SEC. 2. 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 industry- 
wide crises, changing market forces, and the pres-
sures of globalization. 
(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 
by 
over 
$450,000,000,000, and the Pension Benefit Guar-
anty Corporation, the agency that insures traditional 
pensions, 
had 
a 
2004 
deficit 
of 
over 
$23,000,000,000. 
(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 or circumvent collective bargaining obligations.
(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 benefits at the 
same time the benefits of non-highly paid employees 
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.
TITLE 
I—FAIRNESS 
IN 
PLAN 
TERMINATIONS AND CONVER-
SIONS 
SEC. 101. TERMINATION FAIRNESS STANDARD FOR NON-
QUALIFIED 
DEFERRED 
COMPENSATION 
PLANS IN CONNECTION WITH PENSION PLAN 
TERMINATIONS BASED ON BANKRUPTCY RE-
ORGANIZATION OR IN CONNECTION WITH 
CONVERSIONS TO CASH BALANCE PLANS. 
(a) IN GENERAL.—Section 206 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1056) 
is amended by adding at the end the following new sub-
section: 
‘‘(g) TERMINATION FAIRNESS STANDARD FOR NON-
QUALIFIED DEFERRED COMPENSATION PLANS IN CON-
NECTION WITH PENSION PLAN TERMINATIONS BASED 
ON BANKRUPTCY REORGANIZATION OR IN CONNECTION 
WITH CONVERSIONS TO CASH BALANCE PLANS.— 
‘‘(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.— 
‘‘(i) IN
GENERAL.—The term ‘cash 
balance plan’ means a defined benefit plan 
under which the accrued benefit is ex-
pressed to participants and beneficiaries as 
an amount other than an annual benefit 
commencing at normal retirement age. 
‘‘(ii) REGULATIONS TO INCLUDE SIMI-
LAR OR OTHER HYBRID PLANS.—The Sec-
retary shall issue regulations which provide 
that a defined benefit plan (or any portion 
of such a plan) which has an effect similar 
to a plan described in clause (i) shall be 
treated as a cash balance plan. Such regu-
lations may provide that if a plan sponsor 
represents in communications to partici-
pants and beneficiaries that a plan amend-
ment results in a plan being described in 
the preceding sentence, such plan shall be 
treated as a cash balance plan. 
‘‘(B) NOTICE
DATE.—The term ‘notice 
date’ means, with respect to an amendment de-
scribed in paragraph (1)—
‘‘(i) in the case of a distress termi-
nation under section 4041(d), the date of 
the advance notice of intent to terminate 
provided pursuant to section 4041(a)(2), 
‘‘(ii) in the case of a termination initi-
ated by the Pension Benefit Guaranty Cor-
poration under section 4042, the date of 
the application to the court under section 
4042(c), and 
‘‘(iii) in the case of a conversion to a 
cash balance plan, the date of the adoption 
of the amendment. 
‘‘(C) COVERED DEFERRED COMPENSATION 
PLAN.— 
‘‘(i) IN GENERAL.—The term ‘covered 
deferred compensation plan’ means any 
plan providing for the deferral of com-
pensation of a disqualified individual, 
whether or not— 
‘‘(I) compensation of the dis-
qualified individual which is deferred 
under such plan is subject to substan-
tial risk of forfeiture, 
‘‘(II) the disqualified individual’s 
rights to the compensation deferred