similar to those produced by private-sector insurers. To do so, PBGC
attempts to keep its ``assumptions in line with those of private-sector
insurers, and to modify its mortality assumptions whenever it is
necessary to do so to achieve consistency with the private insurer
assumptions.'' \15\ PBGC determined that it could better achieve
consistency with insurers' mortality assumptions by updating the
mortality assumptions under the benefits valuation regulation.
---------------------------------------------------------------------------
\15\ 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.'' \16\
---------------------------------------------------------------------------
\16\ See Pension Comm, American Academy of Actuaries, Selecting
and Documenting Mortality Assumptions for Pensions (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).
IRS and Treasury Rulemaking
The Internal Revenue Service (IRS) and the Treasury Department
reached the same conclusions regarding trends in mortality assumptions.
On April 28, 2022, they issued a proposed rule (IRS proposal) \17\ to
amend their mortality assumptions regulations under section 430(h)(3)
of the Code. PBGC derived its preamble discussion and operative
regulatory provisions for its healthy lives mortality assumptions from
the IRS proposal. On October 20, 2023, IRS and Treasury finalized their
regulation.\18\
---------------------------------------------------------------------------
\17\ 87 FR 25161 (April 28, 2022).
\18\ 88 FR 72357 (Oct. 20, 2023).
---------------------------------------------------------------------------
Updated Healthy Lives Mortality Assumption--Base Mortality Tables
This final rule adopts the proposed healthy lives base mortality
tables. The tables are derived from the tables set forth in the Pri-
2012 Private Retirement Plans Mortality Tables Report published by the
Retirement Plan Experience Committee (RPEC) of the Society of Actuaries
(SOA) in 2019 (Pri-2012 Report).\19\ PBGC agrees with IRS and the
Treasury Department that the Pri-2012 Report is the best available
study of the actual mortality experience of pension plan participants
(other than disabled individuals).\20\
---------------------------------------------------------------------------
\19\ This report is available at https://www.soa.org/49c106/globalassets/assets/files/resources/experience-studies/2019/pri-2012-mortality-tables-report.pdf.
\20\ 87 FR 25161, 25163.
---------------------------------------------------------------------------
The tables in the Pri-2012 Report are gender-distinct and provide
separate non-annuitant and annuitant mortality rates.\21\ Consistent
with PBGC's proposed rule, this final rule does not provide separate
tables for annuitants who are retirees and annuitants who are
contingent beneficiaries. Rather, it provides annuitant mortality
tables that combine the mortality experience of retirees and contingent
beneficiaries. The annuitant mortality tables are used to determine the
present value of benefits for an annuitant. For a non-annuitant, the
non-annuitant mortality tables are used for the periods before the
participant is projected to commence receiving benefits, and the
annuitant mortality tables are used for later periods. For a
beneficiary of a participant, the annuitant mortality tables apply for
the period beginning with each assumed commencement of benefits for the
participant. If the participant has died (or to the extent the
participant is assumed to die before commencing benefits), the
annuitant mortality tables apply for the beneficiary for the period
beginning with each assumed commencement of benefits for the
beneficiary.
---------------------------------------------------------------------------
\21\ The Pri-2012 Report refers to non-annuitant rates as
``employee'' rates. However, because those rates also apply to
former employees prior to benefit commencement, for purposes of this
final rule, the term ``non-annuitant'' is used.
---------------------------------------------------------------------------
These base tables generally have the same mortality rates as the
employee and non-disabled annuitant mortality rates that were released
by RPEC in connection with the Pri-2012 Report. However, the base
tables provided in this rule also include rates for certain situations
that were not included in the base tables in the Pri-2012 Report (i.e.
non-annuitant mortality rates for ages below age 18 and above age 80
and annuitant mortality rates for ages below age 50). The preamble to
the IRS proposal describes the methodology that was used to develop
those additional rates.\22\
---------------------------------------------------------------------------
\22\ See 87 FR 25161, 25163.
---------------------------------------------------------------------------
Several commenters made suggestions for the regulation's base
mortality table. One commenter recommended multi-factor mortality
tables because, according to the commenter, they better match insurer
practice and they more precisely predict mortality by using multiple
data fields to capture the diversity of pension plan mortality by
analyzing the characteristics of the individuals in those pension
plans. Multi-factor mortality is an evolving area, which PBGC intends
to study and monitor as PBGC continues to review ways to improve the
regulation's prescribed assumptions in the future. Another commenter
suggested prescribing use of the Society of Actuaries' RP-2014
Mortality Table instead of Pri-2012. This final rule does not adopt RP-
2014 because, as
[[Page 48296]]
discussed earlier in this preamble, PBGC believes (and one commenter
agreed) that Pri-2012 is the best available study of the actual
mortality experience of pension plan participants. Pri-2012 is also
based on more recent mortality experience than RP-2014 (which is based
on an experience study for the years 2004-2008).
