Pension Benefit Guaranty Corporation October 2011 – Federal Register Recent Federal Regulation Documents

This proposed rule would implement provisions of the Pension Protection Act of 2006 (PPA 2006) that change the rules for determining benefits upon the termination of a statutory hybrid plan, such as a cash balance plan. PPA 2006 provides that, when such a plan terminates, a variable rate used under the plan to determine accrued benefits will be equal to the average of the rates of interest used under the plan during the five-year period ending on the termination date. Further, the amount of the benefit payable in the form of an annuity payable at normal retirement age will be determined using the interest rate and mortality table specified under the plan for that purpose as of the termination date (or an average interest rate if the plan rate is a variable rate). For a plan terminated and trusteed by PBGC, the proposed rule would amend PBGC's regulations to conform the rules for determining the allocation of assets and the amount of benefits payable under Title IV of ERISA to the PPA 2006 changes in the benefit determination rules for statutory hybrid plans. The proposed rule would also implement a PPA 2006 change for determining the present value of the accrued benefit under a statutory hybrid plan. Finally, the proposed rule would provide guidance on benefits payable under a statutory hybrid plan that terminates in a standard termination.

This final rule amends the Pension Benefit Guaranty Corporation's regulation on Benefits Payable in Terminated Single- Employer Plans to prescribe interest assumptions under the regulation for valuation dates in November 2011. The interest assumptions are used for paying benefits under terminating single-employer plans covered by the pension insurance system administered by PBGC.