PBGC Extends Plan Relief Due to Interest Rate Debate

March 31, 2004 (PLANSPONSOR.com) - As federal lawmakers continue wrangling about a replacement interest rate to use in calculating pension benefits, the federal private pension insurer has given plan sponsors a little extra breathing room in filing required reports.

The Pension Benefit Guaranty Corporation (PBGC) said in its Technical Update 04-2 that it was extending for six months the reporting relief provided for by a similar May 2002 update to certain situations where the requirement to report, or the timing of the report, is based on PBGC variable-rate premium (VRP) calculations. In the 2002 technical update, the PBGC permitted use of 100% (rather than 85%) of the annual yield on 30-year Treasuries to value vested benefits for certain PBGC reporting purposes, with the relief tied to reporting periods or events occurring or becoming effective during calendar years 2002 or 2003.

The latest Technical Update extends that relief beyond calendar year 2003, through May 31, 2004.

Wednesday’s PBGC announcement details the specific reporting and other kinds of relief it was extending and the circumstances under which it would be relevant for plan sponsors. The full text of the announcement is at   http://www.pbgc.gov/laws/techupdates/tu04-02.htm .

>The joint U.S. House of Representatives, Senate committee convened to hammer out compromise legislation to replace the 30-year Treasury bond for pension calculations ran into a roadblock last week.  (See House, Senate Committee Run Aground on 30-Year Bond Discussions ).