Requires pension plan administrators to provide certain benefit information to participants or beneficiaries periodically. Requires plan sponsors (employers) and plan administrators to provide all material investment information to participants and beneficiaries, in an accurate form, as required to be disclosed to investors under applicable securities laws, and treats misleading investment information as a violation.
Establishes diversification standards for certain individual account plans holding employer stock and real property. Determines allowable employer asset percentages through formulas which include plan assets in defined benefit plans as well as those in defined contribution plans. Provides exceptions for certain employee stock ownership plans (ESOPs).
Prohibits requiring a participant in or beneficiary of an individual account plan to invest employee contributions or elective deferrals, or earnings allocable to either, in employer assets. Requires individual account plans, if they permit participants or beneficiaries to exercise control over their plan account assets, to also allow, after one year of employee service, reinvestment of any employer contribution of employer assets in other investment options offered by the plan.
Requires individual account plan fiduciaries to give 30 days notice to plan participants and beneficiaries before a lockdown limiting their control over their account assets, and limits the maximum duration of any such lockdown to ten business days. Limits fiduciary exceptions to liability during lockdown periods. Prohibits corporate executives from trading employer securities during lockdown periods.
Requires each fiduciary of an individual account plan to be bonded or insured in an amount sufficient to ensure coverage of financial losses due to failures to meet certain ERISA requirements. Makes liable anyone who participates in or conceals certain breaches of fiduciary duty. Adds remedies, including punitive damages, for certain violations. Requires joint boards of trustees, representing interests of employers and those of employee participants and beneficiaries, to hold in trust the assets of single-employer plans which are individual account plans with some or all assets derived from employee contributions. Prohibits: (1) waiver of rights or claims under ERISA, with specified exceptions; and (2) interference with such rights.
Establishes an Office of Pension Participant Advocacy in the Department of Labor. Directs the Pension Benefit Guaranty Corporation to study and report to specified congressional committees on the feasibility of and options for developing an insurance system for individual account plans.
Treats qualified public accountants as not independent with respect to an employee benefit plan if the accountant or any member or employee of the accountant's firm is employed by or performs services for compensation for any employer maintaining the plan.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1919 Introduced in Senate (IS)]
107th CONGRESS
2d Session
S. 1919
To amend the Employee Retirement Income Security Act of 1974 to provide
for improved disclosure, diversification, account access, and
accountability under individual account plans.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 7, 2002
Mr. Wellstone introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 to provide
for improved disclosure, diversification, account access, and
accountability under individual account plans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Retirement
Security Protection Act of 2002''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title and table of contents.
TITLE I--IMPROVEMENTS IN DISCLOSURE
Sec. 101. Pension benefit information.
Sec. 102. Provision to participants and beneficiaries of material
investment information in accurate form.
TITLE II--DIVERSIFICATION
Sec. 201. Diversification standards for qualifying individual account
plans holding employer stock and real
property.
Sec. 202. Elimination of employer requirements that assets be invested
in employer securities.
TITLE III--APPROPRIATE ACCESS TO INDIVIDUAL ACCOUNTS
Sec. 301. Advance notice, and limitation on duration, of lockdowns.
Sec. 302. Limitation on fiduciary exception during lockdown period.
Sec. 303. Corporate executives may not trade employer securities or
derivatives during lockdown period.
TITLE IV--INCREASED ACCOUNTABILITY
Sec. 401. Bonding or insurance adequate to protect interest of
participants and beneficiaries.
Sec. 402. Liability for breach of fiduciary duty.
Sec. 403. Remedies available for violations of act.
Sec. 404. Participation of participants in trusteeship of individual
account plans.
Sec. 405. Preservation of rights or claims.
Sec. 406. Office of Pension Participant Advocacy.
Sec. 407. Study regarding insurance system for individual account
plans.
Sec. 408. Prohibitions against interference with rights protected under
ERISA.
Sec. 409. Independent qualified public accountant.
TITLE V--GENERAL PROVISIONS
Sec. 501. General effective date.
Sec. 502. Plan amendments.
TITLE I--IMPROVEMENTS IN DISCLOSURE
SEC. 101. PENSION BENEFIT INFORMATION.
(a) Pension Benefit Statements Required on Periodic Basis.--
(1) In general.--Subsection (a) of section 105 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1025) is amended--
(A) by striking ``shall furnish to any plan
participant or beneficiary who so requests in
writing,'' and inserting ``shall furnish at least once
every 3 years, in the case of a participant in a
defined benefit plan who has attained age 35, and
annually, in the case of an individual account plan, to
each plan participant, and shall furnish to any plan
participant or beneficiary who so requests,'', and
(B) by adding at the end the following flush
sentence:
``Information furnished under the preceding sentence to a participant
in a defined benefit plan (other than at the request of the
participant) may be based on reasonable estimates determined under
regulations prescribed by the Secretary.''
(2) Model statement.--Section 105 of such Act (29 U.S.C.
