PBGC Issues Proposed Rule on Actuarial Assumptions for Determining an Employer’s Withdrawal Liability; Comment Period Extended to December 13
Published November 09, 2022
The Pension Benefit Guaranty Corporation (PBGC) has extended the public comment period by 60 days for the proposed rule, "Actuarial Assumptions for Determining an Employer’s Withdrawal Liability."
Comments are due December 13, 2022.
(updated November 9, 2022)
The Pension Benefit Guaranty Corporation (PBGC) issued a proposed rule to provide interest rate assumptions in determining a withdrawing employer’s liability to a multiemployer pension plan.
Under the Employee Retirement Income Security Act of 1974 (ERISA), an employer that withdraws from an underfunded multiemployer plan may owe withdrawal liability to the plan. The amount owed represents the withdrawn employer’s share of the amount by which the present value of the plan’s nonforfeitable benefits exceed the value of the plan’s assets. The plan actuary determines the present value of the plan’s nonforfeitable benefits using actuarial assumptions and methods.
The proposed rule:
- Clarifies that it is reasonable to base the interest assumption used to calculate an employer’s withdrawal liability on the market price of purchasing annuities from private insurers, such as by use of settlement interest rates prescribed by PBGC under Section 4044 of ERISA (4044 rates)
- Would specifically permit the use of 4044 rates either as a standalone assumption or combined with funding interest rate assumptions, to determine withdrawal liability.
PBGC’s legal authority for the rulemaking comes from Section 4213 of the Employee Retirement Income Security Act of 1974 (ERISA), which authorizes PBGC to prescribe actuarial assumptions and methods for purposes of determining an employer’s withdrawal liability, and from Section 4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to carry out the purposes of title IV of ERISA.
Comments are due November 14, 2022.