[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3108 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 3108

 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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 17, 2003

Mr. Boehner (for himself, Mr. Thomas, Mr. George Miller of California, 
 Mr. Rangel, Mr. Sam Johnson of Texas, and Mr. Portman) 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 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).''.
            (3) Conforming amendment.--Section 415(b)(2)(E)(ii) of such 
        Code is amended by inserting before the period at the end ``, 
        except that in the case of years beginning in 2004 or 2005, 
        `5.5 percent' shall be substituted for `5 percent' in clause 
        (i)''.
    (c) Provisions Relating to Plan Amendments.--
            (1) In general.--If this subsection applies to any plan or 
        annuity contract amendment--
                    (A) such plan or contract shall be treated as being 
                operated in accordance with the terms of the plan or 
                contract during the period described in paragraph 
                (2)(B)(i), and
                    (B) except as provided by the Secretary of the 
                Treasury, such plan shall not fail to meet the 
                requirements of section 411(d)(6) of the Internal 
                Revenue Code of 1986 and section 204(g) of the Employee 
                Retirement Income Security Act of 1974 by reason of 
                such amendment.
            (2) Amendments to which section applies.--
                    (A) In general.--This subsection shall apply to any 
                amendment to any plan or annuity contract which is 
                made--
                            (i) pursuant to any amendment made by this 
                        section, and
                            (ii) on or before the last day of the first 
                        plan year beginning on or after January 1, 
                        2006.
                In the case of a governmental plan (as defined in 
                section 414(d) of the Internal Revenue Code of 1986), 
                this paragraph shall be applied by substituting 
                ``2008'' for ``2006''.
                    (B) Conditions.--This subsection shall not apply to 
                any plan or annuity contract amendment unless--
                            (i) during the period beginning on the date 
                        the amendment described in subparagraph (A)(i) 
                        takes effect and ending on the date described 
                        in subparagraph (A)(ii) (or, if earlier, the 
                        date the plan or contract amendment is 
                        adopted), the plan or contract is operated as 
                        if such plan or contract amendment were in 
                        effect; and
                            (ii) such plan or contract amendment 
                        applies retroactively for such period.
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), 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.
            (3) No reduction required.--In the case of any participant 
        or beneficiary, the amount payable under any form of benefit 
        subject to section 417(e)(3) of the Internal Revenue Code of 
        1986 shall not be required to be reduced below the amount 
        determined as of the last day of the last plan year beginning 
        before January 1, 2004, merely because of the amendments made 
        by subsection (b)(3).
                                 <all>