PBGC received a few comments about the feasibility of using the
4044 interest assumption with a different mortality assumption for
calculations other than those for which the use of both assumptions is
required. For example, one commenter noted that because of the way the
4044 yield curve will be determined (i.e., using a current and
representative mortality assumption to determine the spreads), PBGC's
discount rate spot yield curve will stand on its own as a reasonable
assumption for multiple purposes and suggested that for certain
purposes, such as multiemployer withdrawal liability, the use of a
``blue collar'' mortality table ``may better reflect the underlying
demographics of the pension plan being valued.''
While it is true that, when used together, the 4044 interest and
mortality assumptions are designed to result in liabilities that are
similar to what a private-sector insurance company would charge for a
group annuity contract, PBGC agrees that it may be reasonable to use
the interest assumption with a different mortality assumption for
situations where the use of both assumptions is not required (assuming
the mortality assumption reflects plan demographics).
With respect to the comment on withdrawal liability, in general,
PBGC does not mandate use of the 4044 mortality assumption to determine
withdrawal liability. However, as discussed earlier in this preamble,
both the prescribed interest and mortality assumptions must be used to
determine reallocation liability in the event of a mass withdrawal. In
consideration of the comment, PBGC intends to review the assumptions
and methods required for such calculations for possible inclusion in a
future rulemaking project.
Updated Healthy Lives Mortality Assumption--Mortality Improvements
The base tables described above have a base year of 2012 (the
central year of the experience study used to develop the mortality
tables in the Pri-2012 Report). Like the proposed rule, the base tables
are used to develop the mortality tables for future years using Scale
MP-2021 Rates (the mortality improvement scale in the Mortality
Improvement Scale MP-2021 Report,\23\ which was published by the RPEC
in October 2021). That mortality improvement scale was developed using
the same underlying methodology used to develop RPEC's earlier
mortality improvement scales but reflects historical population data
through 2019 and the change to the RPEC-selected assumptions for the
long-term rate of mortality improvement that was first incorporated in
the Mortality Improvement Scale MP-2020 Report.
---------------------------------------------------------------------------
\23\ Report available at https://www.soa.org/4a9de4/globalassets/assets/files/resources/experience-studies/2021/2021-mp-scale-report.pdf.
---------------------------------------------------------------------------
Although IRS and Treasury also proposed using Scale MP-2021 for
future years, their final rule provides for a slightly different
improvement projection. Because PBGC seeks to match insurance company
assumptions and has no indication that changes similar to those
finalized by IRS and Treasury would more closely match insurance
company assumptions, PBGC is finalizing its mortality improvement scale
as proposed. PBGC will continue to monitor and consider new mortality
trend data, including updated mortality improvement scales issued by
RPEC, and intends to amend its regulation to account for new data when
appropriate. The updated healthy lives mortality assumptions closely
align with the mortality assumptions used by private-sector insurers.
The software needed to use generational mortality tables is widely used
and is often used for other business needs such as financial
accounting. Using modern actuarial software, the new assumptions should
be no more difficult to apply.
Updated Disabled Lives Mortality Assumption
As with the proposed rule, this final rule provides that the
healthy lives mortality assumptions (base table and improvement
projections) be used for disabled individuals that are not eligible for
Social Security disability benefits. For individuals that are eligible
for Social Security disability benefits, as with the proposed rule, the
final rule updates the mortality assumptions to reflect more recent
mortality experience by using tables published in the Social Security
Disability Insurance Program Disabled Worker Experience Actuarial Study
125, a study providing ``extensive information on recent actual [Social
Security Disability Insurance] disabled worker experience.'' \24\ The
mortality rates for Social Security disabled participants comprise two
tables: Table 12 for Social Security disabled participants age 75 and
younger, and Table 7C for Social Security disabled participants age 76
and older. As with the current mortality assumptions for individuals
that are eligible for Social Security disability benefits, the updated
assumptions do not include a mortality improvement scale.
---------------------------------------------------------------------------
\24\ Nettie J. Barrick-Funk, Soc. Sec. Admin., Social Security
Disability Insurance Program Disabled Worker Experience Actuarial
Study 125, at ix (2020), https://www.ssa.gov/OACT/NOTES/pdf_studies/study125.pdf.
---------------------------------------------------------------------------
For the reasons discussed earlier, this final rule amends PBGC's
benefits valuation regulation to replace mortality tables for healthy
lives with mortality tables from the Pri-2012 Report. It also replaces
tables relating to mortality improvement for healthy lives with
references to generational mortality improvement projections from the
Mortality Improvement Scale MP-2021 and prescribes their use. It
further amends PBGC's benefits valuation regulation to replace tables
relating to mortality for Social Security disabled participants with
tables derived from Social Security Actuarial Study 125. Finally, it
amends the regulation so that the provisions specifying assumptions for
non-Social Security disabled lives refer to the healthy lives mortality
assumptions.
Expense Assumption
Current Assumptions
Certain administrative expenses are incurred by insurers in
connection with the payment of benefits. These expenses are for such
things as establishing plan files, reviewing plan provisions to
determine benefit entitlements, setting up and updating records,
processing pension applications, and remitting benefit payments.
