[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1922 Introduced in Senate (IS)]







104th CONGRESS
  2d Session
                                S. 1922

    To amend the Employee Retirement Income Security Act of 1974 to 
establish a Pension ProSave system which improves the retirement income 
 security of millions of American workers by encouraging employers to 
  make pension contributions on behalf of employees, by facilitating 
 pension portability, by preserving and increasing retirement savings, 
                    and by simplifying pension law.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 28, 1996

 Mr. Bingaman (for himself and Mr. Jeffords) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend the Employee Retirement Income Security Act of 1974 to 
establish a Pension ProSave system which improves the retirement income 
 security of millions of American workers by encouraging employers to 
  make pension contributions on behalf of employees, by facilitating 
 pension portability, by preserving and increasing retirement savings, 
                    and by simplifying pension law.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pension ProSave Act''.

SEC. 2. ESTABLISHMENT OF PENSION PROSAVE PLANS AND SYSTEM.

    (a) In General.--The Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1 et seq.) is amended by adding at the end the 
following new title:

                   ``TITLE V--PENSION PROSAVE SYSTEM

                  ``Subtitle A--Pension ProSave Plans

``SEC. 5001. EASY ACCESS FOR ALL EMPLOYERS.

    ``(a) Universal Eligibility.--Any employer may establish a Pension 
ProSave Plan for the benefit of its employees.
    ``(b) Simplified Enrollment and Administration.--
            ``(1) Establishment.--An employer may establish a Pension 
        ProSave Plan simply by--
                    ``(A) completing an enrollment form described in 
                subsection (c), and
                    ``(B) submitting such form to the Pension 
                Portability Clearinghouse in the manner provided under 
                subtitle B.
            ``(2) Ease of administration.--An employer establishing a 
        Pension ProSave Plan may make employer and employee 
        contributions, changes in employees participating under the 
        plan, and changes in elections made under section 5002 in the 
        same manner as under paragraph (1).
    ``(c) Simplified Forms.--
            ``(1) Plan document.--The Pension Portability Clearinghouse 
        shall establish a model form for purposes of paragraph (1)(A)--
                    ``(A) which is written in a clear and easily 
                understandable manner,
                    ``(B) the completion of which by an employer will 
                constitute the establishment of a Pension ProSave Plan, 
                and
                    ``(C) which contains only such requests for 
                information as are necessary for the establishment of 
                the plan.
            ``(2) Other forms.--The Pension Portability Clearinghouse 
        shall develop such model forms for purposes of subsection 
        (b)(2) as are necessary to enable an employer to easily 
        administer a Pension ProSave Plan.
            ``(3) Availability.--The Pension Portability Clearinghouse 
        shall make available to all employers the forms developed under 
        this section, and shall include with such forms easy to 
        understand explanatory materials.

``SEC. 5002. PENSION PROSAVE PLANS.

