In the Senate of the United States,
January 28, 2004.
Resolved, That the bill from the House of Representa-
tives (H.R. 3108) entitled ‘‘An Act to amend the Employee
Retirement Income Security Act of 1974 and the Internal
Revenue Code of 1986 to temporarily replace the 30-year
Treasury rate with a rate based on long-term corporate bonds
for certain pension plan funding requirements and other pro-
visions, and for other purposes.’’, do pass with the following
AMENDMENT:
Page 2, line 3, strike out all after ‘‘SECTION’’ and
insert:
1. SHORT TITLE.
This Act may be cited as the ‘‘Pension Stability Act’’.
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‘‘(F) ELECTION TO DISREGARD MODIFIED
INTEREST RATE.—An employer may elect to dis-
regard 
subsections 
(b)(5)(B)(ii)(II) 
and
(l)(7)(C)(i) of section 412 solely for purposes of
determining the interest rate used in calculating
the maximum amount of the deduction allowable
under this section for contributions to a plan to
which such subsections apply.’’
(b) EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974.—
(1) DETERMINATION OF PERMISSIBLE RANGE.—
(A) IN GENERAL.—Section 302(b)(5)(B)(ii)
of the Employee Retirement Income Security Act
of 
1974 
(29 
U.S.C. 
1082(b)(5)(B)(ii)) 
is
amended—
(i) in subclause (I), by inserting ‘‘or
(III)’’ after ‘‘subclause (II)’’;
(ii) by redesignating subclause (II) as
subclause (III);
(iii) by inserting after subclause (I) the
following new subclause:
‘‘(II) SPECIAL RULE FOR YEARS 2004
AND 2005.—In the case of plan years begin-
ning in 2004 or 2005, the term ‘permissible
range’ means a rate of interest which is not
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above, and not more than 10 percent below,
the weighted average of the conservative
long-term corporate bond rates (as deter-
mined under section 412(b)(5)(B)(ii)(II) of
the Internal Revenue Code of 1986) during
the 4-year period ending on the last day be-
fore the beginning of the plan year.’’; and
(iv) 
in 
subclause 
(III), 
as 
so
redesignated—
(I) by inserting ‘‘or (II)’’ after
‘‘subclause (I)’’ the first place it ap-
pears; and
(II) by striking ‘‘subclause (I)’’
the second place it appears and insert-
ing ‘‘such subclause’’.
(2) DETERMINATION OF CURRENT LIABILITY.—
Section 302(d)(7)(C)(i) of such Act (29 U.S.C.
1082(d)(7)(C)(i)) is amended by adding at the end
the following new subclause:
‘‘(IV) SPECIAL
RULE
FOR
2004
AND 2005.—For plan years beginning
in 2004 or 2005, notwithstanding sub-
clause (I), the rate of interest used to
determine current liability under this
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subsection shall be the rate of interest
under subsection (b)(5).’’.
(3) 
CONFORMING
AMENDMENT.—Section
302(e)(7) of such Act (29 U.S.C. 1082(e)(7)) is
amended to read as follows:
‘‘(7) SPECIAL RULE FOR 2002.—In any case in
which the interest rate used to determine current li-
ability 
is 
determined 
under 
subsection
(d)(7)(C)(i)(III), for purposes of applying paragraphs
(1) and (4)(B)(ii) for plan years beginning in 2002,
the current liability of the plan for the preceding plan
year shall be redetermined using 120 as the specified
percentage 
determined 
under 
subsection
(d)(7)(C)(i)(II).’’.
(4) PBGC.—Section 4006(a)(3)(E)(iii) of such
Act (29 U.S.C. 1306(a)(3)(E)(iii)) is amended by
adding at the end the following new subclause:
‘‘(V) In the case of plan years beginning in 2004
or 2005, the annual yield taken into account under
subclause (II) shall be the annual yield computed by
using the conservative long-term corporate bond rate
(as determined under section 412(b)(5)(B)(ii)(II) of
the Internal Revenue Code of 1986) for the month
preceding the month in which the plan year begins.’’