1025) is amended by adding at the end the following new
subsection:
``(e) The Secretary of Labor shall develop a model benefit
statement which may be used by plan administrators in complying with
the requirements of subsection (a). Such statement shall include--
``(1) the amount of nonforfeitable accrued benefits as of
the statement date which is payable at normal retirement age
under the plan,
``(2) the amount of accrued benefits which are forfeitable
but which may become nonforfeitable under the terms of the
plan,
``(3) the amount or percentage of any reduction due to any
permitted disparity under section 401(l) of the Internal
Revenue Code of 1986,
``(4) the percentage of the net return on investment of
plan assets for the preceding plan year (or, with respect to
investments directed by the participant, the net return on
investment of plan assets for such year so directed), and,
stated separately, the administrative, transaction, and other
fees or charges incurred in connection with such investment,
``(5) in the case of an individual account plan, the
percentage of assets in the individual account that consists of
employer securities and employer real property (as defined in
paragraphs (1) and (2), respectively, of section 407(d)), as
determined as of the most recent valuation date of the plan,
``(6) a notice advising participants and beneficiaries of
the importance of diversifying the investment of the assets in
their accounts,
``(7) information on early retirement benefits and joint
and survivor annuity reductions under the plan, including
information on the extent to which a lump sum payment option
fails to reflect the value of any early retirement subsidy
applicable to other payment options, and
``(8) information on how to contact the Social Security
Administration to obtain a participant's personal earnings and
benefit estimate statement.''
(3) Rule for multiemployer plans.--Subsection (d) of
section 105 of such Act (29 U.S.C. 1025) is amended to read as
follows:
``(d) Each administrator of a plan to which more than 1
unaffiliated employer is required to contribute shall furnish to any
plan participant or beneficiary who so requests in writing, a statement
described in subsection (a).''
(4) Form of notice and statement.--Section 105 of such Act
(29 U.S.C. 1025) is amended by adding the end the following new
subsection:
``(f) Any information provided under subsection (a), and the model
statement under subsection (e), shall be in a form calculated to be
understood by the average plan participant.''
(b) Disclosure of Benefit Calculations.--
(1) In general.--Section 105 of such Act (as amended by
subsection (a)) is amended further--
(A) by redesignating subsections (b), (c), (d), and
(e) as subsections (c), (d), (e), and (f),
respectively; and
(B) by inserting after subsection (a) the following
new subsection:
``(b)(1) In the case of a participant or beneficiary who is
entitled to a distribution of a benefit under an employee pension
benefit plan, the administrator of such plan shall--
``(A) notify each participant or beneficiary of the
availability of, and the right to request, the information
described in paragraph (2), and
``(B) provide to the participant or beneficiary the
information described in paragraph (2) upon the written request
of the participant or beneficiary.
``(2) The information described in this paragraph includes--
``(A) a worksheet explaining how the amount of the
distribution was calculated and stating the assumptions used
for such calculation,
``(B) upon written request of the participant or
beneficiary, any documents relating to the calculation (if
available), and
``(C) such other information as the Secretary may
prescribe.
Any information provided under this paragraph shall be in a form
calculated to be understood by the average plan participant.''.
(2) Conforming amendments.--
(A) Section 101(a)(2) of such Act (29 U.S.C.
1021(a)(2)) is amended by striking ``105(a) and (c)''
and inserting ``105(a), (b), and (d)''.
(B) Section 105(c) of such Act (as redesignated by
paragraph (1)(A) of this subsection) is amended by
inserting ``or (b)'' after ``subsection (a)''.
(C) Section 106(b) of such Act (29 U.S.C. 1026(b))
is amended by striking ``sections 105(a) and 105(c)''
and inserting ``subsections (a), (b), and (d) of
section 105''.
SEC. 102. PROVISION TO PARTICIPANTS AND BENEFICIARIES OF MATERIAL
INVESTMENT INFORMATION IN ACCURATE FORM.
(a) In General.--Section 404(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(c)) is amended by adding at the
end the following new paragraph:
``(4) The plan sponsor and plan administrator of a pension plan
described in paragraph (1) shall, in addition to any other fiduciary
duty or responsibility under this part, have a fiduciary duty to ensure
that each participant and beneficiary under the plan, in connection
with the investment by the participant or beneficiary of plan assets in
the exercise of his or her control over assets in his account, is
provided with all material investment information regarding investment
of such assets to the extent that such information is generally
required to be disclosed by the plan sponsor or plan administrator to
investors in connection with such an investment under applicable
securities laws. The provision by the plan sponsor or plan
administrator of any misleading investment information shall be treated
as a violation of this paragraph.''
(b) Enforcement.--
(1) In general.--Section 502(c) of such Act (29 U.S.C.
1132(c)) is amended--
(A) by redesignating paragraph (7) as paragraph
(8); and
(B) by inserting after paragraph (6) the following
new paragraph:
``(7) The Secretary may assess a civil penalty against any person
of up to $1,000 a day from the date of the person's failure or refusal
to comply with the requirements of section 404(c)(4) until such failure
or refusal is corrected.''
(2) Conforming amendment.--Section 502(a)(6) of such Act
(29 U.S.C. 1132(a)(6)) is amended by striking ``(5), or (6)''
and inserting ``(5), (6), or (7)''.
TITLE II--DIVERSIFICATION
SEC. 201. DIVERSIFICATION STANDARDS FOR QUALIFYING INDIVIDUAL ACCOUNT
PLANS HOLDING EMPLOYER STOCK AND REAL PROPERTY.
