I 

108TH CONGRESS 

1ST SESSION H. R. 2078

To amend title I of the Employee Retirement Income Security Act of 1974 

to require equitable funding of pension plans maintained by corporations 

which also maintain executive pension plans. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 13, 2003

Mr. OSE introduced the following bill; which was referred to the Committee 

on Education and the Workforce 

A BILL

To amend title I of the Employee Retirement Income Security Act of 1974 to require equitable funding of pension 

plans maintained by corporations which also maintain 

executive pension plans.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Employees’ Pension 

5 Equity Act of 2003’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 
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1 (1) Some large companies are setting aside mil2 lions of dollars to protect pensions of highly com3 pensated executives at the same time as they forgo 

4 contributions to financially strained and under5 funded pension plans for non-executive workers. 

6 Underfunding of pension plans for non-executives 

7 has been increasing. 

8 (2) There are a variety of pension-type ‘‘supple9 mental executive retirement plans’’ for highly com10 pensated executives, including: unfunded executive 

11 pension plans; executive plan ‘‘rabbi trusts,’’ which 

12 are not taxable when established but are subject to 

13 creditors’ claims; executive plan ‘‘secular trusts,’’ 

14 where company contributions are taxable but not 

15 subject to creditors’ claims; and, corporate-owned, 

16 trust-owned, or split-dollar life insurance. 

17 (3) It is difficult to compare the funding levels 

18 of regular pension plans and executive pensions. 

19 Under current law, companies must disclose pension 

20 assets and liabilities, company contributions, and 

21 other details of employee pension plans in their an22 nual reports. But, for executive pensions, companies 

23 are only required by the Securities and Exchange 

24 Commission to disclose the existence of trusts they 

25 establish for their Chief Executive Officer and their 
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1 four other highest-paid executive officers, and not 

2 the amount of money in them or other details. 

3 SEC. 3. EQUITABLE FUNDING REQUIREMENT FOR EMPLOY4 ERS MAINTAINING AN EXECUTIVE PENSION 

5 PLAN. 

6 Section 302 of the Employee Retirement Income Se7 curity Act of 1974 (29 U.S.C. 1082) is amended—

8 (1) by redesignating subsection (h) as sub9 section (i); and 

10 (2) by inserting after subsection (g) the fol11 lowing new subsection: 

12 ‘‘(h) EQUITABLE FUNDING REQUIREMENT FOR EM13 PLOYERS MAINTAINING AN EXECUTIVE PENSION PLAN.—

14 ‘‘(1) DEFINITIONS.—For purposes of this sub15 section—

16 ‘‘(A) EXECUTIVE PENSION PLAN.—The 

17 term ‘executive pension plan’ means, with re18 spect to an employer, any pension plan main19 tained by such employer primarily for the pur20 pose of providing for the deferral of compensa21 tion of one or more highly compensated employ22 ees of such employer. 

23 ‘‘(B) NON-EXECUTIVE PENSION PLAN.—

24 The term ‘non-executive pension plan’ means, 

25 with respect to an employer, a pension plan 
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1 maintained by such employer other than an ex2 ecutive pension plan maintained by such em3 ployer. 

4 ‘‘(C) HIGHLY COMPENSATED EMPLOYEE.—

5 The term ‘highly compensated employee’ has 

6 the meaning provided such term in section 

7 414(q) of the Internal Revenue Code of 1986. 

8 ‘‘(D) FUNDED CURRENT LIABILITY PER9 CENTAGE.—The term ‘funded current liability 

10 percentage’ has the meaning provided such 

11 term in subsection (d)(8)(B). 

12 ‘‘(2) REQUIREMENT.—In any case in which—

13 ‘‘(A) an employer maintains a non-execu14 tive pension plan to which this part applies, and 

15 ‘‘(B) the employer also maintains an exec16 utive pension plan for any plan year ending 

17 with or during a plan year of such non-execu18 tive pension plan, 

19 the employer shall meet the equitable funding re20 quirement of this subsection for such plan year of 

21 such non-executive pension plan. 

22 ‘‘(3) EQUITABLE FUNDING REQUIREMENT.—

23 The equitable funding requirement of this subsection 

24 is met by an employer for a plan year if—
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1 ‘‘(A) the excess executive plan funding per2 centage of the employer for such plan year is 

3 not more than 5 percent, or 

4 ‘‘(B) the employer has applied to the plan 

5 the additional contributions necessary to correct 

6 such excess executive funding percentage by a 

7 reduction of not less than 5 percentage points. 

8 ‘‘(4) EXCESS EXECUTIVE PLAN FUNDING PER9 CENTAGE.—For purposes of this subsection, the ex10 cess executive plan funding percentage of an em11 ployer for a plan year of a non-executive pension 

12 plan is the difference between—

13 ‘‘(A) the funded current liability percent14 age of the executive pension plan maintained by 

15 the employer with respect to the plan year of 

16 such executive pension plan ending with or dur17 ing such plan year of such non-executive pen18 sion plan, and 

19 ‘‘(B) the funded current liability percent20 age of the non-executive pension plan main21 tained by the employer with respect to such 

22 plan year of such non-executive pension plan. 

23 ‘‘(5) TREATMENT OF 2 OR MORE EXECUTIVE

24 PENSION PLANS.—In any case in which an employer 

25 maintains 2 or more executive pension plans for plan 
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1 years ending with or during a plan year of a non2 executive plan maintained by such employer, the ref3 erence in paragraph (4)(A) to the funded current li4 ability percentage of an executive pension plan shall 

5 be deemed a reference to the average of the funded 

6 current liability percentages for such plan years of 

7 such executive pension plans maintained by such em8 ployer. ’’. 

9 SEC. 4. EFFECTIVE DATE. 

10 The amendment made by this Act shall apply with 

11 respect to plan years (of non-executive pension plans) be12 ginning after the date of the enactment of this Act.

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