(c) EFFECTIVE DATES.—
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(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to plan years beginning after December 31,
2003.
(2) LOOKBACK RULES.—For purposes of apply-
ing subsections (l)(9)(B)(ii) and (m)(1) of section 412
of the Internal Revenue Code of 1986, and subsections
(d)(9)(B)(ii) and (e)(1) of section 302 of the Em-
ployee Retirement Income Security Act of 1974 to
plan years beginning after December 31, 2003, the
amendments made by this section may be applied as
if such amendments had been in effect for all years
beginning before such date.
(3) TRANSITION RULE FOR SECTION 415 LIMITA-
TION.—In the case of any participant or beneficiary
receiving a distribution after December 31, 2003 and
before January 1, 2005, the amount payable under
any form of benefit subject to section 417(b)(3) of the
Internal Revenue Code of 1986 and subject to adjust-
ment under section 415(b)(2)(B) of such Code shall
not, solely by reason of the amendment made by sub-
section (a)(4), be less than the amount that would
have been so payable had the amount payable been
determined using the applicable interest rate in effect
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as of the last day of the last plan year beginning be-
fore January 1, 2004.
SEC. 3. ELECTION OF ALTERNATIVE DEFICIT REDUCTION
CONTRIBUTION.
(a) AMENDMENT OF 1986 CODE.—Section 412(l) of the
Internal Revenue Code of 1986 (relating to applicability
of subsection) is amended by adding at the end the following
new paragraph:
‘‘(12) ALTERNATIVE
INCREASE
FOR
CERTAIN
PLANS MEETING REQUIREMENTS IN 2000.—
‘‘(A) IN GENERAL.—In the case of a defined
benefit plan established and maintained by an
applicable employer, if this subsection did not
apply to the plan for the plan year beginning in
2000 (determined without regard to paragraph
(6)), then, at the election of the employer, the in-
creased amount under paragraph (1) for any ap-
plicable plan year shall be the greater of—
‘‘(i) 20 percent (40 percent in the case
of an applicable plan year beginning after
December 27, 2004) of the increased amount
under paragraph (1) determined without re-
gard to this paragraph, or
‘‘(ii) the increased amount which
would be determined under paragraph (1) if
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the deficit reduction contribution under
paragraph (2) for the applicable plan year
were determined without regard to subpara-
graphs (A), (B), and (D) of paragraph (2).
‘‘(B) 
RESTRICTIONS
ON
BENEFIT
IN-
CREASES.—No amendment which increases the
liabilities of the plan by reason of any increase
in benefits, any change in the accrual of benefits,
or any change in the rate at which benefits be-
come nonforfeitable shall be adopted during any
applicable plan year, unless—
‘‘(i) the funded current liability per-
centage (as defined in paragraph (8)(B)) as
of the end of such plan year is projected
(taking into account the effect of the amend-
ment) to be at least 75 percent,
‘‘(ii) the amendment provides for an
increase in benefits under a formula which
is not based on a participant’s compensa-
tion, but only if the rate of such increase is
not in excess of the contemporaneous rate of
increase in average wages of participants
covered by the amendment,
‘‘(iii) the amendment is required by a
collective bargaining agreement which is in
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effect on the date of enactment of this sub-
paragraph, or
‘‘(iv) the amendment is otherwise de-
scribed in subparagraph (A) or (C) of sub-
section (f)(2).
If a plan is amended during any applicable plan
year in violation of the preceding sentence, any
election under this paragraph shall not apply to
any applicable plan year ending on or after the
date on which such amendment is adopted.
‘‘(C) APPLICABLE
EMPLOYER.—For pur-
poses of this paragraph—
‘‘(i) IN GENERAL.—The term ‘applica-
ble employer’ means an employer which
is—
‘‘(I) a commercial passenger air-
line,
‘‘(II) primarily engaged in the
production or manufacture of a steel
mill product, or the mining or proc-
essing of iron ore or beneficiated iron
ore products, or
‘‘(III) an organization described
in section 501(c)(5) and which estab-
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lished the plan to which this para-
graph applies on June 30, 1955.
