II

103D CONGRESS

1ST SESSION S. 105

To amend the Internal Revenue Code of 1986 and the Employee Retirement

Income Security Act of 1974 to improve pension plan funding.

IN THE SENATE OF THE UNITED STATES

JANUARY 21 (legislative day, JANUARY 5), 1993

Mr. JEFFORDS (for himself, Mr. DURENBERGER amd Mrs. KASSEBAUM) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to improve pension plan funding.

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 ‘‘Pension Funding Im5 provement Act of 1993’’.
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1 TITLE I—AMENDMENTS TO PEN2 SION PLAN FUNDING RE3 QUIREMENTS

4 SEC. 101. AMENDMENTS TO INTERNAL REVENUE CODE OF

5 1986.

6 (a) GENERAL RULE.—Subsection (a) of section 412

7 of the Internal Revenue Code of 1986 (relating to mini8 mum funding standards) is amended to read as follows:

9 ‘‘(a) GENERAL RULE.—

10 ‘‘(1) PLANS TO WHICH SECTION APPLIES.—Ex11 cept as provided in subsection (h), this section ap12 plies to a plan if, for any plan year beginning on or

13 after the effective date of this section for such

14 plan—

15 ‘‘(A) such plan included a trust which was

16 qualified (or was determined by the Secretary

17 to have qualified) under section 401(a), or

18 ‘‘(B) such plan satisfied (or was deter19 mined by the Secretary to have satisfied) the

20 requirements of section 403(a).

21 ‘‘(2) SATISFACTION OF MINIMUM FUNDING

22 STANDARD.—A plan to which this section applies

23 shall have satisfied the minimum funding standard

24 for such plan for a plan year if, as of the end of
3

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1 such plan year, the plan does not have an accumu2 lated funding deficiency.

3 ‘‘(3) ACCUMULATED FUNDING DEFICIENCY.—

4 For purposes of this section and section 4971, the

5 term ‘accumulated funding deficiency’ means for any

6 plan the largest of—

7 ‘‘(A) the lesser of—

8 ‘‘(i) the excess of the total charges to

9 the funding standard account for all plan

10 years (beginning with the first plan year to

11 which this section applies) over the total

12 credits to such account for such years;

13 ‘‘(ii) the excess of the total charges to

14 the alternative minimum funding standard

15 account for such plan years over the total

16 credits to such account for such years;

17 ‘‘(B) the excess (if any) of the

18 underfunding reduction requirement (if any) for

19 the plan year applicable under subsection (l)

20 over the amount considered contributed by the

21 employer to or under the plan for the plan year;

22 or

23 ‘‘(C) the excess (if any) of the solvency

24 maintenance requirement (if any) for the plan

25 year applicable under subsection (o) over the
4

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1 amount considered contributed by the employer

2 to or under the plan for the plan year.

3 In any plan year in which a multiemployer plan is

4 in reorganization, the accumulated funding defi5 ciency of the plan shall be determined under section

6 418B.’’

7 (b) UNDERFUNDING REDUCTION REQUIREMENT.—

8 Subsection (l) of section 412 of such Code is amended to

9 read as follows:

10 ‘‘(l) UNDERFUNDING REDUCTION REQUIREMENT

11 FOR PLANS THAT ARE NOT MULTIEMPLOYER PLANS.—

12 ‘‘(1) UNDERFUNDING REDUCTION REQUIRE13 MENT.—In the case of a defined benefit plan (other

14 than a multiemployer plan) which has a funded cur15 rent liability percentage of less than 100 percent (as

16 of the first day of the plan year), the underfunding

17 reduction requirement for such plan year is the sum

18 of—

19 ‘‘(A) an amount equal to the product of—

20 ‘‘(i) the unfunded current liability of

21 the plan (as of such first day), multiplied

22 by

23 ‘‘(ii) 30 percent, reduced by the prod24 uct of—

25 ‘‘(I) .25 multiplied by
5

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1 ‘‘(II) the excess (if any) of the

2 funded current liability percentage of

3 the plan (as of such first day) over 35

4 percent;

5 ‘‘(B) the expected increase in the current

6 liability attributable to benefits accruing during

7 the plan year;

8 ‘‘(C) the amount described in subsection

9 (b)(2)(C) as necessary to amortize any waived

10 funding deficiency; and

11 ‘‘(D) the unpredictable contingent event

12 amount (if any) for such plan year.

13 The underfunding reduction requirement shall not

14 exceed the sum of the amount necessary to increase

15 the funded current liability percentage (as of such

16 first day) to 100 percent and the amount determined

17 under subparagraph (B).

