text: 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.
target: 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.
feat_title: Continued Participation Pension Act of 1996