I
106TH CONGRESS
1ST SESSION
H. R. 1176
To amend the Internal Revenue Code of 1986 to require pension plans
to provide adequate notice to individuals whose future benefit accruals
are being significantly reduced, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 18, 1999
Mr. WELLER (for himself, Mr. BENTSEN, and Mr. NEY) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Education and the Workforce, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To amend the Internal Revenue Code of 1986 to require
pension plans to provide adequate notice to individuals
whose future benefit accruals are being significantly re-
duced, and for other purposes.
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 Right to Know
Act’’.
SEC. 2. NOTICE REQUIREMENTS FOR LARGE PENSION
PLANS SIGNIFICANTLY REDUCING FUTURE
PENSION BENEFIT ACCRUALS.
(a) PLAN REQUIREMENT.—Section 401(a) of the In-
ternal Revenue Code of 1986 (relating to qualified pen-
sion, profit-sharing, and stock bonus plans) is amended
by inserting after paragraph (34) the following new para-
graph:
‘‘(35) NOTICE REQUIREMENTS FOR LARGE DE-
FINED
BENEFIT
PLANS
SIGNIFICANTLY
REDUCING
FUTURE BENEFIT ACCRUALS.—
‘‘(A) IN GENERAL.—If a large defined ben-
efit plan adopts an amendment which has the
effect of significantly reducing the rate of fu-
ture benefit accrual of 1 or more participants,
a trust which is part of such plan shall not con-
stitute a qualified trust under this section un-
less, after adoption of such amendment and not
less than 15 days before its effective date, the
plan administrator provides—
‘‘(i) a written statement of benefit
change described in subparagraph (B) to
each applicable individual, and
‘‘(ii) a written notice setting forth the
plan amendment and its effective date to
each employee organization representing
participants in the plan.
Any such notice may be provided to a person
designated, in writing, by the person to which
it would otherwise be provided. The plan ad-
ministrator shall not be treated as failing to
meet the requirements of this subparagraph
merely because the statement or notice is pro-
vided before the adoption of the plan amend-
ment if no material modification of the amend-
ment occurs before the amendment is adopted.
‘‘(B) STATEMENT OF BENEFIT CHANGE.—
A statement of benefit change described in this
subparagraph shall—
‘‘(i) be written in a manner calculated
to be understood by the average plan par-
ticipant, and
‘‘(ii) include the information described
in subparagraph (C).
‘‘(C) INFORMATION CONTAINED IN STATE-
MENT OF BENEFIT CHANGE.—The information
described in this subparagraph includes the fol-
lowing:
‘‘(i) Notice setting forth the plan
amendment and its effective date.
‘‘(ii) A comparison of the following
amounts under the plan with respect to an
applicable individual, determined both with
and without regard to the plan amend-
ment:
‘‘(I) The accrued benefit and the
present value of the accrued benefit as
of the effective date.
‘‘(II) The projected accrued ben-
efit and the projected present value of
the accrued benefit as of the date
which is 3 years, 5 years, and 10
years from the effective date and as of
the normal retirement age.
‘‘(iii) A table of all annuity factors
used to calculate benefits under the plan,
presented in the form provided in section
72 and the regulations thereunder.
Benefits described in clause (ii) shall be stated
separately and shall be calculated by using the
applicable mortality table and the applicable in-
terest rate under section 417(e)(3)(A).
‘‘(D) LARGE DEFINED BENEFIT PLAN; AP-
PLICABLE INDIVIDUAL.—For purposes of this
paragraph—
‘‘(i) 
LARGE
DEFINED
BENEFIT
PLAN.—The term ‘large defined benefit
plan’ means any defined benefit plan which
had 1,000 or more participants who had
accrued a benefit under the plan (whether
or not vested) as of the last day of the
plan year preceding the plan year in which
the plan amendment becomes effective.
‘‘(ii) APPLICABLE
INDIVIDUAL.—The
term ‘applicable individual’ means—
‘‘(I) each participant in the plan,
and
‘‘(II) each beneficiary who is an
alternate payee (within the meaning
of section 414(p)(8)) under an appli-
cable 
qualified 
domestic 
relations
order (within the meaning of section
414(p)(1)(A)).
‘‘(E) ACCRUED BENEFIT; PROJECTED RE-
TIREMENT
BENEFIT.—For purposes of this
paragraph—
‘‘(i) PRESENT
VALUE
OF
ACCRUED
BENEFIT.—The present value of an ac-
crued benefit of any applicable individual
shall be calculated as if the accrued benefit
were in the form of a single life annuity
commencing at the participant’s normal re-
tirement age (and by taking into account
any early retirement subsidy).
‘‘(ii) 
PROJECTED
ACCRUED
BEN-
EFIT.—
‘‘(I) IN
GENERAL.—The pro-
jected accrued benefit of any applica-
ble individual shall be calculated as if
the benefit were payable in the form
of a single life annuity commencing at
the participant’s normal retirement
age (and by taking into account any
early retirement subsidy).
‘‘(II) 
COMPENSATION
AND
OTHER
ASSUMPTIONS.—Such benefit
shall be calculated by assuming that
compensation and all other benefit
factors would increase for each plan
year beginning after the effective date
of the plan amendment at a rate equal
to the median average of the CPI in-
crease percentage (as defined in sec-
tion 215(i) of the Social Security Act)
for the 5 calendar years immediately
preceding the calendar year before the
calendar year in which such effective
date occurs.
