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Compliance January 12, 2006
PBGC Extends Use of the PFEA 85% Corporate Rate
January 12, 2006 (PLANSPONSOR.com) - The Pension
Benefit Guaranty Corporation (PBGC) has issued Technical
Update 06-1 which waives reporting by certain employers of
financial and actuarial information under section 4010 of the
Employee Retirement Income Security Act (ERISA).
Reported by Rebecca Moore
According to the update, ERISA section 4010 generally requires controlled groups to report to the PBGC if the aggregate unfunded vested benefits in plans maintained by the controlled group exceed $50 million (“the 4010 Gateway Test”).
For purposes of determining vested benefits for the 4010 Gateway Test for plan years ending before December 31, 2005, the Pension Funding Equity Act of 2004 (PFEA) set the PBGC’s variable rate premium interest rate for plan years beginning in 2004 or 2005 at 85% of the annual rate of interest determined by the Secretary of the Treasury on amounts invested conservatively in long?term investment grade corporate bonds (PFEA 85% Corporate Rate) for the calendar month preceding the calendar month in which the plan year begins. According to the update, the PFEA 85% Corporate Rate no longer applies for plan years beginning on or after December 31, 2005.
However, since pending legislation in the US House and Senate would extend the use of the PFEA 85% Corporate Rate for another year, the PBGC’s notice extends the rate’s use for another year.
Reporting of financial and actuarial information is waived for information years ending on or after December 31, 2005, and on or before June 30, 2006, provided no filing would be required if, for purposes of the 4010 Gateway Test, the PFEA 85% Corporate Rate is used for valuing vested benefits for plan years ending on or after December 31, 2005.
The update is here .