Rehabilitation for Multiemployer Pensions Act of 2019

II Calendar No. 390 116TH CONGRESS 1ST SESSION H. R. 397 IN THE SENATE OF THE UNITED STATES JULY 25, 2019 Received DECEMBER 18, 2019 Read the first time DECEMBER 19, 2019 Read the second time and placed on the calendar AN ACT To amend the Internal Revenue Code of 1986 to create a Pension Rehabilitation Trust Fund, to establish a Pen- sion Rehabilitation Administration within the Depart- ment of the Treasury to make loans to multiemployer defined benefit plans, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Rehabilitation for Mul- 4 tiemployer Pensions Act of 2019’’. 5 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 2 HR 397 PCS SEC. 2. PENSION REHABILITATION ADMINISTRATION; ES- 1 TABLISHMENT; POWERS. 2 (a) ESTABLISHMENT.—There is established in the 3 Department of the Treasury an agency to be known as 4 the ‘‘Pension Rehabilitation Administration’’. 5 (b) DIRECTOR.— 6 (1) ESTABLISHMENT OF POSITION.—There 7 shall be at the head of the Pension Rehabilitation 8 Administration a Director, who shall be appointed 9 by the President. 10 (2) TERM.— 11 (A) IN GENERAL.—The term of office of 12 the Director shall be 5 years. 13 (B) SERVICE UNTIL APPOINTMENT OF 14 SUCCESSOR.—An individual serving as Director 15 at the expiration of a term may continue to 16 serve until a successor is appointed. 17 (3) POWERS.— 18 (A) APPOINTMENT OF DEPUTY DIREC- 19 TORS, OFFICERS, AND EMPLOYEES.—The Di- 20 rector may appoint Deputy Directors, officers, 21 and employees, including attorneys, in accord- 22 ance with chapter 51 and subchapter III of 23 chapter 53 of title 5, United States Code. 24 (B) CONTRACTING.— 25 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 3 HR 397 PCS (i) IN GENERAL.—The Director may 1 contract for financial and administrative 2 services (including those related to budget 3 and accounting, financial reporting, per- 4 sonnel, and procurement) with the General 5 Services Administration, or such other 6 Federal agency as the Director determines 7 appropriate, for which payment shall be 8 made in advance, or by reimbursement, 9 from funds of the Pension Rehabilitation 10 Administration in such amounts as may be 11 agreed upon by the Director and the head 12 of the Federal agency providing the serv- 13 ices. 14 (ii) SUBJECT TO APPROPRIATIONS.— 15 Contract authority under clause (i) shall be 16 effective for any fiscal year only to the ex- 17 tent that appropriations are available for 18 that purpose. 19 SEC. 3. PENSION REHABILITATION TRUST FUND. 20 (a) IN GENERAL.—Subchapter A of chapter 98 of the 21 Internal Revenue Code of 1986 is amended by adding at 22 the end the following new section: 23 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 4 HR 397 PCS ‘‘SEC. 9512. PENSION REHABILITATION TRUST FUND. 1 ‘‘(a) CREATION OF TRUST FUND.—There is estab- 2 lished in the Treasury of the United States a trust fund 3 to be known as the ‘Pension Rehabilitation Trust Fund’ 4 (hereafter in this section referred to as the ‘Fund’), con- 5 sisting of such amounts as may be appropriated or cred- 6 ited to the Fund as provided in this section and section 7 9602(b). 8 ‘‘(b) TRANSFERS TO FUND.— 9 ‘‘(1) AMOUNTS ATTRIBUTABLE TO TREASURY 10 BONDS.—There shall be credited to the Fund the 11 amounts transferred under section 6 of the Rehabili- 12 tation for Multiemployer Pensions Act of 2019. 13 ‘‘(2) LOAN INTEREST AND PRINCIPAL.— 14 ‘‘(A) IN GENERAL.—The Director of the 15 Pension Rehabilitation Administration estab- 16 lished under section 2 of the Rehabilitation for 17 Multiemployer Pensions Act of 2019 shall de- 18 posit in the Fund any amounts received from a 19 plan as payment of interest or principal on a 20 loan under section 4 of such Act. 21 ‘‘(B) INTEREST.—For purposes of sub- 22 paragraph (A), the term ‘interest’ includes 23 points and other similar amounts. 24 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 5 HR 397 PCS ‘‘(3) AVAILABILITY OF FUNDS.—Amounts cred- 1 ited to or deposited in the Fund shall remain avail- 2 able until expended. 3 ‘‘(c) EXPENDITURES FROM FUND.—Amounts in the 4 Fund are available without further appropriation to the 5 Pension Rehabilitation Administration— 6 ‘‘(1) for the purpose of making the loans de- 7 scribed in section 4 of the Rehabilitation for Multi- 8 employer Pensions Act of 2019, 9 ‘‘(2) for the payment of principal and interest 10 on obligations issued under section 6 of such Act, 11 and 12 ‘‘(3) for administrative and operating expenses 13 of such Administration.’’. 14 (b) CLERICAL AMENDMENT.