The Pension Benefit Guaranty Corporation (PBGC) has issued its interest rate assumptions for the first quarter of 2021.
On Dec. 14 the PBGC issued a final rule that amends its regulation on Allocation of Assets in Single-Employer Plans to prescribe interest assumptions under the asset allocation regulation for plans with valuation dates in the first quarter of 2021. These interest assumptions are used for valuing benefits under terminating single-employer plans and for other purposes.
The first quarter 2021 interest assumptions will be 1.69% for the first 20 years following the valuation date and 1.66% thereafter. The new rates compare to those of the 4th quarter of 2020 as follows:
| Measure | Change, 4th Quarter of 2020 to the 1st Quarter of 2021 |
| Period during which the select (initial) rate applies | No change |
| Select rate | + 0.07% |
| Ultimate (final) rate | + 0.26% |
The PBGC uses the interest assumptions in appendix B to part 4044 to determine the present value of annuities in an involuntary or distress termination of a single-employer plan under the asset allocation regulation. The PBGC also uses the assumptions to determine the value of multiemployer plan benefits and certain assets when a plan terminates by mass withdrawal in accordance with its regulation on Duties of Plan Sponsor Following Mass Withdrawal (29 CFR part 4281).
Effective Date
The first quarter 2021 interest assumptions will be effective Jan. 1, 2021. They will appear in the Federal Register of Dec. 15, 2020.
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