18 ‘‘(2) UNPREDICTABLE CONTINGENT EVENT

19 AMOUNT.—

20 ‘‘(A) IN GENERAL.—The unpredictable

21 contingent event amount with respect to a plan

22 for any plan year is an amount equal to the

23 greater of—

24 ‘‘(i) the applicable percentage of the

25 product of—
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1 ‘‘(I) 100 percent, reduced (but

2 not below zero) by the funded current

3 liability percentage for the plan year,

4 multiplied by

5 ‘‘(II) the amount of unpredict6 able contingent event benefits paid

7 during the plan year, including (ex8 cept as provided by the Secretary) any

9 payment for the purchase of an annu10 ity contract for a participant or bene11 ficiary with respect to such benefits,

12 or

13 ‘‘(ii) the amount which would be de14 termined for the plan year if the unpredict15 able contingent event benefit liabilities

16 were amortized in equal annual install17 ments over 7 plan years (beginning with

18 the plan year in which such event occurs).

19 ‘‘(B) APPLICABLE PERCENTAGE.—

‘‘In the case of The applicable

plan years beginning in: percentage is:

1989 and 1990 ................................................................................... 5

1991 ................................................................................................... 10

1992 ................................................................................................... 15

1993 ................................................................................................... 20

1994 ................................................................................................... 30

1995 ................................................................................................... 40

1996 ................................................................................................... 50

1997 ................................................................................................... 60

1998 ................................................................................................... 70

1999 ................................................................................................... 80

2000 ................................................................................................... 90

2001 and thereafter ...........................................................................100
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1 ‘‘(C) PARAGRAPH NOT TO APPLY TO EX2 ISTING BENEFITS.—This paragraph shall not

3 apply to unpredictable contingent event benefits

4 (and liabilities attributable thereto) for which

5 the event occurred before the first plan year be6 ginning after December 31, 1988.

7 ‘‘(D) SPECIAL RULE FOR FIRST YEAR OF

8 AMORTIZATION.—Unless the employer elects

9 otherwise, the amount determined under sub10 paragraph (A) for the plan year in which the

11 event occurs shall be equal to 150 percent of

12 the amount determined under subparagraph

13 (A)(i). The amount under subparagraph (A)(ii)

14 for subsequent plan years in the amortization

15 period shall be adjusted in the manner provided

16 by the Secretary to reflect the application of

17 this subparagraph.

18 ‘‘(3) CURRENT LIABILITY.—For purposes of

19 this subsection and subsection (o)—

20 ‘‘(A) IN GENERAL.—The term ‘‘current li21 ability’’ means all liabilities to employees and

22 their beneficiaries under the plan.

23 ‘‘(B) TREATMENT OF UNPREDICTABLE

24 CONTINGENT EVENT BENEFITS.—
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1 ‘‘(i) IN GENERAL.—For purposes of

2 subparagraph (A), any unpredictable con3 tingent event benefit shall not be taken

4 into account until the event on which the

5 benefit is contingent occurs.

6 ‘‘(ii) UNPREDICTABLE CONTINGENT

7 EVENT BENEFIT.—The term ‘unpredictable

8 contingent event benefit’ means any benefit

9 contingent on an event other than—

10 ‘‘(I) age, service, compensation,

11 death, or disability, or

12 ‘‘(II) an event which is reason13 ably and reliably predictable (as deter14 mined by the Secretary).

15 ‘‘(C) INTEREST RATES USED.—The rate of

16 interest used to determine current liability shall

17 be the rate of interest used under subsection

18 (b)(5); except the permissible range under sub19 paragraph (B)(ii) of subsection (b)(5) shall not

20 exceed 100 percent of the weighted average re21 ferred to in such subparagraph.

22 ‘‘(D) CERTAIN SERVICE DISREGARDED.—

23 ‘‘(i) IN GENERAL.—In the case of a

24 participant to whom this subparagraph ap25 plies, only the applicable percentage of the
9

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1 years of service before such individual be2 came a participant shall be taken into ac3 count in computing the current liability of

4 the plan.

5 ‘‘(ii) APPLICABLE PERCENTAGE.—For

6 purposes of clause (i), the applicable per7 centage shall be determined as follows:

‘‘If the years of The applicable

participation are: percentage is:

1 ......................................................................................................... 20

2 ......................................................................................................... 40

3 ......................................................................................................... 60

4 ......................................................................................................... 80

5 or more ...........................................................................................100

8 ‘‘(iii) PARTICIPANTS TO WHOM THIS

9 SUBPARAGRAPH APPLIES.—This subpara10 graph shall apply to any participant who,

11 at the time of becoming a participant—

12 ‘‘(I) has not accrued any other

13 benefit under any defined benefit plan

14 (whether or not terminated) main15 tained by the employer or a member

16 of the same controlled group of which

17 the employer is a member,

18 ‘‘(II) who first becomes a partici19 pant under the plan in a plan year be20 ginning after December 31, 1987, and

21 ‘‘(III) has years of service great22 er than the minimum years of service
10

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1 necessary for eligibility to participate

2 in the plan.

