[House Report 109-34]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     109-34

======================================================================

 
 REQUESTING THE PRESIDENT TO TRANSMIT TO THE HOUSE OF REPRESENTATIVES 
 CERTAIN INFORMATION RELATING TO PLAN ASSETS AND LIABILITIES OF SINGLE-
                         EMPLOYER PENSION PLANS

                                _______
                                

   April 12, 2005.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

    Mr. Boehner, from the Committee on Education and the Workforce, 
                        submitted the following

                             ADVERSE REPORT

                       [To accompany H. Res. 134]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Education and the Workforce, to whom was 
referred the resolution (H. Res. 134) requesting the President 
to transmit to the House of Representatives certain information 
relating to plan assets and liabilities of single-employer 
pension plans, having considered the same, report unfavorably 
thereon without amendment and recommend that the resolution not 
be agreed to.

 Report of the Committee on Education and the Workforce on H. Res. 134


                                PURPOSE

    H. Res. 134, a resolution of inquiry, requests the 
President to transmit to the House of Representatives certain 
specified information relating to plan assets and liabilities 
of certain single-employer pension plans for the previous two 
plan years.

                            COMMITTEE ACTION

109th Congress

    On March 2, 2005, Representative George Miller introduced 
H. Res. 134, a resolution of inquiry requesting the President 
to transmit to the House of Representatives certain information 
relating to plan assets and liabilities of certain single-
employer pension plans. Clause 7 of rule XIII of the Rules of 
the House of Representatives provides that if a resolution of 
inquiry is not reported by the committee(s) of jurisdiction to 
the House within fourteen legislative days of its introduction, 
a motion to discharge such committee(s) from consideration of 
the resolution shall be privileged on the Floor of the House.
    H. Res. 134 was referred to the Committee on Education and 
the Workforce on March 2, 2005. The Committee held no hearings 
on the bill.
    On April 6, 2005, the Committee by unanimous consent 
reported H. Res. 134 unfavorably to the House of 
Representatives with the recommendation that the resolution not 
be adopted.

                                SUMMARY

    H. Res. 134 directs the President \1\ to transmit to the 
House of Representatives within fourteen days certain specified 
information relating to plan assets and liabilities of certain 
single-employer pension plans for the previous two plan years.
---------------------------------------------------------------------------
    \1\ Although the resolution does not so state, the information 
requested is filed with the Pension Benefit Guaranty Corporation 
(``PBGC''), and presumably is to be transmitted to the House of 
Representatives via the President.
---------------------------------------------------------------------------
    Specifically, the resolution calls for the production of 
all information filed with the PBGC by contributing sponsors of 
certain single-employer defined benefit pension plans pursuant 
to sections 4010.8(a)(1) and (2) of title 29 of the Code of 
Federal Regulations for the two most recent plan years. By way 
of explanation, section 4010.8(a)(1) requires that contributing 
sponsors of certain single-employer pension plans provide the 
PBGC with the fair market value of the plan's assets; section 
4010.8(a)(2) requires sponsors to provide the PBGC with the 
value of the plan's benefit liabilities at the end of the plan 
year.
    The resolution also requests information relating to the 
identities of the contributing sponsors of each single-employer 
pension plan from whom the PBGC has obtained this information, 
as well as the members of those plans' sponsors' controlled 
group.\2\
---------------------------------------------------------------------------
    \2\ Under the Employee Retirement Income Security Act (``ERISA''), 
a ``controlled group'' is generally a group of related businesses or 
trades (whether or not incorporated) which are under common control. 
The Department of Labor generally does not find common control where 
the common ownership interest in a group of related businesses or 
trades is less than 25 percent.
---------------------------------------------------------------------------

