I
104TH CONGRESS
1ST SESSION
H. R. 36
To amend the Employee Retirement Income Security Act of 1974 and related
provisions to improve pension plan funding, to limit growth in insurance
exposure, to protect the single-employer plan termination insurance pro-
gram by clarifying the status of claims of the Pension Benefit Guaranty
Corporation and the treatment of insolvent pension plans, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 4, 1995
Mr. FAWELL introduced the following bill; which was referred to the Commit-
tee on Economic and Education Opportunities and, in addition, to the
Committee on the Judiciary, 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 committee concerned
A BILL
To amend the Employee Retirement Income Security Act
of 1974 and related provisions to improve pension plan
funding, to limit growth in insurance exposure, to protect
the single-employer plan termination insurance program
by clarifying the status of claims of the Pension Benefit
Guaranty Corporation and the treatment of insolvent
pension plans, 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 AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Pension Security Act of 1995’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title and table of contents.
Sec. 2. Amendment of ERISA.
TITLE I—AMENDMENTS TO PENSION PLAN FUNDING
REQUIREMENTS
Sec. 101. Revision of additional funding requirements for plans that are not
multiemployer plans.
Sec. 102. Effective dates.
TITLE II—AMENDMENTS TO TITLE IV OF ERISA
Sec. 201. Limitation on benefits guaranteed.
Sec. 202. Enforcement of minimum funding requirements.
Sec. 203. Recovery ratio payable under Corporation’s guaranty.
Sec. 204. Elimination of the seventh revolving fund.
Sec. 205. Distress termination criteria for banking institutions.
TITLE III—EMPLOYER LIABILITY, LIEN AND PRIORITY
Subtitle A—Amendments to the Employee Retirement Income Security Act of
1974
Sec. 301. Employer liability lien and priority amount.
Sec. 302. Clarification of priorities in conformity with the Employee Retirement
Income Security Act of 1974.
Sec. 303. Liability upon liquidation of contributing sponsor where plan remains
ongoing.
SEC. 2. AMENDMENT OF ERISA.
The sections of the Employee Retirement Income Se-
curity Act of 1974 which are amended by the subsequent
provisions of this Act are amended so as to read as such
sections would read if the Uruguay Round Agreements
Act had not been enacted. References to such sections in
the subsequent provisions of this Act shall be deemed ref-
erences to such sections as amended by this section. This
section shall be effective as if included in the Uruguay
Round Agreements Act.
TITLE I—AMENDMENTS TO PEN-
SION 
PLAN 
FUNDING 
RE-
QUIREMENTS
SEC. 101. REVISION OF ADDITIONAL FUNDING REQUIRE-
MENTS FOR PLANS THAT ARE NOT MULTIEM-
PLOYER PLANS.
(a) ACCUMULATED FUNDING DEFICIENCY.—Section
302(a)(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1082(a)(2)) is amended—
(1) by striking ‘‘the excess of the total charges
to the funding standard account’’ through the end of
that sentence, and inserting ‘‘the largest of—’’; and
(2) by adding at the end the following:
‘‘(A) the lesser of—
‘‘(i) the excess of the total charges to
the funding standard account for all plan
years (beginning with the first plan year to
which this section applies) over the total
credits to such account for such years, or,
‘‘(ii) the excess of the total charges to
the alternative minimum funding standard
account for such plan years over the total
credits to such account for such years; or,
‘‘(B) if applicable, the underfunding reduc-
tion requirement under subsection (d), or,
‘‘(C) if applicable, the solvency mainte-
nance requirement under subsection (g).’’