—The table of sections 15 for subchapter A of chapter 98 of the Internal Revenue 16 Code of 1986 is amended by adding at the end the fol- 17 lowing new item: 18 ‘‘Sec. 9512. Pension Rehabilitation Trust Fund.’’. SEC. 4. LOAN PROGRAM FOR MULTIEMPLOYER DEFINED 19 BENEFIT PLANS. 20 (a) LOAN AUTHORITY.— 21 (1) IN GENERAL.—The Pension Rehabilitation 22 Administration established under section 2 is au- 23 thorized— 24 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 6 HR 397 PCS (A) to make loans to multiemployer plans 1 (as defined in section 414(f) of the Internal 2 Revenue Code of 1986) which are defined ben- 3 efit plans (as defined in section 414(j) of such 4 Code) and which— 5 (i) are in critical and declining status 6 (within the meaning of section 432(b)(6) 7 of such Code and section 305(b)(6) of the 8 Employee Retirement and Income Security 9 Act) as of the date of the enactment of 10 this section, or with respect to which a sus- 11 pension of benefits has been approved 12 under section 432(e)(9) of such Code and 13 section 305(e)(9) of such Act as of such 14 date; 15 (ii) as of such date of enactment, are 16 in critical status (within the meaning of 17 section 432(b)(2) of such Code and section 18 305(b)(2) of such Act), have a modified 19 funded percentage of less than 40 percent, 20 and have a ratio of active to inactive par- 21 ticipants which is less than 2 to 5; or 22 (iii) are insolvent for purposes of sec- 23 tion 418E of such Code as of such date of 24 enactment, if they became insolvent after 25 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 7 HR 397 PCS December 16, 2014, and have not been 1 terminated; and 2 (B) subject to subsection (b), to establish 3 appropriate terms for such loans. 4 For purposes of subparagraph (A)(ii), the term 5 ‘‘modified funded percentage’’ means the percentage 6 equal to a fraction the numerator of which is current 7 value of plan assets (as defined in section 3(26) of 8 such Act) and the denominator of which is current 9 liabilities (as defined in section 431(c)(6)(D) of such 10 Code and section 304(c)(6)(D) of such Act). 11 (2) CONSULTATION.—The Director of the Pen- 12 sion Rehabilitation Administration shall consult with 13 the Secretary of the Treasury, the Secretary of 14 Labor, and the Director of the Pension Benefit 15 Guaranty Corporation before making any loan under 16 paragraph (1), and shall share with such persons the 17 application and plan information with respect to 18 each such loan. 19 (3) ESTABLISHMENT OF LOAN PROGRAM.— 20 (A) IN GENERAL.—A program to make the 21 loans authorized under this section shall be es- 22 tablished not later than September 30, 2019, 23 with guidance regarding such program to be 24 promulgated by the Director of the Pension Re- 25 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 8 HR 397 PCS habilitation Administration, in consultation with 1 the Director of the Pension Benefit Guaranty 2 Corporation, the Secretary of the Treasury, and 3 the Secretary of Labor, not later than Decem- 4 ber 31, 2019. 5 (B) LOANS AUTHORIZED BEFORE PRO- 6 GRAM DATE.—Without regard to whether the 7 program under subparagraph (A) has been es- 8 tablished, a plan may apply for a loan under 9 this section before either date described in such 10 subparagraph, and the Pension Rehabilitation 11 Administration shall approve the application 12 and make the loan before establishment of the 13 program if necessary to avoid any suspension of 14 the accrued benefits of participants. 15 (b) LOAN TERMS.— 16 (1) IN GENERAL.—The terms of any loan made 17 under subsection (a) shall state that— 18 (A) the plan shall make payments of inter- 19 est on the loan for a period of 29 years begin- 20 ning on the date of the loan (or 19 years in the 21 case of a plan making the election under sub- 22 section (c)(5)); 23 (B) final payment of interest and principal 24 shall be due in the 30th year after the date of 25 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 9 HR 397 PCS the loan (except as provided in an election 1 under subsection (c)(5)); and 2 (C) as a condition of the loan, the plan 3 sponsor stipulates that— 4 (i) except as provided in clause (ii), 5 the plan will not increase benefits, allow 6 any employer participating in the plan to 7 reduce its contributions, or accept any col- 8 lective bargaining agreement which pro- 9 vides for reduced contribution rates, dur- 10 ing the 30-year period described in sub- 11 paragraphs (A) and (B); 12 (ii) in the case of a plan with respect 13 to which a suspension of benefits