3 ‘‘(iv) ELECTION.—An employer may

4 elect not to have this subparagraph apply.

5 Such an election, once made, may be re6 voked only with the consent of the Sec7 retary.

8 ‘‘(4) OTHER DEFINITIONS.—For purposes of

9 this subsection and subsection (o)—

10 ‘‘(A) UNFUNDED CURRENT LIABILITY.—

11 The term ‘unfunded current liability’ means,

12 with respect to any plan year, the excess (if

13 any) of—

14 ‘‘(i) the current liability under the

15 plan, over

16 ‘‘(ii) the value of the plan assets de17 termined under subsection (c)(2), reduced

18 by any credit balance in the funding stand19 ard account.

20 ‘‘(B) FUNDED CURRENT LIABILITY PER21 CENTAGE.—The term ‘funded current liability

22 percentage’ means, with respect to any plan

23 year, the percentage which—

24 ‘‘(i) the amount determined under

25 subparagraph (A)(ii), is of
11

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1 ‘‘(ii) the current liability under the

2 plan.

3 ‘‘(5) SPECIAL RULES FOR SMALL PLANS.—

4 ‘‘(A) PLANS WITH 100 OR FEWER PARTICI5 PANTS.—This subsection and subsection (o)

6 shall not apply to any plan for any plan year

7 if on each day during the preceding plan year

8 such plan had no more than 100 participants.

9 ‘‘(B) PLANS WITH MORE THAN 100 BUT

10 NOT MORE THAN 150 PARTICIPANTS.—In the

11 case of a plan to which subparagraph (A) does

12 not apply and which on each day during the

13 preceding year had no more than 150 partici14 pants, the additional amounts required by the

15 underfunding reduction requirement under this

16 subsection or the solvency maintenance require17 ment under subsection (o) shall be equal to the

18 product of—

19 ‘‘(i) the excess of such requirements

20 (determined without regard to this sub21 paragraph) over the funding deficiency (if

22 any) under subsection (b), multiplied by,

23 ‘‘(ii) 2 percent for the highest number

24 of participants in excess of 100 on any

25 such day.
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1 ‘‘(C) AGGREGATION OF PLANS.—For pur2 poses of this paragraph, all defined benefit

3 plans maintained by the same employer (or any

4 member of such employer’s controlled group)

5 shall be treated as 1 plan, but only employees

6 of such employer or member shall be taken into

7 account.

8 ‘‘(D) CONTROLLED GROUP.—For purposes

9 of this paragraph, the term ‘controlled group’

10 means any group treated as a single employer

11 under subsection (b), (c), (m), or (o) of section

12 414.’’

13 (c) SOLVENCY MAINTENANCE REQUIREMENTS.—

14 Section 412 of such Code is amended by adding at the

15 end thereof the following new subsection:

16 ‘‘(o) SOLVENCY MAINTENANCE REQUIREMENT FOR

17 PLANS THAT ARE NOT MULTIEMPLOYER PLANS.—

18 ‘‘(1) SOLVENCY MAINTENANCE REQUIRE19 MENT.—In the case of a defined benefit plan (other

20 than a multiemployer plan) which has a funded cur21 rent liability percentage of less than 100 percent (as

22 of the first day of the plan year), the solvency main23 tenance requirement for such plan year is the sum

24 of—

25 ‘‘(A) the sum of:
13

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1 ‘‘(i) all disbursements from the plan

2 for the plan year, and

3 ‘‘(ii) an amount equal to the unfunded

4 current liability of the plan (as of such

5 first day) multiplied by the interest rate

6 used by such plan to determine current li7 ability,

8 ‘‘(B) the amount determined under sub9 section (l)(1)(B), and

10 ‘‘(C) the amount determined under sub11 section (l)(1)(C).

12 The solvency maintenance requirement shall not ex13 ceed the sum of the amount necessary to increase

14 the funded liability percentage (as of such first day)

15 to 100 percent and the amount determined under

16 subparagraph (B).

17 ‘‘(2) LIMITATION ON SOLVENCY MAINTENANCE

18 REQUIREMENT.—

19 ‘‘(A) IN GENERAL.—The amount required

20 under paragraph (1) for any plan year shall not

21 exceed the sum of—

22 ‘‘(i) the amount required under sub23 section (l); and

24 ‘‘(ii) the product of—
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1 ‘‘(I) the excess (if any) of the

2 amount required under paragraph (1)

3 over the amount required under sub4 section (l); multiplied by

5 ‘‘(II) the applicable percentage,

6 ‘‘(B) APPLICABLE PERCENTAGE.—For

7 purposes of subparagraph (A), the applicable

8 percentage is:

‘‘For plan years The applicable

beginning in: percentage is:

1993 ................................................... 20 percent

1994 ................................................... 40 percent

1995 ................................................... 60 percent

1996 ................................................... 80 percent

1997 or thereafter .............................. 100 percent.

