I

104TH CONGRESS

1ST SESSION H. R. 35

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

security for workers, to improve pension plan funding, to limit growth

in insurance exposure, to protect the single-employer plan termination

insurance program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mr. FAWELL introduced the following bill; which was referred to the

Committee on Economic and Educational Opportunities

A BILL

To amend the Employee Retirement Income Security Act

of 1974 to provide security for workers, to improve pension plan funding, to limit growth in insurance exposure,

to protect the single-employer plan termination insurance

program, and for other purposes.

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 AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Retirement Protection Act of 1995’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Amendment of ERISA.
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TITLE I—PENSION PLAN FUNDING

Sec. 101. Minimum funding requirements.

Sec. 102. Limitation on changes in current liability assumptions.

Sec. 103. Anticipation of bargained benefit increases.

Sec. 104. Modification of quarterly contribution requirement.

TITLE II—AMENDMENTS RELATED TO TITLE IV OF THE

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

Sec. 201. Reportable events.

Sec. 202. Alternative to involuntary termination.

Sec. 203. Certain information required to be furnished to PBGC.

Sec. 204. Liability upon liquidation of contributing sponsor or controlled group

member if plan remains ongoing.

Sec. 205. Enforcement of minimum funding requirements.

Sec. 206. Remedies for noncompliance with requirements for standard termination.

Sec. 207. Prohibition on benefit increases where plan sponsor is insolvent.

Sec. 208. Substantial owner benefits.

TITLE III—MISCELLANEOUS AMENDMENTS

Sec. 301. Recovery ratio under ERISA section 4022(c).

Sec. 302. Rules governing computation of amounts payable by corporation.

Sec. 303. Distress termination criteria for certain financial institutions.

Sec. 304. Single sum distributions.

Sec. 305. Adjustments to lien for missed minimum funding contributions.

Sec. 306. Funding of restored plans.

TITLE IV—EFFECTIVE DATE

Sec. 401. Effective date.

1 SEC. 2. AMENDMENT OF ERISA.

2 The sections of the Employee Retirement Income Se3 curity Act of 1974 which are amended by the subsequent

4 provisions of this Act are amended so as to read as such

5 sections would read if the Uruguay Round Agreements

6 Act had not been enacted. References to such sections in

7 the subsequent provisions of this Act shall be deemed ref8 erences to such sections as amended by this section. This

9 section shall be effective as if included in the Uruguay

10 Round Agreements Act.
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1 TITLE I—PENSION PLAN

2 FUNDING

3 SEC. 101. MINIMUM FUNDING REQUIREMENTS.

4 (a) AMENDMENTS TO ADDITIONAL FUNDING RE5 QUIREMENTS FOR SINGLE-EMPLOYER PLANS.—

6 (1) RELATIONSHIP OF ADDITIONAL FUNDING

7 REQUIREMENT TO FUNDING STANDARD ACCOUNT

8 CHARGES AND CREDITS.—

9 (A) Clause (ii) of section 302(d)(1)(A) of

10 such Act is amended to read as follows:

11 ‘‘(ii) the sum of the charges for such

12 plan year under subsection (b)(2), reduced

13 by the sum of the credits for such plan

14 year under subparagraph (B) of subsection

15 (b)(3), plus’’.

16 (B) The last sentence in section 302(d)(1)

17 of such Act is amended to read as follows:

18 ‘‘Such increase shall not exceed the amount which,

19 after taking into account charges (other than the ad20 ditional charge under this subsection) and credits

21 under subsection (b), is necessary to increase the

22 funded current liability percentage (taking into ac23 count the expected increase in current liability due

24 to benefits accruing during the plan year) to 100

25 percent.’’
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1 (2) AMENDMENT TO DEFICIT REDUCTION CON2 TRIBUTION.—Paragraph (2) of section 302(d) of

3 such Act is amended—

4 (A) by striking ‘‘plus’’ at the end of sub5 paragraph (A),

6 (B) by striking the period at the end of

7 subparagraph (B) and inserting ‘‘, plus’’; and

8 (C) by adding at the end the following new

9 subparagraph:

10 ‘‘(C) the expected increase in current li11 ability due to benefits accruing during the plan

12 year.’’

13 (3) INCREASE IN CURRENT LIABILITY DUE TO

14 CHANGE IN REQUIRED ASSUMPTIONS.—

15 (A) Paragraph (3) of section 302(d) of

16 such Act is amended by adding at the end the

17 following new subparagraph:

18 ‘‘(D) SPECIAL RULE FOR REQUIRED

19 CHANGES IN ACTUARIAL ASSUMPTIONS.—

20 ‘‘(i) IN GENERAL.—The unfunded old

21 liability amount with respect to any plan

22 for any plan year shall be increased by the

23 amount necessary to amortize the amount

24 of additional unfunded old liability under

25 the plan in equal annual installments over
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1 a period of 12 plan years (beginning with

2 the first plan year beginning after Decem3 ber 31, 1995).

4 ‘‘(ii) ADDITIONAL UNFUNDED OLD LI5 ABILITY.—For purposes of clause (i), the

6 term ‘additional unfunded old liability’

7 means the amount (if any) by which—

8 ‘‘(I) the current liability of the

9 plan as of the beginning of the first

10 plan year beginning after December

11 31, 1995, valued using the assump12 tions required by paragraph (7)(C) as

13 in effect for plan years beginning

14 after December 31, 1995, exceeds

15 ‘‘(II) the current liability of the

16 plan as of the beginning of such first

17 plan year, valued using the same as18 sumptions used under subclause (I)

19 (other than the assumptions required

20 by paragraph (7)(C)), using the prior

21 interest rate, and using such mortality

22 assumptions as were used to deter23 mine current liability for the first plan

24 year beginning after December 31,

25 1992.
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1 ‘‘(iii) PRIOR INTEREST RATE.—For

2 purposes of clause (ii), the term ‘prior in3 terest rate’ means the rate of interest that

4 is the same percentage of the weighted av5 erage under subsection (b)(5)(B)(ii)(I) for

6 the first plan year beginning after Decem7 ber 31, 1995, as the rate of interest used

8 by the plan to determine current liability

9 for the first plan year beginning after De10 cember 31, 1992, is of the weighted aver11 age under subsection (b)(5)(B)(ii)(I) for

12 such first plan year beginning after De13 cember 31, 1992.’’

14 (4) APPLICABLE PERCENTAGE FOR DETERMIN15 ING UNFUNDED NEW LIABILITY AMOUNT.—Subpara16 graph (C) of section 302(d)(4) of such Act is

17 amended by striking ‘‘35’’ and inserting ‘‘60’’.

18 (5) UNPREDICTABLE CONTINGENT EVENT

19 AMOUNT.—

20 (A) Subparagraph (A) of section 302(d)(5)

21 of such Act is amended—

22 (i) by striking ‘‘greater of’’ and insert23 ing ‘‘greatest of’’ before clause (i);

24 (ii) by striking ‘‘or’’ at the end of

25 clause (i);
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1 (iii) by striking the period at the end

2 of clause (ii) and inserting ‘‘, or’’; and

3 (iv) by adding after clause (ii) the fol4 lowing new clause:

5 ‘‘(iii) the additional amount that

6 would be determined under paragraph

7 (4)(A) if the unpredictable contingent

8 event benefit liabilities were included in

9 unfunded new liability notwithstanding

10 paragraph (4)(B)(ii).’’

