Compliance June 10, 2004

PBGC Adjusts Interest Rate Guidance

June 10, 2004 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) on Thursday made some changes to its previously issued guidance on how to report the move from the use of a 30-year Treasury Yield to a Corporate Bond Index.

Reported by

Fred Schneyer

Technical Update 04-3 explains how the provisions of the Pension Funding Equity Act of 2004 that relate to the PBGC’s variable-rate premium interest rate apply to PBGC reporting and disclosure requirements (See Whew! Bush Signs Pension Relief ) .

Thursday, the federal pension insurer revised the example in section IV. C. 3., “Extensions in PBGC Reportable Events Regulation,” as follows:

Two reportable events occur with respect to calendar year Plan G. Event 1 occurs on April 30, 2004, and Event 2 occurs on April 30, 2005. For purposes of determining whether an extension of port-event reporting applies:

With respect to Event 1, vested benefits would be valued using the JCWAA 100% Treasury Rate for the plan year that began January 1, 2003 (i.e., the December 2002 rate of 4.92%).
With respect to Event 2, vested benefits would be valued using the PFEA 85% Corporate Rate for the plan year that began January 1, 2004 (i.e., the December 2003 rate of 4.94%).

>The original guidance is at http://www.pbgc.gov/laws/techupdates/tu04-03.htm .