9 ‘‘(3) DISBURSEMENTS FROM THE PLAN.—

10 ‘‘(A) IN GENERAL.—The term ‘disburse11 ments from the plan’ means benefit payments,

12 including purchases of annuities or payment of

13 lump sums in satisfaction of liabilities, adminis14 trative expenditures or any other disbursements

15 from the plan or its trust.

16 ‘‘(B) SPECIAL RULE FOR PURCHASES OF

17 ANNUITIES AND PAYMENT OF LUMP SUMS.—In

18 determining the applicable amounts attributable

19 to purchases of annuities or the payment of

20 lump sums under clause (i), the actual purchase

21 or lump sum amounts paid by the plan or trust
15

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1 shall be multiplied by the excess (if any) of one

2 over the initial funding ratio of the plan.’’

3 (d) TRANSITION USE OF CREDIT BALANCES FROM

4 PLAN YEARS BEFORE 1994.—At the election of the em5 ployer maintaining a defined benefit plan subject to the

6 requirements of section 412 of the Internal Revenue Code

7 of 1986, the amounts required under sections 412(l) and

8 412(o) of such Code, as amended by this Act, may be re9 duced by the net of (1) the sum of credits to the funding

10 standard account for plan years beginning on or before

11 December 31, 1993, arising under clauses (ii) and (iii) of

12 section 412(b)(3)(B) of such Code and for amounts con13 sidered contributed by the employer under section

14 412(b)(3)(A) of such Code (to the extent necessary to

15 avoid an accumulated funding deficiency under section

16 412(b) of such Code) and (2) charges to the funding

17 standard account for plan years beginning on or before

18 December 31, 1993, arising under clauses (iv) and (v) of

19 section 412(b)(2)(B) of such Code.

20 SEC. 102. AMENDMENTS TO ERISA.

21 (a) GENERAL RULE.—Section 302(a)(2) of the Em22 ployee Retirement Income Security Act of 1974 is amend23 ed by striking ‘‘the excess of the total charges to the fund24 ing standard account’’ through the end of that sentence,

25 and inserting ‘‘the largest of—
16

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1 ‘‘(A) the lesser of—

2 ‘‘(i) the excess of the total charges to

3 the funding standard account for all plan

4 years (beginning with the first plan year to

5 which this section applies) over the total

6 credits to such account for such years;

7 ‘‘(ii) the excess of the total charges to

8 the alternative minimum funding standard

9 account for such plan years over the total

10 credits to such account for such years;

11 ‘‘(B) the excess (if any) of the

12 underfunding reduction requirement (if any) for

13 the plan year applicable under subsection (d)

14 over the amount considered contributed by the

15 employer to or under the plan for the plan year;

16 or

17 ‘‘(C) the excess (if any) of the solvency

18 maintenance requirement (if any) for the plan

19 year applicable under subsection (g) over the

20 amount considered contributed by the employer

21 to or under the plan for the plan year.’’

22 (b) UNDERFUNDING REDUCTION REQUIREMENT.—

23 Subsection (d) of section 302 of such Act is amended to

24 read as follows:
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1 ‘‘(d) UNDERFUNDING REDUCTION REQUIREMENT

2 FOR PLANS THAT ARE NOT MULTIEMPLOYER PLANS.—

3 ‘‘(1) UNDERFUNDING REDUCTION REQUIRE4 MENT.—In the case of a defined benefit plan (other

5 than a multiemployer plan) which has a funded cur6 rent liability percentage of less than 100 percent (as

7 of the first day of the plan year), the underfunding

8 reduction requirement for such plan year is the sum

9 of—

10 ‘‘(A) an amount equal to the product of—

11 ‘‘(i) the funded current liability per12 centage of the plan (as of such first day),

13 multiplied by

14 ‘‘(ii) 30 percent, reduced by the prod15 uct of—

16 ‘‘(I) .25 multiplied by

17 ‘‘(II) the excess (if any) of the

18 funded current liability percentage of

19 the plan (as of such first day) over 35

20 percent;

21 ‘‘(B) the expected increase in the current

22 liability attributable to benefits accruing during

23 the plan year;
18

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1 ‘‘(C) the amount described in subsection

2 (b)(2)(C) as necessary to amortize any waived

3 funding deficiency; and

4 ‘‘(D) the unpredictable contingent event

5 amount (if any) for such plan year.

6 The underfunding reduction requirement shall not

7 exceed the sum of the amount necessary to increase

8 the funded current liability percentage (as of such

9 first day) to 100 percent and the amount determined

10 under subparagraph (B).