(b) UNDERFUNDING REDUCTION REQUIREMENT.—
Section 302(d) of such Act (29 U.S.C. 1082(d)) is amend-
ed to read as follows:
‘‘(d) UNDERFUNDING REDUCTION REQUIREMENT
FOR PLANS THAT ARE NOT MULTIEMPLOYER PLANS.—
‘‘(1) UNDERFUNDING
REDUCTION
REQUIRE-
MENT.—In the case of a defined benefit plan (other
than a multiemployer plan) that has an initial fund-
ing ratio of less than 100 percent for any plan year,
the underfunding reduction requirement for such
plan year is the sum of:
‘‘(A) an amount equal to the product of—
‘‘(i) the initial unfunded liability of
the plan multiplied by
‘‘(ii) 30 percent, reduced by the prod-
uct of—
‘‘(I) .25 multiplied by
‘‘(II) the excess (if any) of the
initial funding ratio of the plan over
35 percent;
‘‘(B) the charges to the funding standard
account for normal cost under subparagraph
(b)(2)(A) and for the amounts necessary to am-
ortize any waived funding deficiencies under
subparagraph (b)(2)(C);
‘‘(C) the excess (if any) of—
‘‘(i) the sum of charges to the funding
standard account for plans years beginning
after December 31, 1998, for net experi-
ence losses under clause (b)(2)(B)(iv) and
net losses resulting from changes in actu-
arial 
assumptions 
under 
clause
(b)(2)(B)(v) over—
‘‘(ii) the sum of credits to the funding
standard account for plan years beginning
after December 31, 1998—
‘‘(I) for net experience gains
under clause (b)(3)(B)(ii) and net
gains resulting from changes in actu-
arial 
assumptions 
under 
clause
(b)(3)(B)(iii); and
‘‘(II) for amounts considered con-
tributed by the employer under sub-
paragraph (b)(3)(A) (to the extent
they are necessary to avoid an accu-
mulated funding deficiency under sec-
tion 302(b)); and
‘‘(D) the net of—
‘‘(i) charges to the funding standard
account for plan years beginning on or be-
fore December 31, 1998, for net experience
losses under clause (b)(2)(B)(iv) and net
losses resulting from changes in actuarial
assumptions under clause (b)(2)(B)(v);
and
‘‘(ii) the sum of credits to the funding
standard account for plan years beginning
on or before December 31, 1998—
‘‘(I) for net experience gains
under clause (b)(3)(B)(ii) and net
gains resulting from changes in actu-
arial 
assumptions 
under 
clause
(b)(3)(B)(iii); and
‘‘(II) amounts considered contrib-
uted by the employer under subpara-
graph (b)(3)(A) (to the extent they
are necessary to avoid an accumulated
funding 
deficiency 
under 
section
302(b)).
‘‘(2) DEFINITIONS.—For definitions relating to
this subsection, see subsection (g)(3).
‘‘(3) APPLICATION TO SMALL PLANS.—For the
application of this subsection to small plans, see sub-
section (g)(4).’’
(c) SOLVENCY MAINTENANCE REQUIREMENT.—Sec-
tion 302 of such Act is further amended—
(1) by redesignating subsection (g) as (h) as
subsections (h) and (i), respectively; and
(2) by inserting after subsection (f) the follow-
ing new subsection:
‘‘(g) SOLVENCY MAINTENANCE REQUIREMENT FOR
PLANS THAT ARE NOT MULTIEMPLOYER PLANS.—
‘‘(1) 
SOLVENCY
MAINTENANCE
REQUIRE-
MENT.—In the case of a defined benefit plan (other
than a multiemployer plan) that has an initial fund-
ing ratio of less than 100 percent for any plan year,
the solvency maintenance requirement for such plan
year is (subject to paragraph (2)) the sum of—
‘‘(A) the sum of:
‘‘(i) all disbursements from the plan
for the plan year, and
‘‘(ii) an amount equal to the initial
unfunded liability of the plan multiplied by
the interest rate used by such plan (deter-
mined under subparagraph (b)(5)(A));
‘‘(B) the charges described in section
302(d)(1)(B);
‘‘(C) the amount described in section
302(d)(1)(C); and
‘‘(D) the amount described in section
302(d)(1)(D).