Insurers use assumptions about these expenses to price annuities. To
account for this component of private-sector annuity pricing, the
benefits valuation regulation specifies expense assumptions.\25\
---------------------------------------------------------------------------
\25\ Expense assumptions are sometimes described as loading
assumptions or expense loading assumptions.
---------------------------------------------------------------------------
Currently, these expense assumptions are based in part on the total
present value of plan benefits. They are intended to recognize that the
computation of benefit valuations entails certain expenses that are
roughly proportional to the number of participants in a plan, and that
private insurers' expenses, expressed as a percentage of liabilities,
are somewhat lower for larger plans. For the expenses proportional to
the number of plan participants, the benefits valuation regulation
assumes a cost of $200 per participant. In addition, a percentage of
[[Page 48297]]
liabilities is added to the assumed expense amount for all plans in a
way that accounts for the efficiency advantage of larger plans. That
percentage is 5 percent of liabilities up to $200,000, plus a smaller,
variable percentage of liabilities above $200,000.
Reasons for Change and Updated Expense Assumptions
As discussed above, PBGC attempts to set its assumptions to match
the private-sector annuity market. PBGC has determined that simple per-
participant loads are the most common structure for explicitly charging
for administrative expenses and that insurers' expense assumptions
account for a very small portion of the total cost of a group annuity.
PBGC's current multi-tiered expense assumptions are too complicated
given expense assumptions' small share of annuity pricing and the
simple structure insurers typically use. Thus, as with the proposed
rule, this final rule simplifies the expense assumptions. This rule
sets the expense load assumption at $400 per participant for the first
100 participants and $250 for each participant over 100. PBGC concluded
these amounts were reasonable based on a review of per-participant
charges included in group annuity contracts for terminating plans
provided to PBGC as part of the standard termination process. These
amounts will be updated for inflation using the Consumer Price Index
(CPI-U) each year. The rule amends PBGC's benefits valuation regulation
to prescribe these updated expense assumptions.
PBGC received two comments on the proposed expense assumptions. One
commenter suggested breaking down the expense assumptions between
deferred and immediate annuities because expenses on deferred annuities
are higher than on immediate annuities. Though PBGC agrees that
deferred and immediate annuities have different expense levels, because
expenses are such a small component of valuations, capturing this
difference is not worth complicating the assumption. Another commenter
said PBGC should prescribe a lower expense assumption, yielding
expenses between 1.5 percent and 1.8 percent. The prescribed expense
assumption is a dollar amount per participant and will generally result
in assumed expenses below 1.5 percent of liability.
Conforming Changes to the Missing Participants Regulation
Interest Assumption
PBGC's Missing Participants regulation (29 CFR part 4050) provides
that the interest assumption used to determine certain amounts to be
transferred on behalf of a missing participant from a terminating
defined benefit plan \26\ to PBGC's Missing Participants Program is the
interest assumption under PBGC's benefits valuation regulation
applicable to valuations occurring in January of the calendar year in
which the benefit determination date occurs.\27\ Under the current
benefits valuation regulation, the same interest assumption is used for
any valuation date in January. However, under this final rule, two
different interest assumptions apply to valuation dates in January
(i.e., the 4044 yield curve as of December 31 applies for valuation
dates occurring January 1 through January 30 and the 4044 yield curve
as of January 31 applies for a January 31 valuation date). If the
Missing Participants regulation were left unchanged, it would be
unclear which 4044 yield curve should be used for benefit determination
dates occurring in a particular calendar year. Thus, like the proposed
rule, this final rule amends the Missing Participants regulation to
prescribe the use of the 4044 yield curve applicable to valuations
occurring on December 31 of the year preceding the calendar year in
which the benefit determination date occurs. However, there is no 4044
yield curve applicable to valuations occurring on December 31, 2023.
Consequentially, for benefit determination dates to which this rule
applies in 2024, a transition rule prescribes the use of the 4044 yield
curve applicable to valuations occurring on July 31, 2024.
---------------------------------------------------------------------------
\26\ The terminating defined benefit plans covered by PBGC's
Missing Participants Program are single-employer and multiemployer
pension plans covered by title IV of ERISA, and small professional
service employer plans not covered by title IV of ERISA. See 29 CFR
4050.101, 4050.301, and 4050.401.
\27\ See definition of ``PBGC missing participants assumptions''
in 29 CFR 4050.102, 4050.302, and 4050.402.
---------------------------------------------------------------------------
Mortality Assumption
PBGC's Missing Participants regulation prescribes use of a unisex
version of the benefit valuation regulation's mortality assumption for
healthy lives (i.e., a 50/50 blend of the male and female mortality
tables) to determine certain amounts to be transferred on behalf of a
missing participant from a terminating defined benefit plan to PBGC's
Missing Participants Program. Doing the required calculation based on
the current mortality assumption is relatively straightforward.