(a) In General.--Section 407 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1107) is amended by adding at the end
the following:
``(g) Diversification Standards Applicable to Certain Individual
Account Plans.--
``(1) In general.--Except as otherwise provided in this
subsection, an applicable individual account plan--
``(A) may not acquire after December 31, 2003,
qualifying employer securities or qualifying employer
real property for allocation to the account of a
participant or beneficiary to the extent that,
immediately after the acquisition, the participant's or
beneficiary's employer asset percentage would exceed 20
percent, and
``(B) if, on December 31, 2003, a participant's or
beneficiary's employer asset percentage exceeds 20
percent, shall require the participant or beneficiary
to reinvest qualifying employer securities and
qualifying employer real property which are allocated
(or to be allocated) to the account of the participant
or beneficiary to the extent necessary to ensure that
on December 31, 2007, the participant's and
beneficiary's employer asset percentage does not exceed
20 percent.
For purposes of subparagraph (B), the amount determined under
paragraph (3)(A)(ii) shall be the greater of the amount
determined on December 31, 2003, or December 31, 2007.
``(2) Exception for plans with employer assets of less than
15 percent.--
``(A) In general.--Paragraph (1) shall not apply to
applicable individual account plan if at all times
after December 31, 2003, the plan does not exceed the
employer asset limitation determined under paragraph
(4).
``(B) Rules where plan exceeds limits.--
``(i) Years before 2008.--If for any plan
year beginning after December 31, 2003, and
before January 1, 2008, an applicable
individual account plan exceeds the employer
asset limitation determined under paragraph
(4), then--
``(I) paragraph (1)(A) shall apply
to plan years beginning after such plan
year, and
``(II) paragraph (1)(B) shall apply
as of December 31, 2007.
``(ii) Years after 2007.--If for any plan
year beginning after December 31, 2007, an
applicable individual account plan exceeds the
employer asset limitation determined under
paragraph (4), then paragraph (1) shall apply
to plan years beginning after such plan year.
``(C) Plan subsequently complying with limits.--
``(i) Plan year following excess year.--
Subparagraph (B) shall not apply to a plan year
if the plan does not exceed the employer asset
limitation determined under paragraph (4) for
the following plan year.
``(ii) Other years.--If subparagraph (B)
applies to a plan for any plan year and such
plan does not exceed the employer asset limitation of paragraph (4) for
a subsequent plan year after the plan year described in clause (i),
then, subject to the provisions of subparagraph (B), paragraph (1)
shall cease to apply to plan years following such subsequent year.
``(3) Employer asset percentage.--For purposes of this
subsection--
``(A) In general.--The term `employer asset
percentage' means, with respect to any participant or
beneficiary in an applicable individual account plan
maintained by 1 or more plan sponsors, the percentage
equal to a fraction--
``(i) the numerator of which is the fair
market value of all qualifying employer
securities and qualifying employer real
property allocated (or to be allocated) to the
accounts of the participant or beneficiary
under all applicable individual account plans
maintained by such sponsors, and
``(ii) the denominator of which is an
amount equal to the sum of--
``(I) the fair market value of all
assets allocated (or to be allocated)
to the accounts of the participant or
beneficiary under all applicable
individual account plans maintained by
those sponsors, plus
``(II) the present value of the
aggregate accrued benefit of the
participant or beneficiary under all
defined benefit plans maintained by
those plan sponsors.
``(B) Time for determination of percentage.--
``(i) In general.--An applicable individual
account plan shall determine the employer asset
percentage for each participant or beneficiary
each time the plan values the assets of the
participant or beneficiary in the plan, except
that such percentage shall be determined no
less frequently than annually.
``(ii) Present value.--For purposes of
subparagraph (A)(ii)(II), the present value of
a participant's or beneficiary's accrued
benefit shall be determined by the plan, using
the most recent valuation of such accrued
benefit under the defined benefit plan as of
the date of the determination under clause (i).
The Secretary, in consultation with the
Secretary of the Treasury, shall prescribe such
rules as may be necessary to simplify, and
reduce the administrative costs of, the process
used to determine such present value.
``(4) Employer asset limitation.--For purposes of this
subsection--
``(A) In general.--An applicable individual account
plan shall be treated as exceeding the employer asset
limitation determined under this paragraph for any plan
year if, as of the close of such plan year, the
percentage determined under subparagraph (B) with
respect to the plan exceeds 15 percent.
``(B) Percentage.--The percentage determined under
this subparagraph with respect to any applicable
individual account plan maintained by 1 or more plan
sponsors is the percentage equal to a fraction--
``(i) the numerator of which is the fair
market value of all qualifying securities and
qualifying employer real property held by all
applicable individual account plans maintained
by such sponsors, and
``(ii) the denominator of which is the fair
market value of all assets of all applicable
individual account plans and defined benefit
plans maintained by such sponsors.
``(C) Restrictions on plans taken into account.--
For purposes of subparagraph (B), plans maintained by a
sponsor shall only be taken into account to the extent
that, as determined under regulations prescribed by the
Secretary, such plans cover the same or substantially
all the same employees, or any group of employees, as
are covered by the applicable individual account plan
with respect to which a determination under this
paragraph is being made. For purposes of the preceding
sentence, a group of employees may be taken into
account only if the members of such group are the
members of the same subsidiary, division, line of
business, or other business unit or group of employees
as determined in accordance with such regulations.