has been 14 approved under section 432(e)(9) of the 15 Internal Revenue Code of 1986 and section 16 305(e)(9) of the Employee Retirement In- 17 come Security Act of 1974, or under sec- 18 tion 418E of such Code, before the loan, 19 the plan will reinstate the suspended bene- 20 fits (or will not carry out any suspension 21 which has been approved but not yet im- 22 plemented); 23 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 10 HR 397 PCS (iii) the plan sponsor will comply with 1 the requirements of section 6059A of the 2 Internal Revenue Code of 1986; 3 (iv) the plan will continue to pay all 4 premiums due under section 4007 of the 5 Employee Retirement Income Security Act 6 of 1974; and 7 (v) the plan and plan administrator 8 will meet such other requirements as the 9 Director of the Pension Rehabilitation Ad- 10 ministration provides in the loan terms. 11 The terms of the loan shall not make reference 12 to whether the plan is receiving financial assist- 13 ance under section 4261(d) of the Employee 14 Retirement Income Security Act of 1974 (29 15 U.S.C. 1431(d)) or to any adjustment of the 16 loan amount under subsection (d)(2)(A)(ii). 17 (2) INTEREST RATE.—Except as provided in 18 the second sentence of this paragraph and sub- 19 section (c)(5), loans made under subsection (a) shall 20 have as low an interest rate as is feasible. Such rate 21 shall be determined by the Pension Rehabilitation 22 Administration and shall— 23 (A) not be lower than the rate of interest 24 on 30-year Treasury securities on the first day 25 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 11 HR 397 PCS of the calendar year in which the loan is issued; 1 and 2 (B) not exceed the greater of— 3 (i) a rate 0.2 percentage points higher 4 than such rate of interest on such date; or 5 (ii) the rate necessary to collect reve- 6 nues sufficient to administer the program 7 under this section. 8 (c) LOAN APPLICATION.— 9 (1) IN GENERAL.—In applying for a loan under 10 subsection (a), the plan sponsor shall— 11 (A) demonstrate that, except as provided 12 in subparagraph (C)— 13 (i) the loan will enable the plan to 14 avoid insolvency for at least the 30-year 15 period described in subparagraphs (A) and 16 (B) of subsection (b)(1) or, in the case of 17 a plan which is already insolvent, to 18 emerge from insolvency within and avoid 19 insolvency for the remainder of such pe- 20 riod; and 21 (ii) the plan is reasonably expected to 22 be able to pay benefits and the interest on 23 the loan during such period and to accu- 24 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 12 HR 397 PCS mulate sufficient funds to repay the prin- 1 cipal when due; 2 (B) provide the plan’s most recently filed 3 Form 5500 as of the date of application and 4 any other information necessary to determine 5 the loan amount under subsection (d); 6 (C) stipulate whether the plan is also ap- 7 plying for financial assistance under section 8 4261(d) of the Employee Retirement Income 9 Security Act of 1974 (29 U.S.C. 1431(d)) in 10 combination with the loan to enable the plan to 11 avoid insolvency and to pay benefits, or is al- 12 ready receiving such financial assistance as a 13 result of a previous application; 14 (D) state in what manner the loan pro- 15 ceeds will be invested pursuant to subsection 16 (d), the person from whom any annuity con- 17 tracts under such subsection will be purchased, 18 and the person who will be the investment man- 19 ager for any portfolio implemented under such 20 subsection; and 21 (E) include such other information and 22 certifications as the Director of the Pension Re- 23 habilitation Administration shall require. 24 VerDate Sep 11 2014 02:12 Dec 20, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H397.PCS H397 kjohnson on DSK79L0C42 with BILLS 13 HR 397 PCS (2) STANDARD FOR ACCEPTING ACTUARIAL AND 1 PLAN SPONSOR DETERMINATIONS AND DEMONSTRA- 2 TIONS IN THE APPLICATION.—In evaluating the plan 3 sponsor’s application, the Director of the Pension 4 Rehabilitation Administration shall accept the deter- 5 minations and demonstrations in the application un- 6 less the Director, in consultation with the Director 7 of the Pension Benefit Guaranty Corporation, the 8 Secretary of the Treasury, and the Secretary of 9 Labor, concludes that any such determinations or 10 demonstrations in the application (or any underlying 11 assumptions) are unreasonable or are inconsistent 12 with any rules issued by the Director p [Text truncated for display. 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