‘‘(ii) OTHER EMPLOYERS MAY APPLY
FOR RELIEF.—
‘‘(I) IN GENERAL.—Except as pro-
vided in subclause (II), an employer
other than an employer described in
clause (i) shall be treated as an appli-
cable employer if the employer files an
application (at such time and in such
manner as the Secretary may pre-
scribe) to be treated as an applicable
employer for purposes of this para-
graph.
‘‘(II) EXCEPTION.—Subclause (I)
shall not apply to an employer if,
within 90 days of the filing of the ap-
plication, the Secretary determines
(taking into account the application of
this paragraph) that there is a reason-
able likelihood that the employer will
be unable to make future required con-
tributions to the plan in a timely
manner.
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‘‘(D) APPLICABLE
PLAN
YEAR.—For pur-
poses of this paragraph—
‘‘(i) IN GENERAL.—The term ‘applica-
ble plan year’ means any plan year begin-
ning after December 27, 2003, and before
December 28, 2005, for which the employer
elects the application of this paragraph.
‘‘(ii) LIMITATION
ON
NUMBER
OF
YEARS WHICH MAY BE ELECTED.—An elec-
tion may not be made under this paragraph
with respect to more than 2 plan years.
‘‘(E) ELECTION.—An election under this
paragraph shall be made at such time and in
such manner as the Secretary may prescribe.’’
(b) AMENDMENT OF ERISA.—Section 302(d) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1082(d)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(12) ALTERNATIVE
INCREASE
FOR
CERTAIN
PLANS MEETING REQUIREMENTS IN 2000.—
‘‘(A) IN GENERAL.—In the case of a defined
benefit plan established and maintained by an
applicable employer, if this subsection did not
apply to the plan for the plan year beginning in
2000 (determined without regard to paragraph
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(6)), then, at the election of the employer, the in-
creased amount under paragraph (1) for any ap-
plicable plan year shall be the greater of—
‘‘(i) 20 percent (40 percent in the case
of an applicable plan year beginning after
December 27, 2004) of the increased amount
under paragraph (1) determined without re-
gard to this paragraph, or
‘‘(ii) the increased amount which
would be determined under paragraph (1) if
the deficit reduction contribution under
paragraph (2) for the applicable plan year
were determined without regard to subpara-
graphs (A), (B), and (D) of paragraph (2).
‘‘(B) 
RESTRICTIONS
ON
BENEFIT
IN-
CREASES.—No amendment which increases the
liabilities of the plan by reason of any increase
in benefits, any change in the accrual of benefits,
or any change in the rate at which benefits be-
come nonforfeitable under the plan shall be
adopted during any applicable plan year,
unless—
‘‘(i) the funded current liability per-
centage (as defined in paragraph (8)(B)) as
of the end of such plan year is projected
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(taking into account the effect of the amend-
ment) to be at least 75 percent,
‘‘(ii) the amendment provides for an
increase in benefits under a formula which
is not based on a participant’s compensa-
tion, but only if the rate of such increase is
not in excess of the contemporaneous rate of
increase in average wages of participants
covered by the amendment,
‘‘(iii) the amendment is required by a
collective bargaining agreement which is in
effect on the date of enactment of this sub-
paragraph, or
‘‘(iv) the amendment is otherwise de-
scribed in subparagraph (A) or (C) of sec-
tion 304(b)(2).
If a plan is amended during any applicable plan
year in violation of the preceding sentence, any
election under this paragraph shall not apply to
any applicable plan year ending on or after the
date on which such amendment is adopted.
‘‘(C) APPLICABLE
EMPLOYER.—For pur-
poses of this paragraph—
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‘‘(i) IN GENERAL.—The term ‘applica-
ble employer’ means an employer which
is—
‘‘(I) a commercial passenger air-
line,
‘‘(II) primarily engaged in the
production or manufacture of a steel
mill product, or the mining or proc-
essing of iron ore or beneficiated iron
ore products, or
‘‘(III) an organization described
in section 501(c)(5) of the Internal
Revenue Code of 1986 and which estab-
lished the plan to which this para-
graph applies on June 30, 1955.