``(5) Divestiture.--
``(A) In general.--The Secretary shall prescribe
regulations under which a plan is given a reasonable
period of time to divest itself of qualifying employer
securities and qualifying employer real property in
order to meet the requirements of this subsection.
``(B) Waiver in certain cases.--The Secretary may
by regulations waive the application of this subsection
or provide an extension of time for compliance with
this subsection in cases where the failure to comply
with paragraph (1) or (2) was inadvertent or was
attributable to an acquisition or merger involving a
plan sponsor, or in such other cases as the Secretary
determines appropriate.
``(6) Applicable individual account plan.--For purposes of
this subsection--
``(A) In general.--The term `applicable individual
account plan' means an individual account plan other
than a plan described in subparagraph (B) or (C).
``(B) Employee stock ownership plans.--Such term
shall not include an employee stock ownership plan (as
defined in section 4975(e)(7) of the Internal Revenue
Code of 1986), or a plan which meets the requirements
of section 409(a) of such Code, if--
``(i) the plan sponsors of such plan, or
any affiliate thereof, have not issued any
securities which are readily tradable on an
established securities market, or
``(ii) the plan holds employer securities
possessing more than 50 percent of--
``(I) the total combined voting
power of all classes of employer
securities entitled to vote, or
``(II) the total value of employer
securities of all classes of employer
securities.
``(C) Collectively bargained plans.--Such term
shall not include any plan maintained pursuant to 1 or
more collective bargaining agreements between employee
representatives and 1 or more employers.
``(D) Secretarial authority.--The Secretary may
provide that a plan shall not be treated as an
applicable individual account plan if the plan
establishes to the satisfaction of the Secretary that--
``(i) the plan has developed an alternative
approach to management of risks associated with
failures to adequately diversify investments
which is protective of the rights and interests
of participants and beneficiaries, and
``(ii) the plan has an opinion from an
independent fiduciary that the requirements of
clause (i) have been met.''
(b) Study.--As soon as practicable after the date of enactment of
this Act, the Secretary of Labor, acting jointly with the Secretary of
the Treasury, shall undertake a study with respect to the application
of the amendments made by this section to employee stock ownership
plans under which the only contributions which may be made are
nonelective contributions. Such study shall include consideration of--
(1) whether such plans should be exempted from the
application of such amendments,
(2) whether such plans should be given a longer period to
meet the diversification standards set forth in such amendments
or should be allowed to meet alternative diversification
standards,
(3) how to best balance the interests of participants and
beneficiaries in employee stock ownership plans with their
retirement security interest of having adequate protection from
investment volatility and the risk of large losses associated
with inadequate diversification, and
(4) possible market responses to the need to protect
employees from losses through the use of hedging or other
insurance instruments, including consideration of whether it
would be appropriate to give the Secretary of Labor authority
to grant group or class exceptions for use of such instruments.
The Secretary and the Secretary of the Treasury shall report the
results of the study, together with any recommendations for legislative
changes, to the Committee on Education and the Workforce of the House
of Representatives and the Committee on Health, Education, Labor, and
Pensions of the Senate.
(c) Conforming Amendments.--
(1) Section 407 of such Act (29 U.S.C. 1107) is amended--
(A) by striking ``Subsection (a)'' in subsection
(b)(1) and inserting ``Subject to subsection (g),
subsection (a)'', and
(B) by striking ``10 percent'' in the heading.
(2) The item relating to section 407 in the table of
sections for part 4 of title I of such Act is amended by
striking ``10 percent''.
SEC. 202. ELIMINATION OF EMPLOYER REQUIREMENTS THAT ASSETS BE INVESTED
IN EMPLOYER SECURITIES.
(a) In General.--Section 404 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end
the following new subsection:
``(e)(1) An individual account plan shall provide that--
``(A) a participant or beneficiary may not be required to
invest any employee contribution or elective deferral (or any
earnings allocable to either) in employer securities or
employer real property, and
``(B) if the plan permits a participant or beneficiary to
exercise control over assets in his or her account, the
participant or beneficiary has the right after 1 year of
service with employers maintaining the plan to reinvest any
employer contribution of employer securities or employer real
property in any other investment option provided by the plan.
In the case of nonelective employer contributions to an employee stock
ownership plan, a participant or beneficiary shall not have the right
to reinvest under subparagraph (B) until the participant has 10 years
of participation under the plan.
``(2) Paragraph (1)(B) shall apply to a plan only if any plan
sponsor, or any affiliate thereof, has issued securities which are
readily tradable on an established securities market.
``(3)(A) Except as provided in subparagraph (B), within 30 days
after the date of any election by a participant or beneficiary under
paragraph (1)(B) to reinvest employer contributions, the plan
administrator shall take such actions as are necessary to effectuate
such reinvestment.
``(B) In any case in which the plan provides for elections
periodically during prescribed periods, the 30-day period described in
clause (i) shall commence at the end of each such prescribed period.