                     COMMITTEE STATEMENT AND VIEWS

Background: ERISA Reporting Requirements

    Title I of ERISA contains fundamental protections for 
participants and beneficiaries of employee benefit plans. Part 
1 of Title I sets forth the duties of plan administrators to 
notify participants and beneficiaries of the terms of the 
benefit plans in which they participate, their rights under 
these plans, and the benefits which have accrued under the 
terms of their plans. When ERISA was enacted in 1974, Congress 
provided for such disclosure of meaningful plan information to 
protect employees' retirement security.
    Title IV of ERISA contains provisions dealing with the 
PBGC's Plan Termination Insurance Program, which insures the 
pension benefits of participants and beneficiaries in single- 
and multi-employer pension plans.\3\ In general, section 
4010(a) of ERISA requires that the contributing plan sponsor 
(as well as members of the contributing sponsor's controlled 
group) of single employer plans that are underfunded by a 
certain dollar amount in the aggregate must provide certain 
specified information annually to the PBGC. These filings are 
commonly known as ``4010 filings.''
---------------------------------------------------------------------------
    \3\ Under the single-employer insurance program, the PBGC pays 
guaranteed and certain other pension benefits to participants and 
beneficiaries if their plan terminates with insufficient assets.
---------------------------------------------------------------------------
    The purpose of the 4010 filing requirement is to improve 
PBGC's ability to monitor companies with underfunded pension 
plans, which represent potential liabilities that PBGC may have 
to assume in the future.\4\ The standards for determining 
whether a plan is required to make a 4010 filing were set by 
amendments to ERISA that were contained in the Retirement 
Protection Act of 1994 (``RPA''). Section 4010(b) requires 
information to be provided to the PBGC if, at the end of the 
preceding plan year, the aggregate unfunded vested benefits of 
all underfunded plans maintained by the contributing sponsors 
and members of its controlled group is greater than $50 
million; if minimum funding waivers exceeding $1 million have 
been granted with respect to any plan maintained by the 
contributing sponsor or controlled group member; or if there 
were missed required plan contributions in excess of $1 million 
for the preceding plan year.
---------------------------------------------------------------------------
    \4\ ERISA also requires that plans less than 90 percent funded 
generally must provide a notice to participants regarding the funding 
status of the plan and the limitations of the PBGC's benefit guarantee 
to workers and retirees annually. Specifically, ERISA section 4011 
requires companies to provide an annual notice to participants and 
beneficiaries if the plan is less than 90 percent funded; notice is not 
required, however, if the plan is not subject to the variable rate 
premium requirements. Under current law, the variable rate premium is 
$9 for every $1,000 of unfunded vested benefits. No variable rate 
premium is required if the plan meets its full funding limitation under 
ERISA.
---------------------------------------------------------------------------
    In addition to setting the 4010 filing standards, the RPA 
amended ERISA to expand 4010 reporting requirements for 
underfunded plans to include generally: (1) Identifying 
information about the plan sponsor and its controlled group; 
(2) actuarial information regarding the plan's fair market 
value of assets and the value of liabilities on a termination 
basis; (3) financial information of the company including, but 
not limited to, audited financial statements, income 
statements, cash flow statements, and proprietary information; 
and (4) any other financial information that PBGC requires by 
regulation.
    Section 4010(c) of ERISA provides that any of the 
information that a contributing sponsor or controlled group 
member provides to the PBGC will not be subject to public 
disclosure under the Freedom of Information Act.\5\
---------------------------------------------------------------------------
    \5\ Prior to the enactment of the RPA, the PBGC published an annual 
list of 50 companies with the largest plan underfunding. This list was 
initiated by the PBGC without statutory direction and was compiled from 
public sources, such as corporate annual reports and Form 5500 filings. 
However, because the new 4010 filings provided the PBGC with 
significant information in order to determine and monitor the financial 
health of single employer pension plans, it was no longer necessary to 
publish the annual list. On September 3, 1997, PBGC announced that it 
would no longer publish the annual list of 50 companies with the 
largest pension underfunding.
---------------------------------------------------------------------------

Section 4010's Determination of ``Underfunded'' Status is Outdated, 
        Inaccurate, and Does Not Provide Meaningful Information 
        Regarding Underfunded Plans