11 (B) Paragraph (5) of section 302(d) of

12 such Act is amended by adding at the end the

13 following new subparagraph:

14 ‘‘(E) LIMITATION.—The present value of

15 the amounts described in subparagraph (A)

16 with respect to any one event shall not exceed

17 the unpredictable contingent event benefit li18 abilities attributable to that event.’’

19 (C) Clause (ii) of section 302(e)(4)(D) of

20 such Act is amended—

21 (i) by striking ‘‘greater of’’ and insert22 ing ‘‘greatest of’’ before subclause (I);

23 (ii) by striking ‘‘or’’ at the end of

24 subclause (I);
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1 (iii) by striking the period at the end

2 of subclause (II) and inserting ‘‘, or’’; and

3 (iv) by adding after subclause (II) the

4 following new clause:

5 ‘‘(III) 25 percent of the amount

6 determined under subsection

7 (d)(5)(A)(iii) for the plan year.’’

8 (6) REQUIRED INTEREST RATE AND MORTALITY

9 ASSUMPTIONS FOR DETERMINING CURRENT LIABIL10 ITY.—Subparagraph (C) of section 302(d)(7) of

11 such Act is amended to read as follows:

12 ‘‘(C) INTEREST RATE AND MORTALITY AS13 SUMPTIONS USED.—Effective for plan years be14 ginning after December 31, 1995—

15 ‘‘(i) the rate of interest used to deter16 mine current liability under this subsection

17 shall be the rate of interest used under

18 subsection (b)(5), except that the highest

19 rate in the permissible range under sub20 paragraph (B)(ii) thereof shall not exceed

21 100 percent of the weighted average re22 ferred to in such subparagraph, and

23 ‘‘(ii) the mortality table used to deter24 mine current liability under this subsection
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1 shall be the table prescribed by the Sec2 retary.

3 The table prescribed under clause (ii) shall be

4 based on the prevailing commissioners’ stand5 ard table used to determine reserves for group

6 annuity contracts issued on the date as of

7 which current liability is determined. The Sec8 retary shall prescribe separate tables, which

9 may be used instead of the table described in

10 the preceding sentence, to calculate mortality

11 rates for participants who satisfy the definition

12 of disability under titles II and XVI of the So13 cial Security Act and the regulations there14 under.’’

15 (7) TRANSITION RULE.—Section 302(d) of such

16 Act is amended by adding at the end the following

17 new paragraph:

18 ‘‘(9) PHASEIN OF INCREASES IN FUNDING RE19 QUIRED BY RETIREMENT PROTECTION ACT OF

20 1995.—

21 ‘‘(A) IN GENERAL.—For any applicable

22 plan year, at the election of the employer, the

23 increase under paragraph (1) shall not exceed

24 the greater of—
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1 ‘‘(i) the increase that would be re2 quired under paragraph (1) if the provi3 sions of this title as in effect for plan years

4 beginning before January 1, 1996, had re5 mained in effect, or

6 ‘‘(ii) the amount which, after taking

7 into account charges (other than the addi8 tional charge under this subsection) and

9 credits under subsection (b), is necessary

10 to increase the funded current liability per11 centage (taking into account the expected

12 increase in current liability due to benefits

13 accruing during the plan year) for the ap14 plicable plan year to a percentage equal to

15 the sum of the initial funded current liabil16 ity percentage of the plan plus the applica17 ble number of percentage points for such

18 applicable plan year.

19 ‘‘(B) APPLICABLE NUMBER OF PERCENT20 AGE POINTS.—

21 ‘‘(i) INITIAL FUNDED CURRENT LI22 ABILITY PERCENTAGE OF 75 PERCENT OR

23 BHLESS.—Except as provided in clause

24 (ii), for plans with an initial funded cur25 rent liability percentage of 75 percent or
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1 less, the applicable number of percentage

2 points for the applicable plan year is:

The applicable

‘‘In the case of number of

applicable plan years percentage

beginning in: points is:

1996 ................................................. 3

1997 ................................................. 6

1998 ................................................. 9

1999 ................................................. 12

2000 ................................................. 15

2001 ................................................. 19

2002 ................................................. 24.

3 ‘‘(ii) OTHER CASES.—In the case of a

4 plan to which this clause applies, the appli5 cable number of percentage points for any

6 such applicable plan year is the sum of—

7 ‘‘(I) 2 percentage points;

8 ‘‘(II) the applicable number of

9 percentage points (if any) under this

10 clause for the preceding applicable

11 plan year;

12 ‘‘(III) the product of .10 multi13 plied by the excess (if any) of (a) 85

14 percentage points over (b) the sum of

15 the initial funded current liability per16 centage and the number determined

17 under subclause (II);

18 ‘‘(IV) for applicable plan years

19 beginning in 2000, 1 percentage

20 point; and
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1 ‘‘(V) for applicable plan years be2 ginning in 2001, 2 percentage points.

3 ‘‘(iii) PLANS TO WHICH CLAUSE (ii)

4 APPLIES.—

5 ‘‘(I) IN GENERAL.—Clause (ii)

6 shall apply to a plan for an applicable

7 plan year if the initial funded current

8 liability percentage of such plan is

9 more than 75 percent.

10 ‘‘(II) PLANS INITIALLY UNDER

11 CLAUSE (i).—In the case of a plan

12 which (but for this subclause) has an

13 initial funded current liability percent14 age of 75 percent or less, clause (ii)

15 (and not clause (i)) shall apply to

16 such plan with respect to applicable

17 plan years beginning after the first

18 applicable plan year for which the

19 sum of the initial funded current li20 ability percentage and the applicable

21 number of percentage points (deter22 mined under clause (i)) exceeds 75

23 percent. For purposes of applying

24 clause (ii) to such a plan, the initial

25 funded current liability percentage of
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1 such plan shall be treated as being the

2 sum referred to in the preceding sen3 tence.

4 ‘‘(C) DEFINITIONS.—For purposes of this

5 paragraph—

6 ‘‘(i) The term ‘applicable plan year’

7 means a plan year beginning after Decem8 ber 31, 1995, and before January 1, 2003.

9 ‘‘(ii) The term ‘initial funded current

10 liability percentage’ means the funded cur11 rent liability percentage as of the first day

12 of the first plan year beginning after De13 cember 31, 1995.’’

14 (8) LIQUIDITY REQUIREMENT.—

15 (A) Section 302(e) of such Act is amended

16 by redesignating paragraph (5) as paragraph

17 (6) and by inserting after paragraph (4) the

18 following new paragraph:

19 ‘‘(5) LIQUIDITY REQUIREMENT.—

20 ‘‘(A) IN GENERAL.—A plan to which this

21 paragraph applies shall be treated as failing to

22 pay the full amount of any required installment

23 to the extent that the value of the liquid assets

24 paid in such installment is less than the liquid25 ity shortfall (whether or not such liquidity
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1 shortfall exceeds the amount of such install2 ment required to be paid but for this para3 graph).

4 ‘‘(B) PLANS TO WHICH PARAGRAPH AP5 PLIES.—This paragraph shall apply to a de6 fined benefit plan to which subsection (d) ap7 plies and which—

8 ‘‘(i) is required to pay installments

9 under this subsection for a plan year, and

10 ‘‘(ii) has a liquidity shortfall for any

11 quarter during such plan year.

12 ‘‘(C) PERIOD OF UNDERPAYMENT.—For

13 purposes of paragraph (1), any portion of an

14 installment that is treated as not paid under

15 subparagraph (A) shall continue to be treated

16 as unpaid until the close of the quarter in

17 which the due date for such installment occurs.

