[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3108 Engrossed in House (EH)]
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 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 pension plan funding requirements and other provisions, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Pension Funding Equity Act of
2003''.
SEC. 2. FINDINGS; SENSE OF CONGRESS.
(a) Findings.--The Congress finds the following:
(1) The defined benefit pension system has recently
experienced severe difficulties due to an unprecedented
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 liabilities 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, conservative 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 comprehensive 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 enhance retirement
security for workers who rely on defined pension plan benefits,
to reduce the volatility of contributions, to provide plan
sponsors with predictability for plan contributions, and to
ensure adequate 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 Income Security
Act of 1974 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
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
Secretary 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
``subclause (I)'' the first place it appears,
and
(ii) by striking ``subclause (I)'' the
second place it appears and inserting ``such
subclause''.
(C) Conforming amendment.--Subclause (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 interest 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 Secretary of the Treasury on amounts
conservatively invested in long-term corporate bonds for the
month preceding the month in which the plan year begins. For
purposes of the preceding sentence, the Secretary 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
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
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
``subclause (I)'' the first place it appears,
and
(ii) by striking ``subclause (I)'' the
second place it appears and inserting ``such
subclause''.
(C) Conforming amendment.--Subclause (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 interest under
subsection (b)(5).''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to years beginning
after December 31, 2003.
(2) Lookback rules.--For purposes of applying subsections
(l)(9)(B)(ii) and (m)(1) of section 412 of the Internal Revenue
Code of 1986 and subsections (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.