To amend title I of the Employee Retirement Income Security Act of 1974 to require equitable funding of pension plans maintained by corporations which also maintain executive pension plans.

May 13, 2003

Mr. OSE introduced the following bill; which was referred to the Committee on Education and the Workforce

To amend title I of the Employee Retirement Income Security Act of 1974 to require equitable funding of pension plans maintained by corporations which also maintain executive pension plans.

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 `Employees' Pension Equity Act of 2003'.

SEC. 2. FINDINGS.

The Congress finds as follows:

(1) Some large companies are setting aside millions of dollars to protect pensions of highly compensated executives at the same time as they forgo contributions to financially strained and underfunded pension plans for non-executive workers. Underfunding of pension plans for non-executives has been increasing.

(2) There are a variety of pension-type `supplemental executive retirement plans' for highly compensated executives, including: unfunded executive pension plans; executive plan `rabbi trusts,' which are not taxable when established but are subject to creditors' claims; executive plan `secular trusts,' where company contributions are taxable but not subject to creditors' claims; and, corporate-owned, trust-owned, or split-dollar life insurance.

(3) It is difficult to compare the funding levels of regular pension plans and executive pensions. Under current law, companies must disclose pension assets and liabilities, company contributions, and other details of employee pension plans in their annual reports. But, for executive pensions, companies are only required by the Securities and Exchange Commission to disclose the existence of trusts they establish for their Chief Executive Officer and their four other highest-paid executive officers, and not the amount of money in them or other details.

SEC. 3. EQUITABLE FUNDING REQUIREMENT FOR EMPLOYERS MAINTAINING AN EXECUTIVE PENSION PLAN.

Section 302 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082) is amended--

(1) by redesignating subsection (h) as subsection (i); and

(2) by inserting after subsection (g) the following new subsection:

`(h) EQUITABLE FUNDING REQUIREMENT FOR EMPLOYERS MAINTAINING AN EXECUTIVE PENSION PLAN-

`(1) DEFINITIONS- For purposes of this subsection--

`(A) EXECUTIVE PENSION PLAN- The term `executive pension plan' means, with respect to an employer, any pension plan maintained by such employer primarily for the purpose of providing for the deferral of compensation of one or more highly compensated employees of such employer.

`(B) NON-EXECUTIVE PENSION PLAN- The term `non-executive pension plan' means, with respect to an employer, a pension plan maintained by such employer other than an executive pension plan maintained by such employer.

`(C) HIGHLY COMPENSATED EMPLOYEE- The term `highly compensated employee' has the meaning provided such term in section 414(q) of the Internal Revenue Code of 1986.

`(D) FUNDED CURRENT LIABILITY PERCENTAGE- The term `funded current liability percentage' has the meaning provided such term in subsection (d)(8)(B).

`(2) REQUIREMENT- In any case in which--

`(A) an employer maintains a non-executive pension plan to which this part applies, and

`(B) the employer also maintains an executive pension plan for any plan year ending with or during a plan year of such non-executive pension plan,

the employer shall meet the equitable funding requirement of this subsection for such plan year of such non-executive pension plan.

`(3) EQUITABLE FUNDING REQUIREMENT- The equitable funding requirement of this subsection is met by an employer for a plan year if--

`(A) the excess executive plan funding percentage of the employer for such plan year is not more than 5 percent, or

`(B) the employer has applied to the plan the additional contributions necessary to correct such excess executive funding percentage by a reduction of not less than 5 percentage points.

`(4) EXCESS EXECUTIVE PLAN FUNDING PERCENTAGE- For purposes of this subsection, the excess executive plan funding percentage of an employer for a plan year of a non-executive pension plan is the difference between--

`(A) the funded current liability percentage of the executive pension plan maintained by the employer with respect to the plan year of such executive pension plan ending with or during such plan year of such non-executive pension plan, and

`(B) the funded current liability percentage of the non-executive pension plan maintained by the employer with respect to such plan year of such non-executive pension plan.

`(5) TREATMENT OF 2 OR MORE EXECUTIVE PENSION PLANS- In any case in which an employer maintains 2 or more executive pension plans for plan years ending with or during a plan year of a non-executive plan maintained by such employer, the reference in paragraph (4)(A) to the funded current liability percentage of an executive pension plan shall be deemed a reference to the average of the funded current liability percentages for such plan years of such executive pension plans maintained by such employer. '.

SEC. 4. EFFECTIVE DATE.

The amendment made by this Act shall apply with respect to plan years (of non-executive pension plans) beginning after the date of the enactment of this Act.

END