article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Pension Right to Know Act''. SEC. 2. NOTICE REQUIREMENTS FOR LARGE PENSION PLANS SIGNIFICANTLY REDUCING FUTURE PENSION BENEFIT ACCRUALS. (a) Plan Requirement.--Section 401(a) of the Internal Revenue Code of 1986 (relating to qualified pension, profit-sharing, and stock bonus plans) is amended by inserting after paragraph (34) the following new paragraph: ``(35) Notice requirements for large defined benefit plans significantly reducing future benefit accruals.-- ``(A) In general.--If a large defined benefit plan adopts an amendment which has the effect of significantly reducing the rate of future benefit accrual of 1 or more participants, a trust which is part of such plan shall not constitute a qualified trust under this section unless, after adoption of such amendment and not less than 15 days before its effective date, the plan administrator provides-- ``(i) a written statement of benefit change described in subparagraph (B) to each applicable individual, and ``(ii) a written notice setting forth the plan amendment and its effective date to each employee organization representing participants in the plan. Any such notice may be provided to a person designated, in writing, by the person to which it would otherwise be provided. The plan administrator shall not be treated as failing to meet the requirements of this subparagraph merely because the statement or notice is provided before the adoption of the plan amendment if no material modification of the amendment occurs before the amendment is adopted. ``(B) Statement of benefit change.--A statement of benefit change described in this subparagraph shall-- ``(i) be written in a manner calculated to be understood by the average plan participant, and ``(ii) include the information described in subparagraph (C). ``(C) Information contained in statement of benefit change.--The information described in this subparagraph includes the following: ``(i) Notice setting forth the plan amendment and its effective date. ``(ii) A comparison of the following amounts under the plan with respect to an applicable individual, determined both with and without regard to the plan amendment: ``(I) The accrued benefit and the present value of the accrued benefit as of the effective date. ``(II) The projected accrued benefit and the projected present value of the accrued benefit as of the date which is 3 years, 5 years, and 10 years from the effective date and as of the normal retirement age. ``(iii) A table of all annuity factors used to calculate benefits under the plan, presented in the form provided in section 72 and the regulations thereunder. Benefits described in clause (ii) shall be stated separately and shall be calculated by using the applicable mortality table and the applicable interest rate under section 417(e)(3)(A). ``(D) Large defined benefit plan; applicable individual.--For purposes of this paragraph-- ``(i) Large defined benefit plan.--The term `large defined benefit plan' means any defined benefit plan which had 1,000 or more participants who had accrued a benefit under the plan (whether or not vested) as of the last day of the plan year preceding the plan year in which the plan amendment becomes effective. ``(ii) Applicable individual.--The term `applicable individual' means-- ``(I) each participant in the plan, and ``(II) each beneficiary who is an alternate payee (within the meaning of section 414(p)(8)) under an applicable qualified domestic relations order (within the meaning of section 414(p)(1)(A)). ``(E) Accrued benefit; projected retirement benefit.--For purposes of this paragraph-- ``(i) Present value of accrued benefit.-- The present value of an accrued benefit of any applicable individual shall be calculated as if the accrued benefit were in the form of a single life annuity commencing at the participant's normal retirement age (and by taking into account any early retirement subsidy). ``(ii) Projected accrued benefit.-- ``(I) In general.--The projected accrued benefit of any applicable individual shall be calculated as if the benefit were payable in the form of a single life annuity commencing at the participant's normal retirement age (and by taking into account any early retirement subsidy). ``(II) Compensation and other assumptions.--Such benefit shall be calculated by assuming that compensation and all other benefit factors would increase for each plan year beginning after the effective date of the plan amendment at a rate equal to the median average of the CPI increase percentage (as defined in section 215(i) of the Social Security Act) for the 5 calendar years immediately preceding the calendar year before the calendar year in which such effective date occurs. ``(III) Benefit factors.--For purposes of subclause (II), the term `benefit factors' means social security benefits and all other relevant factors under section 411(b)(1)(A) used to compute benefits under the plan which had increased from the 2d plan year preceding the plan year in which the effective date of the plan amendment occurs to the 1st such preceding plan year. ``(iii) Normal retirement age.--The term `normal retirement age' means the later of-- ``(I) the date determined under section 411(a)(8), or ``(II) the date a plan participant attains age 62.'' (b) Amendments to ERISA.