18 ‘‘(D) LIMITATION ON INCREASE.—If the

19 amount of any required installment is increased

20 by reason of subparagraph (A), in no event

21 shall such increase exceed the amount which,

22 when added to prior installments for the plan

23 year, is necessary to increase the funded cur24 rent liability percentage (taking into account

25 the expected increase in current liability due to
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1 benefits accruing during the plan year) to 100

2 percent.

3 ‘‘(E) DEFINITIONS.—For purposes of this

4 paragraph—

5 ‘‘(i) LIQUIDITY SHORTFALL.—The

6 term ‘liquidity shortfall’ means, with re7 spect to any required installment, an

8 amount equal to the excess (as of the last

9 day of the quarter for which such install10 ment is made) of the base amount with re11 spect to such quarter over the value (as of

12 such last day) of the plan’s liquid assets.

13 ‘‘(ii) BASE AMOUNT.—

14 ‘‘(I) IN GENERAL.—The term

15 ‘base amount’ means, with respect to

16 any quarter, an amount equal to 3

17 times the sum of the adjusted dis18 bursements from the plan for the 12

19 months ending on the last day of such

20 quarter.

21 ‘‘(II) SPECIAL RULE.—If the

22 amount determined under clause (i)

23 exceeds an amount equal to 2 times

24 the sum of the adjusted disburse25 ments from the plan for the 36
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1 months ending on the last day of the

2 quarter and an enrolled actuary cer3 tifies to the Secretary that such ex4 cess is the result of nonrecurring cir5 cumstances, the base amount with re6 spect to such quarter shall be deter7 mined without regard to amounts re8 lated to those nonrecurring cir9 cumstances.

10 ‘‘(iii) DISBURSEMENTS FROM THE

11 PLAN.—The term ‘disbursements from the

12 plan’ means all disbursements from the

13 trust, including purchases of annuities,

14 payments of single sums and other bene15 fits, and administrative expenses.

16 ‘‘(iv) ADJUSTED DISBURSEMENTS.—

17 The term ‘adjusted disbursements’ means

18 disbursements from the plan reduced by

19 the product of—

20 ‘‘(I) the plan’s funded current li21 ability percentage (as defined in sub22 section (d)(8)) for the plan year, and

23 ‘‘(II) the sum of the purchases of

24 annuities, payments of single sums,
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1 and such other disbursements as the

2 Secretary shall provide in regulations.

3 ‘‘(v) LIQUID ASSETS.—The term ‘liq4 uid assets’ means cash, marketable securi5 ties and such other assets as specified by

6 the Secretary in regulations.

7 ‘‘(vi) QUARTER.—The term ‘quarter’

8 means, with respect to any required install9 ment, the 3-month period preceding the

10 month in which the due date for such in11 stallment occurs.

12 ‘‘(F) REGULATIONS.—The Secretary may

13 prescribe such regulations as are necessary to

14 carry out this paragraph.’’

15 (B) LIMITATION ON DISTRIBUTIONS

16 OTHER THAN LIFE ANNUITIES PAID BY THE

17 PLAN.—

18 (i) Section 204 of the Employee Re19 tirement Income Security Act of 1974 (29

20 U.S.C. 1054) is amended by redesignating

21 subsection (i) as (j) and inserting a new

22 subsection (i) to read as follows:

23 ‘‘(i) LIMITATION ON DISTRIBUTIONS OTHER THAN

24 LIFE ANNUITIES PAID BY THE PLAN.—
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1 ‘‘(1) IN GENERAL.—Notwithstanding any other

2 provision of this part, the fiduciary of a pension plan

3 that is subject to the additional funding require4 ments of section 302(d) shall not permit a prohib5 ited payment to be made from a plan during a pe6 riod in which such plan has a liquidity shortfall (as

7 defined in section 302(e)(5)).

8 ‘‘(2) PROHIBITED PAYMENT.—For purposes of

9 paragraph (1), the term ‘prohibited payment’

10 means—

11 ‘‘(A) any payment, in excess of the month12 ly amount paid under a single life annuity (plus

13 any social security supplements described in the

14 last sentence of section 204(b)(1)(G)), to a par15 ticipant or beneficiary whose annuity starting

16 date (as defined in section 205(h)(2)), that oc17 curs during the period referred to in paragraph

18 (1),

19 ‘‘(B) any payment for the purchase of an

20 irrevocable commitment from an insurer to pay

21 benefits, and

22 ‘‘(C) any other payment specified by the

23 Secretary by regulations.

24 ‘‘(3) PERIOD OF SHORTFALL.—For purposes of

25 this subsection, a plan has a liquidity shortfall dur-
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1 ing the period that there is an underpayment of an

2 installment under section 302(e) by reason of para3 graph (5)(A) thereof.

4 ‘‘(4) COORDINATION WITH OTHER PROVI5 SIONS.—Compliance with this subsection shall not

6 constitute a violation of any other provision of this

7 Act.’’

8 (ii) Section 502 of such Act is amend9 ed by adding at the end thereof a new sub10 section (m) to read as follows:

11 ‘‘(m) In the case of a distribution to a pension plan

12 participant or beneficiary in violation of section 204(i) by

13 a plan fiduciary, the Secretary shall assess a penalty

14 against such fiduciary in an amount equal to the value

15 of the distribution. Such penalty shall not exceed $10,000

16 for each such distribution.’’

17 (9) AMENDMENT TO DEFINITION OF FULL

18 FUNDING LIMITATION.—

19 (A) Subparagraph (A) of section 302(c)(7)

20 of such Act is amended—

21 (i) by inserting ‘‘(including the ex22 pected increase in current liability due to

23 benefits accruing during the plan year)’’

24 after ‘‘current liability’’ in clause (i), and
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1 (ii) by adding at the end the following

2 flush sentences:

3 ‘‘In no event shall the excess described in the

4 preceding sentence for any plan year be less

5 than the excess (if any) of 90 percent of the

6 current liability of the plan (including the ex7 pected increase in current liability due to bene8 fits accruing during the plan year) over the

9 value of the plan’s assets determined under

10 paragraph (2). For purposes of the preceding

11 sentence, the term ‘current liability’ has the

12 meaning given such term by subsection (d)(7)

13 (determined without regard to subsection

14 (d)(7)(D)), and assets shall not be reduced by

15 any credit balance in the funding standard ac16 count.’’.

17 (C) Subparagraph (B) of section 302(c)(7)

18 of such Act is amended to read as follows:

19 ‘‘(B) CURRENT LIABILITY.—For purposes

20 of subparagraph (D) and subclause (I) of sub21 paragraph (A)(i), the term ‘current liability’

22 has the meaning given such term by subsection

23 (d)(7) (without regard to subparagraphs (C)

24 and (D) thereof) and using the rate of interest

25 used under subsection (b)(5)(B).’’
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1 (b) EFFECTIVE DATE.—

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

3 this section shall apply to plan years beginning after

4 December 31, 1995.

5 (2) DELAY IN EFFECTIVE DATE FOR DISABLED

6 LIVES.—For plan years beginning before January 1,

7 1997, current liability may be determined using a

8 plan’s own assumptions for purposes of calculating

9 the mortality rates of disabled lives.