However, because this final rule provides that future mortality
improvements will be reflected using generational mortality, if the
Missing Participants regulation were left unchanged, practitioners
would need to create, and use, a unisex version of a generational
mortality table, which would be somewhat cumbersome and complicated. To
alleviate the complication, as with the proposed rule, PBGC is amending
the Missing Participants regulation to provide that a unisex, static
version of the mortality table be used for this purpose. More
specifically, PBGC is amending the portion of the definition of ``PBGC
missing participants assumptions'' related to mortality to use a 50/50
blend of static male and female mortality combined tables reflecting
non-annuitant and annuitant mortality rates. The proposed rule stated
that these male and female tables would be identical to the static
mortality tables proposed by IRS and Treasury as an alternative for
plans with 500 or fewer participants. Though this final rule does not
change the methodology for determining the missing participants static
mortality tables, the tables will not be identical to the IRS and
Treasury small plan tables because of changes to improvement projection
that IRS and Treasury finalized. This final rule includes the static
mortality table for 2024 valuations to which this rule applies. PBGC
intends to amend the regulation annually to provide static mortality
tables reflecting mortality improvements.
Other Housekeeping Changes
As previously discussed, the interest, mortality, and expense
assumptions are specified in appendixes to part 4044. To better align
with Office of the Federal Register guidance, this final rule specifies
the updated assumptions within the codified text of part 4044 instead.
The expected retirement age assumptions, which are also used in present
value of benefit calculations under part 4044 (but not modified by this
rule), are moved to codified text as well. This final rule retains the
current interest assumptions in appendix B for reference, but the other
three appendixes are removed. The final rule updates cross-references
to the appendixes throughout PBGC's regulations so that they refer to
the codified text. Compared to the proposed rule, the final rule
updates additional cross references in PBGC's regulations
[[Page 48298]]
to reflect the new location of the expected retirement age assumptions.
Applicability and Transition
One commenter suggested providing a transition period for the
regulated community to adapt to the new format of the assumptions and
that PBGC continue publishing select and ultimate interest rates for a
period of time for third-party use. The amendments apply to
calculations where the valuation date is on or after July 31, 2024,
giving adequate time to those that need it. However, PBGC will not
continue to publish select and ultimate rates. As described earlier in
the preamble, the select and ultimate methodology is outmoded.
Incorporation by Reference
Section 4044.53(c)(1)(iii) of the final regulation provides that
the mortality improvement rates used to construct the generational
mortality tables to be used are the Scale MP-2021 Rates which are
described in the Mortality Improvement Scale MP-2021 Report. The Office
of the Federal Register (OFR) has regulations concerning incorporation
by reference. 1 CFR part 51. These regulations require that agencies
must discuss in the preamble to a rule or proposed rule the way in
which materials that the agency incorporates by reference are
reasonably available to interested persons, and how interested parties
can obtain the materials. 1 CFR 51.5(b).
The Scale MP-2021 Rates and the Mortality Improvement Scale MP-2021
Report are described in this preamble under the heading ``Updated
healthy lives mortality assumption--mortality improvements'' in the
``Mortality Assumption'' section of this preamble. The Mortality
Improvement Scale MP-2021 Report was issued by the Retirement Plans
Experience Committee of the Society of Actuaries in October of 2021 and
is available to the public for free viewing online on the Society of
Actuary's website at 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 final rule under Executive
Order 12866.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity).
Although this is not a significant regulatory action under
Executive Order 12866, PBGC has examined the economic implications of
this final rule and has concluded that the rule's changes will have a
minimal impact on liabilities determined under PBGC's regulations.
The updates to the assumptions under the benefits valuation
regulation will, on average, produce benefit liabilities that are very
close to the valuations produced by the current assumptions. The
results for any particular benefit valuation, however, could be
different as a result of adopting an interest rate methodology based on
market rates (i.e., eliminating the lag between when data used to set
the interest assumption are observed and the interest rate environment
on the valuation date).
The impact on liabilities resulting from eliminating the above-
noted lag will not be biased in favor of higher or lower benefit
liabilities. Also, the impact should be fairly small (i.e., within a
few percentage points) unless market rates on the valuation date are
significantly different from what PBGC would have used to determine the
4044 interest assumption absent this change (i.e., had the lag not been
eliminated).
PBGC's analysis indicates that, ignoring the impact of the interest
rate timing difference described in the prior paragraph, the impact
will also be relatively small in situations where the updated 4044
interest assumption is used, but not the updated 4044 mortality
assumption. For example, this might be the case with respect to certain
withdrawal liability calculations. For plans using the 4044 interest
assumption but not the 4044 mortality assumption to determine
withdrawal liability, the updated assumptions will generally result in
lower benefit liabilities, but liability measurements should be within
a few percentage points of liability measurements using the current
methodology. Thus, the change will result in only a minor change in
withdrawal liability.
The changes to generational mortality tables and to a yield-curve
based interest assumption impose a small and not significant
administrative burden on plans and practitioners that do calculations
using the assumptions.
Section 6 of Executive Order 13563 requires agencies to rethink
existing regulations by periodically reviewing their regulatory
programs for rules that ``may be outmoded, ineffective, insufficient,
or excessively burdensome.'' These rules should be modified,
streamlined, expanded, or repealed as appropriate. PBGC is updating
certain outmoded assumptions in its benefits valuation regulation
consistent with the principles for review under E.O. 13563.
