II

105TH CONGRESS

1ST SESSION S. 107

To require the offer in every defined benefit plan of a joint and 2⁄3 survivor

annuity option and to require comparative disclosure of all benefit options

to both spouses.

IN THE SENATE OF THE UNITED STATES

JANUARY 21, 1997

Mrs. BOXER introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To require the offer in every defined benefit plan of a joint

and 2⁄3 survivor annuity option and to require comparative disclosure of all benefit options to both spouses.

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 Benefits Fair5 ness Act’’.

6 SEC. 2. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY

7 REQUIREMENTS.

8 (a) AMENDMENTS TO ERISA.—

9 (1) AMOUNT OF ANNUITY.—
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1 (A) IN GENERAL.—Paragraph (1) of sec2 tion 205(a) of the Employee Retirement Income

3 Security Act of 1974 (29 U.S.C. 1055(a)) is

4 amended by inserting ‘‘or, at the election of the

5 participant, shall be provided in the form of a

qualified joint and 2 6 ⁄3 survivor annuity’’ after

7 ‘‘survivor annuity,’’.

8 (B) DEFINITION.—Subsection (d) of sec9 tion 205 of such Act (29 U.S.C. 1055) is

10 amended—

11 (i) by redesignating paragraphs (1)

12 and (2) as subparagraphs (A) and (B), re13 spectively,

14 (ii) by inserting ‘‘(1)’’ after ‘‘(d)’’,

15 and

16 (iii) by adding at the end the follow17 ing new paragraph:

18 ‘‘(2) For purposes of this section, the term ‘‘qualified

joint and 2 19 ⁄3 survivor annuity’’ means an annuity—

20 ‘‘(A) for the participant while both the partici21 pant and the spouse are alive with a survivor annu22 ity for the life of surviving individual (either the par23 ticipant or the spouse) equal to 67 percent of the
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1 amount of the annuity which is payable to the par2 ticipant while both the participant and the spouse

3 are alive,

4 ‘‘(B) which is the actuarial equivalent of a sin5 gle annuity for the life of the participant, and

6 ‘‘(C) which, for all other purposes of this Act,

7 is treated as a qualified joint and survivor annuity.’’.

8 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

9 of section 205(c)(3)(A) of such Act (29 U.S.C.

10 1055(c)(3)(A)) is amended to read as follows:

11 ‘‘(i) the terms and conditions of each qualified

joint and survivor annuity and qualified joint and 2 12 ⁄3

13 survivor annuity offered, accompanied by an illustra14 tion of the benefits under each such annuity for the

15 particular participant and spouse and an acknowl16 edgement form to be signed by the participant and

17 the spouse that they have read and considered the

18 illustration before any form of retirement benefit is

19 chosen,’’.

20 (b) AMENDMENTS TO INTERNAL REVENUE CODE.—

21 (1) AMOUNT OF ANNUITY.—

22 (A) IN GENERAL.—Clause (i) of section

23 401(a)(11)(A) of the Internal Revenue Code of
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1 1986 (relating to requirement of joint and sur2 vivor annuity and preretirement survivor annu3 ity) is amended by inserting ‘‘or, at the election

4 of the participant, shall be provided in the form

of a qualified joint and 2 5 ⁄3 survivor annuity’’

6 after ‘‘survivor annuity,’’.

7 (B) DEFINITION.—Section 417 of such

8 Code (relating to definitions and special rules

9 for purposes of minimum survivor annuity re10 quirements) is amended by redesignating sub11 section (f) as subsection (g) and by inserting

12 after subsection (e) the following new sub13 section:

‘‘(f) DEFINITION OF QUALIFIED JOINT AND 2 14 ⁄3 SUR15 VIVOR ANNUITY.—For purposes of this section and section

401(a)(11), the term ‘‘qualified joint and 2 16 ⁄3 survivor an17 nuity’’ means an annuity—

18 ‘‘(1) for the participant while both the partici19 pant and the spouse are alive with a survivor annu20 ity for the life of surviving individual (either the par21 ticipant or the spouse) equal to 67 percent of the

22 amount of the annuity which is payable to the par23 ticipant while both the participant and the spouse

24 are alive,
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1 ‘‘(2) which is the actuarial equivalent of a sin2 gle annuity for the life of the participant, and

3 ‘‘(3) which, for all other purposes of this title,

4 is treated as a qualified joint and survivor annuity.’’.

5 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

6 of section 417(a)(3)(A) of such Code (relating to ex7 planation of joint and survivor annuity) is amended

8 to read as follows:

9 ‘‘(i) the terms and conditions of each

10 qualified joint and survivor annuity and

qualified joint and 2 11 ⁄3 survivor annuity of12 fered, accompanied by an illustration of

13 the benefits under each such annuity for

14 the particular participant and spouse and

15 an acknowledgement form to be signed by

16 the participant and the spouse that they

17 have read and considered the illustration

18 before any form of retirement benefit is

19 chosen,’’.

20 (c) EFFECTIVE DATES.—

21 (1) IN GENERAL.—The amendments made by

22 this section shall apply to plan years beginning after

23 December 31, 1996.

24 (2) SPECIAL RULE FOR COLLECTIVELY BAR25 GAINED PLANS.—In the case of a plan maintained
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1 pursuant to 1 or more collective bargaining agree2 ments between employee representatives and 1 or

3 more employers ratified on or before the date of en4 actment of this Act, the amendments made by this

5 section shall apply to the first plan year beginning

6 on or after the earlier of—

7 (A) the later of—

8 (i) January 1, 1998, or

9 (ii) the date on which the last of such

10 collective bargaining agreements termi11 nates (determined without regard to any

12 extension thereof after the date of enact13 ment of this Act), or

14 (B) January 1, 1999.

15 (3) PLAN AMENDMENTS.—If any amendment

16 made by this section requires an amendment to any

17 plan, such plan amendment shall not be required to

18 be made before the first plan year beginning on or

19 after January 1, 1999, if—

20 (A) during the period after such amend21 ment made by this section takes effect and be22 fore such first plan year, the plan is operated

23 in accordance with the requirements of such

24 amendment made by this section, and
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1 (B) such plan amendment applies retro2 actively to the period after such amendment

3 made by this section takes effect and such first

4 plan year.

5 A plan shall not be treated as failing to provide defi6 nitely determinable benefits or contributions, or to

7 be operated in accordance with the provisions of the

8 plan, merely because it operates in accordance with

9 this paragraph.

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