On December 14, 2021, the PBGC issued a final rule that amends the regulation on the allocation of assets in single-employer plans. The guidance, which is effective January 1, 2022, provides interest assumptions for plans with valuation dates in the first quarter of 2022.

These interest assumptions are used for valuing benefits under terminating single-employer plans, amongst other purposes. Specifically, the PBGC uses the interest assumptions to determine the present value of annuities in an involuntary or distress termination of a single-employer plan under the asset allocation regulation. The assumptions are also used to determine the value of multiemployer plan benefits and certain assets when a plan terminates by mass withdrawal in accordance with PBGC's regulation on Duties of Plan Sponsor Following Mass Withdrawal.

The first quarter 2022 interest assumptions will be 2.37 percent for the first 20 years following the valuation date (the initial period) and 2.03 percent (the final rate) thereafter. As compared to the interest assumptions in effect for the fourth quarter of 2021, these updated assumptions reflect a decrease of 0.03 percent in the initial rate and a decrease of 0.08 percent in the final rate.

Employers who sponsor defined benefit pension plans may want to be aware of the updated guidance.

Allocation of Assets in Single-Employer Plans; Interest Assumptions for Valuing Benefits »