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CERTIFICATE OF RIGHTS

Section 108.-This section requires the Secretary to promulgate regulations requiring each plan to furnish or make available to its participants (whichever is most practicable), upon termination of service with vested rights, with a certificate reciting the benefits due to such participants and the location of the entity responsible for the payments and pertinent data relating thereto. A copy of such certificate shall be filed with the Secretary.

TITLE II.-VESTING AND FUNDING REQUIREMENTS

PART A-VESTING

Section 201.-This section requires that no pension or profitsharing-retirement plan may require as a condition of eligibility to participate in the plan, a period of service longer than one year or an age greater than 25, whichever occurs later, except that any plan which provides 100 percent immediate vesting upon entry into the plan may restrict participation to those who have attained age 30, or three years of service, whichever occurs later.

Section 202.-This section provides that all pension and profitsharing-retirement plans are required to vest accrued benefits in participants with respect to service rendered both before, as well as after, the effective date of the title at the rate of a 30 percent vested interest, commencing with eight years of service, and increasing by 10 percent each year thereafter in order that 100 percent vesting is attained after 15 years of service. Vested plan benefits acquired under the Act may not be assigned or alienated, except that where a plan fails to make such provision, the Secretary shall be required to provide for final disposition of such benefits.

It further provides that no more than three of the eight years required to qualify for a 30 percent vested right need be continuous, but that service prior to age 25 may be ignored in determining eligibility for a vested right unless the participant or his employer has made contributions to the plan with respect to service prior to age 25.

In addition, in the event a participant has achieved 100 percent full vesting when permanently separated from the plan and subsequently returns to coverage under the same plan, he may be treated as a new participant for purposes of vesting schedule.

Any plan may allow more liberal vesting than required by the Act. If, upon application by a plan, the Secretary determines that a plan's vesting provisions assures a degree of vesting protection as equitable as the vesting schedules required by the Act, he may waive the Act's requirements and permit the plan's vesting schedule to remain unchanged.

PART B-FUNDING

Section 210.-This section requires that plans provide for compulsory funding of its obligations to its employees, Every employer is required to provide contributions for funding of his pension plan in a manner adequate to amortize all pension benefit liabilities which may accrue under the terms of the plan. Employers must fund all normal

service costs annually and must fund initial unfunded liabilities existing on the effective date of this title (or in any plan established after the effective date of the title) within 30 years from the applicable date, in no less than equal amounts annually. If any amendment to the plan results in substantial increase to the plan's unfunded liabilities, the increase shall be funded separately as if it were a new plan and shall be regarded as a new plan for purposes of the plan termination insurance program established under this Act.

If a plan has an experience deficiency (resulting from actuarial error) for any particular year, the deficiency must be removed in no more than a five-year period, except that where such deficiency cannot be removed within such period without exceeding allowable limits for tax deductions under the Internal Revenue Code for a given year during such period, the Secretary may prescribe necessary additional time to permit removal of such deficiency within allowable tax deduction limitations.

Within six months after the effective date of rules promulgated by the Secretary to implement this title, but not later than 12 months. after the effective date of the title or within six months after date of plan establishment, whichever is later, the plan is required to submit a report by an actuary who has been certified by the Secretary, stating information necessary to determine the appropriate application of the funding requirements to the plan. Plans are also required to be reviewed every five years by certified actuaries who are to report the funding obligations which must be met and any surplus or experience deficiencies. The Secretary is authorized to exempt certain plans from these filing requirements if consistent with the purpose of the Act.

Section 211.-This section provides that subject to the authority of the Secretary to provide exemptions in cases of hardship, and certain other circumstances all assets of terminated pension plans must be distributed according to the following priorities:

First, to refund to nonretired participants in the plan the amount of contributions made by them; second, to retirees; third, to persons eligible to retire on date of plan termination; fourth, to participants who have vested rights under the plan but who have not reached retirement age; and fifth, to other participants. In addition, employers are held liable for contributions (including amounts withheld from employees) owing to the plan which were required to be made by virtue of the funding requirements of the Act, but which were not made as of the date of plan termination. Upon either complete or substantial termination of a profit-sharing plan, the interests of all participants shall fully vest.

The Secretary may approve payment of benefits due to survivors in accordance with priorities which are equal to those of the employees whose service had acquired such benefits.

PART C.-VARIANCES

Section 216.-This section authorizes the Secretary to defer, in whole or in part, applicability of the vesting provisions for a period not to exceed five years from the effective date of such requirements where a plan makes a showing that the vesting requirements would increase the employer's costs or contributions to the plan to an extent

that "substantial economic injury" would result to the employer and to the interests of the participants.

The definition of "substantial economic injury" is defined to include, but not to be limited to, a substantial risk to plan continuance, inability to discharge benefit obligations, substantial curtailment of pension or other employee benefits, or the production of an adverse effect upon employment levels of the work force of the employer contributing to the plan.

In collectively-bargained plans, both employer and union are required to submit application for the variance, and where such a submission is made, the Secretary is required to give due weight to the experience, competence, and knowledge of the parties concerning the necessity for the variance.

Section 217.-This section provides that where an employer can make a showing to the Secretary of Labor that he cannot make the required annual contribution to the pension plan, the Secretary may waive such contributions and authorize that such deficiency be funded over a period not to exceed five years in no less than equal annual payments. However, to authorize such variance, the Secretary must be satisfied that such waiver will not have an adverse effect upon the interests of employees and will not impair the financial position of the Pension Benefit Insurance Fund. No waiver may be granted for more than five years, and when a plan has been granted five consecutive waivers, the Secretary has the authority to: (1) merge or consolidate a deficiently funded plan with another plan of the employer, if feasible; (2) order termination of a plan if necessary to protect the interests of the participants or the position of the plan termination insurance program; (3) or such other action as may be appropriate to carry out the purposes of the Act.

