mark_stephenson
10-30-2009, 11:44 AM
A bill has been introduced in Congress that seeks to give relief to single and multiemployer plans. One thing the bill does is make PBGC the plan for orphan participants of multiemployer plans. Whether the country is in the mood for another mammoth bailout remains to be seem.
Here is some of the fact sheet and the text of the bill.
The Pomeroy-Tiberi Proposal for Pension Funding Relief
Congressman Pomeroy and Tiberi believe Congress should pass reasonable pension funding relief to keep employees working and give them security in knowing their pensions will be there when they need them.
Pension Funding Relief:
· Multi-employer plans that meet a solvency test would also be eligible for relief. Two options would allow employers to repay recent losses over a 30-year period, and employers would be unable to increase plan benefits for two years. (1) The bill would extend rehabilitation and funding improvement periods for the plans in endangered and critical status; or (2) the bill would facilitate mergers of funds and allows the Pension Benefit Guarantee Corporation (PBCG) to provide assistance when it can to lower long-term loss. This bill would also update PBGC benefit guarantees
Protects Workers and Retirees:
· Rather than losing their jobs and their pensions, this bill would give workers the security of knowing they will continue working and receive their pension when they need it.
· This bill would encourage employers to keep pensions active so workers’ benefits would continue to grow.
· Worker and retirees’ protections enacted in WERA against pension benefit accruals being frozen in 2009 and 2010 would continue under this bill.
· By prohibiting pension plans from being drained by lump sum ad hoc benefits to certain individuals, future retirees would be protected.
· The date when pensions are guaranteed would change to the date of the plan termination.
TITLE II--MULTIEMPLOYER PLANS
SEC. 201. ADJUSTMENTS TO FUNDING STANDARD ACCOUNT RULES; REPORTING CLARIFICATION.
(a) Amortization Periods-
(1) AMENDMENT TO ERISA- Section 304(b) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new paragraph:
`(8) ELECTIVE SPECIAL RELIEF RULES-
`(A) PLAN SPONSOR ELECTION-
`(i) IN GENERAL- Notwithstanding any other provision of this subsection, effective with the actuarial valuation for either of the first two plan years beginning after August 31, 2008, the plan sponsor of a multiemployer plan that meets the solvency test in subparagraph (B) may elect to use either the rule in clause (ii) or the rule in clause (iii) in maintaining its funding standard account.
`(ii) COMBINED OUTSTANDING BALANCE- Under this clause, the outstanding balances of all amounts required to be amortized under both paragraph (2) and paragraph (3) may be combined into one amount under each such paragraph, to be amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(iii) CERTAIN INVESTMENT LOSSES- Under this clause, the total amount of the net investment losses, if any, incurred in either or both of the first two plan years ending after August 31, 2008, may be charged as an item separate from other experience losses and amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(B) SOLVENCY TEST- An election may be made under this paragraph if the plan actuary certifies that the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended.
`(C) RESTRICTION ON BENEFIT INCREASES- In the case of a plan for which a rule described in subparagraph (A) is elected, in addition to any other applicable restrictions on benefit increases, an amendment increasing benefits may not go into effect during the period of two plan years immediately following the plan year for which the rule is first effective, unless--
`(i) the plan actuary certifies that such increase is paid for out of additional contributions not allocated to the plan at the time the election was made and the plan's funded percentage and projected credit balances for those two plan years are reasonably expected to be generally at the same levels as they would have been if the benefit increase had not been adopted, or
`(ii) the amendment is required as a condition of qualification under part I of subchapter D of chapter 1 of the Internal Revenue Code of 1986 or to comply with other applicable law.'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Section 431(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
`(8) ELECTIVE SPECIAL RELIEF RULES-
`(A) PLAN SPONSOR ELECTION-
`(i) IN GENERAL- Notwithstanding any other provision of this subsection, effective starting with the actuarial valuation for either of the first two plan years beginning after August 31, 2008, the plan sponsor of a multiemployer plan that meets the solvency test in subparagraph (B) may elect to use either the rule in clause (ii) or the rule in clause (iii) in maintaining its funding standard account.
`(ii) COMBINED OUTSTANDING BALANCE- Under this clause, the outstanding balances of all amounts required to be amortized under both paragraph (2) and paragraph (3) may be combined into one amount under each such paragraph, to be amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(iii) CERTAIN INVESTMENT LOSSES- Under this clause, the total amount of the net investment losses, if any, incurred in either or both of the first two plan years ending after August 31, 2008, may be charged as an item separate from other experience losses and amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(B) SOLVENCY TEST- An election may be made under this paragraph if the plan actuary certifies that the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended.
`(C) RESTRICTION ON BENEFIT INCREASES- In the case of a plan for which a rule described in subparagraph (A) is elected, in addition to any other applicable restrictions on benefit increases, an amendment increasing benefits may not go into effect during the period of two plan years immediately following the plan year for which the rule is first effective, unless--
`(i) the plan actuary certifies that such increase is paid for out of additional contributions not allocated to the plan when the election was made and the plan's funded percentage and projected credit balances for those two plan years are reasonably expected to be generally at the same levels as they would have been if the benefit increase had not been adopted, or
`(ii) the amendment is required as a condition of qualification under part I of subchapter D of chapter 1 or to comply with other applicable law.'.
(b) Automatic Amortization Extensions-
(1) AMENDMENT TO ERISA- Section 304(d)(1)(A) of the Employee Retirement Income Security Act of 1974 is amended--
(A) by striking `(not in excess of 5 years)' and inserting `(not in excess of 10 years)', and
(B) by redesignating subparagraph (C) as subparagraph (D) and inserting after subparagraph (B) the following new subparagraph:
`(C) DEEMED APPROVAL-
`(i) IN GENERAL- An application under this paragraph shall be deemed approved unless, within 45 days after it is submitted, the Secretary notifies the plan sponsor that the actuary has failed to certify to one or more of the criteria listed in subparagraph (B).
`(ii) CORRECTIONS- If, within 30 days after receiving a notice under this subparagraph, the plan sponsor corrects any omissions identified in the notice under this subparagraph or otherwise demonstrates that the actuary's certification satisfies subparagraph (B), the application shall be deemed approved.'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Section 431(d)(1)(A) of the Internal Revenue Code of 1986 is amended--
(A) by striking `(not in excess of 5 years)' and inserting `(not in excess of 10 years)', and
(B) by redesignating subparagraph (C) as subparagraph (D) and inserting after subparagraph (B) the following new subparagraph:
`(C) DEEMED APPROVAL-
`(i) IN GENERAL- An application under this paragraph shall be deemed approved unless, within 45 days after it is submitted, the Secretary notifies the plan sponsor that the actuary has failed to certify to one or more of the criteria listed in subparagraph (B).
`(ii) CORRECTIONS- If, within 30 days after receiving a notice under this subparagraph, the plan sponsor corrects any omissions identified in the notice under this subparagraph or otherwise demonstrates that the actuary's certification satisfies subparagraph (B), the application shall be deemed approved.'.