Regulatory Flexibility Act
The Regulatory Flexibility Act \28\ imposes certain requirements
respecting rules that are subject to the notice-and-comment
requirements of section 553(b) of the Administrative Procedure Act, or
any other law,\29\ and that are likely to have a significant economic
impact on a substantial number of small entities. Unless an agency
certifies that a final rule is not likely to have a significant
economic impact on a substantial number of small entities, section 604
of the Regulatory Flexibility Act requires that the agency present a
final regulatory flexibility analysis at the time of the publication of
the final rule describing the impact of the rule on small entities and
seek public comment on such impact. Small entities include small
businesses, organizations, and governmental jurisdictions.\30\
---------------------------------------------------------------------------
\28\ 5 U.S.C. 601 et seq.
\29\ The applicable definition of ``rule'' is found in section
601 of the Regulatory Flexibility Act. See 5 U.S.C. 601(2).
\30\ The applicable definitions of ``small business,'' ``small
organization,'' and ``small governmental jurisdiction'' are found in
section 601 of the Regulatory Flexibility Act. See 5 U.S.C. 601.
---------------------------------------------------------------------------
For purposes of the Regulatory Flexibility Act requirements with
respect to this final rule, PBGC considers a small entity to be a plan
with fewer than 100 participants.\31\ This is substantially the same
criterion PBGC uses in other regulations \32\ and is consistent with
certain requirements in title I of ERISA \33\ and the Code,\34\ as well
as the definition of a small entity that PBGC and the Department of
Labor
[[Page 48299]]
(DOL) have used for purposes of the Regulatory Flexibility Act.\35\
---------------------------------------------------------------------------
\31\ PBGC consulted with the Small Business Administration's
Office of Advocacy before making this determination. Memorandum
received from the U.S. Small Business Administration, Office of
Advocacy on March 9, 2021.
\32\ See, e.g., special rules for small plans under part 4007
(Payment of Premiums).
\33\ See, e.g., section 104(a)(2) of ERISA, which permits the
Secretary of Labor to prescribe simplified annual reports for
pension plans that cover fewer than 100 participants.
\34\ See, e.g., section 430(g)(2)(B) of the Code, which permits
plans with 100 or fewer participants to use valuation dates other
than the first day of the plan year.
\35\ See, e.g., PBGC's proposed rule on Reportable Events and
Certain Other Notification Requirements, 78 FR 20039, 20057 (April
3, 2013) and DOL's final rule on Procedures Governing the Filing and
Processing of Prohibited Transaction Exemption Applications, 89 FR
4662, 4690 (Jan. 24, 2024).
---------------------------------------------------------------------------
Further, while some large employers operate small plans along with
larger ones, in general, most small plans are maintained by small
employers. Thus, PBGC believes that assessing the impact of the final
rule on small plans is an appropriate substitute for evaluating the
effect on small entities. The definition of small entity considered
appropriate for this purpose differs, however, from a definition of
small business based on size standards promulgated by the Small
Business Administration \36\ under the Small Business Act. PBGC
therefore requested comments on the appropriateness of the size
standard used in evaluating the impact of the amendments in the final
rule on small entities. PBGC received no comments on this point.
---------------------------------------------------------------------------
\36\ See, 13 CFR 121.201.
---------------------------------------------------------------------------
Based on its definition of small entity, PBGC certifies under
Section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
that the amendments in this final rule will not have a significant
economic impact on a substantial number of small entities. As explained
earlier in this preamble, the assumptions will continue to produce
valuations that align with group annuity prices. Because of this, PBGC
does not expect the assumptions to have a significant economic impact
on a substantial number of entities of any size. Similarly, because
technology improvements allow even small plans (and their service
providers) to apply the more complicated interest and mortality
assumptions of this rule without additional administrative burden, this
final rule will not increase administrative costs on these entities.
Accordingly, as provided in Section 605 of the Regulatory Flexibility
Act, sections 603 and 604 do not apply.
List of Subjects
29 CFR Part 4001
Employee benefit plans, Pension insurance, Pensions.
29 CFR Part 4010
Pension insurance, Pensions, Reporting and recordkeeping
requirements.
29 CFR Part 4022
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4041
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4041A
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4043
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 amends 29 CFR parts
4001, 4010, 4022, 4041, 4041A, 4043, 4044, 4050, 4262, and 4281 as
follows:
PART 4001--TERMINOLOGY
0
1. The authority citation for part 4001 continues to read as follows:
Authority: 29 U.S.C. 1301, 1302(b)(3).
Sec. 4001.2 [Amended]
0
2. Amend Sec. 4001.2 in the definition of Expected retirement age
(XRA) by removing ``Sec. Sec. 4044.55 through 4044.57'' and adding in
its place ``Sec. Sec. 4044.55 through 4044.58''.
PART 4010--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
0
3. The authority citation for part 4010 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1310.
0
4. Amend Sec. 4010.8 in table 1 to paragraph (d)(2)(ii) under
``Assumptions'' by revising the entry for ``Interest'' and under
``Decrements'' by revising the entry for ``Retirement'' to read as
follows:
Sec. 4010.8 Plan actuarial information.