10 SEC. 102. LIMITATION ON CHANGES IN CURRENT LIABILITY

11 ASSUMPTIONS.

12 (a) IN GENERAL.—Paragraph (5) of section 302(c)

13 of the Employee Retirement Income Security Act of 1974

14 (29 U.S.C. 1082(c)(5)) is amended—

15 (1) by striking ‘‘If the funding method’’ and in16 serting the following:

17 ‘‘(A) IN GENERAL.—If the funding meth18 od’’, and

19 (2) by adding at the end the following new sub20 paragraph:

21 ‘‘(B) APPROVAL REQUIRED FOR CERTAIN

22 CHANGES IN ASSUMPTIONS BY CERTAIN SINGLE

23 EMPLOYER PLANS SUBJECT TO ADDITIONAL

24 FUNDING REQUIREMENT.—
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1 ‘‘(i) IN GENERAL.—No actuarial as2 sumption (other than the assumptions de3 scribed in subsection (d)(7)(C)) used to de4 termine the current liability for a plan to

5 which this subparagraph applies may be

6 changed without the approval of the Sec7 retary.

8 ‘‘(ii) PLANS TO WHICH SUBPARA9 GRAPH APPLIES.—This subparagraph shall

10 apply to a plan only if—

11 ‘‘(I) subsection (d) applies to the

12 plan;

13 ‘‘(II) the employer (within the

14 meaning of section 302(c)(11) (with15 out regard to subparagraph (B) there16 of)) maintaining such plan is de17 scribed in section 4043(b)(1); and

18 ‘‘(III) the change in assumptions

19 (determined after taking into account

20 any changes in interest rate and mor21 tality table) results in a decrease in

22 the unfunded current liability of the

23 plan for the current plan year that is

24 $50,000,000 or greater, or that is

25 $5,000,000 or greater and that is 5
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1 percent or more of the current liabil2 ity of the plan before such change.’’

3 (b) EFFECTIVE DATE.—

4 (1) IN GENERAL.—The amendment made by

5 this section shall apply to changes in assumptions

6 for plan years beginning after October 28, 1993.

7 (2) CERTAIN CHANGES CEASE TO BE EFFEC8 TIVE.—In the case of changes in assumptions for

9 plan years beginning after December 31, 1992, and

10 on or before October 28, 1993, such changes shall

11 cease to be effective for plan years beginning after

12 December 31, 1995, if—

13 (A) such change would have required the

14 approval of the Secretary had such amendment

15 applied to such change, and

16 (B) such change is not so approved.

17 SEC. 103. ANTICIPATION OF BARGAINED BENEFIT IN18 CREASES.

19 (a) IN GENERAL.—Section 302(c) of the Employee

20 Retirement Income Security Act of 1974 (29 U.S.C.

21 1082(c)) is amended by adding at the end the following

22 new paragraph:

23 ‘‘(12) ANTICIPATION OF BENEFIT INCREASES

24 EFFECTIVE IN THE FUTURE.—In determining pro25 jected benefits, the funding method of a collectively
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1 bargained plan described in section 413(a) of the In2 ternal Revenue Code of 1986 (other than a multiem3 ployer plan) shall anticipate benefit increases sched4 uled to take effect during the term of the collective

5 bargaining agreement applicable to the plan.’’

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

7 this section shall apply to plan years beginning after De8 cember 31, 1995 with respect to collective bargaining

9 agreements in effect on or after January 1, 1996.

10 SEC. 104. MODIFICATION OF QUARTERLY CONTRIBUTION

11 REQUIREMENT.

12 (a) IN GENERAL.—Paragraph (1) of section 302(e)

13 of the Employee Retirement Income Security Act of 1974

14 (29 U.S.C. 1082(e)) is amended—

15 (1) by inserting ‘‘which has a funded current li16 ability percentage (as defined in subsection (d)(8))

17 for the preceding plan year of less than 100 per18 cent’’ before ‘‘fails’’, and

19 (2) by striking ‘‘any plan year’’ and inserting

20 ‘‘the plan year’’.

21 (b) EFFECTIVE DATE.—The amendment made by

22 this section shall apply to plan years beginning after the

23 date of enactment of this Act.
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1 TITLE II—AMENDMENTS RELAT2 ED TO TITLE IV OF THE EM3 PLOYEE RETIREMENT IN4 COME SECURITY ACT OF 1974

5 SEC. 201. REPORTABLE EVENTS.

6 (a) RESPONSIBILITY FOR REPORTABLE EVENTS RE7 PORTING.—Section 4043(a) of the Employee Retirement

8 Income Security Act of 1974 (29 U.S.C. 1343(a)) is

9 amended—

10 (1) in the first sentence, by inserting ‘‘or the

11 contributing sponsor’’ before ‘‘knows or has reason

12 to know’’;

13 (2) in the first sentence, by inserting ‘‘, unless

14 a notice otherwise required under this subsection has

15 already been provided with respect to such event’’

16 before the period at the end; and

17 (3) by striking the last sentence.

18 (b) NOTIFICATION THAT EVENT IS ABOUT TO

19 OCCUR.—Section 4043 of such Act is amended by redesig20 nating subsections (b), (c), and (d) as (c), (d), and (e),

21 respectively, and by inserting after subsection (a) the fol22 lowing new subsection:

23 ‘‘(b)(1) The requirements of this subsection shall be

24 applicable to a contributing sponsor only if the aggregate

25 unfunded vested benefits at the end of the preceding plan
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1 year (as determined under section 4006(a)(3)(E)(iii)) of

2 plans which are maintained by such sponsor and the mem3 bers of such sponsor’s controlled group and are covered

4 by this title exceed $50,000,000 (taking into account only

5 those plans with unfunded vested benefits).

6 ‘‘(2) No later than 30 days prior to the effective date

7 of an event described in paragraph (9), (10), (11), (12),

8 or (13) of subsection (c), a contributing sponsor to which

9 the requirements of this subsection apply shall notify the

10 corporation that the event is about to occur.

11 ‘‘(3) The corporation may waive the requirement of

12 this subsection with respect to any or all reportable events

13 with respect to any contributing sponsor.’’

14 (c) NEW REPORTABLE EVENTS.—Subsection (c) of

15 section 4043 of such Act (as redesignated by subsection

16 (b)) is amended—

17 (1) by striking the ‘‘or’’ at the end of para18 graph (8);

19 (2) by striking paragraph (9); and

20 (3) by inserting after paragraph (8) the follow21 ing new paragraphs:

22 ‘‘(9) when, as a result of an event, a person

23 ceases to be a member of the controlled group;

24 ‘‘(10) when a contributing sponsor or a member

25 of a contributing sponsor’s controlled group
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1 liquidates in a case under title 11, United States

2 Code, or under any similar Federal law or law of a

3 State or political subdivision of a State;

4 ‘‘(11) when a contributing sponsor or a member

5 of a contributing sponsor’s controlled group declares

6 an extraordinary dividend or redeems, in any 12-

7 month period, an aggregate of 10 percent or more

8 of the total combined voting power of all classes of

9 stock entitled to vote, or an aggregate of 10 percent

10 of more of the total value of shares of all classes of

11 stock, of a contributing sponsor and all members of

12 its controlled group;

13 ‘‘(12) when, in any 12-month period, an aggre14 gate of 3 percent or more of the benefit liabilities of

15 a plan covered by this title and maintained by a con16 tributing sponsor or a member of its controlled

17 group are transferred to a person that is not a mem18 ber of the controlled group or to a plan or plans

19 maintained by a person or persons that are not such

20 a contributing sponsor or a member of its controlled

21 group; or

22 ‘‘(13) when any other event occurs that may be

23 indicative of a need to terminate the plan and that

24 is prescribed by the corporation in regulations.’’
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1 (d) DISCLOSURE EXEMPTION.—Section 4043 of such

2 Act is amended by adding at the end the following new

3 subsection:

4 ‘‘(f) Any information or documentary material sub5 mitted to the corporation pursuant to this section or sec6 tion 4050(c)(2) shall be exempt from disclosure, and no

7 such information or documentary material may be made

8 public, except as may be relevant to any administrative

9 or judicial action or proceeding. Nothing in this section

10 is intended to prevent disclosure to either body of Con11 gress or to any duly authorized committee or subcommit12 tee of the Congress.’’

