I 

108TH CONGRESS 

1ST SESSION H. R. 2719

To provide special funding requirements for certain pension plans maintained 

by commercial passenger air carriers. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 14, 2003

Mr. CAMP (for himself, Mr. POMEROY, Mr. RAMSTAD, Mr. SANDLIN, Mr. 

MATSUI, Mr. KLECZKA, and Mr. TANNER) introduced the following bill; 

which was referred to the Committee on Education and the Workforce, 

and in addition to the Committee on Ways and Means, for a period to 

be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL

To provide special funding requirements for certain pension 

plans maintained by commercial passenger air carriers.

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 ‘‘Air Line Pension Act 

5 of 2003’’. 

6 SEC. 2. MODIFICATION OF FUNDING REQUIREMENTS FOR 

7 CERTAIN PLANS. 

8 (a) FUNDING RULES FOR CERTAIN PLANS.—
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1 (1) IN GENERAL.—Notwithstanding any provi2 sion of the Internal Revenue Code of 1986 or the 

3 Employee Retirement Income Security Act of 1974 

4 to the contrary, the provisions of subsections (b), 

5 (c), and (d) shall apply for any plan year beginning 

6 after December 27, 2002, in the case of a defined 

7 benefit plan—

8 (A) that is established and maintained by 

9 a commercial passenger air carrier; and 

10 (B) that has a funded percentage of less 

11 than 80 percent as of January 1, 2003. 

12 (2) FUNDED PERCENTAGE.—For purposes of 

13 this section, the term ‘‘funded percentage’’ means 

14 the quotient (expressed as a percentage) derived by 

15 dividing—

16 (A) the market value of plan assets as of 

17 January 1, 2003 (excluding receivable contribu18 tions), by 

19 (B) the current liability of the plan as of 

20 January 1, 2003. 

21 (3) INTEREST RATE.—In determining current 

22 liability for purposes of paragraph (2), the assumed 

23 interest rate shall be 6.65 percent. 

24 (4) ESTIMATION OF CURRENT LIABILITY.—If 

25 the valuation date for the plan is not January 1, 
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1 2003, the current liability as of January 1, 2003, 

2 shall be estimated based on generally accepted actu3 arial principles and practices. 

4 (b) MORATORIUM ON DEFICIT REDUCTION CON5 TRIBUTION.—

6 (1) IN GENERAL.—In applying section 

7 412(l)(9)(A) of such Code and section 302(d)(9)(A) 

8 of such Act with respect to a plan described in sub9 section (a)(1), the funded current liability percent10 age of the plan shall be treated as not less than 90 

11 percent for plan years beginning after December 27, 

12 2002 and before December 27, 2007. 

13 (2) TERMINATION OF MORATORIUM IN CERTAIN

14 CASES.—If the funded current liability percentage of 

15 the plan, without application of paragraph (1), is 90 

16 percent or greater during any plan year beginning 

17 after December 27, 2002 and before December 27, 

18 2007, paragraph (1) shall cease to apply to the plan 

19 for plan years beginning with or after such plan 

20 year. 

21 (3) EXTENSION OF AMORTIZATION PERIODS.—

22 For plan years for which paragraph (1) applies in 

23 the case of the plan, net experience gains and net 

24 experience losses shall be amortized under sections 

25 412(b)(2)(B)(iv) and 412(b)(3)(B)(ii) of such Code 
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1 (respectively) and sections 302(b)(2)(B)(iv) and 

2 302(b)(3)(B)(ii) of such Act (respectively), over a 

3 period of 15 plan years. 

4 (4) OPTION TO COMBINE OR TO OFFSET AMOR5 TIZATION BASES.—For the first plan year for which 

6 paragraph (1) applies with respect to the plan, 

7 amounts required to be amortized under paragraphs 

8 (2) and (3) of section 412(b) of such Code and para9 graphs (2) and (3) of section 302(b) of such Act 

10 may be combined into one amount under such sec11 tions, and may be offset against other amounts re12 quired to be amortized under such sections, with the 

13 resulting amount in either case to be amortized over 

14 a period of 15 plan years. 