11 ‘‘(2) UNPREDICTABLE CONTINGENT EVENT

12 AMOUNT.—

13 ‘‘(A) IN GENERAL.—The unpredictable

14 contingent event amount with respect to a plan

15 for any plan year is an amount equal to the

16 greater of—

17 ‘‘(i) the applicable percentage of the

18 product of—

19 ‘‘(I) 100 percent, reduced (but

20 not below zero) by the funded current

21 liability percentage for the plan year,

22 multiplied by

23 ‘‘(II) the amount of unpredict24 able contingent event benefits paid

25 during the plan year, including (ex-
19

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1 cept as provided by the Secretary) any

2 payment for the purchase of an annu3 ity contract for a participant or bene4 ficiary with respect to such benefits,

5 or

6 ‘‘(ii) the amount which would be de7 termined for the plan year if the unpredict8 able contingent event benefit liabilities

9 were amortized in equal annual install10 ments over 7 plan years (beginning with

11 the plan year in which such event occurs).

12 ‘‘(B) APPLICABLE PERCENTAGE.—

‘‘In the case of The applicable

plan years beginning in: percentage is:

1989 and 1990 ................................................................................... 5

1991 ................................................................................................... 10

1992 ................................................................................................... 15

1993 ................................................................................................... 20

1994 ................................................................................................... 30

1995 ................................................................................................... 40

1996 ................................................................................................... 50

1997 ................................................................................................... 60

1998 ................................................................................................... 70

1999 ................................................................................................... 80

2000 ................................................................................................... 90

2001 and thereafter ...........................................................................100

13 ‘‘(C) PARAGRAPH NOT TO APPLY TO EX14 ISTING BENEFITS.—This paragraph shall not

15 apply to unpredictable contingent event benefits

16 (and liabilities attributable thereto) for which

17 the event occurred before the first plan year be18 ginning after December 31, 1988
20

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1 ‘‘(D) SPECIAL RULE FOR FIRST YEAR OF

2 AMORTIZATION.—Unless the employer elects

3 otherwise, the amount determined under sub4 paragraph (A) for the plan year in which the

5 event occurs shall be equal to 150 percent of

6 the amount determined under subparagraph

7 (A)(i). The amount under subparagraph (A)(ii)

8 for subsequent plan years in the amortization

9 period shall be adjusted in the manner provided

10 by the Secretary to reflect the application of

11 this subparagraph.

12 ‘‘(3) CURRENT LIABILITY.—For purposes of

13 this subsection and subsection (g)—

14 ‘‘(A) IN GENERAL.—The term ‘‘current li15 ability’’ means all liabilities to employees and

16 their beneficiaries under the plan.

17 ‘‘(B) TREATMENT OF UNPREDICTABLE

18 CONTINGENT EVENT BENEFITS.—

19 ‘‘(i) IN GENERAL.—For purposes of

20 subparagraph (A), any unpredictable con21 tingent event benefit shall not be taken

22 into account until the event on which the

23 benefit is contingent occurs.

24 ‘‘(ii) UNPREDICTABLE CONTINGENT

25 EVENT BENEFIT.—The term ‘unpredictable
21

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1 contingent event benefit’ means any benefit

2 contingent on an event other than—

3 ‘‘(I) age, service, compensation,

4 death, or disability, or

5 ‘‘(II) an event which is reason6 ably and reliably predictable (as deter7 mined by the Secretary).

8 ‘‘(C) INTEREST RATES USED.—The rate of

9 interest used to determine current liability shall

10 be the rate of interest used under subsection

11 (b)(5); except that the permissible range under

12 subparagraph (B)(ii) of subsection (b)(5) shall

13 not exceed 100 percent of the weighted average

14 referred to in such subparagraph.

15 ‘‘(D) CERTAIN SERVICE DISREGARDED.—

16 ‘‘(i) IN GENERAL.—In the case of a

17 participant to whom this subparagraph ap18 plies, only the applicable percentage of the

19 years of service before such individual be20 came a participant shall be taken into ac21 count in computing the current liability of

22 the plan.

23 ‘‘(ii) APPLICABLE PERCENTAGE.—For

24 purposes of clause (i), the applicable per25 centage shall be determined as follows:
22

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‘‘If the years of The applicable

participation are: percentage is:

1 ......................................................................................................... 20

2 ......................................................................................................... 40

3 ......................................................................................................... 60

4 ......................................................................................................... 80

5 or more ...........................................................................................100

1 ‘‘(iii) PARTICIPANTS TO WHOM THIS

2 SUBPARAGRAPH APPLIES.—This subpara3 graph shall apply to any participant who,

4 at the time of becoming a participant—

5 ‘‘(I) has not accrued any other

6 benefit under any defined benefit plan

7 (whether or not terminated) main8 tained by the employer or a member

9 of the same controlled group of which

10 the employer is a member,

11 ‘‘(II) who first becomes a partici12 pant under the plan in a plan year be13 ginning after December 31, 1987, and

14 ‘‘(III) has years of service great15 er than the minimum years of service

16 necessary for eligibility to participate

17 in the plan.