``(4) Not later than 30 days prior to the date on which a
participant completes 1 year of service with employers maintaining the
plan (or 10 years of participation under the plan in the case of an
employee stock ownership plan which only provides for nonelective
employer contributions), the plan administrator shall provide to such
participant and his or her beneficiaries a written notice--
``(A) setting forth their rights under paragraph (1)(B)
with respect to employer contributions, and
``(B) describing the importance of diversifying the
investment of account assets.
``(5) For purposes of this subsection--
``(A) the term `elective deferral' has the meaning given
such term by section 402(g)(3) of the Internal Revenue Code of
1986,
``(B) the term `employee stock ownership plan' has the
meaning given such term by section 4975(e)(7) of such Code,
``(C) the terms `employer securities' and `employer real
property' have the meanings given such terms by section 407(d),
``(D) the term `participation' has the meaning given such
term by section 204(b)(4), and
``(E) the term `year of service' has the meaning given such
term by section 203(b)(2).''
(b) Qualification Requirements for Employee Stock Ownership
Plans.--Notwithstanding any other provision of law, an employee stock
ownership plan shall not be treated as failing to meet any requirement
to maintain a minimum percentage of its assets in employer securities
solely by reason of a participant electing to reinvest employer
securities in other assets.
(c) Recommendations Relating to Nonpublicly Traded Stock.--Within 1
year after the date of the enactment of this Act, the Secretary of
Labor shall transmit to the Committee on Education and the Workforce of
the House of Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate the Secretary's recommendations
regarding legislative changes relating to treatment, under section
404(a)(3) of the Employee Retirement Income Security Act of 1974 (as
added by this section), of individual account plans under which a
participant or beneficiary is permitted to exercise control over assets
in his or her account, in cases in which such assets include employer
securities which are not readily tradable under an established
securities market.
(d) Conforming Amendment.--Section 407(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1107(b)) is amended
by striking paragraph (2) and by redesignating paragraph (3) as
paragraph (2).
(e) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments
made by this section shall apply with respect to plan years
beginning on or after January 1, 2003.
(2) Delayed effective date for existing holdings.--In any
case in which a portion of the nonforfeitable accrued benefit
of a participant or beneficiary is held in the form of employer
securities (as so defined) immediately before the first date of
the first plan year to which the amendments made by this
section apply, such portion shall be taken into account only
with respect to plan years beginning on or after January 1,
2004.
TITLE III--APPROPRIATE ACCESS TO INDIVIDUAL ACCOUNTS
SEC. 301. ADVANCE NOTICE, AND LIMITATION ON DURATION, OF LOCKDOWNS.
Section 404 of the Employee Retirement Income Security Act of 1974
(as amended by section 202) is amended further by adding at the end the
following new subsection:
``(f)(1) In the case of any eligible individual account plan (as
defined in section 407(d)(3)) which explicitly provides for the
acquisition and holding of qualifying employer securities and
qualifying employer real property (as defined in section 407(d))--
``(A) no lockdown may take effect until at least 30 days
after written notice of such lockdown is provided by the plan
administrator to such participant or beneficiary, and
``(B) any lockdown may not continue for a period in excess
of 10 consecutive business days.
``(2) Subject to such regulations as the Secretary may prescribe,
the requirements of paragraph (1) shall not apply in cases of
emergency.
``(3) For purposes of this subsection, the term `lockdown' means
any temporary lockdown, blackout, or freeze with respect to, suspension
of, or similar limitation on the ability of a participant or
beneficiary (who has met minimum participation requirements applicable
in accordance with section 202) to exercise control over the assets in
his or her account as otherwise generally provided under the plan (as
determined under regulations of the Secretary).''
SEC. 302. LIMITATION ON FIDUCIARY EXCEPTION DURING LOCKDOWN PERIOD.
Section 404(c) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1104(c)) is amended by adding at the end the following
new paragraph:
``(3) Notwithstanding paragraph (1), if--
``(A) a person is otherwise a fiduciary with respect to a
plan described in paragraph (1), and
``(B) such person violates any fiduciary duty under
subsection (f) or any other provision of this part in the
implementation of a lockdown (as defined in subsection (f)(3))
in connection with such plan,
such person shall be liable under this part for any loss which results
from a participant's or beneficiary's inability to exercise control
over qualifying employer securities or qualifying employer real
property (as defined in section 407(d)) in his or her account by reason
of the lockdown.''
SEC. 303. CORPORATE EXECUTIVES MAY NOT TRADE EMPLOYER SECURITIES OR
DERIVATIVES DURING LOCKDOWN PERIOD.
(a) In General.--Part 5 of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding at the end the
following:
``SEC. 518. CORPORATE EXECUTIVES NOT TO TRADE EMPLOYER SECURITIES
DURING LOCKDOWN PERIOD.
``If an individual account plan to which section 404(c) applies
allows a participant or beneficiary to direct the investment of assets
in his or her account in qualifying employer securities or qualifying
employer real property, it shall be unlawful for any person described
in section 16(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78p)
with respect to any plan sponsor of such plan to, directly or
indirectly, sell or exercise any employer security of the plan sponsor,
or any derivative thereof, during any period during which a lockdown
(as defined in section 404(f)(3)) is in effect with respect to such
plan.''