‘‘(2) LIMITATION ON SOLVENCY MAINTENANCE
REQUIREMENT.—For plan years commencing after
December 31, 1998, the amount required under
paragraph (1) shall not exceed the sum of—
‘‘(A) the amount required under section
302(d); and
‘‘(B) the product desired by multiplying—
‘‘(i) the excess (if any) of—
‘‘(I) the amount required under
paragraph (1) over
‘‘(II) the amount required under
section 302(d); by—
‘‘(ii) the applicable percentage.
‘‘(3) APPLICABLE PERCENTAGE.—For purposes
of paragraph (2)(B)(ii), the applicable percentage is:
‘‘For plan years
The applicable
commencing after:
percentage is:
December 31, 1998 ...........................................
20 percent
December 31, 1999 ...........................................
40 percent
December 31, 2000 ...........................................
60 percent
December 31, 2001 ...........................................
80 percent
December 31, 2002 ...........................................
100 percent.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section and subsection (d)—
‘‘(A) INITIAL UNFUNDED LIABILITY.—The
term ‘initial unfunded liability’ means the ex-
cess (if any) of the amount necessary to satisfy
the initial termination liability of the plan over
the initial value of assets of the plan.
‘‘(B) INITIAL FUNDING RATIO.—The term
‘initial funding ratio’ means the ratio of (i) the
initial value of assets of the plan to (ii) the
amount necessary to satisfy the initial termi-
nation liability of the plan.
‘‘(C) INITIAL TERMINATION LIABILITY.—
The term ‘initial termination liability’ means all
liabilities with respect to employees and their
beneficiaries under the plan in the meaning of
section 401(a)(2) of the Internal Revenue Code
of 1986 as of the first day of the plan year.
‘‘(D) INITIAL
VALUE
OF
ASSETS.—The
term ‘initial value of assets’ means the value of
the assets of the plan determined under section
302(c)(2) as of the first day of the plan year.
‘‘(E) DISBURSEMENTS FROM THE PLAN.—
‘‘(i) IN
GENERAL.—The term ‘dis-
bursements from the plan’ means benefit
payments, including purchases of annuities
or payment of lump sums in satisfaction of
liabilities, administrative expenditures or
any other disbursements from the plan or
its trust.
‘‘(ii) SPECIAL RULE FOR PURCHASES
OF
ANNUITIES
AND
PAYMENT
OF
LUMP
SUMS.—In 
determining 
the 
applicable
amounts attributable to purchases of annu-
ities or the payment of lump sums under
clause (i), the actual purchase or lump
sum amounts paid by the plan or trust
shall be multiplied by the excess (if any) of
one over the initial funding ratio of the
plan.
‘‘(5) SPECIAL RULES FOR SMALL PLANS.—
‘‘(A) PLANS WITH 100 OR FEWER PARTICI-
PANTS.—This subsection and subsection (d)
shall not apply to any plan for any plan year
if on each day during the preceding plan year
such plan had no more than 100 participants.
‘‘(B) PLANS WITH MORE THAN 100 BUT
NOT
MORE
THAN
150
PARTICIPANTS.—In the
case of a plan to which subparagraph (A) does
not apply and which on each day during the
preceding year had no more than 150 partici-
pants, the additional amounts required by the
underfunding reduction requirement under sub-
section (d) or the solvency maintenance require-
ment under this subsection shall be equal to the
product of—
‘‘(i) the excess of such requirements
(determined without regard to this sub-
paragraph) over the funding deficiency (if
any) under subsection 302(b), multiplied
by;
‘‘(ii) 2 percent for the highest number
of participants in excess of 100 on any
such day.’’
‘‘(C) AGGREGATION OF PLANS.—For pur-
poses of this paragraph, all defined benefit
plans maintained by the same employer (or any
member of such employer’s controlled group)
shall be treated as 1 plan, but only employees
of such employer or member shall be taken into
account.’’
