II

104TH CONGRESS

2D SESSION S. 1842

To amend the Employee Retirement Income Security Act of 1974 to improve

protections for workers in multiemployer pension plans.

IN THE SENATE OF THE UNITED STATES

JUNE 5, 1996

Mr. JEFFORDS introduced the following bill; which was read twice and

referred to the Committee on Labor and Human Resources

A BILL

To amend the Employee Retirement Income Security Act

of 1974 to improve protections for workers in multiemployer 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 ‘‘Workers’ Pension Pro5 tection Act of 1996’’.
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1 TITLE I—PENSION PLAN

2 FUNDING

3 SEC. 101. AMENDMENTS TO PENSION PLAN FUNDING RE4 QUIREMENTS.

5 Part 3 of subtitle B of title I of the Employee Retire6 ment Income Security Act of 1974 is amended—

7 (1) by redesignating section 308 (29 U.S.C.

8 1086) as section 309; and

9 (2) by inserting after section 307 the following

10 new section:

11 ‘‘SEC. 308. TREATMENT OF MULTIEMPLOYER PLANS.

12 ‘‘(a) LIMITATION ON BENEFIT INCREASES FOR UN13 DERFUNDED PLANS.—The trustees of a plan described in

14 section 3(37) shall not increase benefits for a plan year

15 if the plan had a funded current liability percentage of

16 95 percent or less on the last day of the plan year imme17 diately preceding the plan year in which the increase in

18 benefits would take effect.

19 ‘‘(b) LIMITATION ON AMOUNT OF BENEFIT IN20 CREASE FOR OTHER MULTIEMPLOYER PLANS.—

21 ‘‘(1) IN GENERAL.—A plan described in section

22 3(37) with a funded current liability percentage of

23 95 percent or more shall not increase benefits if

24 such increase would result in a funded current liabil25 ity percentage of less than 90 percent for the plan
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1 year in which the benefit increase takes effect, in2 cluding the amount of the unfunded current liability

3 under the plan attributable to the benefit increase.

4 ‘‘(2) SPECIAL RULE FOR CERTAIN PLANS.—A

5 plan described in section 3(37) that increases bene6 fits in accordance with paragraph (1) shall not in7 crease benefits until the plan has reachieved a fund8 ed current liability percentage of 95 percent or more

9 on the last day of the plan year immediately preced10 ing the plan year in which the benefit increase would

11 take effect.

12 ‘‘(c) TREATMENT OF INTEREST RATES.—

13 ‘‘(1) IN GENERAL.—The rate of interest used to

14 determine current liabilities under this section for a

15 plan described in section 3(37) shall be the rate of

16 interest used under section 302(b)(5)(B)(ii), except

17 that the highest rate in the permissible range under

18 subparagraph (B)(ii) of such section shall not exceed

19 the specified percentage under paragraph (2) of the

20 weighted average referred to in such subparagraph.

21 ‘‘(2) SPECIFIED PERCENTAGE.—For purposes

22 of paragraph (1) the specified percentage shall be:

‘‘In the case of plan years the specified

beginning in calendar year: percentage is:

1996 ......................................................................................... 109

1997 ......................................................................................... 108

1998 ......................................................................................... 107

1999 ......................................................................................... 106

2000 ......................................................................................... 105.
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1 ‘‘(d) TREATMENT OF MORTALITY TABLES.—

2 ‘‘(1) STANDARD TABLE.—In the case of plan

3 years beginning prior to the first plan year to which

4 the tables described in paragraph (2) apply, the

5 mortality table used in determining current liability

6 under this subsection shall be the table prescribed by

7 the Secretary of Labor which must be based on the

8 prevailing standard table (as described in section

9 807 of the Internal Revenue Code of 1986) used by

10 the Commissioner of the Internal Revenue Service to

11 determine reserves for group annuity contracts is12 sued on January 1, 1993.

13 ‘‘(2) SECRETARIAL AUTHORITY.—The Secretary

14 of Labor shall by regulation prescribe, for plan years

15 beginning after December 31, 1999, mortality tables

16 to be used in determining current liability under this

17 subsection. Such tables shall be identical to those

18 prescribed by the Secretary of Treasury under sec19 tion 412(l)(7)(C)(ii)(II) of the Internal Revenue

20 Code of 1986.

21 ‘‘(e) DEFINITIONS.—For purposes of this section:

22 ‘‘(1) BENEFITS.—The term ‘benefits’ for a plan

23 described in section 3(37) means all benefits to par24 ticipants and their beneficiaries under the plan.
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1 ‘‘(2) CURRENT LIABILITY.—The term ‘current

2 liability’ for a plan described in section 3(37) means

3 all liabilities to participants and their beneficiaries

4 under the plan.

5 ‘‘(3) UNFUNDED CURRENT LIABILITY.—For a

6 plan described in section 3(37), the term ‘unfunded

7 current liability’ means, with respect to any plan

8 year, the excess (if any) of—

9 ‘‘(A) the current liability under the plan,

10 over

11 ‘‘(B) the value of the plan assets deter12 mined under section 302(c)(2) (29 U.S.C.

13 1082(c)(2)), reduced by any credit balance in

14 the funding standard account.

15 The Secretary of Labor may provide for such reduc16 tion for purposes of any other provision which ref17 erences this subsection.

18 ‘‘(4) FUNDED CURRENT LIABILITY PERCENT19 AGE.—For a plan described in section 3(37), the

20 term ‘funded current liability percentage’ means,

21 with respect to any plan year, the percentage

22 which—

23 ‘‘(A) the amount determined under para24 graph (3)(B), is of

25 ‘‘(B) the current liability under the plan.’’.
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1 SEC. 102. EXCEPTION TO RULE PROHIBITING DECREASE OF

2 ACCRUED BENEFITS.

3 Section 204(g)(1) of the Employee Retirement In4 come Security Act of 1974 (29 U.S.C. 1054(g)(1)) is

5 amended by adding before the period the following: ‘‘, or

6 an amendment which reduces an increase in accrued bene7 fits resulting from an increase in benefits prohibited by

8 section 308 (a) or (b)’’.