(c) Extended Smoothing Period and Wider Asset Valuation Corridor for Certain Losses-
(1) IN GENERAL-
(A) The Secretary of the Treasury shall not treat the asset valuation method of a multiemployer plan as unreasonable solely because the plan elects to use either or both of the options described in subparagraph (B) or (C). A plan may elect to use any or all of such options. The election of such options shall apply for purposes of sections 431 and 432 of the Internal Revenue Code of 1986.
(B) With respect to net investment losses incurred in either or both of the first two plan years ending after August 31, 2008, the plan may utilize a smoothing period of not more than ten years.
(C) For either or both of the first two plan years beginning after August 31, 2008, the asset value reflected by the method may not be more than 130 percent of the current fair market value.
(2) DEEMED APPROVAL- The election by a plan of either or both of the options described in paragraph (1) shall be deemed approved by the Secretary of the Treasury under section 412(d)(1) of the Internal Revenue Code of 1986.
(d) Modification of Certain Amortization Extensions Under Prior Law- Any amortization extensions under the terms of section 412(e) of the Internal Revenue Code of 1986 (prior to enactment of the Pension Protection Act of 2006) that were granted to multiemployer plans shall remain in effect notwithstanding the impact of investment losses incurred by the plans in 2008, 2009 or 2010, unless the plan sponsor elects otherwise.
(e) Clarification of Multiemployer Reporting and Disclosure Requirements- Sections 103(f)(2)(C) and 104(d)(1)(D) of the Employee Retirement Income Security Act of 1974 are both amended by striking `as an employer of the participant'.
(f) Effective Date-
(1) The amendments made by this section shall take effect as of the first day of the first plan year beginning after August 31, 2008, provided however that any election a plan makes pursuant to this section that affects the plan's funding standard account for the first plan year beginning after August 31, 2008 shall be disregarded for purposes of applying the provisions of section 305 of the Employee Retirement Income Security Act of 1974 and section 432 of the Internal Revenue Code of 1986 to that plan year.
(2) Notwithstanding paragraph (1), the restrictions on plan amendments increasing benefits in sections 304(b)(8)(C) of the ERISA and 431(b)(8)(C) of the Internal Revenue Code, as added by this section, shall be effective 30 days after the date of enactment of this Act .
SEC. 202. MULTIEMPLOYER PLANS IN ENDANGERED OR CRITICAL STATUS.
(a) Optional Longer Correction Periods-
(1) AMENDMENT TO ERISA-
(A) FUNDING IMPROVEMENT PERIOD- Section 305(c)(4) of the Employee Retirement Income Security Act of 1974 is amended by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, and by inserting after subparagraph (B) the following new subparagraph:
`(C) ELECTION TO EXTEND PERIOD- The plan sponsor of an endangered or seriously endangered plan may elect to extend the applicable funding improvement period by up to 5 years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(B) REHABILITATION PERIOD- Section 305(e)(4) of such Act is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
`(B) ELECTION TO EXTEND PERIOD- The plan sponsor of a plan in critical status may elect to extend the rehabilitation period by up to five years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986-
(A) FUNDING IMPROVEMENT PERIOD- Section 432(c)(4) of the Internal Revenue Code of 1986 is amended by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, and by inserting after subparagraph (B) the following new subparagraph:
`(C) ELECTION TO EXTEND PERIOD- The plan sponsor of an endangered or seriously endangered plan may elect to extend the applicable funding improvement period by up to 5 years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(B) REHABILITATION PERIOD- Section 432(e)(4) of such Code is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
`(B) ELECTION TO EXTEND PERIOD- The plan sponsor of a plan in critical status may elect to extend the rehabilitation period by up to five years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(b) Simplification of the Funding Improvement Period for Certain Seriously Endangered Plans-
(1) AMENDMENT TO ERISA- Section 305(c) of the Employee Retirement Income Security Act of 1974 is amended--
(A) by striking paragraph (5) and redesignating paragraph (6) as paragraph (5), and
(B) in paragraph (1) by striking `(as modified by paragraph (5))'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Section 432(c) of the Internal Revenue Code of 1986 is amended--
(A) by striking paragraph (5) and redesignating paragraph (6) as paragraph (5), and
(B) in paragraph (1) by striking `(as modified by paragraph (5))'.
(c) Social Security Level Income Option-
(1) AMENDMENT TO ERISA- Subparagraph (B)(i) of section 305(f)(2) of the Employee Retirement Income Security Act of 1974 is amended by striking `204(b)(1)(G)),' and inserting `204(b)(1)(G) or any stream of payments that is structured to be similar in amount and duration to such supplements),'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Subparagraph (A)(i) of section 432(f)(2) of the Internal Revenue Code of 1986 is amended by striking `411(b)(1)(A)),' and inserting `411(b)(1)(A) or any stream of payments that is structured to be similar in amount and duration to such supplements),'.
(3) EFFECTIVE DATE-
(A) IN GENERAL- Except as provided in paragraph (2), the amendments made by this subsection shall apply as if included in sections 202(a) and 212(a) of the Pension Protection Act of 2006.
(B) TRANSITION RULE-
(i) In the case of a plan described in clause (ii), a plan shall not be required to comply with the amendments made by this section until the date that is 60 days after the date of enactment of this Act , but such a plan may comply on any otherwise permitted earlier date.
(ii) A plan is described in this clause if a restriction on benefit payments is or has been imposed, pursuant to section 305(f) of the Employee Retirement Income security Act of 1974 and section 432(f) of the Internal Revenue Code of 1986, in effect with respect to such plan as of the date of enactment of this Act .
(d) Technical Corrections-
(1) AMENDMENTS TO ERISA- Section 305(c) of the Employee Retirement Income Security Act of 1974 is amended--
(A) in paragraph (1)(B)(i)--
(i) by striking `plan, including--' and all that follows through `one proposal for reductions' and inserting `plan, including one proposal for reductions',
(ii) by striking `, and' at the end of subclause (I) and inserting a period, and
(iii) by striking subclause (II),
(B) in paragraph (7)(A), by striking `(1)(B)(i)(I)' and inserting `(1)(B)(i)',
(C) in paragraph (4) by adding at the end the following:
`(E) PLANS THAT ACHIEVE FUNDING IMPROVEMENT BENCHMARKS WHILE IN ENDANGERED OR SERIOUSLY ENDANGERED STATUS- If the plan's actuary certifies under subsection (b)(3)(A) that the plan has achieved the applicable increase in the funding percentage described in paragraph (3) of this subsection and that the plan is nevertheless still in endangered status, the provisions of this subsection and subsection (d) shall remain in effect until the earlier of the expiration of the funding improvement period or the last day preceding the plan year for which the actuary certifies that the plan is no longer in endangered status.', and
(D) in paragraph (4)(C)(ii) by striking all that follows `whichever is applicable,' and inserting the following: `shall end as of the close of the preceding plan year, except that, until the start of the rehabilitation plan adoption period--
`(I) the rules of subparagraphs (A) and (B) of subsection (d)(1) shall apply if, prior to the date the of the critical-status certification, the plan was in the funding improvement plan adoption period for the plan year, and
`(II) the rules of subsection (d)(2) shall apply if, prior to the date of the critical-status certification, the plan was in the funding improvement period for the plan year.'.