‘‘(ii) OTHER EMPLOYERS MAY APPLY
FOR RELIEF.—
‘‘(I) IN GENERAL.—Except as pro-
vided in subclause (II), an employer
other than an employer described in
clause (i) shall be treated as an appli-
cable employer if the employer files an
application (at such time and in such
manner as the Secretary of the Treas-
ury may prescribe) to be treated as an
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‘‘(E) NOTICE
REQUIREMENTS
FOR
PLANS
ELECTING
ALTERNATIVE
DEFICIT
REDUCTION
CONTRIBUTIONS.—
‘‘(i) IN
GENERAL.—If an employer
elects an alternative deficit reduction con-
tribution under this paragraph and section
412(l)(12) of the Internal Revenue Code of
1986 for any year, the employer shall pro-
vide, within 30 days (120 days in the case
of an employer described in subparagraph
(C)(ii)) of filing the election for such year,
written notice of the election to participants
and beneficiaries and to the Pension Benefit
Guaranty Corporation.
‘‘(ii) NOTICE
TO
PARTICIPANTS
AND
BENEFICIARIES.—The notice under clause
(i) to participants and beneficiaries shall
include with respect to any election—
‘‘(I) the due date of the alternative
deficit reduction contribution and the
amount by which such contribution
was reduced from the amount which
would have been owed if the election
were not made, and
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‘‘(II) a description of the benefits
under the plan which are eligible to be
guaranteed by the Pension Benefit
Guaranty Corporation and an expla-
nation of the limitations on the guar-
antee and the circumstances under
which such limitations apply, includ-
ing the maximum guaranteed monthly
benefits which the Pension Benefit
Guaranty Corporation would pay if
the plan terminated while under-
funded.
‘‘(iii) NOTICE
TO
PBGC.—The notice
under clause (i) to the Pension Benefit
Guaranty Corporation shall include—
‘‘(I) the information described in
clause (ii)(I),
‘‘(II) the number of years it will
take to restore the plan to full funding
if the employer only makes the re-
quired contributions, and
‘‘(III) information as to how the
amount by which the plan is under-
funded compares with the capitaliza-
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tion of the employer making the elec-
tion.
‘‘(F) ELECTION.—An election under this
paragraph shall be made at such time and in
such manner as the Secretary of the Treasury
may prescribe.’’
(c) EFFECT OF ELECTION.—An election under section
412(l)(12) of the Internal Revenue Code of 1986 or section
302(d)(12) of the Employee Retirement Income Security
Act of 1974 (as added by this section) with respect to a
plan shall not invalidate any obligation (pursuant to a col-
lective bargaining agreement in effect on the date of the elec-
tion) to provide benefits, to change the accrual of benefits,
or to change the rate at which benefits become nonforfeitable
under the plan .
(d) PENALTY FOR FAILING TO PROVIDE NOTICE.—
Section 502(c)(3) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1132(c)(3)) is amended by in-
serting ‘‘or who fails to meet the requirements of section
302(d)(12)(E) with respect to any participant or bene-
ficiary’’ after ‘‘101(e)(2)’’.
SEC. 4. MULTIEMPLOYER PLAN FUNDING NOTICES.
(a) IN GENERAL.—Section 104 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 104) is
amended by redesignating subsection (d) as subsection (e)
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and by inserting after subsection (c) the following new sub-
section:
‘‘(d) MULTIEMPLOYER
DEFINED
BENEFIT
PLAN
FUNDING NOTICES.—
‘‘(1) IN GENERAL.—The administrator of a de-
fined benefit plan which is a multiemployer plan
shall for each plan year provide a plan funding no-
tice to each plan participant and beneficiary, to each
labor organization representing such participants or
beneficiaries, and to each employer that has an obli-
gation to contribute under the plan.
‘‘(2) INFORMATION CONTAINED IN NOTICES.—
‘‘(A) IDENTIFYING INFORMATION.—Each no-
tice required under paragraph (1) shall contain
identifying information, including the name of
the plan, the address and phone number of the
plan administrator and the plan’s principal ad-
ministrative officer, each plan sponsor’s em-
ployer identification number, and the plan num-
ber of the plan.
