Chris Allen Multiemployer Pension Recapitalization and Reform Act of 2020

II 116TH CONGRESS 2D SESSION S. 5045 To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to reform the treatment of multiemployer plans, to ensure the ability of the Pension Benefit Guaranty Corporation to provide guaranteed benefits of retirees, and for other purposes. IN THE SENATE OF THE UNITED STATES DECEMBER 17, 2020 Mr. GRASSLEY (for himself and Mr. ALEXANDER) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 and the Em- ployee Retirement Income Security Act of 1974 to reform the treatment of multiemployer plans, to ensure the abil- ity of the Pension Benefit Guaranty Corporation to pro- vide guaranteed benefits of retirees, and for other pur- poses. 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; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Chris Allen Multiemployer Pension Recapitalization and 5 Reform Act of 2020’’. 6 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 5045 IS (b) TABLE OF CONTENTS.—The table of contents for 1 this Act is as follows: 2 Sec. 1. Short title; table of contents. TITLE I—RESTRUCTURING PENSION INSURANCE FOR MULTIEMPLOYER DEFINED BENEFIT PENSION PLANS Subtitle A—Special Partitions of Eligible Multiemployer Plans Sec. 101. Special partitions of eligible multiemployer plans. Subtitle B—PBGC Reforms Sec. 111. Guarantee rate increase for plans receiving financial assistance. Sec. 112. Amendment to definition of insolvency. Sec. 113. Termination of multiemployer plans. Sec. 114. Benefits under certain terminated plans. Subtitle C—Pension Insurance Modeling Sec. 121. Pension insurance modeling. TITLE II—FUNDING RULES, WITHDRAWAL LIABILITY, AND OTHER REFORMS Subtitle A—Minimum Funding Standard for Multiemployer Plans Sec. 201. Valuation of plan liabilities. Subtitle B—Additional Funding Rules for Multiemployer Plans PART I—PLAN STATUS AMENDMENTS Sec. 211. Amendments to Internal Revenue Code of 1986. Sec. 212. Amendments to Employee Retirement Income Security Act of 1974. Sec. 213. Transition rules. PART II—PROVISIONS RELATING TO PLAN MERGERS Sec. 221. Provisions relating to plan mergers and consolidations. Sec. 222. Clarification of PBGC financial assistance for plan mergers and par- titions. Sec. 223. Restoration not required for certain mergers. PART III—WITHDRAWAL LIABILITY REFORM Sec. 231. Withdrawal liability reform. TITLE III—PLAN GOVERNANCE, DISCLOSURE, AND OTHER RE- FORMS FOR MULTIEMPLOYER DEFINED BENEFIT PENSION PLANS Subtitle A—Plan Governance and Operations for Multiemployer Plans Sec. 301. Independent trustees. Sec. 302. Investigatory authority. Sec. 303. Conditions on financial assistance. VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 5045 IS Sec. 304. Excise tax on excess compensation of covered employees of parti- tioned multiemployer plans. Subtitle B—Reportable Events for Multiemployer Plans Sec. 311. Reportable events. Subtitle C—Funding Notices to Participants in Multiemployer Plans Sec. 321. Improved multiemployer plan disclosure. Sec. 322. Penalties for failure to provide notices. Subtitle D—Consistency of Criminal Penalties Sec. 331. Consistency of criminal penalties. TITLE IV—OTHER MULTIEMPLOYER PLAN REFORMS Sec. 401. Clarification of fiduciary duty of retiree representative who is a trust- ee. Sec. 402. Safe harbors. Sec. 403. Clarification of notice and comment process. Sec. 404. Protection of participants receiving disability benefits. Sec. 405. Model notice. TITLE V—ALTERNATIVE PLAN STRUCTURES Sec. 501. Composite plans. Sec. 502. Application of certain requirements to composite plans. Sec. 503. Treatment of composite plans under title IV. Sec. 504. Conforming changes. Sec. 505. Effective date. TITLE VI—FINANCIAL PROVISIONS Sec. 601. Additional premiums. Sec. 602. Funding. Sec. 603. Composite plan transition fee. VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6211 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 5045 IS TITLE I—RESTRUCTURING PEN- 1 SION INSURANCE FOR MULTI- 2 EMPLOYER DEFINED BEN- 3 EFIT PENSION PLANS 4 Subtitle A—Special Partitions of 5 Eligible Multiemployer Plans 6 SEC. 101. SPECIAL PARTITIONS OF ELIGIBLE MULTIEM- 7 PLOYER PLANS. 8 (a) IN GENERAL.—Title IV of the Employee Retire- 9 ment Income Security Act of 1974 (29 U.S.C. 1301 et 10 seq.) is amended by inserting after section 4233 the fol- 11 lowing: 12 ‘‘SEC. 4233A. SPECIAL PARTITIONS OF ELIGIBLE MULTIEM- 13 PLOYER PLANS. 14 ‘‘(a) IN GENERAL.— 15 ‘‘(1) REQUIREMENT TO ORDER PARTITION.