(2) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986- Section 432(c) of the Internal Revenue Code of 1986 is amended--
(A) in paragraph (1)(B)(i)--
(i) by striking `plan, including--' and all that follows through `one proposal for reductions' and inserting `plan, including one proposal for reductions',
(ii) by striking `, and' at the end of subclause (I) and inserting a period, and
(iii) by striking subclause (II),
(B) in paragraph (7)(A), by striking `(1)(B)(i)(I)' and inserting `(1)(B)(i)',
(C) in paragraph (4) by adding at the end the following:
`(E) PLANS THAT ACHIEVE FUNDING IMPROVEMENT BENCHMARKS WHILE IN ENDANGERED OR SERIOUSLY ENDANGERED STATUS- If the plan's actuary certifies under subsection (b)(3)(A) that the plan has achieved the applicable increase in the funding percentage described in paragraph (3) of this subsection and that the plan is nevertheless still in endangered status, the provisions of this subsection and subsection (d) shall remain in effect until the earlier of the expiration of the funding improvement period or the last day preceding the plan year for which the actuary certifies that the plan is no longer in endangered status.', and
(D) in paragraph (4)(C)(ii) by striking all that follows `whichever is applicable,' and inserting the following: `shall end as of the close of the preceding plan year, except that, until the start of the rehabilitation plan adoption period--
`(I) the rules of subparagraphs (A) and (B) of subsection (d)(1) shall apply if, prior to the date the of the critical-status certification, the plan was in the funding improvement plan adoption period for the plan year, and
`(II) the rules of subsection (d)(2) shall apply if, prior to the date of the critical-status certification, the plan was in the funding improvement period for the plan year.
SEC. 203. MULTIEMPLOYER PLAN MERGERS AND ALLIANCES.
(a) Multiemployer Plan Alliances-
(1) AMENDMENTS TO ERISA-
(A) Section 4231 of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new subsection:
`(e) Multiemployer Plan Alliances-
`(1) IN GENERAL- The plan sponsor of a multiemployer plan into which another multiemployer plan has been merged may designate the merger as an alliance to which the rules of this subsection apply by amending the plan--
`(A) to identify the allied plan, and
`(B) to delineate the terms of operation of the alliance, including the allocation of employer contributions and experience gains and losses between the merged plan and the partially separate frozen allied plan described in paragraphs (2) and (3).
`(2) APPLICABLE PROVISIONS- Except to the extent otherwise provided in the plan amendment under paragraph (1), sections 302, 304 and 305 (minimum funding), Part 1 of Subtitle E (withdrawal liability), sections 4244A and 4281 (plan termination), part 3 of subtitle E (plan reorganization and insolvency) and section 4261 (financial assistance from the corporation) shall apply to the frozen allied plan and the plan into which the allied plan was merged as if they were separate plans.
`(3) FROZEN ALLIED PLAN TREATED AS SEPARATE PLAN-
`(A) ASSETS AND LIABILITIES- The frozen allied plan that is treated in part as a separate plan pursuant to this paragraph comprises the assets and liabilities of the allied plan as if it had been amended, effective immediately before the effective date of the merger, to cease all benefit accruals.
`(B) EMPLOYERS MAINTAINING PLAN- The employers that were obligated to contribute to the allied plan immediately before the effective date of the merger, and any successors thereto whether by sale, reorganization or otherwise, shall be considered to be the employers maintaining the partially separate frozen allied plan, to the extent they continue to have an obligation to contribute with respect to participants or facilities covered by the allied plan.
`(C) PARTICIPANTS AND BENEFICIARIES- The participants and beneficiaries of the allied plan immediately before the effective date of the merger shall be considered to be the participants and beneficiaries of the partially separate frozen allied plan thereafter.
`(4) TREATMENT OF MERGED PLAN AS SINGLE PLAN- Except as provided in paragraphs (2) and (3), the allied plan and the plan into which it has been merged shall be treated as a single plan.
`(5) OTHER RULES-
`(A) ADOPTION OF INITIAL PLAN AMENDMENT- The plan amendment initially designating a merger as an alliance, identifying the allied plan and delineating the terms of the alliance must be adopted by no later than the last day of the plan year in which the merger takes effect.
`(B) SUBSEQUENT AMENDMENTS- That initial plan amendment may subsequently be modified or repealed, except that the plan gives notice of the change to the employers and participants of the allied plan at least 15 days before the subsequent amendment takes effect.
`(C) DISCRETION TO TREAT MERGERS DIFFERENTLY- The plan sponsor of a multiemployer plan may, in its discretion, treat some mergers as alliances and others as full mergers, and may prescribe different terms of operation for different alliances, if the basis for the distinctions is not unreasonable.'.
(B) Subsection (b) of section 4231 of such Act is amended by striking `and' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting `, and' , and by inserting after paragraph (4) adding at the end the following:
`(5) a merger that is designated as an alliance under subsection (e) shall not be treated as failing to meet any of the criteria of this subsection solely because benefits under the allied plan are, or are expected to be, reduced or eliminated pursuant to section 305 as a result of the endangered or critical status of the frozen allied plan.'.
(C) Section 404(a) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new paragraph:
`(3) With respect to a merger of multiemployer plans, including a merger that is designated as an alliance under section 4231(e), the plan sponsors of the merging plans shall be considered to meet the requirements of paragraph (1)(A) if the plan sponsors determine that the merger is not reasonably likely to be adverse to the long-term interests of the participants and beneficiaries of the plan for which the plan sponsors are responsible prior to the merger.'.
(i) Section 4231(c) of the Employee Retirement Income Security Act of 1974 is amended by striking `The merger of multiemployer plans or the transfer' and inserting `The merger of multiemployer plans, including a merger that is designated as an alliance, or the transfer'.
(2) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986- Section 412 of the Internal Revenue Code of 1986 is amended by adding at the end the following:
`(e) Multiemployer Plan Alliances-
`(1) IN GENERAL- Except to the extent otherwise provided in the plan amendment under section 4231(e)(1) of the Employee Retirement Income Security Act of 1974 designating a multiemployer plan merger as an alliance, this section and sections 431 and 432 shall apply to the frozen allied plan and the plan into which the allied plan was merged as if they were separate plans.
`(2) EMPLOYERS MAINTAINING PLAN- The employers that were obligated to contribute to the allied plan immediately before the effective date of the merger, and any successors thereto whether by sale, reorganization or otherwise, shall be considered to be the employers maintaining the partially separate frozen allied plan to the extent they continue to have an obligation to contribute with respect to participants or facilities covered by the allied plan.
`(3) PARTICIPANTS AND BENEFICIARIES- The participants and beneficiaries of the allied plan immediately before the effective date of the merger shall be considered to be the participants and beneficiaries of the partially separate frozen allied plan thereafter.
`(4) TREATMENT OF MERGED PLAN AS SINGLE PLAN- Except as provided in paragraphs (2) and (3) of section 4231(e) of the Employee Retirement Income Security Act of 1974, the allied plan and the plan into which it has been merged shall be treated as a single plan.