(d) CONFORMING AMENDMENTS.—
(1) Section 302(b)(5)(B) of such Act (29
U.S.C. 1082(b)(5)(B)) is amended by striking ‘‘and
for purposes of determining a plan’s required con-
tribution under section 302(d)’’ and inserting
‘‘under section 302(c)(7)(B)’’.
(2) Section 302(c)(7)(B) of such Act (29
U.S.C. 1082(c)(7)(B)) is amended by striking ‘‘has
the meaning given such term by subsection
302(d)(7) (without regard to subparagraph (D)
thereof)’’ and inserting ‘‘means all liabilities with re-
spect to employees and their beneficiaries under the
plan within the meaning of applicable Federal law
determined by using the interest rate under section
302(b)(5)(B)’’.
(3) Section 307 of such Act (29 U.S.C. 1085b)
is amended—
(A) by striking ‘‘current liability’’, ‘‘funded
current liability percentage’’, ‘‘unfunded current
liability’’, and ‘‘302(d)’’ each place they appear
and inserting ‘‘initial termination liability’’,
‘‘initial funding ratio’’, ‘‘initial unfunded liabil-
ity’’, and ‘‘302(g)’’, respectively; and
(B) in subsection (f), by striking ‘‘except’’
and all that follows and inserting ‘‘except that
in computing initial unfunded liability there
shall not be taken into account an amount
equal to the initial unfunded liability of the
plan as of the beginning of the first plan year
beginning after December 31, 1987 (determined
without regard to any plan amendment increas-
ing liabilities adopted after October 16, 1987),
reduced by an amount equal to the product of
the amount necessary to amortize such pre-
1988 initial unfunded liability in equal annual
installments over a period of 18 plan years (be-
ginning with the first plan year beginning after
December 31, 1988) multiplied by the number
of years (but not more than 18) beginning since
December 31, 1988.’’.
SEC. 102. EFFECTIVE DATES.
The amendments made by this subtitle shall be effec-
tive for plan years beginning after December 31, 1998.
TITLE II—AMENDMENTS TO
TITLE IV OF ERISA
SEC. 201. LIMITATION ON BENEFITS GUARANTEED.
(a) IN GENERAL.—Section 4022(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1322(b)) is amended by adding after paragraph (7) the
following new paragraph:
‘‘(8)(A) Benefits under a new plan or any increase
in benefits under a plan resulting from a plan amendment,
which new plan or amendment was adopted or became ef-
fective after December 31, 1996, shall be disregarded, un-
less—
‘‘(i) the plan was fully funded for vested bene-
fits for the plan year that the new plan or amend-
ment was adopted or became effective, whichever is
later, or became fully funded for vested benefits in
a subsequent plan year; and
‘‘(ii) the new plan or amendment was adopted
or effective, whichever is later, at least one year
prior to the date of plan termination.
‘‘(B) For purposes of this paragraph, a plan is ‘fully
funded for vested benefits’ for any plan year if such plan
has no unfunded vested benefits (within the meaning of
section 4006(a)(3)(E)(iii)) as of the last day of such plan
year.
‘‘(C)(i) Except as provided in clause (ii), paragraph
(7) and subparagraphs (B) and (C) of paragraph (5) shall
not apply to benefits disregarded under subparagraph (A).
‘‘(ii) This paragraph shall not apply, and paragraph
(7) and subparagraphs (B) and (C) of paragraph (5) shall
apply to any new plan or plan amendment resulting from
a collective bargaining agreement or amendment thereto
entered and ratified on or prior to December 31, 1996.’’.
(b) NO GUARANTY FOR NEW UNPREDICTABLE CON-
TINGENT EVENT BENEFITS.—Subsection (b) of section
4022 of such Act (as amended by subsection (b) of this
section) is further amended by adding at the end the fol-
lowing new paragraph:
‘‘(9)(A) Notwithstanding paragraph (8), any unpre-
dictable contingent event benefit (or any increase in such
a benefit) created by any plan provision or amendment
adopted or effective after December 31, 1996, shall not
be guaranteed.