13 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

14 (1) Subsection (a) of section 4043 of such Act,

15 and subsections (d) and (e) of such section 4043 (as

16 redesignated by subsection (b)) are amended by

17 striking ‘‘subsection (b)’’ each place it appears and

18 inserting ‘‘subsection (c)’’.

19 (2) Section 4042(a)(3) of such Act is amended

20 by striking ‘‘4043(b)(7)’’ and inserting

21 ‘‘4043(c)(7)’’.

22 (f) EFFECTIVE DATE.—The amendments made by

23 this section shall be effective for events occurring 60 days

24 or more after the date of enactment of this Act.
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1 SEC. 202. ALTERNATIVE TO INVOLUNTARY TERMINATION.

2 (a) IN GENERAL.—Subtitle C of title IV of the Em3 ployee Retirement Income Security Act of 1974 (29

4 U.S.C. 1341 et seq.) is amended by adding at the end

5 the following new section:

6 ‘‘SEC. 4050. JUDICIAL RELIEF OTHER THAN INVOLUNTARY

7 TERMINATION.

8 ‘‘(a) INSTITUTION OF PROCEEDINGS.—

9 ‘‘(1) IN GENERAL.—Whenever the corporation

10 determines (without regard to the potential availabil11 ity of relief under this section) that, upon the occur12 rence of an event described in paragraph (9), (10),

13 (11), (12), or (13) of section 4043(c), the possible

14 long-run loss of the corporation with respect to a

15 plan may reasonably be expected to increase unrea16 sonably if the plan is not terminated, the corporation

17 may, in its discretion, institute proceedings under

18 this section as an alternative to instituting proceed19 ings under section 4042 to terminate the plan.

20 ‘‘(2) LIMITATION.—In the case of an event de21 scribed in paragraph (9) or (13) of section 4043(c),

22 this section shall apply only if, immediately after the

23 effective date of the event, the total revenues, the

24 total operating income, or the total assets of a con25 tributing sponsor and all members of its controlled

26 group would be less than 90 percent of the total rev-
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1 enues, the total operating income, or the total as2 sets, respectively, of a contributing sponsor and all

3 members of its controlled group immediately before

4 the effective date of the event. For purposes of this

5 paragraph, all events occurring in any 12-month pe6 riod shall be treated as a single event.

7 ‘‘(b) Whenever the corporation makes a determina8 tion under subsection (a), it may, upon notice to a contrib9 uting sponsor, apply to the appropriate United States dis10 trict court for such legal or equitable relief as the corpora11 tion deems appropriate and consistent with its duties

12 under this title. The court shall grant such relief as it de13 termines necessary to protect the interests of the partici14 pants or to avoid any unreasonable deterioration of the

15 financial condition of the plan or any unreasonable in16 crease in the liability of the fund, without interfering un17 reasonably with the business of the contributing sponsor

18 or members of its controlled group.

19 ‘‘(c)(1) In any case in which the corporation is pro20 vided with a notice required by subsection 4043(b) within

21 the time specified in that subsection, the corporation may

22 bring an action under this section no later than 30 days

23 after the date such notice is received. Notwithstanding the

24 preceding sentence, the corporation may, no later than 30

25 days after the date such notice is received, require the sub-
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1 mission of additional information or documentary mate2 rial, in which case an action under this section may be

3 brought no later than 20 days after the corporation re4 ceives all the information and documentary material it had

5 required.

6 ‘‘(2) After a notice described in paragraph (1) is pro7 vided to the corporation, a person may elect, upon further

8 notice to the corporation, to proceed with an event prior

9 to the expiration of the time periods described in para10 graph (1). In the case of such an election, an action under

11 this section may be brought at any time within the period

12 specified in subsection 4003(e)(6).

13 ‘‘(3) In any case in which the corporation is not pro14 vided with a notice required by subsection (b) of section

15 4043 by the time specified in that subsection, in any case

16 in which a person fails or refuses to provide the additional

17 information or documentary material required by the cor18 poration under paragraph (1), or in any case in which a

19 person proceeds with an event without providing the cor20 poration with the further notice required under paragraph

21 (2) with respect to such event, an action under this section

22 may be brought at any time within the time period speci23 fied in subsection 4003(e)(6).
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1 ‘‘(4) Except as provided in paragraph (1), (2), or (3),

2 an action under this section may not be brought after the

3 effective date of the event giving rise to the transaction.

4 ‘‘(5) For purposes of applying subsection 4003(e)(6)

5 to paragraphs (2) and (3), a cause of action shall be

6 deemed to arise on the effective date of the event.

7 ‘‘(d) Nothing in this section shall limit the authority

8 of the corporation to initiate proceedings to terminate a

9 plan under section 4042, or to initiate proceedings or to

10 seek relief under any other provision of this title or any

11 other law.’’

12 (b) CONFORMING AMENDMENT.—Section 4042(a) of

13 such Act (29 U.S.C. 1342(a)) is amended by inserting,

14 after ‘‘determines’’ the first place it appears, the following:

15 ‘‘(without regard to the potential availability of relief

16 under section 4050)’’.

17 (c) 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 4049 the following new

20 item:

‘‘Sec. 4050. Judicial relief other than involuntary termination.’’

21 (d) EFFECTIVE DATE.—The amendments made by

22 this section shall be effective for events occurring 60 days

23 or more after the date of the enactment of this Act.
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1 SEC. 203. CERTAIN INFORMATION REQUIRED TO BE FUR2 NISHED TO PBGC.

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

4 Employee Retirement Income Security Act of 1974 (29

5 U.S.C. 1301 et seq.) is amended by adding at the end

6 the following new section:

7 ‘‘SEC. 4010. AUTHORITY TO REQUIRE CERTAIN INFORMA8 TION.

9 ‘‘(a) INFORMATION REQUIRED.—Each person de10 scribed in subsection (b) shall provide the corporation an11 nually, on or before a date specified by the corporation

12 in regulations, with—

13 ‘‘(1) such records, documents, or other informa14 tion that the corporation specifies in regulations as

15 necessary to determine the liabilities and assets of

16 plans covered by this title; and

17 ‘‘(2) copies of such person’s audited (or, if un18 available, unaudited) financial statements, and such

19 other financial information as the corporation may

20 prescribe in regulations.

21 ‘‘(b) PERSONS REQUIRED TO PROVIDE INFORMA22 TION.—The persons covered by subsection (a) are each

23 contributing sponsor, and each member of a contributing

24 sponsor’s controlled group, of a single-employer plan cov25 ered by this title, if—
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1 ‘‘(1) the aggregate unfunded vested benefits at

2 the end of the preceding plan year (as determined

3 under section 4006(a)(3)(E)(iii)) of plans which are

4 maintained by the contributing sponsor and the

5 members of its controlled group and are covered by

6 this title exceed $50,000,000 (taking into account

7 only those plans of the contributing sponsor and its

8 controlled group with unfunded vested benefits); or

9 ‘‘(2) the conditions for imposition of a lien de10 scribed in section 302(f)(1)(A) and (B) have been

11 met with respect to any plan maintained by the con12 tributing sponsor or any member of its controlled

13 group; or

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

15 $1,000,000 have been granted with respect to any

16 plan maintained by the contributing sponsor or any

17 member of its controlled group, and any portion

18 thereof is still outstanding.