    ``(a) Treatment of Plan.--Except as otherwise provided in this 
part, a Pension ProSave Plan shall be treated in the same manner as an 
employee pension benefit plan.
    ``(b) Pension ProSave Plan Defined.--For purposes of this title, 
the term `Pension ProSave Plan' means a plan--
            ``(1) which is established by an employer for the exclusive 
        benefit of its employees and their beneficiaries,
            ``(2) under which the only contributions which may be made 
        are contributions to Pension ProSave Accounts established on 
        behalf of such employees, and
            ``(3) which meets--
                    ``(A) the contribution requirements of subsection 
                (c),
                    ``(B) the vesting requirements of subsection (d),
                    ``(C) the distribution and loan requirements of 
                subsection (e), and
                    ``(D) the reporting requirements of subsection (f).
    ``(c) Contribution Requirements.--
            ``(1) In general.--The requirements of this subsection are 
        met if the only contributions under the plan on behalf of any 
        employee are--
                    ``(A) nonelective contributions described in 
                paragraph (2), and
                    ``(B) elective employee contributions described in 
                paragraph (3).
            ``(2) Nonelective contributions.--
                    ``(A) In general.--A Pension ProSave Plan shall 
                require an employer to make nonelective contributions 
                equal to 1 percent of compensation for each eligible 
                employee.
                    ``(B) Election to increase contributions.--
                            ``(i) In general.--A plan shall not fail to 
                        meet the requirements of subparagraph (A) 
                        merely because, pursuant to the terms of the 
                        plan, an employer may elect a uniform rate of 
                        nonelective contributions in excess of 1 
                        percent.
                            ``(ii) Time for election.--A plan may 
                        provide that an election under clause (i) may 
                        be made--
                                    ``(I) for a year only if notice is 
                                given to all eligible employees within 
                                a reasonable period before the 60-day 
                                period referred to in paragraph (5)(B),
                                    ``(II) at any time during a year 
                                only if such notice is given at least 
                                30 days before the first day of the 
                                first month for which the election is 
                                to take effect, or
                                    ``(III) within 45 days of the close 
                                of the year only if such notice is 
                                given before such 45th day.
                    ``(C) Election to decrease contributions.--
                            ``(i) In general.--A plan shall not fail to 
                        meet the requirements of subparagraph (A) 
                        merely because, pursuant to the terms of the 
                        plan, an employer may elect for any year to 
                        suspend nonelective contributions or to elect a 
                        uniform rate of contributions of less than 1 
                        percent. Such election may be made only if 
                        notice is given to all eligible employees 
                        within a reasonable period of time before the 
                        60-day period referred to in paragraph (5)(B).
                            ``(ii) Limitation.--An employer may not 
                        elect a lower percentage under clause (i), or 
                        to suspend nonelective contributions, for any 
                        year if that election would result in 
                        nonelective contributions being lower than 1 
                        percent in more than 2 of the years in the 5-
                        year period ending with such year. For purposes 
                        of the preceding sentence, nonelective 
                        contributions for any year prior to the 
                        establishment of the Pension ProSave Plan shall 
                        be treated as 1 percent.
                    ``(D) Maximum amount.--The plan shall provide that 
                an employer may not make nonelective contributions on 
                behalf of an eligible employee for any year in excess 
                of $5,000.
            ``(3) Elective contributions.--
                    ``(A) In general.--A Pension ProSave Plan shall 
                allow each eligible employee to make elective 
                contributions for any year in an amount equal to the 
                greater of--
                            ``(i) an amount equal to twice the 
                        nonelective contributions of the employer for 
                        such year on behalf of the employee, or
                            ``(ii) $2,000.
                    ``(B) Timing of contributions.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), contributions under subparagraph 
                        (A) shall be expressed as a percentage of 
                        compensation and shall be made by an employer 
                        as provided in paragraph (5)(A)(i).
                            ``(ii) Catch up contributions.--If the 
                        maximum amount which may be contributed under 
                        subparagraph (A) exceeds the elective 
                        contributions made under clause (i) for any 
                        plan year, an employee may make elective 
                        contributions in an amount equal to such excess 
                        (or any portion thereof) not later than the due 
                        date (including extensions) for the return of 
                        tax for the taxable year within which the plan 
                        year ends. Such contributions shall be made in 
                        such manner as the Pension Portability 
                        Clearinghouse may provide.
                    ``(C) Maximum amount.--The plan shall provide that 
                an employee may not make elective contributions for any 
                year in excess of $5,000.
                    ``(D) No constructive receipt.--For purposes of 
                section 402(e)(3) of the Internal Revenue Code of 1986, 
                contributions under this paragraph shall be treated in 
