The Pension Benefit Guaranty Corporation (PBGC), on October 14, 2022, unveiled a proposed rule to provide a range of interest rate assumptions that a multiemployer plan actuary can use to calculate the withdrawal liability of a withdrawing employer. Current PBGC regulations don’t provide for that (except with respect to a plan terminating as the result of a mass withdrawal) even though ERISA delegates to the PBGC rule-making authority as to actuarial assumptions. Under current law, ERISA 4213 only requires that all actuarial assumptions and methods be “reasonable (taking into account the experience of the plan and reasonable expectation” and offer the “Actuary’s best estimate of anticipated experience under the plan....” obviously opening the door to interest rate challenges by withdrawing employers.
The proposed rule, according to PBGC, is intended to “provide clarity” as to a range of permissible interest rate assumptions. The proposed range includes any rate from and including PBGC annuity rates (ERISA 4044 ) to the minimum funding rate used for a given multiemployer plan and anything in between those rates. According to the PBGC, the impact of the rule would be to increase the amount of withdrawal liability plans collected and to reduce arbitration and litigation.
Comments on the proposed rule are due on November 14, 2014.