```

[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 37 Introduced in House (IH)]

104th CONGRESS
  1st Session
                                 H. R. 37

To amend the Employee Retirement Income Security Act of 1974 to improve 
                         pension plan funding.

_______________________________________________________________________

                    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 improve 
                         pension plan funding.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pension Funding Improvement Act of 
1995''.

SEC. 2. AMENDMENT OF ERISA.

    The sections of the Employee Retirement Income Security Act of 1974 
which are amended by the subsequent provisions of this Act are amended 
so as to read as such sections would read if the Uruguay Round 
Agreements Act had not been enacted. References to such sections in the 
subsequent provisions of this Act shall be deemed references to such 
sections as amended by this section. This section shall be effective as 
if included in the Uruguay Round Agreements Act.

                     TITLE I--PENSION PLAN FUNDING

SEC. 101. AMENDMENTS TO PENSION PLAN FUNDING REQUIREMENTS.

    Section 302(a)(2) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1082(a)(2)) is amended by striking ``the excess of the 
total charges to the funding standard account'' through the end of that 
sentence, and inserting ``the largest of--
                    ``(A) the lesser of--
                            ``(i) the excess of the total charges to 
                        the funding standard account for all plan years 
                        (beginning with the first plan year to which 
                        this section applies) over the total credits to 
                        such account for such years;
                            ``(ii) the excess of the total charges to 
                        the alternative minimum funding standard 
                        account for such plan years over the total 
                        credits to such account for such years;
                    ``(B) the excess (if any) of the underfunding 
                reduction requirement (if any) for the plan year 
                applicable under subsection (d) over the amount 
                considered contributed by the employer to or under the 
                plan for the plan year; or
                    ``(C) the excess (if any) of the solvency 
                maintenance requirement (if any) for the plan year 
                applicable under subsection (g) over the amount 
                considered contributed by the employer to or under the 
                plan for the plan year.''

SEC. 102. UNDERFUNDING REDUCTION REQUIREMENT.

    Subsection (d) of section 302 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1082(d)) is amended to read as follows:
    ``(d) Underfunding Reduction Requirement for Plans That Are Not 
Multiemployer Plans.--
            ``(1) Underfunding reduction requirement.--In the case of a 
        defined benefit plan (other than a multiemployer plan) which 
        has a funded current liability percentage of less than 100 
        percent (as of the first day of the plan year), the 
        underfunding reduction requirement for such plan year is the 
        sum of--
                    ``(A) an amount equal to the product of--
                            ``(i) the funded current liability 
                        percentage of the plan (as of such first day), 
                        multiplied by
                            ``(ii) 30 percent, reduced by the product 
                        of--
                                    ``(I) .25 multiplied by
                                    ``(II) the excess (if any) of the 
                                funded current liability percentage of 
                                the plan (as of such first day) over 35 
                                percent;
                    ``(B) the expected increase in the current 
                liability attributable to benefits accruing during the 
                plan year;
                    ``(C) the amount described in subsection (b)(2)(C) 
                as necessary to amortize any waived funding deficiency; 
                and
                    ``(D) the unpredictable contingent event amount (if 
                any) for such plan year.
        The underfunding reduction requirement shall not exceed the sum 
        of the amount necessary to increase the funded current 
        liability percentage (as of such first day) to 100 percent and 
        the amount determined under subparagraph (B).
            ``(2) Unpredictable contingent event amount.--
                    ``(A) In general.--The unpredictable contingent 
                event amount with respect to a plan for any plan year 
                is an amount equal to the greater of--
                            ``(i) the applicable percentage of the 
                        product of--
                                    ``(I) 100 percent, reduced (but not 
                                below zero) by the funded current 
                                liability percentage for the plan year, 
                                multiplied by
                                    ``(II) the amount of unpredictable 
                                contingent event benefits paid during 
                                the plan year, including (except as 
                                provided by the Secretary) any payment 
                                for the purchase of an annuity contract 
                                for a participant or beneficiary with 
                                respect to such benefits, or
                            ``(ii) the amount which would be determined 
                        for the plan year if the unpredictable 
                        contingent event benefit liabilities were 
                        amortized in equal annual installments over 7 
                        plan years (beginning with the plan year in 
                        which such event occurs).