— 16 Upon the application by the plan sponsor of an eligi- 17 ble multiemployer plan described in subsection (b) 18 for a partition of the plan, the corporation shall 19 order a partition of the plan in accordance with this 20 section, provided the other requirements in this sec- 21 tion are met. The corporation shall make a deter- 22 mination regarding the application not later than 23 150 days after the date such application was filed 24 (or, if later, the date such application was com- 25 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 5045 IS pleted) in accordance with regulations that shall be 1 issued by the corporation under subsection (h). 2 ‘‘(2) NOTIFICATION OF PARTICIPANTS.—Not 3 later than 30 days after submitting an application 4 for partition of a plan under paragraph (1), the plan 5 sponsor of the plan shall notify the participants and 6 beneficiaries of such application, in the form and 7 manner prescribed by the corporation. 8 ‘‘(3) IMPLEMENTATION OF TRANSFER.—The 9 corporation shall implement the partition order 10 issued under this section not later than 60 days 11 after the completion of the corporation’s determina- 12 tion under paragraph (1). 13 ‘‘(4) FILING DATE OF APPLICATION.—Parti- 14 tions under this section shall apply only with respect 15 to any eligible multiemployer plan whose plan spon- 16 sor files an application that is determined by the 17 corporation to be complete pursuant to regulations 18 issued by the corporation under subsection (h)(1) 19 and that is filed by the later of the time specified 20 in such regulations or 1 year after the corporation 21 issues such regulations. 22 ‘‘(b) ELIGIBLE MULTIEMPLOYER PLAN.—For pur- 23 poses of this section— 24 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 5045 IS ‘‘(1) IN GENERAL.—The term ‘eligible multiem- 1 ployer plan’ means a multiemployer plan that meets 2 any of the following conditions: 3 ‘‘(A) The plan became insolvent (as de- 4 scribed in section 4245(b), as in effect the day 5 before the date of enactment of this section) on 6 or after December 16, 2014, and prior to the 7 date of enactment of this section and has not 8 terminated. 9 ‘‘(B) The plan— 10 ‘‘(i)(I) was certified, in the most re- 11 cent annual certification filed pursuant to 12 section 305(b)(3) (as in effect on the day 13 before the date of enactment of this sec- 14 tion) before the date of enactment of this 15 section, to be in critical and declining sta- 16 tus (as defined in section 305(b)(6), as so 17 in effect), and has not terminated as of 18 such date; 19 ‘‘(II) implemented a suspension of 20 benefits under section 305(e)(9) (as in ef- 21 fect on the day before the date of enact- 22 ment of this section) prior to the date of 23 enactment of this section; 24 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 5045 IS ‘‘(III)(aa) was certified, in the most 1 recent annual certification filed pursuant 2 to section 305(b)(3) (as so in effect) before 3 the date of enactment of this section, to be 4 in critical status (as defined in section 5 305(b)(2), as so in effect), and has not ter- 6 minated as of such date; 7 ‘‘(bb) has a funded percentage that is 8 less than 40 percent on a current liability 9 basis, based on the most recent Form 10 5500, Schedule MB, line 1b(1) for current 11 value of assets and line 1d(2)(a) for cur- 12 rent liability, filed before the date of enact- 13 ment of this section; and 14 ‘‘(cc) has an active to inactive partici- 15 pant ratio that is below 40 percent as of 16 the most recent Form 5500 filed before the 17 date of enactment of this section; or 18 ‘‘(IV)(aa) was certified, in the most 19 recent annual certification filed pursuant 20 to section 305(b)(3) (as so in effect) before 21 the date of enactment of this section, to be 22 in critical status (as defined in section 23 305(b)(2), as so in effect) and has not ter- 24 minated before such date, 25 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 5045 IS ‘‘(bb) has an active to total partici- 1 pant ratio that is below 20 percent as of 2 the most recent Form 5500 filed before the 3 date of enactment of the section; and 4 ‘‘(cc) has more than 100,000 partici- 5 pants as of the most recent Form 5500 6 filed before the date of enactment of the 7 section; and 8 ‘‘(ii) is not the plan described in sec- 9 tion 9701(a)(3) of the Internal Revenue 10 Code of 1986, determined without regard 11 to the limitation on participation to indi- 12 viduals who retired in 1976 and thereafter. 13 ‘‘(2) ELIGIBLE PLANS REQUIRED TO FILE FOR 14 PARTITION.— 15 ‘‘(A) IN GENERAL.