18 ‘‘(iv) ELECTION.—An employer may

19 elect not to have this subparagraph apply.

20 Such an election, once made, may be re21 voked only with the consent of the Sec22 retary.
23

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1 ‘‘(4) OTHER DEFINITIONS.—For purposes of

2 this subsection and subsection (o)—

3 ‘‘(A) UNFUNDED CURRENT LIABILITY.—

4 The term ‘unfunded current liability’ means,

5 with respect to any plan year, the excess (if

6 any) of—

7 ‘‘(i) the current liability under the

8 plan, over

9 ‘‘(ii) the value of the plan assets de10 termined under subsection (c)(2), reduced

11 by any credit balance in the funding stand12 ard account.

13 ‘‘(B) FUNDED CURRENT LIABILITY PER14 CENTAGE.—The term ‘funded current liability

15 percentage’ means, with respect to any plan

16 year, the percentage which—

17 ‘‘(i) the amount determined under

18 subparagraph (A)(ii), is of

19 ‘‘(ii) the current liability under the

20 plan.

21 ‘‘(5) SPECIAL RULES FOR SMALL PLANS.—

22 ‘‘(A) PLANS WITH 100 OR FEWER PARTICI23 PANTS.—This subsection and subsection (g)

24 shall not apply to any plan for any plan year
24

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1 if on each day during the preceding plan year

2 such plan had no more than 100 participants.

3 ‘‘(B) PLANS WITH MORE THAN 100 BUT

4 NOT MORE THAN 150 PARTICIPANTS.—In the

5 case of a plan to which subparagraph (A) does

6 not apply and which on each day during the

7 preceding year had no more than 150 partici8 pants, the additional amounts required by the

9 underfunding reduction requirement under this

10 subsection or the solvency maintenance require11 ment under subsection (g) shall be equal to the

12 product of—

13 ‘‘(i) the excess of such requirements

14 (determined without regard to this sub15 paragraph) over the funding deficiency (if

16 any) under subsection (b), multiplied by,

17 ‘‘(ii) 2 percent for the highest number

18 of participants in excess of 100 on any

19 such day.

20 ‘‘(C) AGGREGATION OF PLANS.—For pur21 poses of this paragraph, all defined benefit

22 plans maintained by the same employer (or any

23 member of such employer’s controlled group)

24 shall be treated as 1 plan, but only employees
25

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1 of such employer or member shall be taken into

2 account.

3 ‘‘(D) CONTROLLED GROUP.—For purposes

4 of this paragraph, the term ‘controlled group’

5 means any group treated as a single employer

6 under subsection (b), (c), (m), or (o) of section

7 414.’’

8 (c) SOLVENCY MAINTENANCE REQUIREMENTS.—

9 Section 302 of such Act is amended—

10 (1) by redesignating subsections (g) and (h) as

11 subsections (h) and (i), respectively, and

12 (2) by inserting after subsection (f) the follow13 ing new subsection:

14 ‘‘(g) SOLVENCY MAINTENANCE REQUIREMENT FOR

15 PLANS THAT ARE NOT MULTIEMPLOYER PLANS.—

16 ‘‘(1) SOLVENCY MAINTENANCE REQUIRE17 MENT.—In the case of a defined benefit plan (other

18 than a multiemployer plan) which has a funded cur19 rent liability percentage of less than 100 percent (as

20 of the first day of the plan year), the solvency main21 tenance requirement for such plan year is the sum

22 of—

23 ‘‘(A) the sum of:

24 ‘‘(i) all disbursements from the plan

25 for the plan year, and
26

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1 ‘‘(ii) an amount equal to the unfunded

2 current liability of the plan (as of such

3 first day) multiplied by the interest rate

4 used by such plan to determine current li5 ability,

6 ‘‘(B) the amount determined under sub7 section (d)(1)(B), and

8 ‘‘(C) the amount determined under sub9 section (d)(1)(C).

10 The solvency maintenance requirement shall not ex11 ceed the sum of the amount necessary to increase

12 the funded liability percentage (as of such first day)

13 to 100 percent and the amount determined under

14 subparagraph (B).

15 ‘‘(2) LIMITATION ON SOLVENCY MAINTENANCE

16 REQUIREMENT.—

17 ‘‘(A) IN GENERAL.—The amount required

18 under paragraph (1) for any plan year shall not

19 exceed the sum of—

20 ‘‘(i) the amount required under sub21 section (d); and

22 ‘‘(ii) the product of—

23 ‘‘(I) the excess (if any) of the

24 amount required under paragraph (1)
27

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1 over the amount required under sub2 section (d); multiplied by

3 ‘‘(II) the applicable percentage,

4 ‘‘(B) APPLICABLE PERCENTAGE.—For

5 purposes of subparagraph (A), the applicable

6 percentage is:

‘‘For plan years The applicable

beginning in: percentage is:

1993 ................................................... 20 percent

1994 ................................................... 40 percent

1995 ................................................... 60 percent

1996 ................................................... 80 percent

1997 or thereafter .............................. 100 percent.