                    ``(B) Applicable percentage.--

                    In the case of plan
                                                         The applicable
                      years beginning in:
                                                         percentage is:
                            1991 and 1992............             5    
                            1993.....................            10    
                            1994.....................            15    
                            1995.....................            20    
                            1996.....................            30    
                            1997.....................            40    
                            1998.....................            50    
                            1999.....................            60    
                            2000.....................            70    
                            2001.....................            80    
                            2002.....................            90    
                            2003 and thereafter......           100    
                    ``(C) Paragraph not to apply to existing 
                benefits.--This paragraph shall not apply to 
                unpredictable contingent event benefits (and 
                liabilities attributable thereto) for which the event 
                occurred before the first plan year beginning after 
                December 31, 1990.
                    ``(D) Special rule for first year of 
                amortization.--Unless the employer elects otherwise, 
                the amount determined under subparagraph (A) for the 
                plan year in which the event occurs shall be equal to 
                150 percent of the amount determined under subparagraph 
                (A)(i). The amount under subparagraph (A)(ii) for 
                subsequent plan years in the amortization period shall 
                be adjusted in the manner provided by the Secretary to 
                reflect the application of this subparagraph.
            ``(3) Current liability.--For purposes of this subsection 
        and subsection (g)--
                    ``(A) In general.--The term ``current liability'' 
                means all liabilities to employees and their 
                beneficiaries under the plan.
                    ``(B) Treatment of unpredictable contingent event 
                benefits.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), any unpredictable contingent 
                        event benefit shall not be taken into account 
                        until the event on which the benefit is 
                        contingent occurs.
                            ``(ii) Unpredictable contingent event 
                        benefit.--The term `unpredictable contingent 
                        event benefit' means any benefit contingent on 
                        an event other than--
                                    ``(I) age, service, compensation, 
                                death, or disability, or
                                    ``(II) an event which is reasonably 
                                and reliably predictable (as determined 
                                by the Secretary).
                    ``(C) Interest rates used.--The rate of interest 
                used to determine current liability shall be the rate 
                of interest used under subsection (b)(5); except that 
                the permissible range under subparagraph (B)(ii) of 
                subsection (b)(5) shall not exceed 100 percent of the 
                weighted average referred to in such subparagraph.
                    ``(D) Certain service disregarded.--
                            ``(i) In general.--In the case of a 
                        participant to whom this subparagraph applies, 
                        only the applicable percentage of the years of 
                        service before such individual became a 
                        participant shall be taken into account in 
                        computing the current liability of the plan.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage 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    
                            ``(iii) Participants to whom this 
                        subparagraph applies.--This subparagraph shall 
                        apply to any participant who, at the time of 
                        becoming a participant--
                                    ``(I) has not accrued any other 
                                benefit under any defined benefit plan 
                                (whether or not terminated) maintained 
                                by the employer or a member of the same 
                                controlled group of which the employer 
                                is a member,
                                    ``(II) who first becomes a 
                                participant under the plan in a plan 
                                year beginning after December 31, 1989, 
                                and
                                    ``(III) has years of service 
                                greater than the minimum years of 
                                service necessary for eligibility to 
                                participate in the plan.
                            ``(iv) Election.--An employer may elect not 
                        to have this subparagraph apply. Such an 
                        election, once made, may be revoked only with 
                        the consent of the Secretary.
            ``(4) Other definitions.--For purposes of this subsection 
        and subsection (o)--
                    ``(A) Unfunded current liability.--The term 
                `unfunded current liability' means, with respect to any 
                plan year, the excess (if any) of--
                            ``(i) the current liability under the plan, 
                        over
                            ``(ii) the value of the plan assets 
                        determined under subsection (c)(2), reduced by 
                        any credit balance in the funding standard 
                        account.
                    ``(B) Funded current liability percentage.--The 
                term `funded current liability percentage' means, with 
                respect to any plan year, the percentage which--
                            ``(i) the amount determined under 
                        subparagraph (A)(ii), is of
                            ``(ii) the current liability under the 
                        plan.
            ``(5) Special rules for small plans.--
                    ``(A) Plans with 100 or fewer participants.--This 
                subsection and subsection (g) shall not apply to any 
                plan for any plan year if on each day during the 
                preceding plan year such plan had no more than 100 
                participants.
