Rightsizing Pension Premiums Act of 2017

To amend the Employee Retirement Income Security Act of 1974 to adjust single-employer premiums, and for other purposes. 1. Short title This Act may be cited as the Rightsizing Pension Premiums Act of 2017 2. Rightsizing pension premiums (a) In general Section 4006(a) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1306(a) (9) Premium adjustments for small employers and based on PBGC funded percentage (A) In general Notwithstanding paragraph (3)(A)(i) and subject to subparagraphs (B) and (C), the annual premium rate payable to the corporation by a single-employer plan for basic benefits guaranteed under this title is— (i) in the case of a single-employer plan for any plan year beginning in a fiscal year with respect to which the average of the single-employer pension insurance program funded percentages for the 2 fiscal years immediately preceding such fiscal year is 110 percent or greater, an amount for each individual who is a participant in such plan during the plan year equal to the sum of $19 and an additional premium equal to the quotient (not to exceed $500) obtained by dividing— (I) an amount equal to $9 for each $1,000 (or fraction thereof) of unfunded vested benefits under the plan as of the close of the preceding plan year, by (II) the number of participants in such plan as of the close of the preceding plan year; (ii) in the case of a single-employer plan for any plan year beginning in a fiscal year with respect to which the average of the single-employer pension insurance program funded percentages for the 2 fiscal years immediately preceding such fiscal year is at least 100 percent but less than 110 percent, an amount for each individual who is a participant in such plan during the plan year equal to the sum of $30 and an additional premium equal to the quotient (not to exceed $500) obtained by dividing— (I) an amount equal to $9 for each $1,000 (or fraction thereof) of unfunded vested benefits under the plan as of the close of the preceding plan year, by (II) the number of participants in such plan as of the close of the preceding plan year; (iii) in the case of a single-employer plan for any plan year beginning in a fiscal year with respect to which the average of the single-employer pension insurance program funded percentages for the 2 fiscal years immediately preceding such fiscal year is at least 90 percent but less than 100 percent, an amount for each individual who is a participant in such plan during the plan year equal to the sum of $64 and an additional premium equal to the quotient (not to exceed $500) obtained by dividing— (I) an amount equal to $28 for each $1,000 (or fraction thereof) of unfunded vested benefits under the plan as of the close of the preceding plan year, by (II) the number of participants in such plan as of the close of the preceding plan year; (iv) notwithstanding clauses (i) through (iii), in the case of a CSEC plan (as defined in section 210(f)) or single-employer plan maintained by a small employer for any plan year, an amount for each individual who is a participant in such plan during the plan year equal to the sum of $19 and an additional premium equal to the quotient (not to exceed $500) obtained by dividing— (I) an amount equal to $9 for each $1,000 (or fraction thereof) of unfunded vested benefits under the plan as of the close of the preceding plan year, by (II) the number of participants in such plan as of the close of the preceding plan year; and (v) in any other case, the amount determined under paragraph (3)(A)(i). (B) Small employer premium phase-out (i) In general In the case of a single-employer plan maintained by an employer who has more than 500 employees but not more than 600 employees on the first day of the plan year, the annual premium rate payable to the corporation by such plan for basic benefits guaranteed under this title is an amount for each individual who is a participant in such plan during the plan year equal to the sum of— (I) the annual premium rate that would be so payable by such plan if such plan were maintained by a small employer for such plan year, plus— (II) the applicable percentage of the excess of— (aa) the annual premium rate so payable by such plan without regard to this subparagraph, over (bb) the annual premium rate that would be so payable by such plan as described under subclause (I). (ii) Applicable percentage For purposes of this subparagraph, the applicable percentage (I) the number of employees of the employer to the extent such number exceeds 500, over (II) 100. (C) Special rule for multiple employer plans In the case of a multiple employer plan (other than a CSEC plan (as defined in section 210(f))), the annual premium rate payable to the corporation by such plan for basic benefits guaranteed under this title is the sum of the annual premiums that, if each employer maintaining such plan were treated as maintaining a separate plan in which— (i) the number of participants equals the number of participants in the multiple employer plan who are employed (or formerly employed) by such employer, and (ii) the amount of unfunded vested benefits equals the portion of the unfunded