19 ‘‘(c) INFORMATION EXEMPT FROM DISCLOSURE RE20 QUIREMENTS.—Any information or documentary material

21 submitted to the corporation pursuant to this section shall

22 be exempt from disclosure under section 552 of title 5,

23 United States Code, and no such information or documen24 tary material may be made public, except as may be rel25 evant to any administrative or judicial action or proceed-
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•HR 35 IH

1 ing. Nothing in this section is intended to prevent disclo2 sure to either body of Congress or to any duly authorized

3 committee or subcommittee of the Congress.’’

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

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

6 after the item relating to section 4009 the following new

7 item:

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

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall be effective on the date of enactment of

10 this Act.

11 SEC. 204. LIABILITY UPON LIQUIDATION OF CONTRIBUTING

12 SPONSOR OR CONTROLLED GROUP MEMBER

13 IF PLAN REMAINS ONGOING.

14 (a) IN GENERAL.—Section 4062 of the Employee Re15 tirement Income Security Act of 1974 (29 U.S.C. 1362)

16 is amended by adding at the end the following new sub17 section:

18 ‘‘(f) LIABILITY ON LIQUIDATION OF CONTRIBUTING

19 SPONSOR OR CONTROLLED GROUP MEMBER.—

20 ‘‘(1) IN GENERAL.—In any case in which all or

21 substantially all of the assets of a person who is a

22 contributing sponsor of a single-employer plan, or a

23 member of a controlled group of a contributing

24 sponsor of a single-employer plan, are liquidated in

25 a case under title 11, United States Code, or under
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1 any similar Federal law or law of a State or political

2 subdivision of a State, but the plan is not termi3 nated, such person shall be deemed liable under sub4 section (b) as if the plan had terminated under sec5 tion 4041(c) in the course of such liquidation and as

6 if the termination date were the date determined by

7 the corporation as the date on which the liquidation

8 was initiated.

9 ‘‘(2) LIMITED JOINT AND SEVERAL LIABIL10 ITY.—The liability under this subsection shall be

11 joint and several only among the members of the

12 controlled group (including, where applicable, the

13 contributing sponsor) who are liquidating as de14 scribed in paragraph (1).

15 ‘‘(3) APPLICABILITY OF OTHER PROVISIONS.—

16 Except as provided in paragraph (2), any provision

17 of this Act or any other provision of law that applies

18 to liability under the preceding subsections of this

19 section upon termination of a plan shall apply in the

20 same manner and to the same extent to the liability

21 established under this subsection. For purposes of

22 this paragraph, the date referred to in paragraph

23 (1) shall be deemed the termination date.

24 ‘‘(4) LIABILITY OWED TO PLAN; TRANSFER OF

25 LIABILITY PAYMENTS TO THE ONGOING PLAN
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1 WHERE COLLECTED BY THE CORPORATION.—The li2 ability established under this subsection shall be

3 owed to the plan, and may be collected by either the

4 plan or the corporation. The corporation shall pay to

5 the plan any amounts collected by the corporation in

6 satisfaction of the liability established under this

7 subsection in connection with such plan.

8 ‘‘(5) REGULATIONS.—The corporation may pre9 scribe regulations under this subsection, including—

10 ‘‘(A) rules governing—

11 ‘‘(i) the determination of whether and

12 when a liquidation referred to in this sub13 section has occurred, and

14 ‘‘(ii) the assignment of the plan’s or

15 corporation’s claim to liability payments

16 under this subsection to other members of

17 the controlled group as a means of collect18 ing such payments, subject to the transfer

19 of such payments to the plan, and

20 ‘‘(B) rules providing alternative arrange21 ments for making liability payments under this

22 subsection.’’

23 (b) CONFORMING AMENDMENT.—Section 4062(a) of

24 such Act is amended—
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1 (1) in paragraph (1), by striking ‘‘and’’ after

2 ‘‘subsection (b),’’; and

3 (2) in paragraph (2), by striking the period

4 after ‘‘subsection (c)’’ and inserting ’’, and’’; and

5 (3) by adding at the end the following new

6 paragraph:

7 ‘‘(3) liability to the plan, to the extent provided

8 in subsection (f).’’

9 (c) COORDINATION WITH MINIMUM FUNDING

10 RULES.—Section 302(c) of the Employee Retirement In11 come Security Act of 1974 is amended by adding at the

12 end the following new paragraph:

13 ‘‘(13) TREATMENT OF LIABILITY ON LIQUIDA14 TION OF EMPLOYER.—Any amount paid to a plan

15 pursuant to section 4062(f)—

16 ‘‘(A) shall be treated as not contributed by

17 the employer for purposes of subsection

18 (b)(3)(A), and

19 ‘‘(B) shall be treated as a net experience

20 gain of the plan under subsection

21 (b)(3)(B)(ii).’’

22 (d) EFFECTIVE DATE.—The amendments made by

23 this section shall be effective for liquidations initiated on

24 or after the date of enactment of this Act.
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1 SEC. 205. ENFORCEMENT OF MINIMUM FUNDING REQUIRE2 MENTS.

3 (a) IN GENERAL.—Paragraph (1) of section 4003(e)

4 of the Employee Retirement Income Security Act of 1974

5 (29 U.S.C. 1303(e)(1)) is amended—

6 (1) by inserting ‘‘(A)’’ after ‘‘enforce’’; and

7 (2) by striking the period after ‘‘title’’ and in8 serting ‘‘, and (B) in the case of a plan which is cov9 ered under this title (other than a multiemployer

10 plan) and for which the conditions for imposition of

11 a lien described in section 302(f)(1)(A) and (B) have

12 been met, section 302.’’

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

14 this section shall be effective for installments and other

15 payments required under section 302 of the Employee Re16 tirement Income Security Act of 1974 that become due

17 on or after the date of the enactment of this Act.

18 SEC. 206. REMEDIES FOR NONCOMPLIANCE WITH REQUIRE19 MENTS FOR STANDARD TERMINATION.

20 (a) NOTICE OF NONCOMPLIANCE.—Section

21 4041(b)(2)(C)(i) of the Employee Retirement Income

22 Security Act of 1974 (29 U.S.C. 1341(b)(2)(C)(i)) is

23 amended—

24 (1) by striking subclause (I) and inserting the

25 following new subclause:
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1 ‘‘(I) it determines, based on the

2 notice sent under paragraph (2)(A) of

3 subsection (b), that there is reason to

4 believe that the plan is not sufficient

5 for benefit liabilities, or’’;

6 (2) by striking the period at the end of

7 subclause (II) and inserting ‘‘, or’’; and

8 (3) by adding at the end the following new

9 subclause:

10 ‘‘(III) it determines that any

11 other requirement of subparagraph

12 (A) or (B) of this paragraph or of

13 subsection (a)(2) has not been met,

14 unless it further determines that the

15 issuance of such notice would be in16 consistent with the interests of par17 ticipants and beneficiaries.’’

