I 
108TH CONGRESS 
1ST SESSION H. R. 3108
To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to temporarily replace the 30-year Treas-
ury rate with a rate based on long-term corporate bonds for certain 
pension plan funding requirements and other provisions, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 17, 2003
Mr. BOEHNER (for himself, Mr. THOMAS, Mr. GEORGE MILLER of California, 
Mr. RANGEL, Mr. SAM JOHNSON of Texas, and Mr. PORTMAN) intro-
duced the following bill; which was referred to the Committee on Edu-
cation and the Workforce, and in addition to the Committee on Ways and 
Means, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
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.
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. 
(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.—
(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 
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: 
‘‘(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 
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 
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).’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
415(b)(2)(E)(ii) of such Code is amended by insert-
ing before the period at the end ‘‘, except that in the 
case of years beginning in 2004 or 2005, ‘5.5 per-
cent’ shall be substituted for ‘5 percent’ in clause 
(i)’’. 
(c) PROVISIONS
RELATING
TO
PLAN
AMEND-
MENTS.—
(1) IN GENERAL.—If this subsection applies to 
any plan or annuity contract amendment—
(A) such plan or contract shall be treated 
as being operated in accordance with the terms 
of the plan or contract during the period de-
scribed in paragraph (2)(B)(i), and
(B) except as provided by the Secretary of 
the Treasury, such plan shall not fail to meet 
the requirements of section 411(d)(6) of the In-
ternal Revenue Code of 1986 and section 
204(g) of the Employee Retirement Income Se-
curity Act of 1974 by reason of such amend-
ment. 
(2) AMENDMENTS
TO
WHICH
SECTION
AP-
PLIES.—
(A) IN
GENERAL.—This subsection shall 
apply to any amendment to any plan or annuity 
contract which is made—
(i) pursuant to any amendment made 
by this section, and 
(ii) on or before the last day of the 
first plan year beginning on or after Janu-
ary 1, 2006. 
In the case of a governmental plan (as defined 
in section 414(d) of the Internal Revenue Code 
of 1986), this paragraph shall be applied by 
substituting ‘‘2008’’ for ‘‘2006’’. 
(B) CONDITIONS.—This subsection shall 
not apply to any plan or annuity contract 
amendment unless—
(i) during the period beginning on the 
date the amendment described in subpara-
graph (A)(i) takes effect and ending on the 
date described in subparagraph (A)(ii) (or, 
if earlier, the date the plan or contract 
amendment is adopted), the plan or con-
tract is operated as if such plan or con-
tract amendment were in effect; and 
(ii) such plan or contract amendment 
applies retroactively for such period. 
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the amendments made by this 
section shall apply to years beginning after Decem-
ber 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 
applied as if such amendments had been in effect for 
all years beginning before such date.
(3) NO REDUCTION REQUIRED.—In the case of 
any participant or beneficiary, the amount payable 
under any form of benefit subject to section 
417(e)(3) of the Internal Revenue Code of 1986 
shall not be required to be reduced below the 
amount determined as of the last day of the last 
plan year beginning before January 1, 2004, merely 
because of the amendments made by subsection 
(b)(3).
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