‘‘(B) 
SPECIFIC
INFORMATION.—A 
plan
funding notice under paragraph (1) shall
include—
‘‘(i) a statement as to whether the
plan’s funded current liability percentage
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(as defined in section 302(d)(8)(B)) for the
plan year to which the notice relates is at
least 100 percent (and, if not, the actual
percentage);
‘‘(ii) a statement of the value of the
plan’s assets, the amount of benefit pay-
ments, and the ratio of the assets to the
payments for the plan year to which the re-
port relates;
‘‘(iii) a summary of the rules gov-
erning insolvent multiemployer plans, in-
cluding the limitations on benefit payments
and any potential benefit reductions and
suspensions (and the potential effects of
such limitations, reductions, and suspen-
sions on the plan); and
‘‘(iv) a general description of the bene-
fits under the plan which are eligible to be
guaranteed by the Pension Benefit Guar-
anty Corporation, along with an expla-
nation of the limitations on the guarantee
and the circumstances under which such
limitations apply.
‘‘(C) OTHER
INFORMATION.—Each notice
under paragraph (1) shall include any addi-
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tional information which the plan administrator
elects to include to the extent not inconsistent
with regulations prescribed by the Secretary.
‘‘(3) TIME FOR PROVIDING NOTICE.—Any notice
under paragraph (1) shall be provided no later than
two months after the deadline (including extensions)
for filing the annual report for the plan year to which
the notice relates.
‘‘(4) FORM
AND
MANNER.—Any notice under
paragraph (1)—
‘‘(A) shall be provided in a form and man-
ner prescribed in regulations of the Secretary,
‘‘(B) shall be written in a manner so as to
be understood by the average plan participant,
and
‘‘(C) may be provided in written, electronic,
or other appropriate form to the extent such form
is reasonably accessible to persons to whom the
notice is required to be provided.’’
(b) PENALTIES.—Section 502(c)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1132(c)(1)) is amended by striking ‘‘or section 101(e)(1)’’
and inserting ‘‘, section 101(e)(1), or section 104(d)’’.
(c) REGULATIONS
AND MODEL NOTICE.—The Sec-
retary of Labor shall, not later than 1 year after the date
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of the enactment of this Act, issue regulations (including
a model notice) necessary to implement the amendments
made by this section.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to plan years beginning after December
31, 2004.
SEC. 5. AMORTIZATION HIATUS FOR NET EXPERIENCE
LOSSES IN MULTIEMPLOYER PLANS.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—
(1) IN GENERAL.—Section 302(b)(7) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C.1082(b)(7)) is amended by adding at the end
the following new subparagraph:
‘‘(F)(i) If a multiemployer plan has a net expe-
rience loss for any plan year beginning after June 30,
2002, and before July 1, 2006—
‘‘(I) the plan may elect to have the 15-year
amortization period under paragraph (2)(B)(iv)
with respect to the loss begin in any plan year
selected by the plan from among the 3 imme-
diately succeeding plan years, and
‘‘(II) if the plan makes an election under
subclause (I) for any plan year, the net experi-
ence loss for the year shall, for purposes of deter-
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mining any charge to the funding standard ac-
count, or interest, with respect to the loss, be
treated in the same manner as if it were a net
experience loss occurring in the year selected by
the plan under subclause (I) (without regard to
any net experience loss or gain otherwise deter-
mined for such year).
Notwithstanding the preceding sentence, a plan may
elect to have this subparagraph apply to net experi-
ence losses for only 2 plan years beginning after June
30, 2002, and before July 1, 2006.
