I 
108TH CONGRESS 
2D SESSION 
H. R. 5292
To amend title I of the Employee Retirement Income Security Act of 1974 
and the Internal Revenue Code of 1986 to limit the availability of 
benefits under an employer’s nonqualified deferred compensation plans 
in the event that any of the employer’s defined pension plans are sub-
jected to a distress or PBGC termination in connection with bankruptcy 
reorganization or a conversion to a cash balance plan. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 8, 2004
Mr. GEORGE MILLER of California (for himself, Mr. HOEFFEL, Mr. PAYNE, 
Mr. GRIJALVA, Mr. OWENS, Mrs. MCCARTHY of New York, Mr. 
DOGGETT, Mr. BISHOP of New York, Mr. DAVIS of Illinois, Mr. VAN 
HOLLEN, Mr. ANDREWS, Mr. KUCINICH, and Mr. TIERNEY) introduced 
the following bill; which was referred to the Committee on Education 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 jurisdiction of the 
committee concerned 
A BILL 
To amend title I of the Employee Retirement Income Secu-
rity Act of 1974 and the Internal Revenue Code of 
1986 to limit the availability of benefits under an em-
ployer’s nonqualified deferred compensation plans in the 
event that any of the employer’s defined pension plans 
are subjected to a distress or PBGC termination in con-
nection with bankruptcy reorganization or a conversion 
to a cash balance plan.
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 Fairness Act 
of 2004’’. 
SEC. 1. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds as follows: 
(1) The pension system sponsored by private 
employers is in a weakened state due to economic re-
cession and heightened global competition. 
(2) Employers increasingly are terminating or 
reducing the benefits provided under traditional de-
fined benefit pension plans. 
(3) Over 44,000,000 workers, retirees, and 
their families depend on defined benefit pension 
plans as a critical component of their retirement se-
curity in addition to Social Security. 
(4) Defined benefit pension plans are currently 
estimated to be underfunded up to a total of 
$400,000,000,000, and the Pension Benefit Guar-
anty Corporation, the agency that insures traditional 
pensions, 
had 
a 
2003 
deficit 
of 
over 
$10,000,000,000. 
(5) The Congress in enacting the Employee Re-
tirement Income Security Act of 1974 intended em-
ployers to adequately fund their pension plans and 
did not intend for the Pension Benefit Guaranty 
Corporation to be used as a means for restructuring 
companies to escape their unfunded pension liabil-
ities. 
(6) Cash balance pension plans were created to 
reduce traditional defined benefit pension obligations 
without statutory authorization, and adequate stand-
ards do not exist to adequately protect the pensions 
of pension plan participants, particularly older par-
ticipants. 
(7) Corporate executives often preserve or en-
hance executive pension and other employee benefits 
at the same time the benefits of non-highly paid em-
ployees are reduced. 
(b) PURPOSE.—It is the purpose of this Act to better 
protect the retirement benefits afforded to workers and 
retirees by protecting the solvency of the Pension Benefit 
Guaranty Corporation and ensuring equitable treatment 
of corporate executives as compared to treatment provided 
to other employees when restructuring employers shift un-
funded pension liabilities onto the Pension Benefit Guar-
anty Corporation or convert to cash balance pension plans 
without adequately protecting the retirement security of 
older workers.
SEC. 2. TERMINATION FAIRNESS STANDARD FOR NON-
QUALIFIED 
DEFERRED 
COMPENSATION 
PLANS IN CONNECTION WITH A PENSION 
PLAN TERMINATION BASED ON BANKRUPTCY 
REORGANIZATION OR IN CONNECTION WITH 
A CONVERSION OF A PLAN TO A CASH BAL-
ANCE PLAN. 
Section 206 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1056) is amended by adding 
at the end the following new subsection: 
‘‘(g) TERMINATION FAIRNESS STANDARD FOR NON-
QUALIFIED DEFERRED COMPENSATION PLANS IN CON-
NECTION WITH A PENSION PLAN TERMINATION BASED 
ON BANKRUPTCY REORGANIZATION OR IN CONNECTION 
WITH A CONVERSION OF A PENSION PLAN TO A CASH 
BALANCE PLAN.—
‘‘(1) IN GENERAL.—In any case in which a cor-
poration is a plan sponsor of a defined benefit plan 
with respect to which a plan amendment is adopted 
that has the effect of—
‘‘(A) implementing a distress termination 
of the plan under section 4041(c) based on 
bankruptcy reorganization or a termination of 
the plan initiated by the Pension Benefit Guar-
anty Corporation under section 4042 based on 
bankruptcy reorganization, in any case in which
the plan is not sufficient for guaranteed bene-
fits (within the meaning of section 4041(d)(2)) 
as of the proposed termination date, or 
‘‘(B) converting such plan to a cash bal-
ance plan, in any case in which the amend-
ment—
‘‘(i) results in a significant reduction 
in the rate of future benefit accruals (with-
in the meaning of section 204(h)(1)) of 
participants with at least 10 years of serv-
ice under the plan, or 
‘‘(ii) does not provide for an election 
by affected participants with at least 10 
years of service under the plan (and their 
beneficiaries) to retain coverage under the 
terms of the plan as in effect immediately 
prior to the amendment, 
any covered deferred compensation plan established 
or maintained by such plan sponsor after the date 
of the adoption of such plan amendment shall meet 
the termination fairness standard of this subsection 
with respect to such plan amendment. 
‘‘(2) TERMINATION
FAIRNESS
STANDARD.—A 
covered deferred compensation plan established or 
maintained by a plan sponsor described in para-
graph (1) meets the termination fairness standard of 
this subsection with respect to a plan amendment 
described in paragraph (1) if, during the 5-year pe-
riod beginning on the date of the adoption of such 
plan amendment—
‘‘(A) no amount of deferred compensation 
accrues to a disqualified individual under the 
terms of such covered deferred compensation 
plan (irrespective of whether the accrual in de-
ferred compensation is expressed in the form of 
a promise, a guarantee, or any other represen-
tation), and 
‘‘(B) in the case of a covered deferred com-
pensation plan established during or after the 
1-year period preceding the notice date (or any 
amendment to a covered deferred compensation 
plan if such amendment is adopted during or 
after such 1-year period), no distribution of ac-
crued deferred compensation is made under 
such plan (or such amendment) to a disquali-
fied individual. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) CASH BALANCE PLAN.—