Pension Right to Know Act - Amends the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 to set forth notice requirements for large pension plans which significantly reduce future benefit accruals.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1176 Introduced in House (IH)]
106th CONGRESS
1st Session
H. R. 1176
To amend the Internal Revenue Code of 1986 to require pension plans to
provide adequate notice to individuals whose future benefit accruals
are being significantly reduced, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 18, 1999
Mr. Weller (for himself, Mr. Bentsen, and Mr. Ney) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Education and the Workforce, 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 Internal Revenue Code of 1986 to require pension plans to
provide adequate notice to individuals whose future benefit accruals
are being significantly reduced, 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 Right to Know Act''.
SEC. 2. NOTICE REQUIREMENTS FOR LARGE PENSION PLANS SIGNIFICANTLY
REDUCING FUTURE PENSION BENEFIT ACCRUALS.
(a) Plan Requirement.--Section 401(a) of the Internal Revenue Code
of 1986 (relating to qualified pension, profit-sharing, and stock bonus
plans) is amended by inserting after paragraph (34) the following new
paragraph:
``(35) Notice requirements for large defined benefit plans
significantly reducing future benefit accruals.--
``(A) In general.--If a large defined benefit plan
adopts an amendment which has the effect of
significantly reducing the rate of future benefit
accrual of 1 or more participants, a trust which is
part of such plan shall not constitute a qualified
trust under this section unless, after adoption of such
amendment and not less than 15 days before its
effective date, the plan administrator provides--
``(i) a written statement of benefit change
described in subparagraph (B) to each
applicable individual, and
``(ii) a written notice setting forth the
plan amendment and its effective date to each
employee organization representing participants
in the plan.
Any such notice may be provided to a person designated,
in writing, by the person to which it would otherwise
be provided. The plan administrator shall not be
treated as failing to meet the requirements of this
subparagraph merely because the statement or notice is
provided before the adoption of the plan amendment if
no material modification of the amendment occurs before
the amendment is adopted.
``(B) Statement of benefit change.--A statement of
benefit change described in this subparagraph shall--
``(i) be written in a manner calculated to
be understood by the average plan participant,
and
``(ii) include the information described in
subparagraph (C).
``(C) Information contained in statement of benefit
change.--The information described in this subparagraph
includes the following:
``(i) Notice setting forth the plan
amendment and its effective date.
``(ii) A comparison of the following
amounts under the plan with respect to an
applicable individual, determined both with and
without regard to the plan amendment:
``(I) The accrued benefit and the
present value of the accrued benefit as
of the effective date.
``(II) The projected accrued
benefit and the projected present value
of the accrued benefit as of the date
which is 3 years, 5 years, and 10 years
from the effective date and as of the
normal retirement age.
``(iii) A table of all annuity factors used
to calculate benefits under the plan, presented
in the form provided in section 72 and the
regulations thereunder.
Benefits described in clause (ii) shall be stated
separately and shall be calculated by using the
applicable mortality table and the applicable interest
rate under section 417(e)(3)(A).
``(D) Large defined benefit plan; applicable
individual.--For purposes of this paragraph--
``(i) Large defined benefit plan.--The term
`large defined benefit plan' means any defined
benefit plan which had 1,000 or more
participants who had accrued a benefit under
the plan (whether or not vested) as of the last
day of the plan year preceding the plan year in
which the plan amendment becomes effective.
``(ii) Applicable individual.--The term
`applicable individual' means--
``(I) each participant in the plan,
and
``(II) each beneficiary who is an
alternate payee (within the meaning of
section 414(p)(8)) under an applicable
qualified domestic relations order
(within the meaning of section
414(p)(1)(A)).
``(E) Accrued benefit; projected retirement
benefit.--For purposes of this paragraph--
``(i) Present value of accrued benefit.--
The present value of an accrued benefit of any
applicable individual shall be calculated as if
the accrued benefit were in the form of a
single life annuity commencing at the
participant's normal retirement age (and by
taking into account any early retirement
subsidy).
``(ii) Projected accrued benefit.--
``(I) In general.--The projected
accrued benefit of any applicable
individual shall be calculated as if
the benefit were payable in the form of
a single life annuity commencing at the
participant's normal retirement age
(and by taking into account any early
retirement subsidy).
``(II) Compensation and other
assumptions.--Such benefit shall be
calculated by assuming that
compensation and all other benefit
factors would increase for each plan
year beginning after the effective date
of the plan amendment at a rate equal
to the median average of the CPI
increase percentage (as defined in
section 215(i) of the Social Security
Act) for the 5 calendar years
immediately preceding the calendar year
before the calendar year in which such
effective date occurs.