-- (1) Benefit statement requirement.--Section 204(h) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(h)) is amended by adding at the end the following new paragraphs: ``(3)(A) If paragraph (1) applies to the adoption of a plan amendment by a large defined benefit plan, the plan administrator shall, after adoption of such amendment and not less than 15 days before its effective date, provide with the notice under paragraph (1) a written statement of benefit change described in subparagraph (B) to each applicable individual. ``(B) A statement of benefit change described in this subparagraph shall-- ``(i) be written in a manner calculated to be understood by the average plan participant, and ``(ii) include the information described in subparagraph (C). ``(C) The information described in this subparagraph includes the following: ``(i) A comparison of the following amounts under the plan with respect to an applicable individual, determined both with and without regard to the plan amendment: ``(I) The accrued benefit and the present value of the accrued benefit as of the effective date. ``(II) The projected accrued benefit and the projected present value of the accrued benefit as of the date which is 3 years, 5 years, and 10 years from the effective date and as of the normal retirement age. ``(ii) A table of all annuity factors used to calculate benefits under the plan, presented in the form provided in section 72 of the Internal Revenue Code of 1986 and the regulations thereunder. Benefits described in clause (i) shall be stated separately and shall be calculated by using the applicable mortality table and the applicable interest rate under section 417(e)(3)(A) of such Code. ``(D) For purposes of this paragraph-- ``(i) The term `large defined benefit plan' means any defined benefit plan which had 1,000 or more participants who had accrued a benefit under the plan (whether or not vested) as of the last day of the plan year preceding the plan year in which the plan amendment becomes effective. ``(ii) The term `applicable individual' means an individual described in subparagraph (A) or (B) of paragraph (1). ``(E) For purposes of this paragraph-- ``(i) The present value of an accrued benefit of any applicable individual shall be calculated as if the accrued benefit were in the form of a single life annuity commencing at the participant's normal retirement age (and by taking into account any early retirement subsidy). ``(ii)(I) The projected accrued benefit of any applicable individual shall be calculated as if the benefit were payable in the form of a single life annuity commencing at the participant's normal retirement age (and by taking into account any early retirement subsidy). ``(II) Such benefit shall be calculated by assuming that compensation and all other benefit factors would increase for each plan year beginning after the effective date of the plan amendment at a rate equal to the median average of the CPI increase percentage (as defined in section 215(i) of the Social Security Act) for the 5 calendar years immediately preceding the calendar year before the calendar year in which such effective date occurs. ``(III) For purposes of subclause (II), the term `benefit factors' means social security benefits and all other relevant factors under section 204(b)(1)(A) used to compute benefits under the plan which had increased from the 2d plan year preceding the plan year in which the effective date of the plan amendment occurs to the 1st such preceding plan year. ``(iii) The term `normal retirement age' means the later of-- ``(I) the date determined under section 3(24), or ``(II) the date a plan participant attains age 62. ``(4) A plan administrator shall not be treated as failing to meet the requirements of this subsection merely because the notice or statement is provided before the adoption of the plan amendment if no material modification of the amendment occurs before the amendment is adopted.'' (2) Conforming amendment.--Section 204(h)(1) of such Act (29 U.S.C. 1054(h)(1)) is amended by inserting ``(including any written statement of benefit change if required by paragraph (3))'' after ``written notice''. (c) Effective Dates.-- (1) In general.--The amendments made by this section shall apply to plan amendments taking effect in plan years beginning on or after the earlier of-- (A) the later of-- (i) January 1, 1999, or (ii) the date on which the last of the collective bargaining agreements pursuant to which the plan is maintained terminates (determined without regard to any extension thereof after the date of the enactment of this Act), or (B) January 1, 2001. (2) Exception where notice given.--The amendments made by this section shall not apply to any plan amendment for which written notice was given to participants or their representatives before March 17, 1999, without regard to whether the amendment was adopted before such date. (3) Special rule.--The period for providing any notice required by, or any notice the contents of which are changed by, the amendments made by this Act shall not end before the date which is 6 months after the date of the enactment of this Act.
summary: Pension Right to Know Act - Amends the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 to set forth notice requirements for large pension plans which significantly reduce future benefit accruals.