Regulatory Updates
Regulatory Updates provide quick access to employee benefit regulations, rulings and other guidance released by governmental agencies in the U.S. and Canada.
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PBGC Proposed Rule on Valuation Assumptions and Methods for Single-Employer Pension Plans; Comments Due October 17
Aug 17, 2023, 05:00
by
Tyler Lloyd
The Pension Benefit Guaranty Corporation (PBGC) released a proposed rule
to amend its regulation on allocation of assets in single-employer
plans to update the interest, mortality, and expense assumptions used to
determine the present value of benefits for a single-employer pension
plan ending in a distress or involuntary termination. The assumptions
are also used for certain multiemployer withdrawal liability
calculations and for other purposes.
The proposed rule would:
- Modernize the interest assumption structure by adopting a yield curve approach;
- Enable the use of market interest rates as of the date of liability measurement (i.e., the valuation date) as the basis for the interest assumption;
- Increase transparency by using a procedure based on publicly available yield curves as of the valuation date;
- Adopt a more recent mortality table along with a generational mortality improvement projection; and
- Simplify the expense assumption.
The PBGC is also publishing a draft white paper describing the valuation methodology used to determine the ERISA 4044 yield curve. Once the rule is finalized, PBGC will modify the draft, as needed.
Comment are due October 17, 2023.