Blogging Employee Benefits

August 24, 2006

PPA Interest Rates for 2006 PBGC Variable Rate Premiums

Filed under: PBGC, Pensions — Fuguerre @ 7:26 am

Along with the extension of the pre-2006 corporate bond basis replacing the 30-year Treasury bond basis for valuation of current liabilities of a pension plan, the Pension Protection Act of 2006 similarly extended the corporate bond basis for the interest rate used to value vested benefits for purposes of the PBGC variable rate premium. [PPA §301(a)(3)] The Pension Benefit Guaranty Corporation has updated its page on Valuing vested benefits for PBGC variable rate to reflect the PPA provision. (Previously, these PPA rates had been available on the PBGC’s page for the 4010 temporary gateway test, which had waived 4010 reporting on the basis of the anticipated PPA rates.)

Note that although PPA §401(a) eliminates the full funding limit exemption of ERISA §4006(a)(3)(E)(iv) after 2007 (i.e., hitting the FFL in 2007 will not relieve you from the VRP in 2008), that exemption does remain intact for the 2006 and 2007 premium years.

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