* * * * *
(d) * * *
(2) * * *
(ii) * * *
Table 1 to Paragraph (d)(2)(ii)
------------------------------------------------------------------------
------------------------------------------------------------------------
Assumptions: * * *
* * * * *
Interest............................ Sec. 4044.54.
* * * * *
Decrements
Retirement................. Sec. Sec. 4044.55 through
4044.58.
* * * * *
------------------------------------------------------------------------
* * * * *
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
0
5. 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.
0
6. Amend Sec. 4022.63 in paragraphs (b) introductory text by:
0
a. Removing the words ``the PBGC'' and adding in their place the word
``PBGC'' wherever they appear; and
0
b. Revising paragraph (b)(1).
The revision reads 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 4041--TERMINATION OF SINGLE-EMPLOYER PLANS
0
7. The authority citation for part 4041 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1341, 1344, 1350.
Sec. 4041.49 [Amended]
0
8. Amend Sec. 4041.49 in paragraph (b)(1)(ii) by removing ``Sec. Sec.
4044.41
[[Page 48300]]
through 4044.57'' and adding in its place ``Sec. Sec. 4044.41 through
4044.58''.
PART 4041A--TERMINATION OF MULTIEMPLOYER PLANS
0
9. The authority citation for part 4041A continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1431, 1441.
Sec. 4041A.43 [Amended]
0
10. Amend Sec. 4041A.43 in paragraph (b)(1) by removing ``Sec. Sec.
4044.41 through 4044.57'' and adding in its place ``Sec. Sec. 4044.41
through 4044.58''.
PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION
REQUIREMENTS
0
11. The authority citation for part 4043 continues to read as follows:
Authority: 29 U.S.C. 1083(k), 1302(b)(3), 1343.
Sec. 4043.65 [Amended]
0
12. Amend Sec. 4043.65 in paragraphs (b)(3) and (4) by removing
``Sec. Sec. 4044.51 through 4044.57'' and adding in its place
``Sec. Sec. 4044.51 through 4044.58'' wherever it occurs.
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
0
13. The authority citation for part 4044 continues to read as follows:
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
Sec. 4044.1 [Amended]
0
14. Amend Sec. 4044.1 in the second sentence of paragraph (b)(1) by
removing ``Sections 4044.51 through 4044.57'' and adding in its place
``Sections 4044.51 through 4044.58'' and by removing ``(Sec. Sec.
4044.55 through 4044.57)'' and adding in its place ``(Sec. Sec.
4044.55 through 4044.58)''.
Sec. 4044.2 [Amended]
0
15. Amend Sec. 4044.2 in paragraph (d) introductory text by removing
``Sec. Sec. 4044.55 through 4044.57'' and adding in its place
``Sec. Sec. 4044.55 through 4044.58''.
Sec. 4044.41 [Amended]
0
16. Amend Sec. 4044.41 in paragraphs (a)(1) and (2) by removing
``Sec. Sec. 4044.51 through 4044.57'' and adding in its place
``Sec. Sec. 4044.51 through 4044.58''.
Sec. 4044.51 [Amended]
0
17. Amend Sec. 4044.51 in paragraph (b)(2)(i) by removing ``Sec. Sec.
4044.55 through 4044.57'' and adding in its place ``Sec. Sec. 4044.55
through 4044.58''.
0
18. 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) Four hundred dollars ($400) multiplied by the lesser of the
applicable participant count and 100, and
(ii) Two hundred-fifty dollars ($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
19. Amend Sec. 4044.53 by revising paragraphs (c), (d), and (e) and
adding 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.
(iii) Mortality improvement rates. The mortality improvement rates
are the Scale MP-2021 Rates described in the Mortality Improvement
Scale MP-2021 Report.
(iv) Incorporation by reference. The Mortality Improvement Scale
MP-2021 Report, October 2021 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.
[[Page 48301]]
(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 2024 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 2024. The cumulative mortality improvement
factor for age 67 males for the period from 2012 to 2024 is 0.9867, and
the mortality rate for 2024 for male annuitants who are age 67 in that
year would be 0.01271, as shown in the following table.
Table 1 to Paragraph (c)(3)(i)--Example Mortality Rate Calculation
----------------------------------------------------------------------------------------------------------------
Annual mortality
Scale MP-2021 improvement factor Cumulative
Calendar year mortality (1-mortality mortality Mortality rate
improvement rate improvement rate) improvement factor
----------------------------------------------------------------------------------------------------------------
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 ..................