No amendments increasing plan benefits are permitted during any period that a funding waiver is in effect.

The Secretary is required to promulgate regulations governing funding of multi-employer plans that cover a substantial portion of the industry or employees in a specific geographic area to assure that such plans are provided with sufficient assets to cover benefits under the plan. In promulgating such regulations, the Secretary is required to set a funding period that will reflect an adequate basis for funding the plan's benefit commitments and which takes into account the particular situation pertaining to the plan, industry, and circumstances involved. In no event is the Secretary authorized to prescribe a funding period for such a multi-employer plan which is less than 30 years, and no such plan is permitted to increase benefits beyond a point for which the contribution rate would be inadequate unless such rate is increased commensurately.

The Secretary may determine also that an employer's withdrawal from a multi-employer plan will significantly reduce the rate of aggregate contributions to the plan. He may then require the fund to be allocated between the nonworking and working participants, and treat the nonworkers' share of the fund as terminated for insurance purposes, and the remaining portion of the fund as a new one for funding, variances, and insurance purposes.

In considering the experience of multi-employer plans for new premium rates for insurance, the Secretary shall take into account the withdrawal of employers from the plan.

TITLE III.-VOLUNTARY PORTABILITY PROGRAM FOR VESTED PENSIONS

PROGRAM ESTABLISHED

Section 301.-This section establishes a voluntary program for portability of vested pension credits. The program will be administered by and under the Secretary's direction, and will be designed to facilitate the voluntary transfer of vested credits between registered plans. Plans registered under the Act may voluntarily apply for membership in the program and upon approval be issued a certificate of membership by the Secretary.

ACCEPTANCE OF DEPOSITS

Section 302.-This section requires that, upon request of a plan participant, plans which are members of this program are required to pay, to a central portability fund administered by the Secretary, monies representing the value of the participant's vested rights when he is separated from the plan prior to retirement. The Secretary will prescribe the terms and circumstances of deposits to be made.

SPECIAL FUND

Section 303.-This section establishes a Voluntary Portability Program Fund under the supervision of the Secretary into which payments will be made in accordance with regulations prescribed by the Secretary under the portability program. The Secretary shall be the trustee of the fund and shall administer the fund and report to the Congress annually of the fund's operations and fiscal status. The Secretary is authorized to deposit the amounts received in financial institutions insured by the FDIC or FSLIC but not more than 10 percent in any one financial institution.

INDIVIDUAL ACCOUNTS

Section 304.-This section requires the Fund to establish individual accounts for each participant for whom it has received monies under the portability program.

PAYMENTS FROM INDIVIDUAL ACCOUNTS

Section 305. This section provides that, at the request of a participant transferring into a new plan, the Secretary is required to pay out if his account the accumulated amounts to purchase pension credits from the new plan which are actuarially equivalent. Unless the monies in a participant's account have been transferred to another employer's plan at the participant's request, the Secretary is required to use the monies in the participant's account to purchase a single-premium life annuity from a qualified life insurance carrier when the participant reaches age 65, and in the event of the participant's death, to pay out monies in this account to his designated beneficiary.

TECHNICAL ASSISTANCE

Section 306.-This section authorizes the Secretary to furnish technical assistance to unions, administrators, and all others affected by

this Act who wish to develop portability or reciprocity arrangements of their own.

TITLE IV.-PLAN TERMINATION INSURANCE PROGRAM

ESTABLISHED

Section 401.-This section establishes a Private Pension Plan Termination Insurance Program administered by the Secretary, which requires plans to insure unfunded vested liabilities incurred prior to enactment of the Act, as well as after enactment of the Act. The Secretary may provide insurance to cover unfunded vested liabilities of a plan not subject to the Act where he determines that such plan conforms to the vesting, funding and all other standards required by the Act. CONDITION OF INSURANCE

Section 402.-This section requires the insurance program to insure participants against loss of vested benefits arising from plan termination.

The amount of vested benefit insurance is limited to 50 percent of highest average monthly wage of participants earned over a fiveyear period, or $500 monthly, whichever is the lesser.

No insurance shall be paid if the plan is terminated less than three years from date of establishment or registration unless the Secretary determines that a registered plan was otherwise in substantial compliance with the Act and that the reserve position of the insurance program will not be adversely affected.

Insurance will not cover vested rights created by any plan amendment which took effect less than three years prior to plan termination. No coverage is extended to participants who own 10 percent or more of employer voting stock.

ASSESSMENT AND PREMIUMS

Section 403.-This section requires plans to pay an initial uniform assessment to be prescribed by the Secretary to cover administrative costs of the program. The Secretary shall prescribe an annual premium rate based upon unfunded vested liabilities. For the first three years, the insurance premium shall not exceed 0.2 percent of unfunded vested liabilities incurred after enactment of the Act. With respect to those unfunded vested liabilities incurred prior to enactment, the premium shall be 0.2 percent, provided that the unfunded vested liabilities of the plan were funded at least 75% during the five-year period preceding enactment.

As to plans which on date of enactment were less than five years old, the premium shall be 0.2 percent, provided that the plan had been reducing its unfunded vested liabilities at a rate of no less than 5 percent annually. In the event plans do not meet the above funding standards, they can be charged a premium not to exceed 0.4 percent or less than 02. percent of pre-enactment unfunded vested liabilities.

Also, in the case of multi-employer plans (as defined in the Act), the premium rate for the initial three years shall not exceed 0.2 percent of unfunded vested liabilities, regardless of when such liabilities were incurred.

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