PBGC Issues Final Rule on Allocation of Assets

The Pension Benefit Guaranty Corporation (PBGC) issued a final rule amending PBGC’s regulation on Allocation of Assets in Single-Employer Plans. The amendment would substitute a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2023. The table is needed to compute the value of early retirement benefits and, thus, the total value of benefits under a plan.

Table I in appendix D (Selection of Retirement Rate Category) is used to determine whether a participant has a low, medium, or high probability of retiring early. The final rule amends appendix D to replace Table I-22 with Table I-23 to provide an updated correlation, appropriate for calendar year 2023, between the amount of a participant’s benefit and the probability that the participant will elect early retirement. Table I-23 will be used to value benefits in plans with valuation dates during calendar year 2023.