2024............................ 0.0052 0.9948 0.9867 0.01271
----------------------------------------------------------------------------------------------------------------
(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 2024, the probability of survival for the annuitant is based on the
mortality rate for a male annuitant who is age 67 in 2024 (0.01271),
and the projected mortality rate for a male annuitant who will be age
68 in 2025 (0.01369), age 69 in 2026 (0.01478), 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
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
[[Page 48302]]
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
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
[[Page 48303]]
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
----------------------------------------------------------------------------------------------------------------
(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
[[Page 48304]]
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 2024
----------------------------------------------------------------------------------------------------------------
Age Unisex mortality Age Unisex mortality
----------------------------------------------------------------------------------------------------------------
0........................................ 0.00207 61.......................... 0.00370
1........................................ 0.00015 62.......................... 0.00441
2........................................ 0.00010 63.......................... 0.00514
3........................................ 0.00008 64.......................... 0.00577
4........................................ 0.00006 65.......................... 0.00658
5........................................ 0.00006 66.......................... 0.00748
6........................................ 0.00005 67.......................... 0.00834
7........................................ 0.00005 68.......................... 0.00928
8........................................ 0.00004 69.......................... 0.01034
9........................................ 0.00004 70.......................... 0.01155
10....................................... 0.00004 71.......................... 0.01294
11....................................... 0.00004 72.......................... 0.01452
12....................................... 0.00005 73.......................... 0.01631
13....................................... 0.00006 74.......................... 0.01837
14....................................... 0.00008 75.......................... 0.02073
15....................................... 0.00009 76.......................... 0.02345
16....................................... 0.00010 77.......................... 0.02656
17....................................... 0.00012 78.......................... 0.03012
18....................................... 0.00014 79.......................... 0.03417
19....................................... 0.00016 80.......................... 0.03899
20....................................... 0.00016 81.......................... 0.04395
21....................................... 0.00017 82.......................... 0.04959
22....................................... 0.00017 83.......................... 0.05595
23....................................... 0.00018 84.......................... 0.06317
24....................................... 0.00019 85.......................... 0.07138
25....................................... 0.00020 86.......................... 0.08063
26....................................... 0.00021 87.......................... 0.09107
27....................................... 0.00022 88.......................... 0.10286
28....................................... 0.00023 89.......................... 0.11596
29....................................... 0.00023 90.......................... 0.13036
30....................................... 0.00025 91.......................... 0.14540
31....................................... 0.00026 92.......................... 0.16090
32....................................... 0.00028 93.......................... 0.17679
33....................................... 0.00030 94.......................... 0.19284
[[Page 48305]]
34....................................... 0.00032 95.......................... 0.20898
35....................................... 0.00034 96.......................... 0.22620
36....................................... 0.00036 97.......................... 0.24386
37....................................... 0.00038 98.......................... 0.26196
38....................................... 0.00040 99.......................... 0.28059
39....................................... 0.00043 100......................... 0.29960
40....................................... 0.00044 101......................... 0.31891
41....................................... 0.00046 102......................... 0.33825
42....................................... 0.00048 103......................... 0.35757
43....................................... 0.00049 104......................... 0.37670
44....................................... 0.00052 105......................... 0.39521
45....................................... 0.00054 106......................... 0.41327
46....................................... 0.00058 107......................... 0.43080
47....................................... 0.00061 108......................... 0.44743
48....................................... 0.00065 109......................... 0.46339
49....................................... 0.00070 110......................... 0.47628
50....................................... 0.00076 111......................... 0.48468
51....................................... 0.00085 112......................... 0.49268
52....................................... 0.00095 113......................... 0.49666
53....................................... 0.00106 114......................... 0.49795
54....................................... 0.00120 115......................... 0.49928
55....................................... 0.00143 116......................... 0.49960
56....................................... 0.00177 117......................... 0.49978
57....................................... 0.00205 118......................... 0.49995
58....................................... 0.00239 119......................... 0.50000
59....................................... 0.00276 120......................... 1.00000
60....................................... 0.00321 ............................ ..................
----------------------------------------------------------------------------------------------------------------
0
20. Add 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 multiplying the rate
determined in paragraph (d)(2)(i) of this section by one-third,
multiplying the rate determined in paragraph (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 this
paragraph (e) for the calendar quarter containing the date of the
blended market yield curve.
(2) Using spreads to adjust a blended market yield curve. The 4044
yield curve described in paragraph (c) of this section is determined by
adjusting the blended market yield curve. This adjustment is made by
adding 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--August 31, 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
[[Page 48306]]
this section is the blended market yield curve as of that date. Because
August 31, 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.
(ii) Example 2--November 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, October 31, 2024. Because
October 31, 2024, is in the fourth calendar quarter of 2024, the
applicable spreads determined under paragraph (e)(1) of this section
are the spreads for the fourth calendar quarter of 2024.