7 ‘‘(3) DISBURSEMENTS FROM THE PLAN.—

8 ‘‘(A) IN GENERAL.—The term ‘disburse9 ments from the plan’ means benefit payments,

10 including purchases of annuities or payment of

11 lump sums in satisfaction of liabilities, adminis12 trative expenditures or any other disbursements

13 from the plan or its trust.

14 ‘‘(B) SPECIAL RULE FOR PURCHASES OF

15 ANNUITIES AND PAYMENT OF LUMP SUMS.—In

16 determining the applicable amounts attributable

17 to purchases of annuities or the payment of

18 lump sums under clause (i), the actual purchase

19 or lump sum amounts paid by the plan or trust

20 shall be multiplied by the excess (if any) of one

21 over the initial funding ratio of the plan.’’
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1 (d) TRANSITION USE OF CREDIT BALANCES FROM

2 PLAN YEARS BEFORE 1994.—At the election of the em3 ployer maintaining a defined benefit plan subject to the

4 requirements of section 302 of the Employee Retirement

5 Income Security Act of 1974, the amounts required under

6 sections 302(d) and 302(g) of such Act, as amended by

7 this Act, may be reduced by the net of (1) the sum of

8 credits to the funding standard account for plan years be9 ginning on or before December 31, 1993, arising under

10 clauses (ii) and (iii) of section 302(b)(3)(B) of such Act

11 and for amounts considered contributed by the employer

12 under section 302(b)(3)(A) of such Act (to the extent nec13 essary to avoid an accumulated funding deficiency under

14 section 302(f) of such Act) and (2) charges to the funding

15 standard account for plan years beginning on or before

16 December 31, 1993, arising under clauses (iv) and (v) of

17 section 302(b)(2)(B) of such Act.

18 SEC. 103. EFFECTIVE DATES.

19 The amendments made by this title shall apply to

20 plan years beginning after December 31, 1993.
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1 TITLE II—REQUIRED SECURITY

2 FOR CERTAIN PLAN AMEND3 MENTS

4 SEC. 201. AMENDMENTS TO INTERNAL REVENUE CODE OF

5 1986.

6 (a) INCREASE IN REQUIRED FUNDING PERCENT7 AGE.—

8 (1) IN GENERAL.—Clause (ii) of section

9 401(a)(29)(A) of the Internal Revenue Code of 1986

10 is amended by striking ‘‘60 percent’’ and inserting

11 ‘‘90 percent’’.

12 (2) CONFORMING AMENDMENT.—Subparagraph

13 (D) of section 401(a)(29) of such Code is amended

14 by striking ‘‘60 percent’’ and inserting ‘‘90 per15 cent’’.

16 (b) INCREASE IN REQUIRED AMOUNT OF SECU17 RITY.—

18 (1) IN GENERAL.—Subparagraph (C) of section

19 401(a)(29) of such Code is amended to read as fol20 lows:

21 ‘‘(C) AMOUNT OF SECURITY.—The security

22 shall be an amount equal to the excess of—

23 ‘‘(i) the amount of additional plan as24 sets which would be necessary to increase

25 the funded current liability percentage
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1 under the plan to 90 percent, including the

2 amount of the unfunded current liability

3 under the plan attributable to the plan

4 amendment, over

5 ‘‘(ii) $1,000,000.’’

6 (2) CONFORMING AMENDMENT.—Subparagraph

7 (E) of section 401(a)(29) of such Code is amended

8 by striking ‘‘, except that’’ and all that follows and

9 inserting a period.

10 (c) PROVISIONS MADE APPLICABLE TO MULTIEM11 PLOYER PLANS.—Clause (i) of section 401(a)(29)(A) of

12 such Code is amended by striking ‘‘(other than a multiem13 ployer plan)’’.

14 SEC. 202. AMENDMENTS TO EMPLOYEE RETIREMENT IN15 COME SECURITY ACT OF 1974.

16 (a) INCREASE IN REQUIRED FUNDING PERCENT17 AGE.—

18 (1) IN GENERAL.—Paragraph (2) of section

19 307(a) of the Employee Retirement Income Security

20 Act of 1974 is amended by striking ‘‘60 percent’’

21 and inserting ‘‘90 percent’’.

