The Pension Benefit Guaranty Corporation published a final rule on Friday amending its regulation on the allocation of assets in single-employer plans.
The amendment involves substituting a new table for determining the expected retirement age of participants in pension plans undergoing distress or involuntary termination. The guidance applies to plans with valuation dates falling in 2025, according to the final rule, which is effective January 1, 2025.
This table is needed to compute the value of early retirement benefits, and, thus, the total value of benefits under a plan. The expected retirement age, or XRA, is one of the assumptions used to determine liabilities under ERISA section 4044.
For ERISA section 4044 calculations, the age at which benefits are assumed to commence depends on two factors:
- Whether the benefit amount is considered low, medium or high (the Retirement Rate Category), and
- When participants, under the provisions of their plan can begin receiving reduced and unreduced benefits (the XRA tables).
A copy of the table is available on PBGC’s ERISA Section 4044 Retirement Assumptions web page.
The final rule also provides the mortality assumption for use with PBGC’s missing participants programs for determination dates in 2025. The current table for the missing participants programs provides the mortality assumption only for benefit determination dates on July 31 and later in 2024. The final rule updates the table to provide the mortality assumption for benefit determination dates in 2025.
In addition, the PBGC determined that notice of, and public comment on the rule are “impracticable, unnecessary and contrary to the public interest,” as the PBGC’s update of the tables for calendar year 2025 are routine.
Plan administrators also need the updated tables to value benefits in a timely manner. As a result, the PBGC stated that the public interest is best served by issuing these tables “expeditiously” without an opportunity for notice or comment. The PBGC wrote that good cause exists for making the table set forth in the amendment effective less than 30 days after publication to allow the use of the proper tables to determine the value benefits for dates in early 2025.
Tags: ERISA, mortality tables, PBGC, Pension Benefit Guaranty Corporation