PBGC Provides New Table for Determining Expected Retirement Ages

The Pension Benefit Guaranty Corporation (PBGC) has issued a rule amending its regulation on Allocation of Assets in Single-Employer Plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2018.

The table is needed to compute the value of early retirement benefits and, thus, the total value of benefits under a plan.

The agency explains that under Section 4044.51(b) of the asset-allocation regulation, early retirement benefits are valued based on the annuity starting date, if a retirement date has been selected, or the expected retirement age, if the annuity starting date is not known on the valuation date. Sections 4044.55 through 4044.57 set forth rules for determining the expected retirement ages for plan participants entitled to early retirement benefits.

Appendix D of part 4044 contains tables to be used in determining the expected early retirement ages. 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 new rule amends appendix D to replace Table I–17 with Table I–18 to provide an updated correlation, appropriate for calendar year 2018, between the amount of a participant’s benefit and the probability that the participant will elect early retirement. The rule is effective January 1.