`(5) ALLIANCE; ALLIED PLAN- For purposes of this subsection, the terms `alliance' and `allied plan' shall have the same meanings as they have under section 4231(e) of the Employee Retirement Income Security Act of 1974.'.
(b) PBGC Assistance for Multiemployer Plan Mergers- Section 4231 of the Employee Retirement Income Security Act of 1974, as amended by this Act , is amended by adding at the end the following:
`(f) Facilitated Mergers-
`(1) IN GENERAL- When requested to do so by the plan sponsors, the corporation shall take reasonable actions to promote and facilitate the merger of two or more multiemployer plans, including a merger that is designated as an alliance, if it determines that the transaction is in the interests of the participants and beneficiaries of at least one of the plans, and is not reasonably expected to be adverse to the long-term interests of the participants and beneficiaries of the other plan or plans. Such facilitation may include training, technical assistance, mediation, communication with stakeholders and support with related requests to other government agencies, among other activities.
`(2) FINANCIAL ASSISTANCE- To facilitate mergers, including mergers designated as alliances, which it determines are reasonably necessary to enable one or more of the plans involved to avoid or postpone insolvency, the corporation may provide financial assistance to the merged plan if it reasonably expects that such financial assistance will reduce the corporation's likely long-term loss with respect to the plans involved.'.
(c) Effective Date- The amendments made by this section shall take effect as of the first day of the first plan year beginning on or after January 1, 2009.
SEC. 204. STRENGTHENING PARTICIPANTS' BENEFIT PROTECTIONS.
(a) Increase in Multiemployer Benefit Guarantee- Paragraph (1) of section 4022A(c) of the Employee Retirement Income Security Act of 1974 is amended to read as follows:
`(1) Except as provided in subsection (g), the monthly benefit of a participant or a beneficiary which is guaranteed under this section by the corporation with respect to a plan is the product of the number of the participant's years of credited service multiplied by the sum of--
`(A) 100 percent of the accrual rate up to $11, plus 75 percent of the lesser of--
`(i) $33, or
`(ii) the accrual rate, if any, in excess of $11, and
`(B) 50 percent of the lesser of--
`(i) $40 or
`(ii) the accrual rate, if any, in excess of $44.'.
(b) Qualified Partition of Eligible Multiemployer Plans-
(1) QUALIFIED PARTITIONS- Section 4233 of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new subsection:
`(g) Qualified Partition of Eligible Multiemployer Plans-
`(1) IN GENERAL- Notwithstanding subsections (a) through (f), upon the election by the plan sponsor of an eligible multiemployer plan of a qualified partition, the corporation shall order a partition of the electing multiemployer plan in accordance with this subsection, effective on the first day of the first month that begins at least 90 days after the date the multiemployer plan made the qualified partition election.
`(2) ELIGIBLE MULTIEMPLOYER PLAN- An eligible multiemployer plan is a multiemployer plan as to which--
`(A) the plan actuary has certified pursuant to section 305(c) that the plan is currently in critical status (within the meaning of section 305(b)(2));
`(B) a substantial reduction in the amount of aggregate contributions under the plan has resulted or will result from--
`(i) cases or proceedings under title 11, United States Code, with respect to employers, or
`(ii) employers' ceasing to be in business, if such employers did not pay the full amount of withdrawal liability demanded by the plan under section 4219;
`(C) the plan sponsor has certified, consistent with projections provided by the plan actuary, that the plan is likely to become insolvent;
`(D) the plan sponsor has certified, consistent with projections provided by the plan actuary, that contributions will have to be increased significantly to prevent insolvency;
`(E) the plan sponsor has certified that, as of the last day of each of the two immediately preceding plan years--
`(i) the ratio of the number of the plan's retirees, beneficiaries of deceased participants, and terminated vested participants to the number of the plan's active participants for each such year was at least 2 to 1; and
`(ii) the ratio of benefit payments made by the plan for each such year to contributions required to be made to the plan under section 304 or 305(e), as applicable, for each such year was at least 2 to 1; and
`(F) the plan sponsor has certified, consistent with projections provided by the plan actuary, that partition would significantly reduce the likelihood that the plan will become insolvent.
`(3) TRANSFERS UNDER QUALIFIED PARTITION ORDER- The corporation's qualified partition order shall provide for transfers as follows:
`(A) An initial transfer of--
`(i) no more than the nonforfeitable benefits directly attributable to service with the employers referred to in paragraph (2)(ii), and
`(ii) assets attributable to any withdrawal liability payments by such employers and , as adjusted by any gains or losses thereon, and reduced by any benefit payments made with regard to service with the employers.
`(B) As of the last day of each plan year following a plan year in which a qualified partition has occurred, the plan sponsor shall determine whether during such plan year, the aggregate contributions under the plan declined by 10 percent or more as a result of events described in paragraph (2)(ii); and if such decline has occurred, an additional transfer of--
`(i) no more than the nonforfeitable benefits directly attributable to service with employers that meets the requirements of paragraph (2)(ii) after the election of a qualified partition, and
`(ii) assets attributable to any withdrawal liability payments by such employers, as adjusted by any gains or losses thereon, and reduced by any benefit payments made with regard to service with the employers.
`(4) PLAN CREATED BY QUALIFIED PARTITION- The plan created by the qualified partition is--
`(A) a successor plan to which section 4022A applies, and
`(B) a terminated multiemployer plan to which section 4041A(d) applies, with respect to which only the employers described in paragraphs (2)(ii) and (3)(ii) have withdrawal liability.'.
(2) EFFECT OF QUALIFIED PARTITION ON PREMIUMS-
(A) Clause (i) of section 4006(a)(3)(C) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following:
`For purposes of this subparagraph, the value of assets held by the corporation and the basic benefits guaranteed for multiemployer plans shall not include assets and liabilities transferred pursuant to a qualified partition order under section 4233(g).'.
(B) Section 4022A(f) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following:
`(5) Basic benefits guaranteed in connection with assets and liabilities transferred to the corporation pursuant to a qualified partition order under section 4233(g) shall be disregarded under subparagraphs (1), (2), and (3)'.
(3) PBGC GUARANTEE OF PARTITIONED BENEFITS -
(A) Section 4022A of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following:
`(i) The monthly benefit of a participant or a beneficiary whose benefit was transferred pursuant to a qualified partition which is guaranteed under this section by the corporation with respect to a plan is the nonforfeitable benefits of the participant or beneficiary transferred pursuant to the qualified partition.'.
(B) Section 4022A(c)(1) of the Employee Retirement Income Security Act of 1974 is amended by striking `subsection (g)' and inserting `subsections (g) and (i)'.
(c) Financing for Qualified Partitions and Other Special Matters-
(1) OBLIGATIONS OF THE CORPORATION- The second sentence of section 4002(g)(2) of the Employee Retirement Income Security Act of 1974 is amended to read as follows:
`The United States Government is not liable for any obligation or liability incurred by the corporation, except with respect to liabilities transferred pursuant to a qualified partition of a multiemployer plan under section 4233(g) and such other special matters as may be designated in legislation making funding available therefor.'.