(b) Conforming Amendment.--The table of contents for part 5 of
title I of such Act is amended by adding at the end the following:
``518. Corporate executives not to trade employer securities during
lockdown period.''
TITLE IV--INCREASED ACCOUNTABILITY
SEC. 401. BONDING OR INSURANCE ADEQUATE TO PROTECT INTEREST OF
PARTICIPANTS AND BENEFICIARIES.
Section 412 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1112) is amended by adding at the end the following new
subsection:
``(f) Notwithstanding the preceding provisions of this section,
each fiduciary of an individual account plan shall be bonded or
insured, in accordance with regulations which shall be prescribed by
the Secretary, in an amount sufficient to ensure coverage by the bond
or insurance of financial losses due to any failure to meet the
requirements of this part.''
SEC. 402. LIABILITY FOR BREACH OF FIDUCIARY DUTY.
(a) Liability for Participating in or Concealing Fiduciary
Breach.--
(1) In general.--Section 409(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1109(a)) is amended--
(A) by inserting ``, or any other person who, with
notice of the facts constituting the breach,
participates in or undertakes to conceal such breach,''
after ``duties imposed upon fiduciaries by this
title'';
(B) by inserting ``and to each participant and
beneficiary of the plan'' after ``plan'' the second
place it appears, and by inserting ``or such
participant or beneficiary'' after ``plan'' the third
place it appears;
(C) by inserting ``or such other person'' after
``profits of such fiduciary'' and ``by the fiduciary'';
and
(D) by inserting ``or entry of an order prohibiting
such fiduciary or such other person from dealing with
employee benefit plans'' after ``removal of such
fiduciary''.
(2) Conforming amendment.--Section 409(b) of such Act (29
U.S.C. 1109(b)) is amended by inserting before the period the
following: ``, unless his liability arises out of his role as a
person who, with notice of facts constituting such breach,
participates in or undertakes to conceal such breach (as
described in subsection (a))''.
(b) Expansion of Available Remedies.--Section 409(a) of such Act
(29 U.S.C. 1109(a)) is amended by striking ``such other equitable or
remedial relief'' and inserting ``such additional relief, including
equitable, compensatory, or remedial relief,''.
(c) Maintenance of Fiduciary Liability.--Section 404(c)(1)(B) of
such Act (29 U.S.C. 1104(c)(1)(B)) is amended by inserting before the
period the following: ``, except that this subparagraph shall not be
construed to exempt any fiduciary from liability for any violation of
subsection (e) or (f)''.
SEC. 403. REMEDIES AVAILABLE FOR VIOLATIONS OF ACT.
(a) Violations of ERISA.--Paragraphs (3)(B) and (5)(B) of section
502(a) of such Act (29 U.S.C. 1132(a) (3)(B) and (5)(B)) are each
amended by striking ``other appropriate equitable relief'' and
inserting ``other appropriate relief, including such additional relief
as a court of equity might have awarded in a case involving the
enforcement or administration of a trust, other equitable relief,
compensatory relief, or remedial relief,''.
(b) Punitive Damages.--Section 502(a)(5) of such Act (29 U.S.C.
1132(a)(5)) is amended by striking ``or'' at the end of subparagraph
(A), by inserting ``or'' after the semicolon at the end, and by
inserting at the end the following: ``(C) to obtain punitive damages if
such violation was committed with malice or reckless indifference;''.
(c) Expert Fees.--Section 502(g)(1) of such Act (29 U.S.C.
1132(g)(1)) is amended--
(1) by inserting ``, reasonable expert fees,'' before ``and
costs'', and
(2) by inserting before the period at the end the
following: ``, except that the court shall award such fees and
costs to a prevailing party in the case of an action brought to
enforce section 510 unless the court determines that it would
be unjust to do so under the circumstances''.
SEC. 404. PARTICIPATION OF PARTICIPANTS IN TRUSTEESHIP OF INDIVIDUAL
ACCOUNT PLANS.
(a) In General.--Section 403(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1103(a)) is amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively;
(2) by inserting ``(1)'' after ``(a)''; and
(3) by adding at the end the following new paragraph:
``(2)(A) Subject to subparagraph (B), the assets of a single-
employer plan which is an individual account plan and under which some
or all of the assets are derived from employee contributions or
elective deferrals shall be held in trust by a joint board of trustees,
which shall consist of two or more trustees representing on an equal
basis the interests of the employer or employers maintaining the plan
and the interests of the participants and their beneficiaries.
``(B) This paragraph shall apply for any plan year only if a
majority of the participants of the individual account plan indicates
to the plan administrator, in such form and manner as shall be
prescribed in regulations of the Secretary, its intention to have this
paragraph so apply.
``(C)(i) Except as provided in clause (ii), in any case in which
the plan is maintained pursuant to one or more collective bargaining
agreements between one or more employee organizations and one or more
employers, the trustees representing the interests of the participants
and their beneficiaries shall be designated by such employee
organizations.
``(ii) Clause (i) shall not apply with respect to a plan described
in such clause if the employee organization (or all employee
organizations, if more than one) referred to in such clause file with
the Secretary, in such form and manner as shall be prescribed in
regulations of the Secretary, a written waiver of their rights under
clause (i).