                    ``(B) Plans with more than 100 but not more than 
                150 participants.--In the case of a plan to which 
                subparagraph (A) does not apply and which on each day 
                during the preceding year had no more than 150 
                participants, the additional amounts required by the 
                underfunding reduction requirement under this 
                subsection or the solvency maintenance requirement 
                under subsection (g) shall be equal to the product of--
                            ``(i) the excess of such requirements 
                        (determined without regard to this 
                        subparagraph) over the funding deficiency (if 
                        any) under subsection (b), multiplied by,
                            ``(ii) 2 percent for the highest number of 
                        participants in excess of 100 on any such day.
                    ``(C) Aggregation of plans.--For purposes of this 
                paragraph, all defined benefit plans maintained by the 
                same employer (or any member of such employer's 
                controlled group) shall be treated as 1 plan, but only 
                employees of such employer or member shall be taken 
                into account.
                    ``(D) Controlled group.--For purposes of this 
                paragraph, the term `controlled group' means any group 
                treated as a single employer under subsection (b), (c), 
                (m), or (o) of section 414.''

SEC. 103. SOLVENCY MAINTENANCE REQUIREMENTS.

    Section 302 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1082) is amended--
            (1) by redesignating subsections (g) and (h) as subsections 
        (h) and (i), respectively, and
            (2) by inserting after subsection (f) the following new 
        subsection:
    ``(g) Solvency Maintenance Requirement for Plans That Are Not 
Multiemployer Plans.--
            ``(1) Solvency maintenance requirement.--In the case of a 
        defined benefit plan (other than a multiemployer plan) which 
        has a funded current liability percentage of less than 100 
        percent (as of the first day of the plan year), the solvency 
        maintenance requirement for such plan year is the sum of--
                    ``(A) the sum of:
                            ``(i) all disbursements from the plan for 
                        the plan year, and
                            ``(ii) an amount equal to the unfunded 
                        current liability of the plan (as of such first 
                        day) multiplied by the interest rate used by 
                        such plan to determine current liability,
                    ``(B) the amount determined under subsection 
                (d)(1)(B), and
                    ``(C) the amount determined under subsection 
                (d)(1)(C).
        The solvency maintenance requirement shall not exceed the sum 
        of the amount necessary to increase the funded liability 
        percentage (as of such first day) to 100 percent and the amount 
        determined under subparagraph (B).
            ``(2) Limitation on solvency maintenance requirement.--
                    ``(A) In general.--The amount required under 
                paragraph (1) for any plan year shall not exceed the 
                sum of--
                            ``(i) the amount required under subsection 
                        (d); and
                            ``(ii) the product of--
                                    ``(I) the excess (if any) of the 
                                amount required under paragraph (1) 
                                over the amount required under 
                                subsection (d); multiplied by
                                    ``(II) the applicable percentage,
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage is:

                         ``For plan years
                                                         The applicable
                           beginning in:
                                                         percentage is:
                                1995.................      20 percent  
                                1996.................      40 percent  
                                1997.................      60 percent  
                                1998.................      80 percent  
                                1999 or thereafter...    100 percent.  
            ``(3) Disbursements from the plan.--
                    ``(A) In general.--The term `disbursements from the 
                plan' means benefit payments, including purchases of 
                annuities or payment of lump sums in satisfaction of 
                liabilities, administrative expenditures or any other 
                disbursements from the plan or its trust.
                    ``(B) Special rule for purchases of annuities and 
                payment of lump sums.--In determining the applicable 
                amounts attributable to purchases of annuities or the 
                payment of lump sums under clause (i), the actual 
                purchase or lump sum amounts paid by the plan or trust 
                shall be multiplied by the excess (if any) of one over 
                the initial funding ratio of the plan.''

SEC. 104. TRANSITION USE OF CREDIT BALANCES FROM PLAN YEARS BEFORE 
              1996.

    At the election of the employer maintaining a defined benefit plan 
subject to the requirements of section 302 of the Employee Retirement 
Income Security Act of 1974, the amounts required under sections 302(d) 
and 302(g) of such Act, as amended by this Act, may be reduced by the 
net of (1) the sum of credits to the funding standard account for plan 
years beginning on or before December 31, 1995, arising under clauses 
(ii) and (iii) of section 302(b)(3)(B) of such Act and for amounts 
considered contributed by the employer under section 302(b)(3)(A) of 
such Act (to the extent necessary to avoid an accumulated funding 
deficiency under section 302(f) of such Act) and (2) charges to the 
funding standard account for plan years beginning on or before December 
31, 1995, arising under clauses (iv) and (v) of section 302(b)(2)(B) of 
such Act.