(2) PBGC FUND ESTABLISHED-
(A) Fund Established.
Here is some of the fact sheet and the text of the bill.
The Pomeroy-Tiberi Proposal for Pension Funding Relief
Congressman Pomeroy and Tiberi believe Congress should pass reasonable pension funding relief to keep employees working and give them security in knowing their pensions will be there when they need them.
Pension Funding Relief:
· Multi-employer plans that meet a solvency test would also be eligible for relief. Two options would allow employers to repay recent losses over a 30-year period, and employers would be unable to increase plan benefits for two years. (1) The bill would extend rehabilitation and funding improvement periods for the plans in endangered and critical status; or (2) the bill would facilitate mergers of funds and allows the Pension Benefit Guarantee Corporation (PBCG) to provide assistance when it can to lower long-term loss. This bill would also update PBGC benefit guarantees
Protects Workers and Retirees:
· Rather than losing their jobs and their pensions, this bill would give workers the security of knowing they will continue working and receive their pension when they need it.
· This bill would encourage employers to keep pensions active so workers’ benefits would continue to grow.
· Worker and retirees’ protections enacted in WERA against pension benefit accruals being frozen in 2009 and 2010 would continue under this bill.
· By prohibiting pension plans from being drained by lump sum ad hoc benefits to certain individuals, future retirees would be protected.
· The date when pensions are guaranteed would change to the date of the plan termination.
TITLE II--MULTIEMPLOYER PLANS
SEC. 201. ADJUSTMENTS TO FUNDING STANDARD ACCOUNT RULES; REPORTING CLARIFICATION.
(a) Amortization Periods-
(1) AMENDMENT TO ERISA- Section 304(b) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new paragraph:
`(8) ELECTIVE SPECIAL RELIEF RULES-
`(A) PLAN SPONSOR ELECTION-
`(i) IN GENERAL- Notwithstanding any other provision of this subsection, effective with the actuarial valuation for either of the first two plan years beginning after August 31, 2008, the plan sponsor of a multiemployer plan that meets the solvency test in subparagraph (B) may elect to use either the rule in clause (ii) or the rule in clause (iii) in maintaining its funding standard account.
`(ii) COMBINED OUTSTANDING BALANCE- Under this clause, the outstanding balances of all amounts required to be amortized under both paragraph (2) and paragraph (3) may be combined into one amount under each such paragraph, to be amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(iii) CERTAIN INVESTMENT LOSSES- Under this clause, the total amount of the net investment losses, if any, incurred in either or both of the first two plan years ending after August 31, 2008, may be charged as an item separate from other experience losses and amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(B) SOLVENCY TEST- An election may be made under this paragraph if the plan actuary certifies that the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended.
`(C) RESTRICTION ON BENEFIT INCREASES- In the case of a plan for which a rule described in subparagraph (A) is elected, in addition to any other applicable restrictions on benefit increases, an amendment increasing benefits may not go into effect during the period of two plan years immediately following the plan year for which the rule is first effective, unless--
`(i) the plan actuary certifies that such increase is paid for out of additional contributions not allocated to the plan at the time the election was made and the plan's funded percentage and projected credit balances for those two plan years are reasonably expected to be generally at the same levels as they would have been if the benefit increase had not been adopted, or
`(ii) the amendment is required as a condition of qualification under part I of subchapter D of chapter 1 of the Internal Revenue Code of 1986 or to comply with other applicable law.'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Section 431(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
`(8) ELECTIVE SPECIAL RELIEF RULES-
`(A) PLAN SPONSOR ELECTION-
`(i) IN GENERAL- Notwithstanding any other provision of this subsection, effective starting with the actuarial valuation for either of the first two plan years beginning after August 31, 2008, the plan sponsor of a multiemployer plan that meets the solvency test in subparagraph (B) may elect to use either the rule in clause (ii) or the rule in clause (iii) in maintaining its funding standard account.
`(ii) COMBINED OUTSTANDING BALANCE- Under this clause, the outstanding balances of all amounts required to be amortized under both paragraph (2) and paragraph (3) may be combined into one amount under each such paragraph, to be amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(iii) CERTAIN INVESTMENT LOSSES- Under this clause, the total amount of the net investment losses, if any, incurred in either or both of the first two plan years ending after August 31, 2008, may be charged as an item separate from other experience losses and amortized in equal annual installments (until fully amortized) over a period of 30 plan years.
`(B) SOLVENCY TEST- An election may be made under this paragraph if the plan actuary certifies that the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended.
`(C) RESTRICTION ON BENEFIT INCREASES- In the case of a plan for which a rule described in subparagraph (A) is elected, in addition to any other applicable restrictions on benefit increases, an amendment increasing benefits may not go into effect during the period of two plan years immediately following the plan year for which the rule is first effective, unless--
`(i) the plan actuary certifies that such increase is paid for out of additional contributions not allocated to the plan when the election was made and the plan's funded percentage and projected credit balances for those two plan years are reasonably expected to be generally at the same levels as they would have been if the benefit increase had not been adopted, or
`(ii) the amendment is required as a condition of qualification under part I of subchapter D of chapter 1 or to comply with other applicable law.'.
(b) Automatic Amortization Extensions-
(1) AMENDMENT TO ERISA- Section 304(d)(1)(A) of the Employee Retirement Income Security Act of 1974 is amended--
(A) by striking `(not in excess of 5 years)' and inserting `(not in excess of 10 years)', and
(B) by redesignating subparagraph (C) as subparagraph (D) and inserting after subparagraph (B) the following new subparagraph:
`(C) DEEMED APPROVAL-
`(i) IN GENERAL- An application under this paragraph shall be deemed approved unless, within 45 days after it is submitted, the Secretary notifies the plan sponsor that the actuary has failed to certify to one or more of the criteria listed in subparagraph (B).
`(ii) CORRECTIONS- If, within 30 days after receiving a notice under this subparagraph, the plan sponsor corrects any omissions identified in the notice under this subparagraph or otherwise demonstrates that the actuary's certification satisfies subparagraph (B), the application shall be deemed approved.'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Section 431(d)(1)(A) of the Internal Revenue Code of 1986 is amended--
(A) by striking `(not in excess of 5 years)' and inserting `(not in excess of 10 years)', and
(B) by redesignating subparagraph (C) as subparagraph (D) and inserting after subparagraph (B) the following new subparagraph:
`(C) DEEMED APPROVAL-
`(i) IN GENERAL- An application under this paragraph shall be deemed approved unless, within 45 days after it is submitted, the Secretary notifies the plan sponsor that the actuary has failed to certify to one or more of the criteria listed in subparagraph (B).
`(ii) CORRECTIONS- If, within 30 days after receiving a notice under this subparagraph, the plan sponsor corrects any omissions identified in the notice under this subparagraph or otherwise demonstrates that the actuary's certification satisfies subparagraph (B), the application shall be deemed approved.'.
(c) Extended Smoothing Period and Wider Asset Valuation Corridor for Certain Losses-
(1) IN GENERAL-
(A) The Secretary of the Treasury shall not treat the asset valuation method of a multiemployer plan as unreasonable solely because the plan elects to use either or both of the options described in subparagraph (B) or (C). A plan may elect to use any or all of such options. The election of such options shall apply for purposes of sections 431 and 432 of the Internal Revenue Code of 1986.