``(iii) In any case in which clause (i) does not apply with respect
to a single-employer plan because the plan is not described in clause
(i) or because of a waiver filed pursuant to clause (ii), the trustee
or trustees representing the interests of the participants and their
beneficiaries shall be selected in accordance with regulations of the
Secretary. Such regulations may provide for selection of trustees by
the employer, but only from individuals who have been demonstrated to
be independent and to have no conflict of interest. An individual shall
not be treated as ineligible for selection as trustee solely because
such individual is an employee of the plan sponsor, except that the
employee so selected may not be a highly compensated employee (as
defined in section 414(q) of the Internal Revenue Code of 1986).
``(iv) The Secretary shall provide by regulation for the
appointment of a neutral, in accordance with the procedures under
section 203(f) of the Labor Management Relations Act, 1947 (29 U.S.C.
173(f)), to cast votes as necessary to resolve tie votes by the
trustees.''
(b) Regulations.--The Secretary of Labor shall prescribe the
initial regulations necessary to carry out the provisions of the
amendments made by this section not later than 90 days after the date
of the enactment of this Act.
SEC. 405. PRESERVATION OF RIGHTS OR CLAIMS.
Section 502 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1132) is amended by adding at the end the following new
subsection:
``(n)(1) The rights under this title (including the right to
maintain a civil action) may not be waived, deferred, or lost pursuant
to any agreement not authorized under this title with specific
reference to this subsection.
``(2) Paragraph (1) shall not apply to an agreement providing for
arbitration or participation in any other nonjudicial procedure to
resolve a dispute if the agreement is entered into knowingly and
voluntarily by the parties involved after the dispute has arisen or is
pursuant to the terms of a collective bargaining agreement.''
SEC. 406. OFFICE OF PENSION PARTICIPANT ADVOCACY.
(a) In General.--Title III of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 3001 et seq.) is amended by adding at
the end the following:
``Subtitle D--Office of Pension Participant Advocacy
``SEC. 3051. OFFICE OF PENSION PARTICIPANT ADVOCACY.
``(a) Establishment.--
``(1) In general.--There is established in the Department
of Labor an office to be known as the `Office of Pension
Participant Advocacy'.
``(2) Pension participant advocate.--The Office of Pension
Participant Advocacy shall be under the supervision and
direction of an official to be known as the `Pension
Participant Advocate' who shall--
``(A) have demonstrated experience in the area of
pension participant assistance, and
``(B) be selected by the Secretary after
consultation with pension participant advocacy
organizations.
The Pension Participant Advocate shall report directly to the
Secretary and shall be entitled to compensation at the same
rate as the highest rate of basic pay established for the
Senior Executive Service under section 5382 of title 5, United
States Code.
``(b) Functions of Office.--It shall be the function of the Office
of Pension Participant Advocacy to--
``(1) evaluate the efforts of the Federal Government,
business, and financial, professional, retiree, labor, women's,
and other appropriate organizations in assisting and protecting
pension plan participants, including--
``(A) serving as a focal point for, and actively
seeking out, the receipt of information with respect to
the policies and activities of the Federal Government,
business, and such organizations which affect such
participants,
``(B) identifying significant problems for pension
plan participants and the capabilities of the Federal
Government, business, and such organizations to address
such problems, and
``(C) developing proposals for changes in such
policies and activities to correct such problems, and
communicating such changes to the appropriate
officials,
``(2) promote the expansion of pension plan coverage and
the receipt of promised benefits by increasing the awareness of
the general public of the value of pension plans and by
protecting the rights of pension plan participants, including--
``(A) enlisting the cooperation of the public and
private sectors in disseminating information, and
``(B) forming private-public partnerships and other
efforts to assist pension plan participants in
receiving their benefits,
``(3) advocating for the full attainment of the rights of
pension plan participants, including by making pension plan
sponsors and fiduciaries aware of their responsibilities,
``(4) giving priority to the special needs of low and
moderate income participants,
``(5) developing needed information with respect to pension
plans, including information on the types of existing pension
plans, levels of employer and employee contributions, vesting
status, accumulated benefits, benefits received, and forms of
benefits, and
``(6) pursuing claims on behalf of participants and
beneficiaries and providing appropriate assistance in the
resolution of disputes between participants and beneficiaries
and pension plans, including assistance in obtaining settlement
agreements.
``(c) Reports.--
``(1) Annual report.--Not later than December 31 of each
calendar year, the Pension Participant Advocate shall report to
the Committee on Education and the Workforce of the House of
Representatives and the Committee on Health, Education, Labor,
and Pensions of the Senate on its activities during the fiscal
year ending in the calendar year. Such report shall--
``(A) identify significant problems the Advocate
has identified,
``(B) include specific legislative and regulatory
changes to address the problems, and
``(C) identify any actions taken to correct
problems identified in any previous report.
The Advocate shall submit a copy of such report to the
Secretary and any other appropriate official at the same time
it is submitted to the committees of Congress.
``(2) Specific reports.--The Pension Participant Advocate
shall report to the Secretary or any other appropriate official
any time the Advocate identifies a problem which may be
corrected by the Secretary or such official.
