I

104TH CONGRESS

2D SESSION H. R. 4162

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

continued participation under a defined benefit plan to employees who

are terminated from employment within seven years of attaining normal

retirement age under the plan.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 24, 1996

Mr. TORRICELLI 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 continued participation under a defined benefit plan to employees who are terminated from

employment within seven years of attaining normal retirement age under the plan.

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 ‘‘Continued Participa5 tion Pension Act of 1996’’.
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1 SEC. 2. CONTINUED PARTICIPATION IN DEFINED BENEFIT

2 PLANS.

3 Part 2 of the Employee Retirement Income Security

4 Act of 1974 (29 U.S.C. 1051 et seq.) is amended by redes5 ignating section 211 as section 212 and by inserting after

6 section 210 (29 U.S.C. 1060) the following new section:

7 ‘‘CONTINUED PARTICIPATION IN DEFINED BENEFIT

8 PLANS FOR CERTAIN INDIVIDUALS

9 ‘‘SEC. 211. (a) IN GENERAL.—A defined benefit plan

10 shall provide, in accordance with this section, that each

11 qualified beneficiary who would lose eligibility to accrue

12 benefits under the plan as a result of a qualifying event,

13 may elect, within the election period, continued participa14 tion under the plan.

15 ‘‘(b) CONTINUED PARTICIPATION.—For purposes of

16 this section, the term ‘continued participation’ means con17 tinued accrual of benefits by a qualified beneficiary in ac18 cordance with section 204(b)(1), if the following require19 ments are met:

20 ‘‘(1) DETERMINATION OF SERVICE.—A partici21 pant shall be treated as having not incurred a break

22 in service with the employer or employers maintain23 ing the plan. The period of continued participation

24 shall be deemed to constitute service with the em25 ployer or employers maintaining the plan for the

26 purpose of determining the nonforfeitability of the
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1 qualified beneficiary’s accrued benefits and for the

2 purpose of determining the accrual of benefits. The

3 period of continued participation shall be deemed to

4 be service with the employer under the terms of the

5 plan or any applicable collective bargaining agree6 ment.

7 ‘‘(2) TERMS OF CONTINUED PARTICIPATION.—

8 For purposes of determining the amount of any li9 ability and any obligation of the plan, earnings and

10 forfeitures shall not be included. In the case of a

11 multiemployer plan, any liability of the plan de12 scribed in this section shall be allocated—

13 ‘‘(A) by the plan in such manner as the

14 sponsor maintaining the plan shall provide; or

15 ‘‘(B) if the sponsor does not so provide, to

16 the last employer employing the person before

17 the qualifying event.

18 ‘‘(3) PERIOD OF CONTINUED PARTICIPATION.—

19 The period of participation shall extend for the pe20 riod beginning on the date of the qualifying event

21 and ending not earlier than the earliest of the fol22 lowing:

23 ‘‘(A) MAXIMUM REQUIRED PERIOD.—The

24 date on which the participant reaches (or would
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1 have reached) normal retirement age under the

2 plan.

3 ‘‘(B) END OF PLAN.—The date on which

4 the employer ceases to provide any defined ben5 efit plan to any employee.

6 ‘‘(C) FAILURE TO PAY CONTRIBUTION.—

7 The date on which benefits cease to accrue

8 under the plan by reason of a failure to make

9 timely payment of any contribution required

10 under the plan with respect to the qualified

11 beneficiary.

