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PBGC Issues Final Rule on Allocation of Assets in Single-Employer Plans

The Pension Benefit Guaranty Corporation (PBGC) on Dec. 21 issued a final rule amending its regulation on allocation of assets in single-employer plans to prescribe interest assumptions under the asset allocation regulation for valuation dates in the first quarter of 2017. The rule is effective Jan. 1, 2017.

The rule says that for the first quarter of 2017, the interest assumptions under the allocation regulation will be 1.87% for the first 20 years following the valuation date and 2.37% thereafter. These interest assumptions represent no change in the select period (the period during which the select rate (the initial rate) applies), a decrease of 0.11% in the select rate, and a decrease of 0.30% in the ultimate rate (the final rate).

The interest assumptions are used for valuing benefits under terminating single-employer plans covered by the pension insurance system administered by PBGC. The PBGC’s regulation on allocation of assets in single-employer plans (29 CFR part 4044) prescribes actuarial assumptions — including interest assumptions — for valuing plan benefits under terminating single-employer plans covered by title IV of ERISA.