9 SEC. 103. NOTICE TO PARTICIPANTS AND OTHERS OF MUL10 TIEMPLOYER PLAN FUNDING STATUS.

11 Section 105 of the Employee Retirement Income Se12 curity Act of 1974 (29 U.S.C. 1025) is amended by adding

13 at the end thereof the following new subsection:

14 ‘‘(e) The trustees of a plan described in section 3(37)

15 shall provide to plan participants, beneficiaries and em16 ployers contributing to the plan, on an annual basis, with17 in 180 days after the last day of the plan year, notice

18 of the plan’s funded current liability percentage on the last

19 day of the immediately preceding plan year, and of the

20 limits on the Pension Benefit Guaranty Corporation’s

21 guarantee if the plan becomes insolvent. Such notice shall

22 be written in a manner so as to be understood by the aver23 age plan participant.’’.

24 SEC. 104. EFFECTIVE DATE.

25 The amendments made by this title shall apply to

26 plans in plan years beginning after December 31, 1996.
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1 TITLE II—ACTUARIAL

2 ASSUMPTIONS

3 SEC. 201. INTEREST RATE AND MORTALITY ASSUMPTIONS

4 USED.

5 Section 4213(b) of the Employee Retirement Income

6 Security Act of 1974 (29 U.S.C. 1393(b)) is amended—

7 (1) by redesignating paragraphs (1) and (2) as

8 subparagraphs (A) and (B), respectively;

9 (2) by striking ‘‘In’’ and inserting ‘‘(1) In’’;

10 and

11 (3) by adding at the end thereof the following

12 new paragraph:

13 ‘‘(2) Effective for plan years beginning after Decem14 ber 31, 1996—

15 ‘‘(A) the rate of interest used to determine an

16 employer’s withdrawal liability under this part shall

17 be the rate of interest determined under section

18 308(c); and

19 ‘‘(B) the mortality table used in determining an

20 employer’s withdrawal liability under this part shall

21 be the mortality table determined under section

22 308(d) for determining current liability.’’.

23 SEC. 202. EFFECTIVE DATE.

24 The amendments made by this title shall apply to

25 plans in plan years beginning after December 31, 1996.
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1 TITLE III—ADMINISTRATION

2 AND ENFORCEMENT

3 SEC. 301. ADMINISTRATION AND ENFORCEMENT REQUIRE4 MENTS.

5 Section 502(a) of the Employee Retirement Income

6 Security Act of 1974 (29 U.S.C. 1132(a)) is amended—

7 (1) paragraph (8), by striking ‘‘or’’ at the end

8 thereof;

9 (2) in paragraph (9), by striking the period and

10 inserting ‘‘; or’’; and

11 (3) by adding at the end thereof the following

12 new paragraph:

13 ‘‘(10) by an employer which contributes to a

14 multiemployer plan (A) to enjoin any act or practice

15 which violates any provision of sections 308,

16 204(g)(1), and 105(e), or (B) to obtain other appro17 priate equitable relief (i) to redress such violations

18 of such sections or (ii) to enforce any provision of

19 such sections.’’.

20 SEC. 302. ATTORNEY’S FEES AND COSTS.

21 Section 502(g) of the Employee Retirement Income

22 Security Act of 1974 (29 U.S.C. 1132(g)) is amended by

23 adding at the end thereof the following new paragraph:
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1 ‘‘(3) In any action under ‘‘section 502(a)(1) by an

2 employer, the court in its discretion may allow a reason3 able attorney’s fee and costs of action to either party.’’.

4 SEC. 303. CIVIL ACTIONS BY CORPORATION.

5 Section 4003(e)(1) of the Employee Retirement In6 come Security Act of 1974 (29 U.S.C. 1303(e)(1)) is

7 amended—

8 (1) by striking ‘‘, and (B)’’ and inserting ‘‘,

9 (B)’’; and

10 (2) by inserting before the period the following:

11 ‘‘, and (C) in the case of a multiemployer plan, sec12 tions 308, 204(g)(1), 105(e), and 4213(b)(2)’’.

13 SEC. 304. EFFECTIVE DATE.

14 The amendments made by this title shall apply to

15 plans in plan years beginning after December 31, 1996.

16 TITLE IV—MISCELLANEOUS

17 PROVISIONS

18 SEC. 401. ELIMINATION OF SPECIAL VESTING RULE FOR

19 MULTIEMPLOYER PLANS.

20 (a) IN GENERAL.—Paragraph (2) of section 203(a)

21 of the Employee Retirement Income Security Act of 1974

22 (29 U.S.C. 1053(a)(2)) is amended—

23 (1) in the matter preceding subparagraph (A),

24 by striking ‘‘subparagraph (A), (B), or (C)’’ and in25 serting ‘‘subparagraph (A) or (B)’’; and
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1 (2) by striking subparagraph (C).

2 (b) EFFECTIVE DATE.—The amendments made by

3 subsection (a) shall apply to plan years beginning after

4 the earlier of—

5 (1) the later of—

6 (A) December 31, 1996; or

7 (B) the date on which the last of the col8 lective bargaining agreements pursuant to

9 which the plan is maintained terminates (deter10 mined without regard to any extension thereof

11 after the date of the enactment of this Act); or

12 (2) January 1, 1999.

13 Such amendments shall not apply to any individual who

14 does not have more than one hour of service under the

15 plan on or after the first day of the first plan year to

16 which such amendments apply.

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