‘‘(B) For purposes of this section, an ‘unpredictable
contingent event benefit’ means any benefit contingent on
an event other than—
‘‘(i) age, service, compensation, death or dis-
ability, or
‘‘(ii) an event which is reasonably and reliably
predictable (as determined under regulations pre-
scribed by the corporation).’’.
(c) CONFORMING AMENDMENT.—Section 4022(b)(1)
of such Act (29 U.S.C. 1322(b)(1)) is amended by insert-
ing ‘‘, (8), or (9)’’ after ‘‘paragraph (7)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall be effective on December 31, 1996.
SEC. 202. ENFORCEMENT OF MINIMUM FUNDING REQUIRE-
MENTS.
(a) IN GENERAL.—Paragraph (1) of section 4003(e)
of Employee Retirement Income Security Act of 1974 (29
U.S.C. 1303(e)(1)) is amended by inserting after ‘‘title’’
the following: ‘‘and, in the case of a plan to which this
title applies under section 4021, section 302’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall be effective for installments and other
payments required under section 302 of the Employee Re-
tirement Income Security Act of 1974 due on or after the
date of the enactment of this Act.
SEC. 203. RECOVERY RATIO PAYABLE UNDER CORPORA-
TION’S GUARANTY.
(a) IN GENERAL.—Section 4022(c)(3)(B) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1322(c)(3)(B)) is amended—
(1) by redesignating clauses (i) and (ii) as
clauses (ii) and (iii) respectively; and
(2) by inserting before clause (ii) (as so redesig-
nated) the following new clause:
‘‘(i) the outstanding amount of benefit li-
abilities does not exceed $20,000,000,’’.
(b) 
TERMINATIONS.—Clause 
(iii) 
of 
section
4022(c)(3)(B) of such Act (29 U.S.C. 1322(c)(3)(B)), as
redesignated by subsection (a), is amended—
(1) by inserting ‘‘, or proceedings were insti-
tuted under section 4042,’’ after ‘‘provided’’; and
(2) by striking ‘‘in which occurs the date of the
notice of intent to terminate with respect to the plan
termination’’.
(c) CONFORMING AMENDMENTS.—Clause (i) of sec-
tion 9312(b)(3)(B) of the Pension Protection Act is
amended—
(1) by inserting ‘‘, or proceedings were insti-
tuted under section 4042,’’ after ‘‘provided’’; and
(2) by striking ‘‘1990’’ and inserting ‘‘1994’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in section
9312(b)(3) of the Pension Protection Act (Public Law
100–203; 101 Stat. 1330–362).
SEC. 204. ELIMINATION OF THE SEVENTH REVOLVING
FUND.
(a) TRANSFER.—Effective September 30, 1997, all
assets and liabilities of the fund described in section
4005(f)(1) of the Employee Retirement Income Security
Act of 1974 (as in effect before the amendments made
by this section) shall be transferred to the fund established
pursuant to section 4005(a) of such Act with respect to
basic benefits guaranteed under section 4022 of such Act.
(b) REPEAL.—Section 4005 of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1305) is
amended—
(1) by striking subsection (f); and
(2) by redesignating subsections (g) and (h) as
subsections (f) and (g), respectively.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to fiscal years begin-
ning after September 30, 1997.
SEC. 205. DISTRESS TERMINATION CRITERIA FOR CERTAIN
FINANCIAL INSTITUTIONS.
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section
4041(c)(2)(B)(i) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1341(c)(2)(B)(i)(I)) is
amended by inserting ‘‘Federal law or’’ before ‘‘law of a
State’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to plan terminations under section
4041 of the Employee Retirement Income Security Act of
1974 with respect to which notices of intent to terminate
under section 4041(a)(2) of such Act are provided on or
after the date of the enactment of this Act.