the same manner as contributions under a qualified cash or deferred 
arrangement under section 401(k) of such Code.
            ``(4) Inflation adjustment.--In the case of plan years 
        beginning in a calendar year after 1996, each of the $5,000 
        amounts contained in this subsection shall be increased by the 
        product of such amount and the percentage (if any) by which the 
        CPI for the preceding calendar year exceeds the CPI for 1995. 
        For purposes of this paragraph, the CPI for any calendar year 
        shall be determined under section 1(f)(4) of the Internal 
        Revenue Code of 1986.
            ``(5) Administrative requirements.--
                    ``(A) Time contributions required to be made.--
                            ``(i) Elective contributions.--The terms of 
                        a Pension ProSave Plan shall require an 
                        employer to make all elective contributions 
                        under paragraph (3) (other than subparagraph 
                        (B)(ii) thereof) not later than the date on 
                        which such contributions would otherwise be 
                        required to be made under title I if such 
                        contributions were elective contributions under 
                        a qualified cash or deferred arrangement under 
                        section 401(k) of the Internal Revenue Code of 
                        1986.
                            ``(ii) Nonelective contributions.--
                                    ``(I) In general.--The terms of a 
                                Pension ProSave Plan shall require an 
                                employer to make all nonelective 
                                contributions under paragraph (2) not 
                                later than the close of the 45-day 
                                period following the last day of the 
                                calendar quarter for which the 
                                contributions are to be made.
                                    ``(II) Contributions after year-
                                end.--For purposes of this subsection, 
                                a contribution on account of a year 
                                which is made within 45 days (or within 
                                a period prescribed by the Secretary) 
                                after the close of the year shall be 
                                deemed to have been made on the last 
                                day of such year.
                    ``(B) Employee elections.--The terms of a Pension 
                ProSave Plan shall provide that--
                            ``(i) an employee may elect to terminate 
                        elective contributions described in paragraph 
                        (3) at any time during the year, except that, 
                        if the employer so elects, the employee may not 
                        resume participation until the first day of the 
                        next year (or such earlier time as provided by 
                        the plan), and
                            ``(ii) each employee eligible to 
                        participate--
                                    ``(I) may elect, during the 60-day 
                                period before the beginning of any 
                                year, to make elective contributions, 
                                or to modify the amount of elective 
                                contributions, for such year,
                                    ``(II) may elect, within 30 days of 
                                becoming eligible to participate in the 
                                plan, to make elective contributions 
                                for the year,
                                    ``(III) may elect, within 30 days 
                                of receiving notice under paragraph 
                                (2)(B) of an increase in nonelective 
                                contributions, to modify the amount of 
                                elective contributions, and
                                    ``(IV) may elect, not later than 
                                the due date described in paragraph 
                                (3)(B)(ii), to make the elective 
                                contributions described in such 
                                paragraph.
    ``(d) Vesting Requirements.--A Pension ProSave Plan meets the 
requirements of this subsection only if the employee's rights to 
nonelective and elective contributions under subsection (c) are 
nonforfeitable. The rules of section 401(k)(4) of the Internal Revenue 
Code of 1986 shall apply for purposes of this subsection.
    ``(e) Special Distribution and Loan Rules.--A Pension ProSave Plan 
meets the requirements of this subsection only if, under the terms of 
the plan, distributions and loans may be made only in accordance with 
the provisions of sections 5022 and 5023 of this title.
    ``(f) Definitions and Special Rules.--For purposes of this 
subsection--
            ``(1) Compensation.--
                    ``(A) In general.--The term `compensation' has the 
                meaning given such term by section 414(q)(3) of the 
                Internal Revenue Code of 1986.
                    ``(B) Self-employed individuals.--Notwithstanding 
                subparagraph (A), in the case of an employee within the 
                meaning of section 401(c)(1) of such Code, compensation 
                under section 414(q)(3) of such Code shall be 
                determined without regard to paragraph (2)(A) (v) and 
                (vi) of section 401(c) of such Code.
            ``(2) Employee.--The term `employee' includes an employee 
        as defined in section 401(c)(1) of such Code.
            ``(3) Eligible employee.--
                    ``(A) In general.--The term `eligible employee' 
                means, with respect to any year, any employee who--
                            ``(i) completed 6 months of service with 
                        the employer at any time during such year, and
                            ``(ii) attained 21 years of age during such 
                        year.
                A plan may provide a uniform shorter period of service 
                or lower age to apply in lieu of those under the 
                preceding sentence.
                    ``(B) Excludable employees.--An employer may elect 
                not to treat employees described in section 410(b)(3) 
                of such Code as eligible employees.
            ``(4) Plan year.--The term `plan year' means the calendar 
        year.

