PBGC Wants to Change Survey of Nonparticipating Single Premium Group Annuity Rates

The Pension Benefit Guaranty Corporation (PBGC) wants to make changes to its quarterly survey of nonparticipating single premium group annuity rates. The agency announced on March 31 that is seeking the Office of Management and Budget’s (OMB) approval of the proposed changes. 

The PBGC’s regulations set actuarial valuation methods and assumptions that are to be used to determine: (1) the actuarial present value of benefits under single-employer plans that are terminating either involuntarily or because they are in distress; and (2) the value of benefits and certain assets under multiemployer plans from which there is a mass withdrawal of contributing employers. 

In each month immediately before the start of a new calendar quarter, the PBGC publishes the interest rates to be used for plans terminating or undergoing mass withdrawal during the next quarter. The assumptions to be used include interest rates intended to reflect current conditions in the annuity markets. 

In order to determine those rates, the PBGC uses a quarterly survey that gathers premium rate data from insurance companies that are providing annuity contracts to terminating pension plans. The PBGC also uses the information from the survey in determining the interest rates it uses to value benefits payable to participants and beneficiaries in PBGC-trusteed plans for purposes of the PBGC's financial statements.

The PBGC is proposing the following changes to the survey: 

• Increases to the dollar ranges in the questions on respondents’ group annuity business in part III to allow the survey to continue to capture the variability and range of business respondents accept as the prices of plan termination annuity contracts increase with inflation.
• Changes to the instructions to clarify that:
  • respondents should provide pricing information only for full plan terminations (and transactions priced consistently with full plan terminations);
  • the annuity rates provided should include reductions for investment expenses but exclude administrative expenses and reductions for competitive bidding; and 
  • respondents should assume that plan provisions are straightforward and do not contain significant levels of anti-selection, expensive options, or subsidies.
• Consolidation and simplification of former parts III and IV into a new part III and elimination of questions asking for information the PBGC no longer uses. 
• Modification of a question asking for the volume of respondents’ plan termination annuity business so that it requests annual data instead of quarterly data to reduce volatility in survey responses. 
• Addition of: 
  • a confirmation that administrative expenses are excluded from pricing information and an option to comment on any exceptions;
  • a question asking for specific information about the interest assumptions underlying the annuity premium rates reported in parts I and II of the survey;
  • a question soliciting feedback on how the PBGC could improve the survey process; and
  • flexibility to conduct the survey electronically.

Public Comments Welcome

The PBGC seeks public comments on these modifications in order to help it to:

• Evaluate whether the proposed collection of information is necessary for the proper performance of its functions, including whether the information will have practical utility.
• Evaluate the accuracy of the its estimate of the burden of the proposed collection of information, including the validity of the methodologies and assumptions used.
• Enhance the quality, utility and clarity of the information to be collected.
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical or other technological collection techniques or other forms of information technology; for example, permitting electronic submission of responses.

Comments may be submitted by any of the following methods: 

• The Federal eRulemaking Portal: https://www.regulations.gov. 
• An Email to: [email protected]. Refer to Survey of Insurance Company Rates or OMB control number 1212-0030 in the subject line.
• By Mail or Hand Delivery to: Regulatory Affairs Division, Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-4026. 

All submissions received must include the agency’s name (Pension Benefit Guaranty Corporation, or PBGC) and refer to the Survey of Insurance Company Rates or OMB control number 1212-0030.