‘‘(ii) An amendment which increases the liabil-
ities of the plan by reason of any increase in benefits,
any change in the accrual of benefits, or any change
in the rate at which benefits become nonforfeitable
under the plan shall not take effect for any plan year
in the hiatus period, unless—
‘‘(I) the funded current liability percentage
(as defined in subsection (d)(8)(B)) as of the end
of the plan year is projected (taking into account
the effect of the amendment) to be at least 75
percent,
‘‘(II) the plan’s actuary certifies that, due
to an increase in contribution rates, the normal
cost attributable to the benefit increase or other
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change is expected to be fully funded in the year
following the year the increase or other change
takes effect, and any increase in the plan’s ac-
crued liabilities attributable to the benefit in-
crease or other change is expected to be fully
funded by the end of the third plan year fol-
lowing the end of the last hiatus period of the
plan, or
‘‘(III) the plan amendment is otherwise de-
scribed in subparagraph (A) or (C) of section
304(b)(2).
‘‘(iii) Clause (ii) shall not apply to an increase
in benefits for a group of participants resulting solely
from a collectively bargained increase in the contribu-
tions made on their behalf.
‘‘(iv) For purposes of this subparagraph, the
term ‘hiatus period’ means any period during which
the amortization of a net experience loss is suspended
by reason of this subparagraph.
‘‘(v) Interest accrued on any net experience loss
during a hiatus period shall be charged to a reconcili-
ation account and not to the funding standard ac-
count.
‘‘(vi) If a plan elects an amortization hiatus
under this subparagraph and section 412(b)(7)(F) of
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the Internal Revenue Code of 1986 for any plan year,
the plan administrator shall provide, within 30 days
of filing the election for such year, written notice of
the election to participants and beneficiaries, to each
labor organization representing such participants or
beneficiaries, and to each employer that has an obli-
gation to contribute under the plan. Such notice shall
include with respect to any election the amount of the
net experience loss to be deferred and the period of the
deferral. Such notice shall also include the maximum
guaranteed monthly benefits which the Pension Ben-
efit Guaranty Corporation would pay if the plan ter-
minated while underfunded.
‘‘(vii) An election under this subparagraph shall
be made at such time and in such manner as the Sec-
retary, after consultation with the Secretary of the
Treasury, may prescribe.’’
(2) PENALTY.—Section 502(c)(4) of such Act (29
U.S.C. 1132(c)(4)) is amended to read as follows:
‘‘(4) The Secretary may assess a civil penalty of
not more than $1,000 a day for each violation by any
person of section 302(b)(7)(F)(vi).’’
(b) AMENDMENTS TO THE INTERNAL REVENUE CODE
OF 1986.—
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(1) IN GENERAL.—Section 412(b)(7) of the Inter-
nal Revenue Code of 1986 (relating to special rules
for multiemployer plans) is amended by adding at the
end the following new subparagraph:
‘‘(F) AMORTIZATION HIATUS.—
‘‘(i) IN GENERAL.—If a multiemployer
plan has a net experience loss for any plan
year beginning after June 30, 2002, and be-
fore July 1, 2006—
‘‘(I) the plan may elect to have
the 15-year amortization period under
paragraph (2)(B)(iv) with respect to
the loss begin in any plan year selected
by the plan from among the 3 imme-
diately succeeding plan years, and
‘‘(II) if the plan makes an election
under subclause (I) for any plan year,
the net experience loss for the year
shall, for purposes of determining any
charge to the funding standard ac-
count, or interest, with respect to the
loss, be treated in the same manner as
if it were a net experience loss occur-
ring in the year selected by the plan
under subclause (I) (without regard to
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any net experience loss or gain other-
wise determined for such year).
Notwithstanding the preceding sentence, a
plan may elect to have this subparagraph
apply to net experience losses for only 2
plan years beginning after June 30, 2002,
and before July 1, 2006.
‘‘(ii) RESTRICTIONS
ON
BENEFIT
IN-
CREASES.—An amendment which increases
the liabilities of the plan by reason of any
increase in benefits, any change in the ac-
crual of benefits, or any change in the rate
at which benefits become nonforfeitable
under the plan shall not take effect for any
plan year in the hiatus period, unless—
‘‘(I) the funded current liability
percentage (as defined in subsection
(l)(8)(B)) as of the end of the plan
year is projected (taking into account
the effect of the amendment) to be at
least 75 percent,
‘‘(II) the plan’s actuary certifies
that, due to an increase in contribu-
tion rates, the normal cost attributable
to the benefit increase or other change