In June 2024, the Pension Benefit Guaranty Corporation (PBGC) issued its final rule updating the interest mortality and expense assumptions used to determine the present value of benefits for Single Employer Pension plans (SEPs) under subpart B of the PBGC’s regulations on Allocation of Assets in SEPs. This is to determine components of mass withdrawal liability for a multiemployer pension plan and other purposes. The final rule is basically the same as the proposed rule published in August 2023 except for certain technical and editorial changes.
Final Rule’s Primary Elements
Following are the major provisions of the PBGC’s final rules:
- Modernizing the interest assumption by adopting a yield curve approach
- Enabling 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
- Increasing transparency by using a procedure based on publicly available yield curves as of the valuation date
- Adopting a more recent mortality table along with a generational mortality improvement projection
- Simplifying the expense assumption
The final rule uses the ERISA 4044 mortality table for healthy lives, which is derived from the tables in the Private Retirement Plans Mortality Tables Report which was published by the Society of Actuaries in 2019. This table is then projected generationally using a prescribed mortality improvement scale.