TITLE III—EMPLOYER
LIABILITY, LIEN AND PRIORITY
SEC. 301. EMPLOYER LIABILITY LIEN AND PRIORITY
AMOUNT.
(a) REVISED LIMITATIONS ON LIEN AND TAX PRIOR-
ITY AMOUNT.—Section 4068(a) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1368(a))
is amended—
(1) by striking ‘‘If any person liable to the cor-
poration’’ and inserting ‘‘(1) Subject to paragraphs
(2) and (3), if any person liable to the corporation’’;
(2) by striking ‘‘section 4062’’ and inserting
‘‘section 4062(a)(1)’’;
(3) by striking the comma after ‘‘belonging to
such person’’ and inserting a period;
(4) by striking ‘‘except that such lien’’ and in-
serting the following:
‘‘(2) In the case of plan terminations under sec-
tion 4041 with respect to which notices of intent to
terminate under section 4041(a)(2) are provided be-
fore January 1, 1997, and plan terminations with
respect to which proceedings are instituted by the
corporation before January 1, 1997, the lien estab-
lished under paragraph (1)’’; and
‘‘(B) For purposes of this paragraph—
‘‘(i) the term ‘currently applicable percent-
age’ means—
‘‘(I) with respect to plan terminations
initiated in calendar year 1997, 10 per-
cent,
‘‘(II) with respect to plan termi-
nations initiated in any calendar year after
1997 and before 2017, the percentage de-
termined under this clause with respect to
plan terminations initiated in the preceding
calendar year, plus 2 percent, and
‘‘(III) with respect to plan termi-
nations initiated in calendar years after
2016, 50 percent.
‘‘(ii) The term ‘amount of benefits attrib-
utable to the occurrence of unpredictable con-
tingent events’ means, with respect to any plan,
the present value of unpredictable contingent
event benefits (within the meaning of section
302(d)(7)(B)(ii)), determined as of the termi-
nation date on the basis of assumptions pre-
scribed by the corporation for purposes of sec-
tion 4044.
‘‘(C) In applying subparagraph (A), the cor-
poration may disregard subclause (I) of clause (ii)
thereof if the corporation determines, in its sole dis-
cretion, that disregarding such subclause (I) is cost-
effective.’’.
(b) CONFORMING
AND CLARIFYING AMENDMENTS
RELATING TO AMOUNT ENTITLED TO PRIORITY TREAT-
MENT IN CASES OF INSOLVENCY.—Section 4068(c)(2) of
such Act (29 U.S.C. 1368(c)(2)) is amended by inserting
‘‘(A)’’ after ‘‘(2)’’ and by adding at the end the following
new subparagraph:
‘‘(B) Subparagraph (A) shall apply—
‘‘(i) in the case of terminations described in
paragraph (2) of subsection (a), only with respect to
so much of the liability as does not exceed the
amount determined under such paragraph (2), and
‘‘(ii) in the case of terminations described in
paragraph (3) of subsection (a), only with respect to
so much of the liability as does not exceed the
amount determined under such paragraph (3).’’.
(c) CLARIFICATION
OF
PBGC CLAIM.—Section
4068(c)(2) of such Act (29 U.S.C. 1368(c)(2)) is amend-
ed—
(1) by striking ‘‘the lien imposed under sub-
section (a)’’ and inserting ‘‘the liability to the cor-
poration under section 4062(a)(1), 4063, or 4064’’;
and
(2) by inserting ‘‘which is’’ after ‘‘tax’’, and by
inserting ‘‘and assigned priority’’ after ‘‘United
States’’.