(B) With respect to net investment losses incurred in either or both of the first two plan years ending after August 31, 2008, the plan may utilize a smoothing period of not more than ten years.
(C) For either or both of the first two plan years beginning after August 31, 2008, the asset value reflected by the method may not be more than 130 percent of the current fair market value.
(2) DEEMED APPROVAL- The election by a plan of either or both of the options described in paragraph (1) shall be deemed approved by the Secretary of the Treasury under section 412(d)(1) of the Internal Revenue Code of 1986.
(d) Modification of Certain Amortization Extensions Under Prior Law- Any amortization extensions under the terms of section 412(e) of the Internal Revenue Code of 1986 (prior to enactment of the Pension Protection Act of 2006) that were granted to multiemployer plans shall remain in effect notwithstanding the impact of investment losses incurred by the plans in 2008, 2009 or 2010, unless the plan sponsor elects otherwise.
(e) Clarification of Multiemployer Reporting and Disclosure Requirements- Sections 103(f)(2)(C) and 104(d)(1)(D) of the Employee Retirement Income Security Act of 1974 are both amended by striking `as an employer of the participant'.
(f) Effective Date-
(1) The amendments made by this section shall take effect as of the first day of the first plan year beginning after August 31, 2008, provided however that any election a plan makes pursuant to this section that affects the plan's funding standard account for the first plan year beginning after August 31, 2008 shall be disregarded for purposes of applying the provisions of section 305 of the Employee Retirement Income Security Act of 1974 and section 432 of the Internal Revenue Code of 1986 to that plan year.
(2) Notwithstanding paragraph (1), the restrictions on plan amendments increasing benefits in sections 304(b)(8)(C) of the ERISA and 431(b)(8)(C) of the Internal Revenue Code, as added by this section, shall be effective 30 days after the date of enactment of this Act .
SEC. 202. MULTIEMPLOYER PLANS IN ENDANGERED OR CRITICAL STATUS.
(a) Optional Longer Correction Periods-
(1) AMENDMENT TO ERISA-
(A) FUNDING IMPROVEMENT PERIOD- Section 305(c)(4) of the Employee Retirement Income Security Act of 1974 is amended by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, and by inserting after subparagraph (B) the following new subparagraph:
`(C) ELECTION TO EXTEND PERIOD- The plan sponsor of an endangered or seriously endangered plan may elect to extend the applicable funding improvement period by up to 5 years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(B) REHABILITATION PERIOD- Section 305(e)(4) of such Act is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
`(B) ELECTION TO EXTEND PERIOD- The plan sponsor of a plan in critical status may elect to extend the rehabilitation period by up to five years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986-
(A) FUNDING IMPROVEMENT PERIOD- Section 432(c)(4) of the Internal Revenue Code of 1986 is amended by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, and by inserting after subparagraph (B) the following new subparagraph:
`(C) ELECTION TO EXTEND PERIOD- The plan sponsor of an endangered or seriously endangered plan may elect to extend the applicable funding improvement period by up to 5 years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(B) REHABILITATION PERIOD- Section 432(e)(4) of such Code is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
`(B) ELECTION TO EXTEND PERIOD- The plan sponsor of a plan in critical status may elect to extend the rehabilitation period by up to five years, including any extension of the period previously elected pursuant to section 205 of the Worker, Retiree and Employer Relief Act of 2008.'.
(b) Simplification of the Funding Improvement Period for Certain Seriously Endangered Plans-
(1) AMENDMENT TO ERISA- Section 305(c) of the Employee Retirement Income Security Act of 1974 is amended--
(A) by striking paragraph (5) and redesignating paragraph (6) as paragraph (5), and
(B) in paragraph (1) by striking `(as modified by paragraph (5))'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Section 432(c) of the Internal Revenue Code of 1986 is amended--
(A) by striking paragraph (5) and redesignating paragraph (6) as paragraph (5), and
(B) in paragraph (1) by striking `(as modified by paragraph (5))'.
(c) Social Security Level Income Option-
(1) AMENDMENT TO ERISA- Subparagraph (B)(i) of section 305(f)(2) of the Employee Retirement Income Security Act of 1974 is amended by striking `204(b)(1)(G)),' and inserting `204(b)(1)(G) or any stream of payments that is structured to be similar in amount and duration to such supplements),'.
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986- Subparagraph (A)(i) of section 432(f)(2) of the Internal Revenue Code of 1986 is amended by striking `411(b)(1)(A)),' and inserting `411(b)(1)(A) or any stream of payments that is structured to be similar in amount and duration to such supplements),'.
(3) EFFECTIVE DATE-
(A) IN GENERAL- Except as provided in paragraph (2), the amendments made by this subsection shall apply as if included in sections 202(a) and 212(a) of the Pension Protection Act of 2006.
(B) TRANSITION RULE-
(i) In the case of a plan described in clause (ii), a plan shall not be required to comply with the amendments made by this section until the date that is 60 days after the date of enactment of this Act , but such a plan may comply on any otherwise permitted earlier date.
(ii) A plan is described in this clause if a restriction on benefit payments is or has been imposed, pursuant to section 305(f) of the Employee Retirement Income security Act of 1974 and section 432(f) of the Internal Revenue Code of 1986, in effect with respect to such plan as of the date of enactment of this Act .
(d) Technical Corrections-
(1) AMENDMENTS TO ERISA- Section 305(c) of the Employee Retirement Income Security Act of 1974 is amended--
(A) in paragraph (1)(B)(i)--
(i) by striking `plan, including--' and all that follows through `one proposal for reductions' and inserting `plan, including one proposal for reductions',
(ii) by striking `, and' at the end of subclause (I) and inserting a period, and
(iii) by striking subclause (II),
(B) in paragraph (7)(A), by striking `(1)(B)(i)(I)' and inserting `(1)(B)(i)',
(C) in paragraph (4) by adding at the end the following:
`(E) PLANS THAT ACHIEVE FUNDING IMPROVEMENT BENCHMARKS WHILE IN ENDANGERED OR SERIOUSLY ENDANGERED STATUS- If the plan's actuary certifies under subsection (b)(3)(A) that the plan has achieved the applicable increase in the funding percentage described in paragraph (3) of this subsection and that the plan is nevertheless still in endangered status, the provisions of this subsection and subsection (d) shall remain in effect until the earlier of the expiration of the funding improvement period or the last day preceding the plan year for which the actuary certifies that the plan is no longer in endangered status.', and
(D) in paragraph (4)(C)(ii) by striking all that follows `whichever is applicable,' and inserting the following: `shall end as of the close of the preceding plan year, except that, until the start of the rehabilitation plan adoption period--
`(I) the rules of subparagraphs (A) and (B) of subsection (d)(1) shall apply if, prior to the date the of the critical-status certification, the plan was in the funding improvement plan adoption period for the plan year, and
`(II) the rules of subsection (d)(2) shall apply if, prior to the date of the critical-status certification, the plan was in the funding improvement period for the plan year.'.