vested benefits under the multiple employer plan attributable to such employer, would be imposed on each separate plan in accordance with this section. In determining the annual premiums that would be imposed on each of the separate plans described under this subparagraph, the determination of whether an employer is a small employer shall be made separately with respect to each employer maintaining the multiple employer plan. (D) Special rule for small employers with 25 or fewer employees In the case of a single-employer plan maintained by a small employer who has 25 or fewer employees on the first day of the plan year (as determined under paragraph (3)(I)(ii)), the additional premium otherwise determined under subparagraph (A)(iv) shall not exceed $5 multiplied by the number of participants in the plan as of the close of the preceding plan year. (E) Wage indexing of certain amounts For each plan year beginning in a calendar year after 2018, there shall be substituted for each of the first and second dollar amounts in clause (ii) of subparagraph (A) and the first, second, and third dollar amounts in clause (iii) of such subparagraph an amount equal to the greater of— (i) the product derived by multiplying each such amount by the ratio of— (I) the national average wage index (as defined in section 209(k)(1) of the Social Security Act) for the first of the 2 calendar years preceding the calendar year in which such plan year begins, to (II) the national average wage index (as so defined) for 2016; and (ii) each such amount as in effect for plan years beginning in the preceding calendar year. If any amount determined under this subparagraph is not a multiple of $1, such product shall be rounded to the nearest multiple of $1. (F) Definitions For purposes of this paragraph: (i) Small employer The term small employer (ii) Multiple employer plan The term multiple employer plan (iii) Single-employer pension insurance program funded percentage The term single-employer pension insurance program funded percentage (I) the value of all assets held by the corporation in any trust or revolving fund on the last day of such fiscal year available for the payment of basic benefits guaranteed under section 4022, to (II) the present value (as determined in accordance with section 303(h) without regard to paragraph (2)(C)(iv)) of the liabilities of the corporation attributable to such guaranteed benefits on the last day of such fiscal year. (iv) Unfunded vested benefits The term unfunded vested benefits (I) the plan’s funding liability (as defined in section 306(j)(5)(C)), determined by only taking into account vested benefits, over (II) the fair market value of plan assets for the plan year which are held by the plan on the valuation date. . (b) Individuals participating in more than one plan Section 4006(a)(3)(B) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1306(a)(3)(B) or paragraph (9) subparagraph (A)(i) (c) Conforming amendment Section 4006(a)(3)(A) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1306 and paragraph (9) subparagraph (C) (d) Effective date The amendments made by this shall apply with respect to plan years beginning after December 31, 2017. 3. Correction of the budget effects of premium changes (a) In general In the Senate and the House of Representatives, for purposes of determining points of order under the Congressional Budget Act of 1974 ( 2 U.S.C. 621 (1) in the Senate, for any bill, joint resolution, amendment, amendment between the Houses, conference report, or motion; or (2) in the House of Representatives, for any bill or joint resolution, or amendment thereto or conference report thereon. (b) Rules of senate and house of representatives Congress adopts the provisions of this section— (1) as an exercise of the rulemaking power of the Senate and the House of Representatives, respectively, and as such is deemed a part of the rules of each House, respectively, and supersede other rules only to the extent that they are inconsistent with such rules; and (2) with full recognition of the constitutional right of either House to change the rules (so far as relating to the procedure of that House) at any time, in the same manner, and to the same extent as in the case of any other rule of that House.

Summary: Rightsizing Pension Premiums Act of 2017 This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to: (1) modify the formula that the Pension Benefit Guaranty Corporation (PBGC) uses to calculate the funded percentage of single-employer pension plans, and (2) reduce single-employer PBGC premiums for pension plans that are sponsored by certain small employers or have specified PBGC funded percentages. The bill also prohibits the budget effects of provisions that change PBGC premiums from being counted for the purposes of determining budget points of order for legislation in the House or the Senate. (The PBGC is a federal agency that insures the benefits of private sector, defined benefit pension plans. The PBGC is financed by insurance premiums paid by sponsors of the plans, investment income, assets from pension plans taken over by the PBGC, and recoveries from the companies formerly responsible for the plans.)