(d) EFFECTIVE DATES.—
(1) Section 4068(a)(2) of the Employee Retire-
ment Income Security Act of 1974 (as amended by
subsection (a)) and section 4068(c)(2)(B)(i) of such
Act (as amended by subsection (b)) shall be effective
with respect to plan terminations under section 4041
of such Act with respect to which notices of intent
to terminate under section 4041(a)(2) of such Act
are provided before January 1, 1997, and plan ter-
minations with respect to which proceedings are in-
stituted by the Pension Benefit Guaranty Corpora-
tion under section 4042 of such Act before January
1, 1997.
(2) Section 4068(a)(3) of the Employee Retire-
ment Income Security Act of 1974 (as amended by
subsection (a)) and section 4068(c)(2)(B)(ii) of such
Act (as amended by subsection (b)) shall be effective
with respect to plan terminations under section 4041
of such Act with respect to which notices of intent
to terminate under section 4041(a)(2) of such Act
are provided on or after January 1, 1997, and plan
terminations with respect to which proceedings are
instituted by the Pension Benefit Guaranty Corpora-
tion under section 4042 of such Act on or after Jan-
uary 1, 1997.
(3) The amendment made by subsection (a)(2)
shall be effective as if included in the enactment of
section 11011(a) of the Single-Employer Pension
Plan Amendments Act of 1986 (Public Law 99–272;
100 Stat. 253).
(4) The amendment made by subsection (c)
shall be effective as if included in the enactment of
section 9312(b)(2)(B) of the Pension Protection Act
(Public Law 100–203, 101 Stat. 1330–361).
SEC. 302. CLARIFICATION OF PRIORITIES IN CONFORMITY
WITH THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974.
(a) PRIORITY AS EXPENSES ARISING BEFORE COM-
MENCEMENT OF CASE.—Paragraph (7) of section 507(a)
of title 11 of the United States Code is amended—
(1) in subparagraph (F), by striking ‘‘or’’ at
the end;
(2) in subparagraph (G), by striking the period
at the end and inserting a semicolon; and
(3) by adding after subparagraph (G) the fol-
lowing:
‘‘(H) unpaid contributions (including inter-
est) to pension plans for plan years beginning
after December 31, 1987, which are attrib-
utable to the period prior to the date of the fil-
ing of the petition and treated as taxes owing
to 
the 
United 
States 
under 
section
412(n)(4)(C) of the Internal Revenue Code of
1986; or
‘‘(I) liability (including interest) arising
under section 4062(a)(1), 4063, or 4064 of the
Employee Retirement Income Security Act of
1974 to the extent it is treated as a tax under
section 4068(c)(2) of such Act, if the date of
pension plan termination is on or prior to the
date of the filing of the petition.
For purposes of subparagraph (I), the date of plan termi-
nation, the amount of the liability, and the extent to which
the liability is treated as a tax shall be determined in ac-
cordance with the provisions of the Employee Retirement
Income Security Act of 1974 and the regulations promul-
gated thereunder.’’.
(b) PRIORITY AS ADMINISTRATIVE EXPENSES ARIS-
ING AFTER COMMENCEMENT OF CASE.—Section 503(b)
of such title 11 is amended—
(1) in paragraph (5), by striking ‘‘and’’ at the
end;
(2) in paragraph (6), by striking the period and
inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(7)(A) unpaid contributions (including inter-
est) to pension plans for plan years beginning after
December 31, 1987, which are attributable to the
period beginning on the date of the filing of the peti-
tion and treated as taxes owing to the United States
under section 412(n)(4)(C) of the Internal Revenue
Code of 1986; and
‘‘(B) liability (including interest) arising under
section 4062(a)(1), 4063, or 4064 of the Employee
Retirement Income Security Act of 1974 to the ex-
tent it is treated as a tax under section 4068(c)(2)
of such Act, if the date of pension plan termination
is after the date of the filing of the petition.
For purposes of paragraph (7)(B), the date of plan termi-
nation, the amount of the liability, and the extent to which
the liability is treated as a tax shall be determined in ac-
cordance with the provisions of the Employee Retirement
Income Security Act of 1974 and the regulations promul-
gated thereunder.’’.
