Public Employee Pension Transparency Act

To amend the Internal Revenue Code of 1986 to provide for reporting and disclosure by State and local public employee retirement pension plans. 1. Short title This Act may be cited as the Public Employee Pension Transparency Act 2. Reporting requirement for certain State or local government retirement plans as condition for State and local bonds tax exemption (a) In general Subpart B of part IV of subchapter B of chapter 1 149A. Reporting with respect to certain State or local government retirement plans (a) In general In the case of a failure to satisfy the report requirements of subsection (c) with respect to any plan maintained with respect to an employee of a State, a political subdivision of a State, or any agency or instrumentality of a State or political subdivision of a State, section 103 shall not apply to the interest on any bond issued during the noncompliance period by any such State or political subdivision. (b) Noncompliance period For purposes of this section, the term noncompliance period (c) Annual report requirements (1) In general The requirements of this subsection shall not be treated as met unless, not later than 210 days after the end of each plan year beginning on or after January 1, 2019, the plan sponsor of a State or local government applicable retirement plan files with the Secretary (in such form and manner as shall be prescribed by the Secretary) a report setting forth the following information with respect to the plan, as determined by the plan sponsor as of the last day of such plan year: (A) A statement (determined according to the plan’s funding method) of the plan liability, the value of plan assets, the amount by which (if any) the plan liability exceeds the value of plan assets, and the funding percentage of the plan. (B) A schedule of all contributions by the plan sponsor for the plan year that indicates which contributions are taken into account under subparagraph (A). (C) Projections for each of the 60 subsequent plan years of the cash flows associated with the plan liability. (D) A statement of the actuarial assumptions used for the plan year, including the rate of return on investment of plan assets and assumptions as to such other matters as the Secretary may prescribe by regulation. (E) The number of each of the following types of participant: (i) Separated from service and receiving benefits. (ii) Not described in clause (i), separated from service, and entitled to future benefits. (iii) Accruing and receiving benefits. (iv) Not described in clause (iii) and accruing benefits. (F) A statement of the plan’s investment returns (including the rate of return) for the plan year and the 5 preceding plan years. (G) Pursuant to such regulations as the Secretary shall prescribe, an explanation of the plan’s funding policy, and a statement of the degree to which, and manner in which, the plan sponsor expects to eliminate any unfunded plan liability for the plan year and the extent to which the plan sponsor has followed the plan’s funding policy for each of the preceding 5 plan years. (H) A statement of the amount of any pension obligation bonds outstanding. (I) A statement of the current cost of the plan for the plan year determined according to the plan’s funding method. (J) A statement of the plan’s administrative and investment expenses. (2) Supplement to report with prescribed valuation and interest rates (A) In general In the case of an annual report under which— (i) plan assets are not valued at fair market value, (ii) any interest rate used to determine the value of plan liabilities under subparagraph (A) or (I) of paragraph (1) is not an interest rate described in subparagraph (B), or (iii) the present value of an accrued benefit is not determined as described in subparagraph (C), the requirements of this subsection shall not be treated as met unless the plan sponsor also includes in such annual report the information described in subparagraphs (A) and (I) of paragraph (1), determined as of the last day of such plan year by valuing plan assets at fair market value, by using the interest rates described in subparagraph (B) to value liabilities, and by determining the present value of accrued benefits as described in subparagraph (C). (B) Interest rates based on Treasury spot rate yield curve (i) In general The interest rates described in this subparagraph are, with respect to any day, the rates of interest which shall be determined by the Secretary for such day on the basis of the Treasury spot rate yield curve for such day. (ii) Treasury spot rate yield curve For purposes of this subparagraph, the term Treasury spot rate yield curve (C) Determining present value of accrued benefits The present value of an accrued benefit is determined as described in this subparagraph if— (i) it is determined by discounting its future cash flows in accordance with subparagraph (B), and (ii) the present value of all benefits accrued for each participant is calculated as of the last day of such plan year using the unit credit funding method. (d) Definitions and special rules For purposes of this section— (1) State or local government applicable retirement plan The term State or local government applicable retirement plan (2) Funding percentage The term funding percentage (A) the value of plan assets as of the end of the plan year, bears to (B) the plan liability of the plan for the plan year. (3) Plan liability The term plan liability (4) Current cost The term current cost (5) Plan sponsor The term plan sponsor (6) Participant (A) In general The term participant (i) who is an employee or former employee of a State, political subdivision of a State, or agency or instrumentality of a State or a political subdivision of a State which is the plan sponsor of such plan, and (ii) who is or may become eligible to receive a benefit of any type from such plan or whose beneficiaries may be eligible to receive any such benefit. (B) Beneficiary The term beneficiary (7) Plan year The term plan year (8) State The term State (9) Fair market value The term fair market value (e) Model reporting statement The Secretary shall develop model reporting that plan sponsors of State or local government employee pension plans may elect to use for purposes of complying with requirements of such subsections (c). (f) Transparency of information filed Reports filed under this section shall be public records open to the inspection of the public, and the Secretary shall create and maintain a searchable public website on which the Secretary shall post such reports not later than 60 days after receipt. . (b) Clerical amendment The table of sections for subpart B of part IV of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 149A. Reporting with respect to certain State or local government retirement plans. . 3. General provisions and rules of construction (a) Limitations on Federal responsibilities relating to plan obligations and liabilities The United States shall not be liable for any obligation related to any current or future shortfall in any State or local government applicable retirement plan. Nothing in this Act (or any amendment made by this Act) or any other provision of law shall be construed to provide Federal Government funds to diminish or meet any current or future shortfall in, or obligation of, any State or local government applicable retirement plan. The preceding sentence shall also apply to the Federal Reserve. (b) No Federal funding standards Nothing in this Act (or any amendment made by this Act) shall be construed to alter existing funding standards for State or local government applicable retirement plans or to require Federal funding standards for such plans. (c) Definitions Terms used in this section which are also used in section 149A

Summary: Public Employee Pension Transparency Act This bill amends the Internal Revenue Code to deny the tax exemption for interest on state and local bonds to bonds issued by a state or political subdivision that does not comply with specified reporting requirements for state or local government employee pension benefit plans. For the tax exemption to apply, sponsors of a state or local government employee pension benefit plan must submit annual reports to the Department of the Treasury that include details regarding: the funding status of the plan, contributions by the plan sponsor for the plan year, projections for each of the next 60 plan years of the cash flows associated with the plan liability, actuarial assumptions used for the plan year, the types of plan participants, investment returns, the funding policy and the degree to which unfunded liabilities are expected to be eliminated, the amount of pension obligation bonds outstanding, the current cost of the plan for the plan year, and administrative and investment expenses. Treasury must: (1) develop model reporting statements, and (2) create and maintain a searchable public website for posting pension plan information required by this bill. The bill also grants the United States an exemption from liability for any current or future shortfall in any state or local government employee pension plan.