15 (c) AMORTIZATION OF 2008 UNFUNDED CURRENT

16 LIABILITY.—

17 (1) IN GENERAL.—In such form and manner as 

18 the Secretary of the Treasury may prescribe, the 

19 sponsor of a plan described in subsection (a)(1) may 

20 make a one-time, irrevocable election with the Sec21 retary of the Treasury to amortize the unfunded 

22 current liability for the first plan year beginning 

23 after December 27, 2007, on an interest-only basis 

24 for the first 5 plan years (beginning with such first 

25 plan year) and thereafter in equal annual install-
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1 ments over a period of 15 plan years (beginning with 

2 the first plan year after December 27, 2012). 

3 (2) DETERMINATION OF 2008 UNFUNDED CUR4 RENT LIABILITY IN CALCULATING DEFICIT REDUC5 TION CONTRIBUTION AFTER MORATORIUM ENDS.—If 

6 the plan sponsor makes an election under paragraph 

7 (1) with respect to the plan, the unfunded current 

8 liability of the plan for the first plan year after De9 cember 27, 2007, shall be calculated as follows: 

10 (A) such unfunded current liability shall 

11 equal the unfunded current liability as of the 

12 first day of such first plan year, and 

13 (B) such unfunded current liability shall be 

14 calculated using the actuarial value of assets as 

15 of the first day of such first plan year. 

16 (3) USE OF 2008 UNFUNDED CURRENT LIABIL17 ITY IN CALCULATING DEFICIT REDUCTION AFTER

18 MORATORIUM ENDS.—If the plan sponsor makes an 

19 election under paragraph (1) with respect to the 

20 plan, the plan’s unfunded old liability, for purposes 

21 of section 412(l) of such Code and section 302(l) of 

22 such Act, shall be deemed equal to the unfunded 

23 current liability calculated under paragraph (2) for 

24 the first plan year after December 27, 2007, and the 

25 plan’s unfunded old liability amount for any plan 
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1 year, for purposes of section 412(l) of such Code 

2 and section 302(l) of such Act, shall be the amount 

3 necessary to amortize the unfunded old liability 

4 under the plan as described in paragraph (1). 

5 (4) CESSATION OF MODIFICATIONS.—If the 

6 funded current liability percentage of the plan, de7 termined without regard to this section, is 90 per8 cent or greater for any plan year after December 27, 

9 2002, this subsection shall cease to apply to the plan 

10 for plan years beginning with or after such plan 

11 year. 

12 (d) RECOGNITION OF WAIVER IN DEFICIT REDUC13 TION CONTRIBUTION.—For any plan described in sub14 section (a)(1), the amount referred to in clause (ii) of sec15 tion 412(l)(8)(A) of such Code and section 302(d)(8)(A) 

16 of such Act shall be deemed to be an amount equal to 

17 the sum of—

18 (1) the value of the plan’s assets determined 

19 under section 412(c)(2) of such Code and section 

20 302(c)(2) of such Act, and 

21 (2) the unamortized portion of any waived 

22 funding deficiency. 
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1 SEC. 3. RESTORATION OF CERTAIN PLANS TERMINATING 

2 IN 2003. 

3 (a) IN GENERAL.—Notwithstanding any provision of 

4 the Internal Revenue Code of 1986 or the Employee Re5 tirement Income Security Act of 1974, the provisions of 

6 subsection (b) shall apply to any defined benefit plan—

7 (1) that is maintained by a commercial pas8 senger air carrier, 

9 (2) that is maintained for the benefit of such 

10 carrier’s employees pursuant to a collective bar11 gaining agreement, and 

12 (3) that terminated during the calendar year 

13 2003. 

14 (b) RESTORATION OF PLAN.—Not later than Decem15 ber 31, 2003, the Pension Benefit Guaranty Corporation 

16 shall restore any plan described in paragraph (1) to the 

17 plan’s pre-termination status and the control of the plan’s 

18 assets and liabilities shall be transferred to the employer, 

19 unless the collective bargaining agreement provides that 

20 the plan should not be restored. 

21 (c) EXCLUSION OF EXPECTED INCREASE IN CUR22 RENT LIABILITY.—In applying section 412(l)(1)(A)(i) of 

23 such Code and section 302(d)(1)(A)(i) of such Act with 

24 respect to a plan restored under subsection (b), any ex25 pected increase in current liability due to benefits accruing 

26 during each plan year as described in section 412(1)(2)(C) 
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1 of such Code and section 302(d)(2)(C) of such Act shall 

2 be excluded. 