(c) NOTICE REQUIRED WHERE FEDERALLY IN-
SURED PENSION PLAN IS ADMINISTERED BY THE DEBT-
OR OR ITS AFFILIATE.—Rule 2002(j) of the Bankruptcy
Rules (11 U.S.C. Appendix) is amended by inserting be-
fore the period at the end the following: ‘‘; (5) to the Pen-
sion Benefit Guaranty Corporation in any case in which
the debtor or an affiliate of the debtor maintains a pension
plan to which title IV of the Employee Retirement Income
Security Act of 1974 applies.’’.
(d) EFFECTIVE DATE.—Sections 507(a)(7)(H) and
503(b)(7)(A) of title 11 of the United States Code (as
amended by this section) shall be effective as if included
in section 9304(e) of the Pension Protection Act (Public
Law 
100–203; 
101 
Stat. 
1330–348). 
Sections
507(a)(7)(I) and 503(b)(7)(B) of such title (as amended
by this section) shall be effective with respect to cases
under such title which commence on or after the date of
the enactment of this Act or cases under such title which
are pending on the date of the enactment of this Act and
in which claims for liability have not been resolved as of
such date.
SEC. 303. LIABILITY UPON LIQUIDATION OF CONTRIBUTING
SPONSOR WHERE PLAN REMAINS ONGOING.
(a) IN GENERAL.—Section 4062 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1362)
is amended by adding at the end the following new sub-
section:
‘‘(f) LIABILITY ON LIQUIDATION OF CONTRIBUTING
SPONSOR.—
‘‘(1) IN GENERAL.—In any case in which all or
substantially all of the assets of a person who is a
contributing sponsor of a single-employer plan are
liquidated in a case under title 11, United States
Code, or under any similar Federal law or law of a
State or political subdivision of a State, and in the
course of such liquidation another member of such
person’s controlled group remains a contributing
sponsor of the plan or is liable for payment of con-
tributions or installments under section 302(c)(11)
of this Act, such person shall be deemed liable under
subsection (b) as if such plan had terminated under
section 4041(c) in the course of such liquidation and
as if the termination date were the date determined
by the corporation as the date on which the liquida-
tion was initiated.
‘‘(2) APPLICABILITY OF OTHER PROVISIONS.—
Any provision of this Act or any other provision of
law that applies to liability under this section upon
termination of a plan shall apply in the same man-
ner and to the same extent to the liability estab-
lished under this subsection. For purposes of this
paragraph, the date referred to in paragraph (1)
shall be deemed the date of plan termination.
‘‘(3) TRANSFER
OF
LIABILITY
PAYMENTS
TO
THE ONGOING PLAN.—The corporation shall pay to
the plan amounts collected by the corporation in sat-
isfaction of any liability established under this sub-
section in connection with such plan.
‘‘(4) REGULATIONS.—The corporation may pre-
scribe regulations under this subsection. Such regu-
lations may—
‘‘(A) prescribe rules governing—
‘‘(i) the basis upon which the plan will
continue as an ongoing plan maintained by
other members of the controlled group,
‘‘(ii) the determination of whether a
liquidation referred to in this subsection
has occurred, and
‘‘(iii) the assignment of the corpora-
tion’s claim to liability payments under
this subsection to other members of the
controlled group as a means of collecting
such payments, subject to the transfer of
such payments to the plan, and
‘‘(B) provide alternative arrangements for
making liability payments under this sub-
section.’’.
(b) CONFORMING AMENDMENT.—Section 4062(a)(1)
of such Act (29 U.S.C. 1362(a)(1)) is amended by striking
‘‘subsection (b)’’ and inserting ‘‘subsections (b) and (f)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall be effective for liquidations initiated on
or after the date of the enactment of this Act.
Æ
HR 36 IH——2
HR 36 IH——3