[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.