22 (2) CONFORMING AMENDMENT.—Subsection (d)

23 of section 302 of such Act is amended by striking

24 ‘‘60 percent’’ and inserting ‘‘90 percent’’.
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1 (b) INCREASE IN AMOUNT OF REQUIRED SECU2 RITY.—

3 (1) IN GENERAL.—Subsection (c) of section

4 307 of such Act is amended to read as follows:

5 ‘‘(c) AMOUNT OF SECURITY.—The security shall be

6 in an amount equal to the excess (if any) of—

7 ‘‘(1) the amount of additional plan assets which

8 would be necessary to increase the funded current li9 ability percentage under the plan to 90 percent, in10 cluding the amount of the unfunded current liability

11 under the plan attributable to the plan amendment,

12 over

13 ‘‘(2) $1,000,000.’’

14 (2) CONFORMING AMENDMENT.—Subsection (f)

15 of section 307 of such Act is amended by striking

16 ‘‘, except that’’ and all that follows and inserting a

17 period.

18 (c) PROVISIONS MADE APPLICABLE TO MULTIEM19 PLOYER PLANS.—Paragraph (1) of section 307(a) of such

20 Act is amended by striking ‘‘(other than a multiemployer

21 plan)’’.

22 (d) CRIMINAL PENALTY MADE APPLICABLE.—Sec23 tion 501 of such Act is amended by inserting ‘‘or of sec24 tion 307’’ after ‘‘this subtitle’’.
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1 SEC. 203. EFFECTIVE DATE.

2 The amendments made by this title shall apply to

3 plan amendments adopted after 1993.

4 TITLE III—MISCELLANEOUS

5 PROVISIONS

6 SEC. 301. REPORTS BY PENSION BENEFIT GUARANTY COR7 PORATION AND CONGRESSIONAL BUDGET

8 OFFICE.

9 (a) Not later than March 1, 1993, the Pension Bene10 fit Guaranty Corporation and the Congressional Budget

11 Office shall submit separate reports to the Congress set12 ting forth alternative increases in premiums that would

13 be required for the assets of the single-employer program

14 established under title IV of the Employee Retirement In15 come Security Act of 1974, as amended, to equal or exceed

16 such program’s current and expected liabilities by 2002.

17 Such reports shall include alternatives in which only the

18 provisions of section 4006(a)(3)(E) of such title are modi19 fied. The reports shall be prepared in a manner consistent

20 with the report required by section 4008 of such title.

21 (b) Effective with respect to fiscal years ending after

22 September 30, 1993, section 4008 of the Employee Retire23 ment Income Security Act of 1974 is amended by—

24 (1) striking ‘‘five’’ in the second sentence of

25 such section and inserting ‘‘five, ten, twenty and

26 thirty’’,
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1 (2) adding at the end thereof the following new

2 sentences: ‘‘The actuarial evaluation shall set forth

3 alternative premium schedules to assure that the as4 sets of the corporation equal or exceed its liabilities

5 during such periods. For any fiscal year that it

6 deems appropriate, the Congressional Budget Office

7 may transmit a separate report that analyzes and

8 comments upon the actuarial evaluation prepared by

9 the corporation (and premium schedules contained

10 therein).’’

11 SEC. 302. CERTAIN INFORMATION REQUIRED TO BE FUR12 NISHED TO PBGC.

13 (a) GENERAL RULE.—Subtitle A of title IV of the

14 Employee Retirement Income Security Act of 1974 is

15 amended by adding at the end thereof the following new

16 section:

17 ‘‘SEC. 4010. AUTHORITY TO REQUIRE CERTAIN INFORMA18 TION.

19 ‘‘(a) GENERAL RULE.—For plans described in sub20 section (b), the corporation may require that a plan spon21 sor or members of a sponsor’s controlled group provide

22 the corporation with such records, documents, or other in23 formation that the corporation deems necessary to deter24 mine the liabilities and assets of plans covered by this title,

25 or the financial condition of sponsors or members of spon-
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1 sors’ controlled groups maintaining plans covered by this

2 title.

3 ‘‘(b) DESCRIPTION OF PLANS.—For purposes of sub4 section (a), a plan is described in this subsection if—

5 ‘‘(1) the underfunding under such plan exceeds

6 $10,000,000;

7 ‘‘(2) the number of participants under such

8 plan is greater than 2,000; or

9 ‘‘(3) minimum funding waivers in excess of

10 $1,000,000 have been granted with respect to such

11 plan.

12 For purposes of this section, all plans maintained by the

13 same sponsor (or any member of such sponsor’s controlled

14 group) shall be treated as 1 plan. For purposes of this

15 subsection, determinations of liabilities and assets shall be

16 made in the same manner as under section 4006.’’

17 (b) CLERICAL AMENDMENT.—The table of contents

18 contained in section 1 of such Act is amended by inserting

19 after the item relating to section 4009 the following new

20 item:

‘‘Sec. 4010. Authority to require certain information.’’

Æ

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