SEC. 105. EFFECTIVE DATES.

    The amendments made by this title shall apply to plan years 
beginning after December 31, 1995.

        TITLE II--REQUIRED SECURITY FOR CERTAIN PLAN AMENDMENTS

SEC. 201. INCREASE IN REQUIRED FUNDING PERCENTAGE.

    (a) In General.--Paragraph (2) of section 307(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1085b(a)(2)) is 
amended by striking ``60 percent'' and inserting ``90 percent''.
    (b) Conforming Amendment.--Subsection (d) of section 302 of such 
Act (29 U.S.C. 1082(d)) is amended by striking ``60 percent'' and 
inserting ``90 percent''.

SEC. 202. INCREASE IN AMOUNT OF REQUIRED SECURITY.

    (a) In General.--Subsection (c) of section 307 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1085b(c)) is amended 
to read as follows:
    ``(c) Amount of Security.--The security shall be in an amount equal 
to the excess (if any) of--
            ``(1) the amount of additional plan assets which would be 
        necessary to increase the funded current liability percentage 
        under the plan to 90 percent, including the amount of the 
        unfunded current liability under the plan attributable to the 
        plan amendment, over
            ``(2) $1,000,000.''
    (b) Conforming Amendment.--Subsection (f) of section 307 of such 
Act is amended by striking ``, except that'' and all that follows and 
inserting a period.

SEC. 203. PROVISIONS MADE APPLICABLE TO MULTIEMPLOYER PLANS.

    Paragraph (1) of section 307(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1085b(a)(1)) is amended by striking 
``(other than a multiemployer plan)''.

SEC. 204. CRIMINAL PENALTY MADE APPLICABLE.

    Section 501 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1131) is amended by inserting ``or of section 307'' after 
``this subtitle''.

SEC. 205. EFFECTIVE DATE.

    The amendments made by this title shall apply to plan amendments 
adopted after 1995.

                  TITLE III--MISCELLANEOUS PROVISIONS

SEC. 301. REPORTS BY PENSION BENEFIT GUARANTY CORPORATION AND 
              CONGRESSIONAL BUDGET OFFICE.

    Effective with respect to fiscal years ending after September 30, 
1995, section 4008 of the Employee Retirement Income Security Act of 
1974 is amended by--
            (1) striking ``five'' in the second sentence of such 
        section and inserting ``five, ten, twenty and thirty'',
            (2) adding at the end thereof the following new sentences: 
        ``The actuarial evaluation shall set forth alternative premium 
        schedules to assure that the assets of the corporation equal or 
        exceed its liabilities during such periods. For any fiscal year 
        that it deems appropriate, the Congressional Budget Office may 
        transmit a separate report that analyzes and comments upon the 
        actuarial evaluation prepared by the corporation (and premium 
        schedules contained therein).''

SEC. 302. CERTAIN INFORMATION REQUIRED TO BE FURNISHED TO PBGC.

    (a) General Rule.--Subtitle A of title IV of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1301 et seq.) is 
amended by adding at the end the following new section:

``SEC. 4010. AUTHORITY TO REQUIRE CERTAIN INFORMATION.

    ``(a) General Rule.--For plans described in subsection (b), the 
corporation may require that a plan sponsor or members of a sponsor's 
controlled group provide the corporation with such records, documents, 
or other information that the corporation deems necessary to determine 
the liabilities and assets of plans covered by this title, or the 
financial condition of sponsors or members of sponsors' controlled 
groups maintaining plans covered by this title.
    ``(b) Description of Plans.--For purposes of subsection (a), a plan 
is described in this subsection if--
            ``(1) the underfunding under such plan exceeds $10,000,000;
            ``(2) the number of participants under such plan is greater 
        than 2,000; or
            ``(3) minimum funding waivers in excess of $1,000,000 have 
        been granted with respect to such plan.
For purposes of this section, all plans maintained by the same sponsor 
(or any member of such sponsor's controlled group) shall be treated as 
1 plan. For purposes of this subsection, determinations of liabilities 
and assets shall be made in the same manner as under section 4006.''
    (b) Clerical Amendment.--The table of contents contained in section 
1 of such Act is amended by inserting after the item relating to 
section 4009 the following new item:

``Sec. 4010. Authority to require certain information.''
                                 <all>
HR 37 IH----2
```