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

19 this section shall apply to any plan termination under sec20 tion 4041(b) of the Employee Retirement Income Security

21 Act of 1974 with respect to which the Pension Benefit

22 Guaranty Corporation has not, as of the date of enactment

23 of this Act, issued a notice of noncompliance that has be24 come final, or otherwise issued a final determination that

25 the plan termination is nullified.
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1 SEC. 207. PROHIBITION ON BENEFIT INCREASES WHERE

2 PLAN SPONSOR IS INSOLVENT.

3 (a) IN GENERAL.—Section 204 of the Employee Re4 tirement Income Security Act of 1974 (29 U.S.C. 1054),

5 as amended by section 101 of this Act, is further amended

6 by redesignating subsection (j) as (k) and inserting a new

7 subsection (j) to read as follows:

8 ‘‘(j)(1) In the case of a plan described in paragraph

9 (3) which is maintained by an employer that is a debtor

10 in a case under title 11, United States Code, or similar

11 Federal or State law, no amendment of the plan which

12 increases the liabilities of the plan by reason of—

13 ‘‘(A) any increase in benefits,

14 ‘‘(B) any change in the accrual of benefits, or

15 ‘‘(C) any change in the rate at which benefits

16 become nonforfeitable under the plan,

17 with respect to employees of the debtor, shall be effective

18 prior to the effective date of such employer’s plan of reor19 ganization.

20 ‘‘(2) Paragraph (1) shall not apply to any plan

21 amendment that—

22 ‘‘(A) the Secretary determines to be reasonable

23 and that provides for only de minimis increases in

24 the liabilities of the plan with respect to employees

25 of the debtor,
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1 ‘‘(B) only repeals an amendment described in

2 section 302(c)(8),

3 ‘‘(C) is required as a condition of qualification

4 under part I of subchapter D, of chapter 1, of the

5 Internal Revenue Code of 1986, or

6 ‘‘(D) was adopted prior to, or pursuant to a col7 lective bargaining agreement entered into prior to,

8 the date on which the employer became a debtor in

9 a case under title 11, United States Code, or similar

10 Federal or State law.

11 ‘‘(3) This subsection shall apply only to plans (other

12 than multiemployer plans) covered under section 4021 of

13 this Act for which the funded current liability percentage

14 (within the meaning of section 302(d)(8) of this Act) is

15 less than 100 percent after taking into account the effect

16 of the amendment.

17 ‘‘(4) For purposes of this subsection, ‘employer’ has

18 the meaning set forth in section 302(c)(11)(A), without

19 regard to section 302(c)(11)(B).’’

20 (b) EFFECTIVE DATE OF PLAN AMENDMENT.—Sec21 tion 4022 of the Employee Retirement Income Security

22 Act of 1974 (29 U.S.C. 1322) is amended by inserting

23 at the end the following new subsection:

24 ‘‘(f) For purposes of this section, the effective date

25 of a plan amendment described in section 204(j)(1) shall
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1 be the effective date of the plan of reorganization of the

2 employer described in section 204(j)(1) or, if later, the ef3 fective date stated in such amendment.’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to plan amendments adopted on

6 or after the date of enactment of this Act.

7 SEC. 208. SUBSTANTIAL OWNER BENEFITS.

8 (a) MODIFICATION OF PHASE-IN OF GUARANTEE.—

9 Section 4022(b)(5) of the Employee Retirement Income

10 Security Act of 1974 is amended by striking subpara11 graphs (B) and (C) and inserting the following new sub12 paragraphs:

13 ‘‘(B) For purposes of this title, the term ‘majority

14 owner’ has the same meaning as the term ‘substantial

15 owner’, if ‘50 percent or more’ is substituted for ‘more

16 than 10 percent’ wherever such phrase appears in sub17 paragraph (A) of this paragraph.

18 ‘‘(C) In the case of a participant who is a majority

19 owner, the amount of benefits guaranteed under this sec20 tion shall not exceed the lesser of—

21 ‘‘(i) the amount otherwise determined under

22 this subsection, or

23 ‘‘(ii) the product of—

24 ‘‘(I) a fraction (not to exceed 1) the nu25 merator of which is the number of years from
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1 the later of the effective date or the adoption

2 date of the plan, and the denominator of which

3 is 30, and

4 ‘‘(II) the amount of the majority owner’s

5 monthly benefits guaranteed under subsection

6 (a) (as limited by paragraph (3) of this sub7 section).’’

8 (b) MODIFICATION OF ALLOCATION OF ASSETS.—

9 (1) Section 4044(a)(4)(B) of such Act (29

10 U.S.C. 1344(a)(4)(B)) is amended by adding ‘‘(C)’’

11 at the end of ‘‘section 4022(b)(5)’’.

12 (2) Section 4044(b) of such Act is amended—

13 (A) in paragraph (2), by inserting ‘‘(4),’’

14 before ‘‘(5)’’, and by inserting a comma after

15 ‘‘(5)’’;

16 (B) by redesignating paragraphs (3)

17 through (6) as paragraphs (4) through (7), re18 spectively; and

19 (C) by inserting a new paragraph (3) to

20 read as follows:

21 ‘‘(3) If assets available for allocation under

22 paragraph (4) of subsection (a) are insufficient to

23 satisfy in full the benefits of all individuals who are

24 described in that paragraph, the assets shall be allo25 cated first to benefits described in subparagraph (A)
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1 of that paragraph. Any remaining assets shall then

2 be allocated to subparagraph (B). If assets allocated

3 to subparagraph (B) are insufficient to satisfy in full

4 the benefits in that subparagraph, the assets shall

5 be allocated pro rata among individuals on the basis

6 of the present value (as of the termination date) of

7 their respective benefits described in that subpara8 graph.’’.

9 (c) EFFECTIVE DATE.—The amendments made by

10 this section shall be effective for plan terminations under

11 section 4041(c) of the Employee Retirement Income Secu12 rity Act of 1974 with respect to which notices of intent

13 to terminate are provided under section 4041(a)(2) of

14 such Act, or under section 4042 of such Act with respect

15 to which proceedings are instituted by the corporation, on

16 or after the date of enactment of this Act.

17 TITLE III—MISCELLANEOUS

18 AMENDMENTS

19 SEC. 301. RECOVERY RATIO UNDER ERISA SECTION 4022(c).

20 (a) IN GENERAL.—Section 4022(c)(3) of the Em21 ployee Retirement Income Security Act of 1974 (29

22 U.S.C. 1322(c)(3)) is amended—

23 (1) by striking ‘‘(3)(A) Except as’’ and all that

24 follows through ‘‘the ration of—’’ in subparagraph

25 (C) and inserting the following:
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1 ‘‘(3) For purposes of this section, the term ‘recovery

2 ratio’ means, with respect to a terminated plan the ratio

3 of—’’; and

4 (2) by redesignating clauses (i) and (ii) in such

5 section 4022(c)(3) (as so amended) as subpara6 graphs (A) and (B), respectively.

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

8 this section shall be effective as if included in the Pension

9 Protection Act.

10 SEC. 302. RULES GOVERNING COMPUTATION OF AMOUNTS

11 PAYABLE BY CORPORATION.

12 (a) PRIOR PLAN TERMINATIONS TAKEN INTO AC13 COUNT IN APPLYING RECOVERY RATIO.—Section

14 4022(c)(3)(B)(ii) of the Employee Retirement Income Se15 curity Act of 1974 (29 U.S.C. 1322(c)(3)(B)(ii)) is

16 amended to read as follows:

17 ‘‘(ii) notices of intent to terminate were pro18 vided, or proceedings were instituted under section

19 4042, after December 17, 1987, and during the first

20 5 fiscal years of the 7-fiscal-year period ending with

21 the fiscal year preceding the fiscal year for which

22 the recovery ratio is being determined.’’