``(3) Reports to be submitted directly.--The report
required under paragraph (1) shall be provided directly to the
committees of Congress without any prior review or comment than
the Secretary or any other Federal officer or employee.
``(d) Specific Powers.--
``(1) Receipt of information.--Subject to such
confidentiality requirements as may be appropriate, the
Secretary and other Federal officials shall, upon request,
provide such information (including plan documents) as may be
necessary to enable the Pension Participant Advocate to carry
out the Advocate's responsibilities under this section.
``(2) Appearances.--The Pension Participant Advocate may
represent the views and interests of pension plan participants
before any Federal agency, including, upon request of a
participant, in any proceeding involving the participant.
``(3) Contracting authority.--In carrying out
responsibilities under subsection (b)(5), the Pension
Participant Advocate may, in addition to any other authority
provided by law--
``(A) contract with any person to acquire
statistical information with respect to pension plan
participants, and
``(B) conduct direct surveys of pension plan
participants.''
(b) Conforming Amendment.--The table of contents for title III of
such Act is amended by adding at the end the following:
``Subtitle C--Office of Pension Participant Advocacy
``3051. Office of Pension Participant Advocacy.''
(c) Effective Date.--The amendment made by this section shall take
effect on January 1, 2003.
SEC. 407. STUDY REGARDING INSURANCE SYSTEM FOR INDIVIDUAL ACCOUNT
PLANS.
(a) Study.--As soon as practicable after the date of the enactment
of this Act, the Pension Benefit Guaranty Corporation shall undertake a
study relating to the establishment of an insurance system for
individual account plans. In conducting such study, the Corporation
shall consider--
(1) the feasibility of such a system, and
(2) options for developing such a system.
(b) Report.--Not later than 3 years after the date of the enactment
of this Act, the Corporation shall report the results of its study,
together with any recommendations for legislative changes, to the
Committee on Education and the Workforce of the House of
Representatives and the Committee on Health, Education, Labor, and
Pensions of the Senate.
SEC. 408. PROHIBITIONS AGAINST INTERFERENCE WITH RIGHTS PROTECTED UNDER
ERISA.
(a) Inquiries and Statements.--Section 510 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1140) is amended by
adding after the second sentence the following new sentence: ``It shall
be unlawful for any person to discharge, fine, suspend, expel, or
discriminate against any person because such person has made a public
or private inquiry concerning the rights of employees or former
employees under any employee benefit plan or this Act or concerning the
administration of (or managing of the assets of) any employee benefit
plan, or because such person has made such inquiry or statement while
at work or using the employer's facilities.''
(b) Cause of Action.--Section 502(a) of such Act (29 U.S.C.
1132(a)) is amended by striking ``or'' at the end of paragraph (8), by
striking the period at the end of paragraph (9) and inserting ``;
and'', and by adding at the end the following new paragraph:
``(10) by the Secretary, or other person referred to in
section 510--
``(A) to enjoin any act or practice which violates
section 510, or
``(B) to obtain appropriate equitable or legal
relief to redress such violation or to enforce section
510.''
(c) Burden of Proof.--Section 510 of such Act (29 U.S.C. 1140) is
amended--
(1) by inserting ``(a)'' after ``Sec. 510.'', and
(2) by adding at the end the following new subsection:
``(b) If a person in any civil action under section 502 establishes
a prima facie case that a violation under subsection (a) has occurred,
the burden of proof shall be on the person alleged to have committed
the violation to establish by clear and convincing evidence that the
violation did not occur.''
SEC. 409. INDEPENDENT QUALIFIED PUBLIC ACCOUNTANT.
Section 103(a)(3) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1023(a)(3)) is amended by adding at the end the
following new subparagraph:
``(E) For purposes of this paragraph, a qualified
public accountant shall not be treated as independent
with respect to an employee benefit plan if the
accountant or any member or employee of the
accountant's firm is employed by or performs services
for compensation for any employer maintaining the
plan.''
TITLE V--GENERAL PROVISIONS
SEC. 501. GENERAL EFFECTIVE DATE.
(a) In General.--Except as otherwise provided in this Act, the
amendments made by this Act shall apply with respect to plan years
beginning on or after January 1, 2003.
(b) Special Rule for Collectively Bargained Plans.--In the case of
a plan maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more employers
ratified on or before the date of the enactment of this Act, subsection
(a) shall be applied to benefits pursuant to, and individuals covered
by, any such agreement by substituting for ``January 1, 2003'' the date
of the commencement of the first plan year beginning on or after the
earlier of--
(1) the later of--
(A) January 1, 2004, or
(B) the date on which the last of such collective
bargaining agreements terminates (determined without
regard to any extension thereof after the date of the
enactment of this Act), or
(2) January 1, 2005.
SEC. 502. PLAN AMENDMENTS.
If any amendment made by this Act requires an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after January 1, 2005, if--
(1) during the period after such amendment made by this Act
takes effect and before such first plan year, the plan is
operated in accordance with the requirements of such amendment
made by this Act, and
(2) such plan amendment applies retroactively to the period
after such amendment made by this Act takes effect and before
such first plan year.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S491-492)
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Committee on Energy and Natural Resources Subcommittee on Water and Power. Hearings held. With printed Hearing: S.Hrg. 107-817.
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