IIB 
108TH CONGRESS 
1ST SESSION H. R. 3108
IN THE SENATE OF THE UNITED STATES 
OCTOBER 14, 2003
Received 
DECEMBER 9, 2003
Read twice and referred to the Committee on Finance 
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 pen-
sion plan funding requirements and other provisions, and 
for other purposes.
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Pension Funding Eq-
uity Act of 2003’’. 
SEC. 2. FINDINGS; SENSE OF CONGRESS. 
(a) FINDINGS.—The Congress finds the following: 
(1) The defined benefit pension system has re-
cently experienced severe difficulties due to an un-
precedented economic climate of low interest rates, 
market losses, and an increased number of retirees. 
(2) The discontinuation of the issuance of 30-
year Treasury securities has made the interest rate 
on such securities an inappropriate and inaccurate 
benchmark for measuring pension liabilities. 
(3) Using the current 30-year Treasury bond 
interest rate has artificially inflated pension liabil-
ities and therefore adversely affected both employers 
offering defined benefit pension plans and working 
families who rely on the safe and secure benefits 
that these plans provide. 
(4) There is consensus among pension experts 
that an interest rate based on long-term, conserv-
ative corporate bonds would provide a more accurate 
benchmark for measuring pension plan liabilities.
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(5) A temporary replacement for the 30-year 
Treasury bond interest rate should be enacted while 
the Congress evaluates permanent and comprehen-
sive funding reforms. 
(b) SENSE OF CONGRESS.—It is the sense of the 
Congress that the Congress must ensure the financial 
health of the defined benefit pension system by working 
to promptly implement— 
(1) a permanent replacement for the pension 
discount rate used for defined benefit pension plan 
calculations, and 
(2) comprehensive funding reforms aimed at 
achieving accurate and sound pension funding to en-
hance retirement security for workers who rely on 
defined pension plan benefits, to reduce the volatility 
of contributions, to provide plan sponsors with pre-
dictability for plan contributions, and to ensure ade-
quate disclosures for plan participants in the case of 
underfunded pension plans. 
SEC. 3. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY 
RATE. 
(a) EMPLOYEE RETIREMENT INCOME SECURITY ACT 
OF 1974.—
(1) 
DETERMINATION
OF
PERMISSIBLE 
RANGE.—
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(A) IN GENERAL.—Clause (ii) of section 
302(b)(5)(B) of the Employee Retirement In-
come Security Act of 1974 is amended by re-
designating subclause (II) as subclause (III) 
and by inserting after subclause (I) the fol-
lowing new subclause: 
‘‘(II) SPECIAL RULE FOR YEARS 2004 
AND 2005.—In the case of plan years be-
ginning after December 31, 2003, and be-
fore January 1, 2006, the term ‘permis-
sible range’ means a rate of interest which 
is not above, and not more than 10 percent 
below, the weighted average of the rates of 
interest on amounts conservatively invested 
in long-term corporate bonds during the 4-
year period ending on the last day before 
the beginning of the plan year. Such rates 
shall be determined by the Secretary on 
the basis of one or more indices selected 
periodically by the Secretary, and the Sec-
retary shall make the permissible range 
publicly available.’’. 
(B) SECRETARIAL AUTHORITY.—Subclause 
(III) of section 302(b)(5)(B)(ii) of such Act, as
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redesignated by subparagraph (A), is amend-
ed—
(i) by inserting ‘‘or (II)’’ after ‘‘sub-
clause (I)’’ the first place it appears, and 
(ii) by striking ‘‘subclause (I)’’ the 
second place it appears and inserting 
‘‘such subclause’’. 
(C) 
CONFORMING
AMENDMENT.—Sub-
clause (I) of section 302(b)(5)(B)(ii) of such 
Act is amended by inserting ‘‘or (III)’’ after 
‘‘subclause (II)’’. 
(2) DETERMINATION OF CURRENT LIABILITY.—
Clause (i) of section 302(d)(7)(C) of such Act 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 
subclause (I), the rate of interest used 
to determine current liability under 
this subsection shall be the rate of in-
terest under subsection (b)(5).’’. 
(3) 
PBGC.—Clause 
(iii) 
of 
section 
4006(a)(3)(E) of such Act is amended by adding at 
the end the following new subclause:
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‘‘(V) In the case of plan years beginning after 
December 31, 2003, and before January 1, 2006, 
the annual yield taken into account under subclause 
(II) shall be the annual yield determined by the Sec-
retary of the Treasury on amounts conservatively in-
vested in long-term corporate bonds for the month 
preceding the month in which the plan year begins. 
For purposes of the preceding sentence, the Sec-
retary of the Treasury shall determine such yield on 
the basis of one or more indices selected periodically 
by the Secretary, and the Secretary shall make such 
yield publicly available.’’. 
(b) INTERNAL REVENUE CODE OF 1986.—
(1) 
DETERMINATION
OF
PERMISSIBLE 
RANGE.—
(A) IN GENERAL.—Clause (ii) of section 
412(b)(5)(B) of the Internal Revenue Code of 
1986 is amended by redesignating subclause 
(II) as subclause (III) and by inserting after 
subclause (I) the following new subclause: 
‘‘(II) SPECIAL RULE FOR YEARS 
2004 AND 2005.—In the case of plan 
years beginning after December 31, 
2003, and before January 1, 2006, 
the term ‘permissible range’ means a
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rate of interest which is not above, 
and not more than 10 percent below, 
the weighted average of the rates of 
interest on amounts conservatively in-
vested in long-term corporate bonds 
during the 4-year period ending on 
the last day before the beginning of 
the plan year. Such rates shall be de-
termined by the Secretary on the 
basis of one or more indices selected 
periodically by the Secretary, and the 
Secretary shall make the permissible 
range publicly available.’’. 
(B) SECRETARIAL AUTHORITY.—Subclause 
(III) of section 412(b)(5)(B)(ii) of such Code, 
as redesignated by subparagraph (A), is amend-
ed—
(i) by inserting ‘‘or (II)’’ after ‘‘sub-
clause (I)’’ the first place it appears, and 
(ii) by striking ‘‘subclause (I)’’ the 
second place it appears and inserting 
‘‘such subclause’’. 
(C) 
CONFORMING
AMENDMENT.—Sub-
clause (I) of section 412(b)(5)(B)(ii) of such
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Code is amended by inserting ‘‘or (III)’’ after 
‘‘subclause (II)’’. 
(2) DETERMINATION OF CURRENT LIABILITY.—
Clause (i) of section 412(l)(7)(C) of such Code 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 
subclause (I), the rate of interest used 
to determine current liability under 
this subsection shall be the rate of in-
terest under subsection (b)(5).’’. 
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to 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 sub-
sections (d)(9)(B)(ii) and (e)(1) of section 302 of 
the Employee Retirement Income Security Act of 
1974 to plan years beginning after December 31, 
2003, the amendments made by this section may be
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applied as if such amendments had been in effect for 
all years beginning before such date.
Passed the House of Representatives October 8, 
2003. 
Attest: 
JEFF TRANDAHL, 
Clerk.