12 ‘‘(4) CONTRIBUTION REQUIREMENTS.—

13 ‘‘(A) IN GENERAL.—A qualified beneficiary

14 electing continued participation is liable to the

15 defined benefit plan for funding any obligation

16 of the plan to provide the benefits described in

17 paragraph (1). The plan shall allocate to quali18 fied beneficiaries the amount of applicable con19 tribution attributable to employer contributions

20 and mandatory employee contributions under

21 the plan, in the same manner that employer

22 contributions and mandatory employee con23 tributions are allocated to similarly situated

24 beneficiaries with respect to whom a qualifying

25 event has not occurred. The plan shall provide
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1 for benefit accruals attributable to voluntary

2 employee contributions only to the extent such

3 benefit accruals attributable to such contribu4 tions were available to the participant prior to

5 the qualifying event. For purposes of computing

6 the beneficiary’s contributions, the participant

7 shall be deemed to have received compensation

8 during the period of continued participation, at

9 the rate in effect prior to the occurrence of the

10 qualifying event, as if the participant had con11 tinued in service under the plan at the rate of

12 1,000 hours of work during any 12-month pe13 riod.

14 ‘‘(B) LIMITATION.—For any period of con15 tinued participation, the contribution made by

16 the qualified beneficiary—

17 ‘‘(i) shall not exceed 102 percent of

18 the applicable contribution for such period,

19 and

20 ‘‘(ii) may, at the election of the payor,

21 be made in monthly installments.

22 In no event may the plan require the payment

23 of any contribution before the day which is 45

24 days after the day on which the qualified bene-
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1 ficiary made the initial election for continued

2 participation.

3 ‘‘(c) ELECTION PERIOD.—

4 ‘‘(1) IN GENERAL.—The election period—

5 ‘‘(A) begins not later than the date on

6 which benefits accrual would, but for continued

7 participation in accordance with the section,

8 cease, and

9 ‘‘(B) is of at least 90 days’ duration.

10 ‘‘(2) EFFECT OF ELECTION ON OTHER BENE11 FICIARIES.—Except as otherwise specified in an elec12 tion, any election of continued participation by a

13 qualified beneficiary shall be deemed to include an

14 election of continued participation on behalf of any

15 other qualified beneficiary who would cease to be a

16 beneficiary under the plan by reason of the qualify17 ing event.

18 ‘‘(d) EXCEPTION FOR CERTAIN PLANS.—Subsection

19 (a) shall not apply to any defined benefit plan for any cal20 endar year if all employers maintaining such plan nor21 mally employed fewer than 20 employees on a typical busi22 ness day during the preceding calendar year.

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

24 ‘‘(1) APPLICABLE CONTRIBUTION.—The appli25 cable contribution for any period of continued par-
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1 ticipation of qualified beneficiaries shall be equal to

2 the actuarial value of benefit accruals attributable to

3 the period of continued participation, as determined

4 under regulations of the Secretary.

5 ‘‘(2) QUALIFIED BENEFICIARY.—The term

6 ‘qualified beneficiary’ means any beneficiary under

7 the plan on the day before the qualifying event, in8 cluding the participant in the case of a qualifying

9 event described in paragraph (3)(A).

10 ‘‘(3) QUALIFYING EVENT.—The term ‘qualify11 ing event’ means any of the following events occur12 ring within seven years of attainment by the partici13 pant of normal retirement age, which, but for the

14 continued participation provided under this section,

15 would result in the cessation of benefit accruals of

16 a qualified beneficiary:

17 ‘‘(A) The termination (other than by rea18 son of such employee’s gross misconduct), or

19 reduction of hours, of the participant’s employ20 ment.

21 ‘‘(B) The death of the participant.’’.

22 SEC. 3. EFFECTIVE DATES.

23 (a) GENERAL RULE.—This Act shall apply to plan

24 years beginning on or after July 1, 1996.
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1 (b) SPECIAL RULE FOR COLLECTIVE BARGAINING

2 AGREEMENTS.—In the case of a defined benefit plan

3 maintained pursuant to one or more collective bargaining

4 agreements between employee representatives and one or

5 more employers ratified before the date of the enactment

6 of this Act, this section shall not apply to plan years begin7 ning before the later of—

8 (1) the date on which the last of the collective

9 bargaining agreements relating to the plan termi10 nates (determined without regard to any extension

11 thereof agreed to after the date of the enactment of

12 this Act), or

13 (2) January 1, 2000.

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