``(III) Benefit factors.--For
purposes of subclause (II), the term
`benefit factors' means social security
benefits and all other relevant factors
under section 411(b)(1)(A) used to
compute benefits under the plan which
had increased from the 2d plan year
preceding the plan year in which the
effective date of the plan amendment
occurs to the 1st such preceding plan
year.
``(iii) Normal retirement age.--The term
`normal retirement age' means the later of--
``(I) the date determined under
section 411(a)(8), or
``(II) the date a plan participant
attains age 62.''
(b) Amendments to ERISA.--
(1) Benefit statement requirement.--Section 204(h) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1054(h)) is amended by adding at the end the following new
paragraphs:
``(3)(A) If paragraph (1) applies to the adoption of a plan
amendment by a large defined benefit plan, the plan
administrator shall, after adoption of such amendment and not
less than 15 days before its effective date, provide with the
notice under paragraph (1) a written statement of benefit
change described in subparagraph (B) to each applicable
individual.
``(B) A statement of benefit change described in this
subparagraph shall--
``(i) be written in a manner calculated to be
understood by the average plan participant, and
``(ii) include the information described in
subparagraph (C).
``(C) The information described in this subparagraph
includes the following:
``(i) A comparison of the following amounts under
the plan with respect to an applicable individual,
determined both with and without regard to the plan
amendment:
``(I) The accrued benefit and the present
value of the accrued benefit as of the
effective date.
``(II) The projected accrued benefit and
the projected present value of the accrued
benefit as of the date which is 3 years, 5
years, and 10 years from the effective date and
as of the normal retirement age.
``(ii) A table of all annuity factors used to
calculate benefits under the plan, presented in the
form provided in section 72 of the Internal Revenue
Code of 1986 and the regulations thereunder.
Benefits described in clause (i) shall be stated separately and
shall be calculated by using the applicable mortality table and
the applicable interest rate under section 417(e)(3)(A) of such
Code.
``(D) For purposes of this paragraph--
``(i) The term `large defined benefit plan' means
any defined benefit plan which had 1,000 or more
participants who had accrued a benefit under the plan
(whether or not vested) as of the last day of the plan
year preceding the plan year in which the plan
amendment becomes effective.
``(ii) The term `applicable individual' means an
individual described in subparagraph (A) or (B) of
paragraph (1).
``(E) For purposes of this paragraph--
``(i) The present value of an accrued benefit of
any applicable individual shall be calculated as if the
accrued benefit were in the form of a single life
annuity commencing at the participant's normal
retirement age (and by taking into account any early
retirement subsidy).
``(ii)(I) The projected accrued benefit of any
applicable individual shall be calculated as if the
benefit were payable in the form of a single life
annuity commencing at the participant's normal
retirement age (and by taking into account any early
retirement subsidy).
``(II) Such benefit shall be calculated by assuming
that compensation and all other benefit factors would
increase for each plan year beginning after the
effective date of the plan amendment at a rate equal to
the median average of the CPI increase percentage (as
defined in section 215(i) of the Social Security Act)
for the 5 calendar years immediately preceding the
calendar year before the calendar year in which such
effective date occurs.
``(III) For purposes of subclause (II), the term
`benefit factors' means social security benefits and
all other relevant factors under section 204(b)(1)(A)
used to compute benefits under the plan which had
increased from the 2d plan year preceding the plan year
in which the effective date of the plan amendment
occurs to the 1st such preceding plan year.
``(iii) The term `normal retirement age' means the
later of--
``(I) the date determined under section
3(24), or
``(II) the date a plan participant attains
age 62.
``(4) A plan administrator shall not be treated as failing
to meet the requirements of this subsection merely because the
notice or statement is provided before the adoption of the plan
amendment if no material modification of the amendment occurs
before the amendment is adopted.''
(2) Conforming amendment.--Section 204(h)(1) of such Act
(29 U.S.C. 1054(h)(1)) is amended by inserting ``(including any
written statement of benefit change if required by paragraph
(3))'' after ``written notice''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan amendments taking effect in plan years beginning
on or after the earlier of--
(A) the later of--
(i) January 1, 1999, or
(ii) the date on which the last of the
collective bargaining agreements pursuant to
which the plan is maintained terminates
(determined without regard to any extension
thereof after the date of the enactment of this
Act), or
(B) January 1, 2001.
(2) Exception where notice given.--The amendments made by
this section shall not apply to any plan amendment for which
written notice was given to participants or their
representatives before March 17, 1999, without regard to
whether the amendment was adopted before such date.
(3) Special rule.--The period for providing any notice
required by, or any notice the contents of which are changed
by, the amendments made by this Act shall not end before the
date which is 6 months after the date of the enactment of this
Act.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E487)
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, 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.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, 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.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, 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.
Referred to the Subcommittee on Employer-Employee Relations.
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