—An eligible multiem- 16 ployer plan (other than a plan eligible under 17 paragraph (1)(B)(i)(II)) shall file with the cor- 18 poration for partition under this section. If an 19 eligible plan required under the preceding sen- 20 tence to file for partition does not so file in a 21 timely manner, the plan is subject to termi- 22 nation under section 4042. 23 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 5045 IS ‘‘(B) EXCEPTION.—If a plan is reasonably 1 determined to be ineligible for future adjust- 2 ments under subsection (j)(3)(C)(iii)— 3 ‘‘(i) subparagraph (A) shall not apply 4 to such plan, and 5 ‘‘(ii) such plan may withdraw the par- 6 tition application (or, as provided by the 7 corporation in regulations, not submit such 8 application at all). 9 ‘‘(c) CONDITIONS FOR PARTITION.— 10 ‘‘(1) RATE OF ACCRUALS.— 11 ‘‘(A) IN GENERAL.—As a condition of any 12 partition under this section, the rate of future 13 accruals, during the period beginning on the 14 date of the partition order and ending 15 years 15 after the effective date of the partition, shall 16 not exceed the lesser of— 17 ‘‘(i) a monthly benefit (payable as a 18 single life annuity commencing at the par- 19 ticipant’s normal retirement age) equal or 20 equivalent to 1 percent of the annual con- 21 tributions required to be made with respect 22 to a participant as of the first day of the 23 first plan year that begins after the date of 24 enactment of this section; or 25 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 5045 IS ‘‘(ii) the accrual rate under the plan 1 on such first day. 2 ‘‘(B) DETERMINATION OF EQUIVALENT 3 RATE.—The plan sponsor may determine the 4 equivalent rate of future accruals based on the 5 standard or average contribution base units 6 which the plan sponsor determines to be rep- 7 resentative for active participants and such 8 other factors as the plan sponsor determines to 9 be relevant. Such determinations by the plan 10 sponsor may be made on the basis of individual 11 active participants, groups of active partici- 12 pants, or all active participants in total. 13 ‘‘(C) SPECIAL RULE FOR FUTURE ACCRU- 14 ALS.—To the extent that the rate of future ac- 15 cruals exceeds the limitation determined under 16 this paragraph, the plan sponsor shall adjust 17 the rate of future accruals in accordance with 18 this paragraph effective as of the date of the 19 partition order. 20 ‘‘(2) ELIMINATION OF ADJUSTABLE BENE- 21 FITS.—As a condition of any partition under this 22 section, the plan sponsor of an eligible multiem- 23 ployer plan shall eliminate all adjustable benefits in 24 the nature of an early retirement subsidy (including 25 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 5045 IS a subsidized early retirement actuarial reduction fac- 1 tor) for all participants not in pay status as of the 2 date of the partition application. Nothing in this 3 paragraph shall affect the right of a participant to 4 receive an unsubsidized early retirement benefit. 5 ‘‘(d) SUCCESSOR PLANS AND ORIGINAL PLANS.— 6 ‘‘(1) IN GENERAL.—The plan created by the 7 partition order is a successor plan to which section 8 4022A applies. 9 ‘‘(2) PLAN SPONSOR AND PLAN ADMINIS- 10 TRATOR.—The plan sponsor of an eligible multiem- 11 ployer plan prior to partition and the administrator 12 of such plan shall be the plan sponsor and the ad- 13 ministrator, respectively, of the original plan and the 14 successor plan created by the partition order. 15 ‘‘(3) ORIGINAL PLAN.—The remaining plan 16 after benefits have been transferred to the successor 17 plan pursuant to the partition order is the original 18 plan. Benefit payments made by the successor plan 19 shall not constitute a reduction in benefits with re- 20 spect to the original plan. 21 ‘‘(e) FINANCIAL ASSISTANCE TO SUCCESSOR PLANS 22 FROM THE CORPORATION.— 23 ‘‘(1) IN GENERAL.—Upon approval of an appli- 24 cation filed pursuant to subsection (i), the corpora- 25 VerDate Sep 11 2014 19:52 Dec 30, 2020 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S5045.IS S5045 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 5045 IS tion shall provide financial assistance to each suc- 1 cessor plan of an eligible multiemployer plan. 2 ‘‘(2) NONAPPLICABILITY OF REPAYMENT 3 RULE.—Financial assistance provided to a successor 4 plan pursuant to this subsection shall not be subject 5 to the requirements of section 4261(b)(2), except 6 that the corporation may condition receipt of finan- 7 cial assistance under this subsection on reasona [Text truncated for display. Full text available on Congress.gov.]