Table 1 to Paragraph (e)--Spreads
----------------------------------------------------------------------------------------------------------------
Third quarter 2024 spreads
-----------------------------------------------------------------------------------------------------------------
Spread Spread Spread
Maturity point (percent) Maturity point (percent) Maturity point (percent)
----------------------------------------------------------------------------------------------------------------
0.5......................... TBD 10.5........... TBD 20.5........... TBD
1.0......................... TBD 11.0........... TBD 21.0........... TBD
1.5......................... TBD 11.5........... TBD 21.5........... TBD
2.0......................... TBD 12.0........... TBD 22.0........... TBD
2.5......................... TBD 12.5........... TBD 22.5........... TBD
3.0......................... TBD 13.0........... TBD 23.0........... TBD
3.5......................... TBD 13.5........... TBD 23.5........... TBD
4.0......................... TBD 14.0........... TBD 24.0........... TBD
4.5......................... TBD 14.5........... TBD 24.5........... TBD
5.0......................... TBD 15.0........... TBD 25.0........... TBD
5.5......................... TBD 15.5........... TBD 25.5........... TBD
6.0......................... TBD 16.0........... TBD 26.0........... TBD
6.5......................... TBD 16.5........... TBD 26.5........... TBD
7.0......................... TBD 17.0........... TBD 27.0........... TBD
7.5......................... TBD 17.5........... TBD 27.5........... TBD
8.0......................... TBD 18.0........... TBD 28.0........... TBD
8.5......................... TBD 18.5........... TBD 28.5........... TBD
9.0......................... TBD 19.0........... TBD 29.0........... TBD
9.5......................... TBD 19.5........... TBD 29.5........... TBD
10.0........................ TBD 20.0........... TBD 30.0........... TBD
----------------------------------------------------------------------------------------------------------------
0
21. 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) * * *
(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, based on the participant's benefit determined under paragraph
(b)(1) of this section and the year in which the participant reaches
URA.
* * * * *
0
22. 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 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
23. Add Sec. 4044.58 before the center heading ``Non-Trusteed Plans''
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.
Table 1 to Sec. 4044.58
Table I-24--Selection of Retirement Rate Category
[For valuation dates in 2024 \1\]
----------------------------------------------------------------------------------------------------------------
Participant's retirement rate category is--
-------------------------------------------------------------------------------
If participant reaches URA in Medium \3\ if monthly benefit at URA High \4\ if
year-- Low \2\ if monthly is-- monthly benefit at
benefit at URA is ---------------------------------------- URA is greater
less than-- From-- To-- than--
----------------------------------------------------------------------------------------------------------------
2025............................ 802 802 3,388 3,388
2026............................ 821 821 3,466 3,466
2027............................ 839 839 3,546 3,546
2028............................ 859 859 3,627 3,627
2029............................ 879 879 3,711 3,711
2030............................ 899 899 3,796 3,796
2031............................ 919 919 3,883 3,883
2032............................ 941 941 3,973 3,973
2033............................ 962 962 4,064 4,064
[[Page 48307]]
2034 or later................... 984 984 4,157 4,157
----------------------------------------------------------------------------------------------------------------
\1\ Applicable tables for valuation dates before 2024 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
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
[[Page 48308]]
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
24. Remove and reserve appendix A to part 4044.
Appendix C to Part 4044--[Removed]
0
25. Remove appendix C to part 4044.
Appendix D to Part 4044--[Removed]
0
26. Remove appendix D to part 4044.
PART 4050--MISSING PARTICIPANTS
0
27. The authority citation for part 4050 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1350.
0
28. Amend Sec. 4050.102 by revising the introductory text and
paragraphs (2), (4), (7) introductory text, and (7)(i) to the
definition of PBGC missing participants assumptions to read as follows:
Sec. 4050.102 Definitions.
* * * * *
PBGC missing participants assumptions means the actuarial
[[Page 48309]]
assumptions prescribed in Sec. Sec. 4044.51 through 4044.58 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. However, for benefit
determination dates July 31 through December 31 of 2024, the interest
assumption is the assumption for valuing benefits under Sec. 4044.54
of this chapter applicable to valuations occurring on July 31, 2024.
* * * * *
(7) Notwithstanding the expected retirement age (XRA) assumptions
in Sec. Sec. 4044.55 through 4044.58 of this chapter--
(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
29. Amend Sec. 4050.302 by revising the introductory text and
paragraphs (2), (4), (7) introductory text, 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 4044.58 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. However, for benefit
determination dates July 31 through December 31 of 2024, the interest
assumption is the assumption for valuing benefits under Sec. 4044.54
of this chapter applicable to valuations occurring on July 31, 2024.
* * * * *
(7) Notwithstanding the expected retirement age (XRA) assumptions
in Sec. Sec. 4044.55 through 4044.58 of this chapter--
(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
30. Amend Sec. 4050.402 by revising the introductory text and
paragraphs (2), (4), (7) introductory text, 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 4044.58 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. However, for benefit
determination dates July 31 through December 31 of 2024, the interest
assumption is the assumption for valuing benefits under Sec. 4044.54
of this chapter applicable to valuations occurring on July 31, 2024.
* * * * *
(7) Notwithstanding the expected retirement age (XRA) assumptions
in Sec. Sec. 4044.55 through 4044.58 of this chapter--
(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
31. 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
32. Amend Sec. 4262.16 in paragraphs (f)(3)(iv), (g)(1) introductory
text, and (h)(1)(ii) by removing the words ``in appendix B to part
4044'' and adding in its place the words ``under Sec. 4044.54''.
PART 4281--DUTIES OF PLAN SPONSOR FOLLOWING MASS WITHDRAWAL
0
33. 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
34. 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.
Ann Y. Orr,
Acting Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2024-11819 Filed 6-5-24; 8:45 am]
BILLING CODE 7709-02-P
