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108th CONGRESS
1st Session
S. 1610
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to ensure the adequate funding of pension
plans, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 11, 2003
Mr. Bayh (for himself and Mr. Kerry) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to ensure the adequate funding of pension
plans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Defined Benefit Pension Plan Reform
Act of 2003''.
SEC. 2. MULTIEMPLOYER PLAN EMERGENCY INVESTMENT LOSS RULE.
(a) Amendment to the Internal Revenue Code of 1986.--Section
412(b)(7) of the Internal Revenue Code of 1986 (relating to special
rules for multiemployer plans) is amended by adding at the end the
following:
``(F) Emergency investment loss method.--
``(i) In general.--In lieu of amortizing
net experience loss as prescribed in paragraph
(2)(B)(iv), a multiemployer plan may elect to
use the emergency investment loss method
described in this subparagraph, starting with
the first plan year in which there is an
emergency investment loss.
``(ii) Emergency investment loss.--An
emergency investment loss for any plan year
beginning on or after July 1, 1999, and ending
before January 1, 2004, is the amount (if any)
by which--
``(I) the fair market value of the
plan's assets as of the last day of the
plan year, is less than
``(II) the fair market value which
would have been determined if the
plan's earnings for the plan year had
been equal to the projected investment
return based on the actuarial interest
rate under paragraph (5)(A) for the
plan year, applied to the fair market
value of assets as of the beginning of
the year and noninvestment cash flows
during the year.
``(iii) Amortization of emergency
investment loss.--The funding standard account
shall be charged with the amounts necessary to
amortize in equal annual installments (until
fully amortized) the plan's emergency
investment loss over a period of 30 plan years.
``(iv) Treatment of adjusted net actuarial
experience.--If an election is in effect for
any plan year described in clause (ii)--
``(I) any net experience gain
otherwise determined for such year
under paragraph (2)(B)(iv) shall be
increased by an amount equal to the
emergency investment loss for such
year, and
``(II) any net experience loss
otherwise determined for such year
under paragraph (3)(B)(ii) shall be
reduced by the emergency investment
loss for such year, except that if such
emergency investment loss exceeds such
net experience loss, the excess shall
be treated as a net experience gain for
such year for purposes of paragraph
(2)(B)(iv).''
(b) Amendment to the Employee Retirement Income Security Act of
1974.--Section 302(b)(7) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1082(b)(7)) is amended by adding at the end the
following:
``(F)(i) In lieu of amortizing net experience loss as prescribed in
paragraph (2)(B)(iv), a multiemployer plan may elect to use the
emergency investment loss method described in this subparagraph,
starting with the first plan year in which there is an emergency
investment loss.
``(ii) An emergency investment loss for any plan year beginning on
or after July 1, 1999, and ending before January 1, 2004, is the amount
(if any) by which--
``(I) the fair market value of the plan's assets as of the
last day of the plan year, is less than
``(II) the fair market value which would have been
determined if the plan's earnings for the plan year had been
equal to the projected investment return based on the actuarial
interest rate under paragraph (5)(A) for the plan year, applied
to the fair market value of assets as of the beginning of the
year and noninvestment cash flows during the year.
``(iii) The funding standard account shall be charged with the
amounts necessary to amortize in equal annual installments (until fully
amortized) the plan's emergency investment loss over a period of 30
plan years.
``(iv) If an election is in effect for any plan year described in
clause (ii)--
``(I) any net experience gain otherwise determined for such
year under paragraph (2)(B)(iv) shall be increased by an amount
equal to the emergency investment loss for such year, and
``(II) any net experience loss otherwise determined for
such year under paragraph (3)(B)(ii) shall be reduced by the
emergency investment loss for such year, except that if such emergency
investment loss exceeds such net experience loss, the excess shall be
treated as a net experience gain for such year for purposes of
paragraph (2)(B)(iv).''
(c) Election Procedure.--
(1) In general.--The Secretary of the Treasury shall
prescribe a procedure under which multiemployer plans that
elect to use the emergency investment loss method described in
section 412(b)(7)(F) of the Internal Revenue Code of 1986 and
section 302(b)(7)(F) of the Employee Retirement Income Security
Act of 1974 may do so either by starting the special
amortization periods in the actuarial valuations for each of
the affected plan years or by starting with a cumulative
emergency investment loss and adjusted net actuarial experience
(based on the outstanding balance of the experience gain bases
for the affected plan years, reduced by the cumulative
emergency investment loss) in the actuarial valuation for the
last plan year ending before January 1, 2004.
(2) Filing period.--The procedures described in paragraph
(1) shall provide a period of not less than 210 days after the
date of enactment of this Act for multiemployer plans to file
Schedule Bs (relating to actuarial information under the plan)
to the Form 5500 Annual Reports for the plan years for which
the emergency investment loss method is elected, including
amended Schedule Bs for annual reports previously filed.