(2) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986- Section 432(c) of the Internal Revenue Code of 1986 is amended--
(A) in paragraph (1)(B)(i)--
(i) by striking `plan, including--' and all that follows through `one proposal for reductions' and inserting `plan, including one proposal for reductions',
(ii) by striking `, and' at the end of subclause (I) and inserting a period, and
(iii) by striking subclause (II),
(B) in paragraph (7)(A), by striking `(1)(B)(i)(I)' and inserting `(1)(B)(i)',
(C) in paragraph (4) by adding at the end the following:
`(E) PLANS THAT ACHIEVE FUNDING IMPROVEMENT BENCHMARKS WHILE IN ENDANGERED OR SERIOUSLY ENDANGERED STATUS- If the plan's actuary certifies under subsection (b)(3)(A) that the plan has achieved the applicable increase in the funding percentage described in paragraph (3) of this subsection and that the plan is nevertheless still in endangered status, the provisions of this subsection and subsection (d) shall remain in effect until the earlier of the expiration of the funding improvement period or the last day preceding the plan year for which the actuary certifies that the plan is no longer in endangered status.', and
(D) in paragraph (4)(C)(ii) by striking all that follows `whichever is applicable,' and inserting the following: `shall end as of the close of the preceding plan year, except that, until the start of the rehabilitation plan adoption period--
`(I) the rules of subparagraphs (A) and (B) of subsection (d)(1) shall apply if, prior to the date the of the critical-status certification, the plan was in the funding improvement plan adoption period for the plan year, and
`(II) the rules of subsection (d)(2) shall apply if, prior to the date of the critical-status certification, the plan was in the funding improvement period for the plan year.
SEC. 203. MULTIEMPLOYER PLAN MERGERS AND ALLIANCES.
(a) Multiemployer Plan Alliances-
(1) AMENDMENTS TO ERISA-
(A) Section 4231 of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new subsection:
`(e) Multiemployer Plan Alliances-
`(1) IN GENERAL- The plan sponsor of a multiemployer plan into which another multiemployer plan has been merged may designate the merger as an alliance to which the rules of this subsection apply by amending the plan--
`(A) to identify the allied plan, and
`(B) to delineate the terms of operation of the alliance, including the allocation of employer contributions and experience gains and losses between the merged plan and the partially separate frozen allied plan described in paragraphs (2) and (3).
`(2) APPLICABLE PROVISIONS- Except to the extent otherwise provided in the plan amendment under paragraph (1), sections 302, 304 and 305 (minimum funding), Part 1 of Subtitle E (withdrawal liability), sections 4244A and 4281 (plan termination), part 3 of subtitle E (plan reorganization and insolvency) and section 4261 (financial assistance from the corporation) shall apply to the frozen allied plan and the plan into which the allied plan was merged as if they were separate plans.
`(3) FROZEN ALLIED PLAN TREATED AS SEPARATE PLAN-
`(A) ASSETS AND LIABILITIES- The frozen allied plan that is treated in part as a separate plan pursuant to this paragraph comprises the assets and liabilities of the allied plan as if it had been amended, effective immediately before the effective date of the merger, to cease all benefit accruals.
`(B) EMPLOYERS MAINTAINING PLAN- The employers that were obligated to contribute to the allied plan immediately before the effective date of the merger, and any successors thereto whether by sale, reorganization or otherwise, shall be considered to be the employers maintaining the partially separate frozen allied plan, to the extent they continue to have an obligation to contribute with respect to participants or facilities covered by the allied plan.
`(C) PARTICIPANTS AND BENEFICIARIES- The participants and beneficiaries of the allied plan immediately before the effective date of the merger shall be considered to be the participants and beneficiaries of the partially separate frozen allied plan thereafter.
`(4) TREATMENT OF MERGED PLAN AS SINGLE PLAN- Except as provided in paragraphs (2) and (3), the allied plan and the plan into which it has been merged shall be treated as a single plan.
`(5) OTHER RULES-
`(A) ADOPTION OF INITIAL PLAN AMENDMENT- The plan amendment initially designating a merger as an alliance, identifying the allied plan and delineating the terms of the alliance must be adopted by no later than the last day of the plan year in which the merger takes effect.
`(B) SUBSEQUENT AMENDMENTS- That initial plan amendment may subsequently be modified or repealed, except that the plan gives notice of the change to the employers and participants of the allied plan at least 15 days before the subsequent amendment takes effect.
`(C) DISCRETION TO TREAT MERGERS DIFFERENTLY- The plan sponsor of a multiemployer plan may, in its discretion, treat some mergers as alliances and others as full mergers, and may prescribe different terms of operation for different alliances, if the basis for the distinctions is not unreasonable.'.
(B) Subsection (b) of section 4231 of such Act is amended by striking `and' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting `, and' , and by inserting after paragraph (4) adding at the end the following:
`(5) a merger that is designated as an alliance under subsection (e) shall not be treated as failing to meet any of the criteria of this subsection solely because benefits under the allied plan are, or are expected to be, reduced or eliminated pursuant to section 305 as a result of the endangered or critical status of the frozen allied plan.'.
(C) Section 404(a) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new paragraph:
`(3) With respect to a merger of multiemployer plans, including a merger that is designated as an alliance under section 4231(e), the plan sponsors of the merging plans shall be considered to meet the requirements of paragraph (1)(A) if the plan sponsors determine that the merger is not reasonably likely to be adverse to the long-term interests of the participants and beneficiaries of the plan for which the plan sponsors are responsible prior to the merger.'.
(i) Section 4231(c) of the Employee Retirement Income Security Act of 1974 is amended by striking `The merger of multiemployer plans or the transfer' and inserting `The merger of multiemployer plans, including a merger that is designated as an alliance, or the transfer'.
(2) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986- Section 412 of the Internal Revenue Code of 1986 is amended by adding at the end the following:
`(e) Multiemployer Plan Alliances-
`(1) IN GENERAL- Except to the extent otherwise provided in the plan amendment under section 4231(e)(1) of the Employee Retirement Income Security Act of 1974 designating a multiemployer plan merger as an alliance, this section and sections 431 and 432 shall apply to the frozen allied plan and the plan into which the allied plan was merged as if they were separate plans.
`(2) EMPLOYERS MAINTAINING PLAN- The employers that were obligated to contribute to the allied plan immediately before the effective date of the merger, and any successors thereto whether by sale, reorganization or otherwise, shall be considered to be the employers maintaining the partially separate frozen allied plan to the extent they continue to have an obligation to contribute with respect to participants or facilities covered by the allied plan.
`(3) PARTICIPANTS AND BENEFICIARIES- The participants and beneficiaries of the allied plan immediately before the effective date of the merger shall be considered to be the participants and beneficiaries of the partially separate frozen allied plan thereafter.
`(4) TREATMENT OF MERGED PLAN AS SINGLE PLAN- Except as provided in paragraphs (2) and (3) of section 4231(e) of the Employee Retirement Income Security Act of 1974, the allied plan and the plan into which it has been merged shall be treated as a single plan.