23 (b) CLARIFICATION UNDER DISTRESS TERMINATION

24 RULES OF DATE FOR DETERMINATIONS RELATING TO

25 SUBSEQUENT INSUFFICIENCY.—Section 4022(c) of such
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1 Act (29 U.S.C. 1322(c)) is amended by adding at the end

2 the following new subsection:

3 ‘‘(5) For purposes of this subsection, in the case of

4 a plan described in section 4041(c)(3)(C)(ii), the out5 standing amount of benefit liabilities and the value of the

6 recoveries of the corporation under section 4062, 4063,

7 or 4064 in connection with such plan shall be determined

8 as of the date described in section 4062(b)(1)(B).’’.

9 (c) INCLUSION OF TERMINATION PROCEEDINGS IN10 STITUTED BY CORPORATION IN TRANSITIONAL RULE.—

11 Section 9312(b)(3)(B)(i) of the Omnibus Budget Rec12 onciliation Act of 1987 (101 Stat. 1330–363) is amended

13 by inserting after ‘‘notices of intent to terminate were pro14 vided’’ the following: ‘‘, or proceedings were instituted

15 under section 4042 of ERISA,’’.

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section shall be effective as if included in section 9312

18 of the Pension Protection Act (101 Stat. 1330–361).

19 SEC. 303. DISTRESS TERMINATION CRITERIA FOR CERTAIN

20 FINANCIAL INSTITUTIONS.

21 (a) CLARIFICATION OF DISTRESS CRITERION.—

22 Subclause (I) of section 4041(c)(2)(B)(i) of the Employee

23 Retirement Income Security Act of 1974 (29 U.S.C.

24 1341(c)(2)(B)(i)) is amended by inserting after ‘‘under

25 any similar’’ the following: ‘‘Federal law or’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall be effective as if included in the Single

3 Employer Pension Plan Amendments Act of 1986.

4 SEC. 304. SINGLE SUM DISTRIBUTIONS.

5 (a) DETERMINATION OF PRESENT VALUE FOR PUR6 POSES OF RESTRICTIONS ON MANDATORY DISTRIBU7 TIONS.—Section 203(e)(2) of the Employee Retirement

8 Income Security Act of 1974 (29 U.S.C. 1053(e)(2)) is

9 amended to read as follows:

10 ‘‘(2) For purposes of paragraph (1), the present value

11 shall be calculated in accordance with section 205(g)(3).’’

12 (b) DETERMINATION OF PRESENT VALUE FOR PUR13 POSES OF RESTRICTIONS ON CASH-OUTS.—Section

14 205(g)(3) of such Act (29 U.S.C. 1055(g)(3)) is amended

15 to read as follows:

16 ‘‘(3) DETERMINATION OF PRESENT VALUE.—

17 ‘‘(A) IN GENERAL.—

18 ‘‘(i) PRESENT VALUE.—Except as

19 provided in subparagraph (B), for pur20 poses of paragraphs (1) and (2), the

21 present value shall not be less than the

22 present value calculated by using the appli23 cable mortality table and the applicable in24 terest rate.
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1 ‘‘(ii) DEFINITIONS.—For purposes of

2 clause (i)—

3 ‘‘(I) APPLICABLE MORTALITY

4 TABLE.—The term ‘applicable mortal5 ity table’ means the table prescribed

6 by the Secretary. Such table shall be

7 based on the prevailing commis8 sioners’ standard table (described in

9 section 807(d)(5)(A) of the Internal

10 Revenue Code of 1986) used to deter11 mine reserves for group annuity con12 tracts issued on the date as of which

13 present value is being determined

14 (without regard to any other subpara15 graph of section 807(d)(5) of such

16 Code).

17 ‘‘(II) APPLICABLE INTEREST

18 RATE.—The term ‘applicable interest

19 rate’ means the annual rate of inter20 est on 30-year Treasury securities for

21 the month before the date of distribu22 tion or such other time as the Sec23 retary may by regulations prescribe.

24 ‘‘(B) EXCEPTION.—In the case of a dis25 tribution from a plan that was adopted and in
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1 effect prior to the date of the enactment of the

2 Retirement Protection Act of 1995, the present

3 value of any distribution made before the ear4 lier of—

5 ‘‘(i) the later of when a plan amend6 ment applying subparagraph (A) is adopt7 ed or made effective, or

8 ‘‘(ii) the first day of the first plan

9 year beginning after December 31, 2000,

10 shall be calculated, for purposes of paragraphs

11 (1) and (2), using the interest rates determined

12 under the regulations of the Pension Benefit

13 Guaranty Corporation for determining the

14 present value of a lump sum distribution on

15 plan termination that were in effect on Septem16 ber 1, 1993, and using the provisions of the

17 plan as in effect on the day before the date of

18 the enactment of the Retirement Protection Act

19 of 1995; but only if such provisions of the plan

20 met the requirements of section 205(g)(3) as in

21 effect on the day before such date of enact22 ment.’’

23 (c) EFFECTIVE DATE.—

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

25 this section shall apply to plan years and limitation
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1 years beginning after December 31, 1995; except

2 that an employer may elect to treat the amendments

3 made by this section as being effective on or after

4 the date of enactment.

5 (2) NO REDUCTION IN ACCRUED BENEFITS.—A

6 participant’s accrued benefit shall not be considered

7 to be reduced in violation of section 204(g) of the

8 Employee Retirement Income Security Act of 1974

9 merely because the benefit is determined in accord10 ance with section 205(g)(3) of the Employee Retire11 ment Income Security Act of 1974, as amended by

12 this Act.

13 SEC. 305. ADJUSTMENTS TO LIEN FOR MISSED MINIMUM

14 FUNDING CONTRIBUTIONS.

15 (a) CLARIFICATION OF APPLICABILITY OF PROVI16 SION.—Section 302(f)(1) of the Employee Retirement In17 come Security Act of 1974 (29 U.S.C. 1082(f)(1)) is

18 amended by striking ‘‘to which this section applies’’ and

19 inserting ‘‘covered under section 4021 of this Act’’.

20 (b) REPEAL OF $1,000,000 OFFSET.—Paragraph (3)

21 of section 302(f) of such Act is amended to read as fol22 lows:

23 ‘‘(3) AMOUNT OF LIEN.—For purposes of para24 graph (1), the amount of the lien shall be equal to

25 the aggregate unpaid balance of required install-
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1 ments and other payments required under this sec2 tion (including interest)—

3 ‘‘(A) for plan years beginning after 1987,

4 and

5 ‘‘(B) for which payment has not been

6 made before the due date.’’

7 (c) REPEAL OF 60-DAY DELAY.—Section

8 302(f)(4)(B) of such Act is amended by striking ‘‘60th

9 day following the’’.

10 (d) EFFECTIVE DATE.—The amendments made by

11 this section shall be effective for installments and other

12 payments required under part 3 of subtitle B of title I

13 of the Employee Retirement Income Security Act of 1974

14 that become due on or after the date of enactment.

15 SEC. 306. FUNDING OF RESTORED PLANS.

16 Any changes made by this Act to part 3 of subtitle

17 B of title I of the Employee Retirement Income Security

18 Act of 1974 shall not apply to a plan which is, on the

19 date of enactment of this Act, subject to a restoration pay20 ment schedule order issued by the Pension Benefit Guar21 anty Corporation.
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1 TITLE IV—EFFECTIVE DATE

2 SEC. 401. EFFECTIVE DATE.

3 Except as otherwise provided in this Act, the amend4 ments made by this Act shall be effective on the date of

5 enactment of this Act.

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