(d) Effective Date.--The amendments made by this section shall
apply to years beginning after June 30, 1999.
SEC. 3. MORTALITY TABLE ADJUSTMENT.
(a) Amendment to the Internal Revenue Code of 1986.--Section
412(l)(7)(C) of the Internal Revenue Code of 1986 is amended by adding
at the end the following:
``(iv) Separate mortality tables for blue-
collar and white-collar workers.--
``(I) In general.--Notwithstanding
clause (ii), in the case of plan years
beginning after December 31, 2003, the
Secretary shall establish separate
mortality tables for blue-collar
workers and white-collar workers which
may be used (in lieu of the tables
under clause (ii)) to determine current
liability under this subsection. For
this purpose, the Secretary shall take
into account the Society of Actuaries
RP-2000 Mortality Table, as adjusted to
take into account the collar adjustment
prescribed in such table to reflect the
workforce covered by the plan.
``(II) Classification of workers.--
For purposes of this clause,
individuals shall be classified as
blue-collar or white-collar workers
under rules prescribed by the
Secretary. In prescribing such rules,
the Secretary shall treat professional
employees (within the meaning of
section 410) as white-collar workers.
``(III) Consistent use.--If an
employer elects to use the tables
prescribed under subclause (I) for any
plan established or maintained by the
employer, the employer shall use the
tables for all such plans other than a
plan for which use of the tables is
prohibited under regulations prescribed
by the Secretary.''.
(b) Amendment to the Employee Retirement Income Security Act of
1974.--Section 302(d)(7)(C) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1082(d)(7)(C)) is amended by adding at the end
the following:
``(iv) Separate mortality tables for blue-
collar and white-collar workers.--
``(I) In general.--Notwithstanding
clause (ii), in the case of plan years
beginning after December 31, 2003, the
Secretary of the Treasury shall
establish separate mortality tables for
blue-collar workers and white-collar
workers which may be used (in lieu of
the tables under clause (ii)) to
determine current liability under this
subsection. For this purpose, the
Secretary of the Treasury shall take
into account the Society of Actuaries
RP-2000 Mortality Table, as adjusted to
take into account the collar adjustment
prescribed in such table to reflect the
workforce covered by the plan.
``(II) Classification of workers.--
For purposes of this clause,
individuals shall be classified as
blue-collar or white-collar workers
under rules prescribed by the Secretary
of the Treasury. In prescribing such
rules, the Secretary of the Treasury
shall treat professional employees
(within the meaning of section 410 of
the Internal Revenue Code of 1986) as
white-collar workers.
``(III) Consistent use.--If an
employer elects to use the tables
prescribed under subclause (I) for any
plan established or maintained by the
employer, the employer shall use the
tables for all such plans other than a
plan for which use of the tables is
prohibited under regulations prescribed
by the Secretary of the Treasury.''.
(c) Effective Date.--The amendments made by this section shall be
effective as of the date of the enactment of this Act.
SEC. 4. MODIFICATION OF FULL-FUNDING LIMITATION FOR PURPOSES OF
DEDUCTION LIMITS ON EMPLOYER PENSION CONTRIBUTIONS.
(a) In General.--Section 404(a)(1)(A) of the Internal Revenue Code
of 1986 (relating to limitation on deductibility of employer
contributions) is amended by adding at the end the following: ``In
determining the full funding limitation for purposes of the preceding
sentence for any year beginning after December 31, 2003, the amount
determined under section 412(c)(7)(A)(i) shall in no event be treated
as being less than 130 percent of current liability (including the
expected increase in current liability due to benefits accruing during
the year).''
(b) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2003.
SEC. 5. REQUIRED NOTIFICATION OF PARTICIPANTS AND BENEFICIARIES OF PLAN
TERMINATIONS BY PENSION BENEFIT GUARANTY CORPORATION.
(a) In General.--Section 4042(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1342(b)) is amended by adding at the
end the following:
``(4)(A) Not later than 30 days after the corporation notifies a
plan administrator under this subsection regarding the commencement of
proceedings to terminate a plan under this section, the corporation
shall provide notice of such proceedings to affected parties as
provided in this paragraph. The notice shall state that such
termination is intended, the proposed termination date, and the
procedure for such termination under this section.
``(B) Upon notice to the plan of the commencement of proceedings,
the plan administrator shall provide the corporation with a list of the
names and addresses of all participants and beneficiaries of the plan.
``(C) The corporation shall provide--
``(i) written notice to each affected party of the plan;
and
``(ii) notice in the 2 newspapers with the largest
circulation in the area of the majority of the affected
parties.''.
(b) Effective Date.--The amendment made by this section shall apply
to proceedings commenced after the date of enactment of this Act.
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