`(5) ALLIANCE; ALLIED PLAN- For purposes of this subsection, the terms `alliance' and `allied plan' shall have the same meanings as they have under section 4231(e) of the Employee Retirement Income Security Act of 1974.'.
(b) PBGC Assistance for Multiemployer Plan Mergers- Section 4231 of the Employee Retirement Income Security Act of 1974, as amended by this Act , is amended by adding at the end the following:
`(f) Facilitated Mergers-
`(1) IN GENERAL- When requested to do so by the plan sponsors, the corporation shall take reasonable actions to promote and facilitate the merger of two or more multiemployer plans, including a merger that is designated as an alliance, if it determines that the transaction is in the interests of the participants and beneficiaries of at least one of the plans, and is not reasonably expected to be adverse to the long-term interests of the participants and beneficiaries of the other plan or plans. Such facilitation may include training, technical assistance, mediation, communication with stakeholders and support with related requests to other government agencies, among other activities.
`(2) FINANCIAL ASSISTANCE- To facilitate mergers, including mergers designated as alliances, which it determines are reasonably necessary to enable one or more of the plans involved to avoid or postpone insolvency, the corporation may provide financial assistance to the merged plan if it reasonably expects that such financial assistance will reduce the corporation's likely long-term loss with respect to the plans involved.'.
(c) Effective Date- The amendments made by this section shall take effect as of the first day of the first plan year beginning on or after January 1, 2009.
SEC. 204. STRENGTHENING PARTICIPANTS' BENEFIT PROTECTIONS.
(a) Increase in Multiemployer Benefit Guarantee- Paragraph (1) of section 4022A(c) of the Employee Retirement Income Security Act of 1974 is amended to read as follows:
`(1) Except as provided in subsection (g), the monthly benefit of a participant or a beneficiary which is guaranteed under this section by the corporation with respect to a plan is the product of the number of the participant's years of credited service multiplied by the sum of--
`(A) 100 percent of the accrual rate up to $11, plus 75 percent of the lesser of--
`(i) $33, or
`(ii) the accrual rate, if any, in excess of $11, and
`(B) 50 percent of the lesser of--
`(i) $40 or
`(ii) the accrual rate, if any, in excess of $44.'.
(b) Qualified Partition of Eligible Multiemployer Plans-
(1) QUALIFIED PARTITIONS- Section 4233 of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new subsection:
`(g) Qualified Partition of Eligible Multiemployer Plans-
`(1) IN GENERAL- Notwithstanding subsections (a) through (f), upon the election by the plan sponsor of an eligible multiemployer plan of a qualified partition, the corporation shall order a partition of the electing multiemployer plan in accordance with this subsection, effective on the first day of the first month that begins at least 90 days after the date the multiemployer plan made the qualified partition election.
`(2) ELIGIBLE MULTIEMPLOYER PLAN- An eligible multiemployer plan is a multiemployer plan as to which--
`(A) the plan actuary has certified pursuant to section 305(c) that the plan is currently in critical status (within the meaning of section 305(b)(2));
`(B) a substantial reduction in the amount of aggregate contributions under the plan has resulted or will result from--
`(i) cases or proceedings under title 11, United States Code, with respect to employers, or
`(ii) employers' ceasing to be in business, if such employers did not pay the full amount of withdrawal liability demanded by the plan under section 4219;
`(C) the plan sponsor has certified, consistent with projections provided by the plan actuary, that the plan is likely to become insolvent;
`(D) the plan sponsor has certified, consistent with projections provided by the plan actuary, that contributions will have to be increased significantly to prevent insolvency;
`(E) the plan sponsor has certified that, as of the last day of each of the two immediately preceding plan years--
`(i) the ratio of the number of the plan's retirees, beneficiaries of deceased participants, and terminated vested participants to the number of the plan's active participants for each such year was at least 2 to 1; and
`(ii) the ratio of benefit payments made by the plan for each such year to contributions required to be made to the plan under section 304 or 305(e), as applicable, for each such year was at least 2 to 1; and
`(F) the plan sponsor has certified, consistent with projections provided by the plan actuary, that partition would significantly reduce the likelihood that the plan will become insolvent.
`(3) TRANSFERS UNDER QUALIFIED PARTITION ORDER- The corporation's qualified partition order shall provide for transfers as follows:
`(A) An initial transfer of--
`(i) no more than the nonforfeitable benefits directly attributable to service with the employers referred to in paragraph (2)(ii), and
`(ii) assets attributable to any withdrawal liability payments by such employers and , as adjusted by any gains or losses thereon, and reduced by any benefit payments made with regard to service with the employers.
`(B) As of the last day of each plan year following a plan year in which a qualified partition has occurred, the plan sponsor shall determine whether during such plan year, the aggregate contributions under the plan declined by 10 percent or more as a result of events described in paragraph (2)(ii); and if such decline has occurred, an additional transfer of--
`(i) no more than the nonforfeitable benefits directly attributable to service with employers that meets the requirements of paragraph (2)(ii) after the election of a qualified partition, and
`(ii) assets attributable to any withdrawal liability payments by such employers, as adjusted by any gains or losses thereon, and reduced by any benefit payments made with regard to service with the employers.
`(4) PLAN CREATED BY QUALIFIED PARTITION- The plan created by the qualified partition is--
`(A) a successor plan to which section 4022A applies, and
`(B) a terminated multiemployer plan to which section 4041A(d) applies, with respect to which only the employers described in paragraphs (2)(ii) and (3)(ii) have withdrawal liability.'.
(2) EFFECT OF QUALIFIED PARTITION ON PREMIUMS-
(A) Clause (i) of section 4006(a)(3)(C) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following:
`For purposes of this subparagraph, the value of assets held by the corporation and the basic benefits guaranteed for multiemployer plans shall not include assets and liabilities transferred pursuant to a qualified partition order under section 4233(g).'.
(B) Section 4022A(f) of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following:
`(5) Basic benefits guaranteed in connection with assets and liabilities transferred to the corporation pursuant to a qualified partition order under section 4233(g) shall be disregarded under subparagraphs (1), (2), and (3)'.
(3) PBGC GUARANTEE OF PARTITIONED BENEFITS -
(A) Section 4022A of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following:
`(i) The monthly benefit of a participant or a beneficiary whose benefit was transferred pursuant to a qualified partition which is guaranteed under this section by the corporation with respect to a plan is the nonforfeitable benefits of the participant or beneficiary transferred pursuant to the qualified partition.'.
(B) Section 4022A(c)(1) of the Employee Retirement Income Security Act of 1974 is amended by striking `subsection (g)' and inserting `subsections (g) and (i)'.
(c) Financing for Qualified Partitions and Other Special Matters-
(1) OBLIGATIONS OF THE CORPORATION- The second sentence of section 4002(g)(2) of the Employee Retirement Income Security Act of 1974 is amended to read as follows:
`The United States Government is not liable for any obligation or liability incurred by the corporation, except with respect to liabilities transferred pursuant to a qualified partition of a multiemployer plan under section 4233(g) and such other special matters as may be designated in legislation making funding available therefor.'.
(2) PBGC FUND ESTABLISHED-
(A) Fund Established.