‘‘(III) BENEFIT
FACTORS.—For
purposes of subclause (II), the term
‘benefit factors’ means social security
benefits and all other relevant factors
under section 411(b)(1)(A) used to
compute benefits under the plan
which had increased from the 2d plan
year preceding the plan year in which
the effective date of the plan amend-
ment occurs to the 1st such preceding
plan year.
‘‘(iii) NORMAL
RETIREMENT
AGE.—
The term ‘normal retirement age’ means
the later of—
‘‘(I) the date determined under
section 411(a)(8), or
‘‘(II) the date a plan participant
attains age 62.’’
(b) AMENDMENTS TO ERISA.—
(1) BENEFIT STATEMENT REQUIREMENT.—Sec-
tion 204(h) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1054(h)) is amended
by adding at the end the following new paragraphs:
‘‘(3)(A) If paragraph (1) applies to the adop-
tion of a plan amendment by a large defined benefit
plan, the plan administrator shall, after adoption of
such amendment and not less than 15 days before
its effective date, provide with the notice under para-
graph (1) a written statement of benefit change de-
scribed in subparagraph (B) to each applicable indi-
vidual.
‘‘(B) A statement of benefit change described in
this subparagraph shall—
‘‘(i) be written in a manner calculated to
be understood by the average plan participant,
and
‘‘(ii) include the information described in
subparagraph (C).
‘‘(C) The information described in this subpara-
graph includes the following:
‘‘(i) A comparison of the following amounts
under the plan with respect to an applicable in-
dividual, determined both with and without re-
gard to the plan amendment:
‘‘(I) The accrued benefit and the
present value of the accrued benefit as of
the effective date.
‘‘(II) The projected accrued benefit
and the projected present value of the ac-
crued benefit as of the date which is 3
years, 5 years, and 10 years from the ef-
fective date and as of the normal retire-
ment age.
‘‘(ii) A table of all annuity factors used to
calculate benefits under the plan, presented in
the form provided in section 72 of the Internal
Revenue Code of 1986 and the regulations
thereunder.
Benefits described in clause (i) shall be stated sepa-
rately and shall be calculated by using the applicable
mortality table and the applicable interest rate
under section 417(e)(3)(A) of such Code.
‘‘(D) For purposes of this paragraph—
‘‘(i) The term ‘large defined benefit plan’
means any defined benefit plan which had
1,000 or more participants who had accrued a
benefit under the plan (whether or not vested)
as of the last day of the plan year preceding the
plan year in which the plan amendment be-
comes effective.
‘‘(ii) The term ‘applicable individual’
means an individual described in subparagraph
(A) or (B) of paragraph (1).
‘‘(E) For purposes of this paragraph—
‘‘(i) The present value of an accrued ben-
efit of any applicable individual shall be cal-
culated as if the accrued benefit were in the
form of a single life annuity commencing at the
participant’s normal retirement age (and by
taking into account any early retirement sub-
sidy).
‘‘(ii)(I) The projected accrued benefit of
any applicable individual shall be calculated as
if the benefit were payable in the form of a sin-
gle life annuity commencing at the participant’s
normal retirement age (and by taking into ac-
count any early retirement subsidy).
‘‘(II) Such benefit shall be calculated by
assuming that compensation and all other ben-
efit factors would increase for each plan year
beginning after the effective date of the plan
amendment at a rate equal to the median aver-
age of the CPI increase percentage (as defined
in section 215(i) of the Social Security Act) for
the 5 calendar years immediately preceding the
calendar year before the calendar year in which
such effective date occurs.
‘‘(III) For purposes of subclause (II), the
term ‘benefit factors’ means social security ben-
efits and all other relevant factors under section
204(b)(1)(A) used to compute benefits under
the plan which had increased from the 2d plan
year preceding the plan year in which the effec-
tive date of the plan amendment occurs to the
1st such preceding plan year.
‘‘(iii) The term ‘normal retirement age’
means the later of—
‘‘(I) the date determined under sec-
tion 3(24), or
‘‘(II) the date a plan participant at-
tains age 62.
‘‘(4) A plan administrator shall not be treated
as failing to meet the requirements of this sub-
section merely because the notice or statement is
provided before the adoption of the plan amendment
if no material modification of the amendment occurs
before the amendment is adopted.’’
(2) 
CONFORMING
AMENDMENT.—Section
204(h)(1) of such Act (29 U.S.C. 1054(h)(1)) is
amended by inserting ‘‘(including any written state-
ment of benefit change if required by paragraph
(3))’’ after ‘‘written notice’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section shall apply to plan amendments taking
effect in plan years beginning on or after the earlier
of—
(A) the later of—
(i) January 1, 1999, or
(ii) the date on which the last of the
collective bargaining agreements pursuant
to which the plan is maintained terminates
(determined without regard to any exten-
sion thereof after the date of the enact-
ment of this Act), or
(B) January 1, 2001.
(2) EXCEPTION WHERE NOTICE GIVEN.—The
amendments made by this section shall not apply to
any plan amendment for which written notice was
given to participants or their representatives before
March 17, 1999, without regard to whether the
amendment was adopted before such date.
(3) SPECIAL RULE.—The period for providing
any notice required by, or any notice the contents of
which are changed by, the amendments made by this
Act shall not end before the date which is 6 months
after the date of the enactment of this Act.
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