article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Continued Participation Pension Act of 1996''. SEC. 2. CONTINUED PARTICIPATION IN DEFINED BENEFIT PLANS. Part 2 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1051 et seq.) is amended by redesignating section 211 as section 212 and by inserting after section 210 (29 U.S.C. 1060) the following new section: ``continued participation in defined benefit plans for certain individuals ``Sec. 211. (a) In General.--A defined benefit plan shall provide, in accordance with this section, that each qualified beneficiary who would lose eligibility to accrue benefits under the plan as a result of a qualifying event, may elect, within the election period, continued participation under the plan. ``(b) Continued Participation.--For purposes of this section, the term `continued participation' means continued accrual of benefits by a qualified beneficiary in accordance with section 204(b)(1), if the following requirements are met: ``(1) Determination of service.--A participant shall be treated as having not incurred a break in service with the employer or employers maintaining the plan. The period of continued participation shall be deemed to constitute service with the employer or employers maintaining the plan for the purpose of determining the nonforfeitability of the qualified beneficiary's accrued benefits and for the purpose of determining the accrual of benefits. The period of continued participation shall be deemed to be service with the employer under the terms of the plan or any applicable collective bargaining agreement. ``(2) Terms of continued participation.--For purposes of determining the amount of any liability and any obligation of the plan, earnings and forfeitures shall not be included. In the case of a multiemployer plan, any liability of the plan described in this section shall be allocated-- ``(A) by the plan in such manner as the sponsor maintaining the plan shall provide; or ``(B) if the sponsor does not so provide, to the last employer employing the person before the qualifying event. ``(3) Period of continued participation.--The period of participation shall extend for the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following: ``(A) Maximum required period.--The date on which the participant reaches (or would have reached) normal retirement age under the plan. ``(B) End of plan.--The date on which the employer ceases to provide any defined benefit plan to any employee. ``(C) Failure to pay contribution.--The date on which benefits cease to accrue under the plan by reason of a failure to make timely payment of any contribution required under the plan with respect to the qualified beneficiary. ``(4) Contribution requirements.-- ``(A) In general.--A qualified beneficiary electing continued participation is liable to the defined benefit plan for funding any obligation of the plan to provide the benefits described in paragraph (1). The plan shall allocate to qualified beneficiaries the amount of applicable contribution attributable to employer contributions and mandatory employee contributions under the plan, in the same manner that employer contributions and mandatory employee contributions are allocated to similarly situated beneficiaries with respect to whom a qualifying event has not occurred. The plan shall provide for benefit accruals attributable to voluntary employee contributions only to the extent such benefit accruals attributable to such contributions were available to the participant prior to the qualifying event. For purposes of computing the beneficiary's contributions, the participant shall be deemed to have received compensation during the period of continued participation, at the rate in effect prior to the occurrence of the qualifying event, as if the participant had continued in service under the plan at the rate of 1,000 hours of work during any 12-month period. ``(B) Limitation.--For any period of continued participation, the contribution made by the qualified beneficiary-- ``(i) shall not exceed 102 percent of the applicable contribution for such period, and ``(ii) may, at the election of the payor, be made in monthly installments. In no event may the plan require the payment of any contribution before the day which is 45 days after the day on which the qualified beneficiary made the initial election for continued participation. ``(c) Election Period.-- ``(1) In general.--The election period-- ``(A) begins not later than the date on which benefits accrual would, but for continued participation in accordance with the section, cease, and ``(B) is of at least 90 days' duration. ``(2) Effect of election on other beneficiaries.--Except as otherwise specified in an election, any election of continued participation by a qualified beneficiary shall be deemed to include an election of continued participation on behalf of any other qualified beneficiary who would cease to be a beneficiary under the plan by reason of the qualifying event. ``(d) Exception for Certain Plans.--Subsection (a) shall not apply to any defined benefit plan for any calendar year if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year. ``(e) Definitions.--For purposes of this section-- ``(1) Applicable contribution.--The applicable contribution for any period of continued participation of qualified beneficiaries shall be equal to the actuarial value of benefit accruals attributable to the period of continued participation, as determined under regulations of the Secretary. ``(2) Qualified beneficiary.--The term `qualified beneficiary' means any beneficiary under the plan on the day before the qualifying event, including the participant in the case of a qualifying event described in paragraph (3)(A). ``(3) Qualifying event.--The term `qualifying event' means any of the following events occurring within seven years of attainment by the participant of normal retirement age, which, but for the continued participation provided under this section, would result in the cessation of benefit accruals of a qualified beneficiary: ``(A) The termination (other than by reason of such employee's gross misconduct), or reduction of hours, of the participant's employment. ``(B) The death of the participant.''. SEC. 3. EFFECTIVE DATES. (a) General Rule.--This Act shall apply to plan years beginning on or after July 1, 1996. (b) Special Rule for Collective Bargaining Agreements.--In the case of a defined benefit plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act, this section shall not apply to plan years beginning before the later of-- (1) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or (2) January 1, 2000.
summary: Continued Participation Pension Act of 1996 - Amends the Employee Retirement Income Security Act of 1974 (ERISA) to provide for continued participation under a defined benefit plan for employees who are terminated from employment within seven years of attaining normal retirement age under the plan.