    The resolution calls for the production of information 
pertaining to plan assets and liabilities based on the total of 
aggregate unfunded vested benefits in excess of $50 million. It 
is the view of the Committee that this standard is outdated, 
inaccurate, and does not provide a meaningful indication of 
whether a plan is underfunded or at risk of termination. 
Indeed, the disclosure or use of 4010 information based on an 
absolute dollar amount is neither practical nor useful in 
determining whether a plan is considered underfunded or at risk 
of termination. In light of this fact, the Committee opposes 
adoption of the resolution.
    The threshold of $50 million as a measure for determining 
if a plan is severely underfunded and is therefore required to 
make a 4010 filing is inappropriate. A more appropriate 
threshold would reflect the percentage of plan underfunding, 
rather than an absolute dollar amount, which inherently 
penalizes large companies that offer multiple plans to their 
workforce or large defined benefit plans with a sizeable amount 
of assets. A $50 million (or any arbitrary, absolute dollar 
amount) threshold is not indicative of and should not serve as 
a proxy for significant plan underfunding or at-risk status, 
simply because pension plans governed by ERISA range in their 
assets from thousands to billion of dollars. Put more simply, 
while $50 million could represent a considerable amount of 
unfunded vested benefits to a small plan, it could represent 
only a fraction of unfunded vested benefits to a very large 
plan with billions of dollars in assets. That smaller plan 
might legitimately be considered ``underfunded'' and at risk, 
which the larger plan would not.
    It is the view of the Committee that, because the threshold 
for determining when a plan is considered significantly 
underfunded is not appropriate, the disclosure of plan 
information based on such threshold is inherently misleading 
and should not be disclosed until a more accurate proxy for 
measuring the financial health of a plan is established.
    The Committee fully believes and endorses the proposition 
that plan participants and beneficiaries are entitled to and 
should receive accurate and timely information as to their 
plans' funding status, and that the PBGC should monitor closely 
those plans which are genuinely underfunded or at risk. The 
Committee is committed to pursuing comprehensive reform of the 
defined benefit pension plan system that will address this 
issue in its proper context. At this time, the Committee does 
not support a piecemeal approach based on an outdated and 
misleading standard.

Conclusion

    For each of the foregoing reasons, the Committee opposes 
the adoption of H. Res. 134, and reports it unfavorably to the 
House of Representatives with the recommendation that the 
resolution not be adopted.

                           SECTION-BY-SECTION

    Section 1. Requests the President to transmit to the House 
of Representatives not later than fourteen days after adoption 
of the resolution copies of all information in his possession 
relating to the information described in paragraphs (1) and (2) 
of section 4010.8(a), title 29, Code of Federal Regulations, 
for the two most recent plan years. The resolution further 
requests information relating to the identities of all 
contributing sponsors, as well as members of their controlled 
group(s), of such plans. The information sought includes the 
name, address, telephone number, and Employer Identification 
Number of each plan sponsor and each member of the controlled 
group, and the legal relationship among each.

                      COMMITTEE OVERSIGHT FINDINGS

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                           COMMITTEE ESTIMATE

    Clauses 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H. Res. 134. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

   NEW BUDGET AUTHORITY AND CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 and with respect to 
requirements of 3(c)(3) of rule XIII of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H. Res. 134 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 12, 2005.
Hon. John A. Boehner,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H. Res. 134, a 
resolution requesting the President to transmit to the House of 
Representatives certain information relating to plan assets and 
liabilities of single-employer pension plans.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Geoffrey 
Gerhardt.
            Sincerely,
                             Douglas Holtz-Eakin, Director.
    Enclosure.

H. Res. 134--A resolution requesting the President to transmit to the 
        House of Representatives certain information relating to plan 
        assets and liabilities of single-employer pension plans

    H. Res. 134 would request that the President provide the 
House of Representatives with certain data filed with the 
Pension Benefit Guaranty Corporation (PBGC) under section 
4010.8 of title 29 of the Code of Federal Regulations. These 
data include information about assets and liabilities filed by 
tax-deferred, single-employer pension plans for the two most 
recent plan years. CBO estimates that implementing H. Res. 134 
could affect PBGC's administrative costs, which are recorded as 
direct spending, but that any additional spending would be 
negligible.
    Section 4010.8 of title 29 of the Code of Federal 
Regulations requires defined-benefit pension plans whose 
benefits are insured by PBGC to supply the agency with certain 
information about their finances. Regulations further state 
that financial information filed under section 4010 that is not 
already publicly available shall be treated as confidential and 
not released to the public. However, plans' data may be 
released to the Congress or to a Congressional committee upon 
formal request.
    Based on information from PBGC, CBO expects that H. Res. 
134 would cause PBGC to release data to the Congress that it 
would otherwise keep confidential. The costs of providing that 
data would be insignificant.
    The CBO staff contact is Geoffrey Gerhardt. This estimate 
was approved by Robert A. Sunshine, Assistant Director for 
Budget Analysis.

                    PERFORMANCE GOALS AND OBJECTIVES

    H. Res. 134 does not authorize funding. Therefore, clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives is inapplicable.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the rule 
does not apply because H. Res. 134 is not a bill or joint 
resolution that may be enacted into law.

      CHANGES IN EXISTING LAW MADE BY THE RESOLUTION, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, the Committee notes that H. Res. 
134 makes no changes to existing law.

                                  