         ``Subtitle B--Establishment of Pension ProSave System

                         ``PART 1--DEFINITIONS

``SEC. 5010. DEFINITIONS.

    ``For purposes of this subtitle and subtitle C:
            ``(1) Advisory council.--The term `Advisory Council' means 
        the Pension Portability Clearinghouse Advisory Council 
        established under section 5053.
            ``(2) Board.--The term `Board' means the board of directors 
        of the Pension Portability Clearinghouse.
            ``(3) Chairman.--The term `Chairman' means the chairman of 
        the board of directors of the Pension Portability 
        Clearinghouse.
            ``(4) Clearinghouse.--The term `Clearinghouse' means the 
        Pension Portability Clearinghouse established under section 
        5051.
            ``(5) Pension prosave plan.--The term `Pension ProSave 
        Plan' has the meaning given such term by section 5002.

           ``PART 2--ESTABLISHMENT OF PENSION PROSAVE SYSTEM

                        ``Subpart A--In General

``SEC. 5011. ESTABLISHMENT OF PENSION PROSAVE SYSTEM.

    ``The Board shall by regulation establish a system of Pension 
ProSave Accounts under which--
            ``(1) employers and employees may make contributions on 
        behalf of employees under a Pension ProSave Plan,
            ``(2) individuals may make qualified rollover contributions 
        to Pension ProSave Accounts,
            ``(3) amounts in the Pension ProSave Accounts are invested 
        as provided in this title, and
            ``(4) loans and distributions of amounts in the Pension 
        ProSave Accounts are made as provided in this title.

              ``Subpart B--Contributions and Distributions

``SEC. 5021. CONTRIBUTIONS TO PENSION PROSAVE ACCOUNTS.

    ``(a) In General.--The system established under section 5011 shall 
provide that the only contributions made to a Pension ProSave Account 
are--
            ``(1) contributions under a Pension ProSave Plan, or
            ``(2) qualified rollover contributions.
    ``(b) Plan Contributions.--The system established under section 
5011 shall provide to the maximum extent feasible that contributions 
under a Pension ProSave Plan are made in such a manner as provides all 
employers with a simple, cost-effective way of making such 
contributions.
    ``(c) Qualified Rollover Contributions.--For purposes of this 
title--
            ``(1) In general.--The term `qualified rollover 
        contribution' means--
                    ``(A) the transfer to a Pension ProSave Account, 
                within 60 days of receipt, of any eligible rollover 
                distribution described in section 402(c) or 403(a)(4) 
                of the Internal Revenue Code of 1986, or
                    ``(B) any direct trustee-to-trustee transfer 
                described in section 401(a)(31) of such Code from a 
                qualified trust to a Pension ProSave Account.
            ``(2) Coordination with tax code.--For purposes of the 
        Internal Revenue Code of 1986, a Pension ProSave Account shall 
        be treated as an eligible retirement plan under section 
        402(c)(8)(B) of such Code.

``SEC. 5022. REQUIREMENTS RELATING TO DISTRIBUTIONS.

    ``(a) Time for Distributions.--
            ``(1) In general.--The system established under section 
        5011 shall provide that amounts in a Pension ProSave Account 
        may not be distributed to participants or beneficiaries earlier 
        than--
                    ``(A) the death or disability of the participant, 
                or
                    ``(B) the attainment of age 59\1/2\.
            ``(2) Mandatory distributions.--Notwithstanding paragraph 
        (1), the provisions of section 401(a)(9) of the Internal 
        Revenue Code of 1986 shall apply to a Pension ProSave Account.
    ``(b) Forms of Distributions.--
            ``(1) In general.--The system established under section 
        5011 shall provide for distributions in such forms as the Board 
        may provide, except that the Board shall provide for--
                    ``(A) a life annuity,
                    ``(B) a joint and survivor annuity,
                    ``(C) an annuity for a term certain, and
                    ``(D) a lump-sum distribution.
            ``(2) Survivor annuities; spousal consent.--The provisions 
        of section 205 shall apply to distributions from a Pension 
        ProSave Account.
            ``(3) Issuers.--Annuities under this subsection shall be 
        provided through persons authorized under applicable State laws 
        to provide such annuities. The Board may limit the maximum 
        amount of annuities issued by any 1 person.

``SEC. 5023. LOAN REQUIREMENTS.

