Sponsors (12)
Requires the Pension Benefit Guaranty Corporation (PBGC) to treat certain guaranteed monthly benefits as equal to the full vested plan benefit, recompute earlier PBGC calculations, and pay any past-due amounts as lump sums. Creates a Treasury trust fund to cover the increased payments and authorizes needed appropriations, and gives PBGC authority to issue rules to implement the change; past-due lump-sum payments must be made within 180 days of enactment.
For purposes of determining guaranteed benefits under ERISA section 4022, the monthly guaranteed benefit for an eligible participant or beneficiary in a covered plan shall equal the full vested plan benefit for that participant or beneficiary.
This Act does not change prior allocations of assets and recoveries under ERISA sections 4044(a) and 4022(c) as previously determined by the PBGC, and the PBGC’s applicable rules, practices, and policies on benefits payable in terminated single-employer plans continue to apply except as provided in this section.
If a participant’s or beneficiary’s monthly benefit amount was calculated before enactment, the PBGC must recalculate that amount under the rule that the guaranteed monthly benefit equals the full vested plan benefit and must adjust future payments as soon as practicable after enactment.
Not later than 180 days after enactment, the PBGC, in consultation with the Secretary of the Treasury and the Secretary of Labor, must make a lump-sum payment to each eligible participant or beneficiary whose guaranteed benefits are recalculated. For an eligible participant, the lump sum equals the excess of (I) the total of the participant’s full vested plan benefits for all months for which guaranteed benefits were paid prior to recalculation over (II) the sum of any applicable payments already made to that participant. For an eligible beneficiary, the lump sum equals (I) the amount that would be determined under the participant clause if the participant were still in pay status, plus (II) the excess described (text in the source is truncated at this point).
Defines “full vested plan benefit” as the monthly benefit that would be guaranteed under ERISA section 4022 at plan termination if calculated without the phase-in limit (subsection (b)(1)) and without the maximum guaranteed benefit limitation (subsection (b)(3)), including the accrued‑at‑normal limitation.
Who is affected and how:
Participants and beneficiaries of the affected defined benefit pension plans (the "certain covered plans") will receive higher guaranteed monthly benefit treatment and, if prior PBGC calculations underpaid them, lump-sum retroactive payments. This directly benefits retirees and survivors whose PBGC-guaranteed benefits had been calculated below the full vested amount.
The Pension Benefit Guaranty Corporation must recalculate earlier determinations, process claims, and make lump-sum payments, increasing PBGC administrative workload and operational costs. PBGC is authorized to write regulations to manage these tasks.
The law creates a Treasury trust fund and authorizes appropriations, shifting the budgetary responsibility for the increased benefit payments to an explicit federal funding mechanism; federal outlays will rise for the payments and for PBGC administrative expenses.
Plan sponsors/employers are not directly required to pay these retroactive amounts under the described text, but changes in PBGC practice and funding could influence future PBGC premiums or policy. There could be longer‑term effects on PBGC’s financial position and premium-setting if the trust fund and appropriations do not fully offset increased liabilities.
The rulemaking process will determine technical details (which beneficiaries qualify, calculation methods, offsets, and claims procedures), so some implementation specifics and timing impacts on individuals depend on subsequent PBGC regulations.
Last progress June 4, 2025 (8 months ago)
Introduced on June 4, 2025 by Jon Husted
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.