GATT & PBGC Rates
Month Gatt Rate PBGC Rate 10 yr T-Bond Rate
May 2012 1.50 April 2012 3.18 1.25 March 2012 3.28 1.25 February 2012 3.11 1.25 January 2012 3.03 1.25 1.83
December2011 2.98 1.50 1.89
November 2011 3.02 1.50 2.08
October 2011 3.13 1.75 2.17
September 2011 3.18 2.25 1.92
August 2011 3.65 2.25 2.23
July 2011 4.27 2.25 2.82
June 2011 4.23 2.5 3.08
May 2011 4.29 2.5 3.14
Many companies use one of these monthly interest rates to calculate lump sum distribustions from their pension plans. Many plans will automatically defer to the rate that will yield the highest payout. If you would like to know how changes in these rates can affect your pension distribustion please call our office or fill out the form on the side of this page.
What are these Rates?
The GATT Rate is the 30-year Treasury bond interest rate and is used as a benchmark for calculations of lump sum distribution from defined benefit plans.
GATT stands for General Agreement on Tariffs and Trade. Decisions that fall under the GATT jurisdiction are made by the Council for Trade in Goods, which is made up of ten representatives from the WTO (World Trade Organization). The GATT’s main goal is to ensure fair trading between the countries of the world. Some of the areas they cover are: Agriculture, market access for goods, rules of origin, anti-dumping, plus a number more and it is still growing. Anything the council can think of to help the world will be implemented in the future.
The 30 year treasury bill is a loan against the US treasury. GATT regulates this sort of thing since it effects the population of the entire globe. Pension plans are often paid out yearly but there is the option to receive one lump sum. Since the pension plan in question would be based on the value of treasury bills, the GATT rules what the percentage will be on a lump sum.
The Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of more than 44 million American workers in more than 29,000 private-sector defined benefit pension plans. A defined benefit plan provides a specified monthly benefit at retirement, often based on a combination of salary and years of service. PBGC was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum. Defined benefit pension plans promise to pay a specified monthly benefit at retirement, commonly based on salary and years on the job.
PBGC is not funded by general tax revenues. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.
PBGC pays monthly retirement benefits, up to a guaranteed maximum, to nearly 744,000 retirees in 4000 pension plans that ended. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1,476,000 people.
The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans ended in 2009 and 2010, workers who retire at age 65 can receive up to $4,500 a month ($54,000 a year). The guarantee is lower for those who retire early or when there is a benefit for a survivor. The guarantee is increased for those who retire after age 65.
To learn more about the GATT or PBGC rates, and how they can effect your pension please don’t hesitate to contact the Flagstone Retirement Consultants team toll free at 866-892-2080, or fell free to E-mail us at Info@flagstoneretirement.com