Pension Security and Transparency Act of 2005

Pension Security and Transparency Act of 2005 - Title I: Funding and Deduction Rules for Single-Employer Defined Benefit Plans and Related Provisions - Subtitle A: Amendments to Employee Retirement Income Security Act of 1974 - (Sec. 101) Amends the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) to repeal existing funding rules and to establish new minimum funding standards for single-employer defined benefit pension plans.

(Sec. 102) Sets forth funding rules for single-employer defined benefit pension plans. Requires such plans to amortize unfunded liabilities over not more than seven years. Eliminates a requirement for deficit reduction contributions. Requires a plan's accrued liability, for all benefits accrued by its participants before the current plan year, to be funded completely. Phases in such 100% funding over three years beginning in 2007, and over five years for plans with 100 or fewer participants.

Revises valuation of plan assets to require use of the fair market value or an averaging of such value through a method permitted under regulations prescribed by the Secretary of the Treasury and limited to a period of not more than 12 months. Revises valuation of plan liabilities to require use of segmented interest rates determined by specified portions of a corporate bond yield curve.

Sets forth special rules for plans at risk of terminating because they are underfunded and sponsored by firms that are financially weak, as determined by bond ratings. Requires such plan sponsors, in determining their required contribution, to assume that participants will retire at the earliest possible date and elect the form of benefit with the highest present value.

(Sec. 103) Sets forth funding-based limits on single-employer plans increasing benefits, distributions, and benefit accruals, which are based on the plan's adjusted funded target liability percentage (funding ratio) as of the valuation date for the preceding plan year. Prohibits a plan amendment from increasing benefits liability if the funding ratio is less than 80% or would be so with such amendment. Prohibits lump-sum payments for a specified period by plans with a funding ratio less than 6o%. Prohibits benefit accruals for specified periods for plans with funding ratio less than 60% in the prior year.

The summary continues for 121 more paragraphs. Read it in full on Congress.gov

Written by analysts at the Congressional Research Service and published on Congress.gov, not by Civibrief. Summarized at the "Passed Senate amended" stage on November 16, 2005. It describes the bill, it is not the legal text.

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