108TH CONGRESS
1ST SESSION
H. R. 3108
AN ACT
To amend the Employee Retirement Income Secu-
rity 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 provisions, and for other
purposes.
108TH CONGRESS
1ST SESSION
H. R. 3108
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.
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
amended—
(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
amended—
(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).’’.
(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
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:
Clerk.