The Pension Benefit Guaranty Corporation (PBGC), the agency that insures benefits in single-employer defined benefit (DB) pension plans, has issued a final rule that modifies assumptions used to calculate de minimis lump-sum benefits in PBGC-trusteed terminated DB plans. Sponsors of single-employer DB plans pay benefit insurance premiums to the PBGC—amounts that will partially fund promised benefits in the event that a plan is terminated and unable to meet benefit obligations—and the PBGC assumes a trustee role on behalf of the plan’s participants and beneficiaries.
In addition to modifying certain assumptions used in de minimis lump sum benefit calculations, the final rule also notes the discontinuance of the PBGC’s monthly issuance of interest rate assumptions. The guidance notes that “because some private-sector plans use PBGC’s lump sum interest rates, the rule provides a table for plans to use to determine interest assumptions in accordance with PBGC’s historical methodology.”
This PBGC final regulation will appear in a future edition of the Federal Register. The document notes that the guidance will take effect January 1, 2021, and will affect plans with termination dates on or after January 1, 2021.