H.R. 3108: The Pension Funding Equity Act

Publication Date: July 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Labor

Type:

Abstract:

The House of Representatives passed H.R. 3108, the Pension Funding Equity Act by a vote of 336-69 on April 2, 2004. The legislation was approved by the Senate on April 8 by a vote of 78-19. President Bush signed the bill into law (P.L. 108-218) on April 10. The law makes several changes to the Internal Revenue Code (IRC) and the Employee Retirement Income Security Act (ERISA) with respect to funding requirements for defined benefit pension plans. Many of these plans experienced declines in the value of their pension fund assets as a result of the stock market decline from 2000 through 2002, and increases in the value of plan liabilities resulting from historically low interest rates. The law changes the interest rate used to calculate the present value of pension plan liabilities, temporarily reduces the amount of additional plan contributions required to be made by sponsors of underfunded plans (but only in certain industries), and makes changes to the schedule for amortizing investment losses incurred by some multiemployer plans.