3 (d) AMORTIZATION OF UNFUNDED AMOUNTS UNDER

4 RESTORATION PAYMENT SCHEDULE.—

5 (1) 2004 UNFUNDED ACCRUED LIABILITY.—

6 (A) IN GENERAL.—In the case of a plan 

7 restored under subsection (b)—

8 (i) the initial post-restoration valu9 ation date for a plan described in sub10 section (a) shall be January 1, 2004, 

11 (ii) the initial restoration amortization 

12 base for a plan described in subsection (a) 

13 shall be an amount equal to the excess 

14 of—

15 (I) the accrued benefit liabilities 

16 returned by the Corporation, over 

17 (II) the market value of plan as18 sets returned by the Corporation, and 

19 (iii) the initial restoration amortiza20 tion base shall be amortized in level annual 

21 installments over a period of 30 years after 

22 the initial post-restoration valuation date, 

23 and the funding standard account of the 

24 plan under section 412 of such Code and 
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1 section 302 of such Act shall be charged 

2 with such installments. 

3 (B) OTHER SPECIAL FUNDING RULES RE4 MAIN APPLICABLE.—At the election of the plan 

5 sponsor, the provisions of subsections (b), (c), 

6 and (d) of section 2 shall apply with respect to 

7 the plan. 

8 (2) RULES OF SPECIAL APPLICATION.—In ap9 plying the 30-year amortization described in para10 graph (1)(A)—

11 (A) the assumed interest rate shall be the 

12 valuation interest rate used to determine the 

13 accrued liability under section 412(c) of such 

14 Code and section 302(c) of such Act, 

15 (B) the actuarial value of assets as of the 

16 initial post-restoration valuation date shall be 

17 reset to the market value of assets with a 5-

18 year phase-in of unexpected investment gains or 

19 losses on a prospective basis, and 

20 (C) for plans using the frozen initial liabil21 ity (FIL) funding method in accordance with 

22 section 412(c) of such Code and section 302(c) 

23 of such Act, the initial unfunded liability used 

24 to determine normal cost shall be reset to the 

25 initial restoration amortization base. 
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1 (e) QUARTERLY CONTRIBUTIONS.—The require2 ments of section 412(m) of such Code and section 302(e) 

3 of such Act shall not apply to a plan restored under sub4 section (b) until the plan year beginning on the initial 

5 post-restoration valuation date. The required annual pay6 ment for that year shall be the lesser of—

7 (1) the amount determined under section 

8 412(m)(4)(B)(i) of such Code and section 

9 302(e)(4)(B)(i) of such Act, or 

10 (2) 100 percent of the amount required to be 

11 contributed under the plan for the plan year begin12 ning January 1, 2003 and ending on the date of 

13 plan termination. 

14 (f) RESETTING OF FUNDING STANDARD ACCOUNT

15 BALANCES.—In the case of a plan restored under sub16 section (b), any accumulated funding deficiency or credit 

17 balance in the funding standard account under section 412 

18 of such Code or section 302 of such Act shall be set equal 

19 to zero as of the initial post-restoration valuation date. 

20 SEC. 4. PBGC LIABILITY LIMITED. 

21 In the case of any plan—

22 (1) which is described in section 2(a)(1), and 

23 which terminates at a time when section 2(b)(1) ap24 plies to the plan, or at a time when the unfunded 

25 current liability of the plan for the first plan year 
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1 after December 27, 2007, is being amortized on an 

2 interest-only basis under section 2(c), or 

3 (2) which is described in section 3(a), which is 

4 restored pursuant to section 3(b), and which subse5 quently terminates with a date of plan termination 

6 prior to the end of the fifth plan year beginning 

7 after December 27, 2007, 

8 section 4022 of the Employee Retirement Income Security 

9 Act of 1974 shall be applied as if the plan had been 

10 amended to provide that participants would receive no 

11 credit for benefit accrual purposes under the plan for serv12 ice on and after the first day of the plan year beginning 

13 after the date of the enactment of this Act. 

14 SEC. 5. EFFECTIVE DATE. 

15 The provisions of this Act shall apply to plan years 

16 beginning after December 27, 2002.

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