    ``(a) In General.--The system established under section 5011 shall 
provide that a participant may obtain a loan of amounts in a Pension 
ProSave Account.
    ``(b) Limitations.--Loans under subsection (a)--
            ``(1) may be made only for the purposes described in 
        subsection (c),
            ``(2) may not in the aggregate exceed the portion of the 
        balance to the credit of the account attributable to elective 
        employee contributions (and earnings allocable thereto), and
            ``(3) shall be subject to the same terms and conditions as 
        similar loans provided by private lenders.
    ``(c) Loan Purposes.--Loans may be made under subsection (a)--
            ``(1) for the payment of acquisition costs of a principal 
        residence of the participant or the participant's spouse, 
        child, or grandchild, but only if the individual had no present 
        ownership interest in a principal residence during the prior 2 
        years,
            ``(2) for tuition, fees, books, supplies, and equipment, 
        and reasonable living expenses while away from home, required 
        for the enrollment or attendance of the participant or the 
        participant's spouse, child, or grandchild at an eligible 
        educational institution (as defined in section 135(c)(3) of the 
        Internal Revenue Code of 1986),
            ``(3) if the participant during the calendar year or the 
        preceding calendar year received unemployment compensation for 
        12 consecutive weeks under any Federal or State law, and
            ``(4) for medical expenses of the participant, the 
        participant's spouse, child, or grandchild, or any ancestor of 
        the participant or spouse, but only if a deduction is allowed 
        with respect to such expenses under section 213 of such Code.

                 ``Subpart C--Clearinghouse Investments

``SEC. 5031. INVESTMENT OPTIONS.

    ``(a) In General.--The Board shall, pursuant to the system 
established under section 5011, enter into arrangements, on a 
competitive basis, with qualified professional asset managers to 
provide individuals with the opportunity to invest sums in a Pension 
ProSave Account in each of the funds described in subsection (b).
    ``(b) Type of Funds.--
            ``(1) In general.--The funds described in the subsection 
        are the following:
                    ``(A) A fixed income investment fund.
                    ``(B) An equity fund.
                    ``(C) A government securities investment fund.
                    ``(D) A small business capitalization fund.
                    ``(E) A public infrastructure fund.
                    ``(F) An international equity fund.
            ``(2) Other funds.--The Board may provide for other funds 
        which the Board determines appropriate, including a common 
        stock index investment fund.
    ``(c) Asset Managers.--
            ``(1) In general.--The Board may select more than one 
        qualified professional asset manager for each type of fund 
        described in subsection (b).
            ``(2) Asset allocation.--The Board may place limits on the 
        amount which may be allocated to any qualified professional 
        asset manager to the extent the Board determines necessary to 
        prevent undue impact on any financial market or undue risk to 
        participants.
            ``(3) Definition.--For purposes of this title, the term 
        ``qualified professional asset manager'' has the meaning given 
        such term by section 8438(a)(7) of title 5, United States Code.
    ``(d) Participant Elections.--
            ``(1) In general.--The system established under section 
        5011 shall provide that an individual on whose behalf a Pension 
        ProSave Account is established may--
                    ``(A) elect the investment funds into which 
                contributions to the account are to be invested, and
                    ``(B) elect to transfer contributions (and 
                earnings) from one fund to another.
            ``(2) Time and method.--
                    ``(A) Time.--Such system shall provide that--
                            ``(i) any election under paragraph (1)(A) 
                        shall be effective on the first day of the 
                        month following the month in which the election 
                        was made, and
                            ``(ii) any election under paragraph (1)(B) 
                        shall be effective on the first business day 
                        following the election.
                    ``(B) Method.--Any election shall be made in the 
                manner provided by the system, except that the Board 
                shall seek to ensure elections may be made in a simple, 
                timely manner.
            ``(3) Limitation.--Any election under this subsection shall 
        be subject to the asset allocation limitation under subsection 
        (c)(2).

   ``Subpart D--Administrative Provisions; Fiduciary Responsibilities

``SEC. 5041. ACCOUNTING AND INFORMATION.

    ``(a) Establishment of Accounts.--
            ``(1) In general.--The system established under section 
        5011 shall provide for the establishment and maintenance of a 
        Pension ProSave Account for each individual--
                    ``(A) for whom contributions are made to the 
                Clearinghouse under a Pension ProSave Plan, or
                    ``(B) who transfers amounts, or on whose behalf 
                amounts are transferred, to the Clearinghouse in a 
                qualified rollover contribution.
            ``(2) Allocations and reductions to account.--Such system 
        shall provide for--
                    ``(A) the allocation to each account of an amount 
                equal to a pro rata share of the net earnings and net 
                losses from each investment of sums in such account, 
                and
                    ``(B) a reduction in each such account for the 
                account's appropriate share of the administrative 
                expenses to be paid out.
            ``(3) Examination of accounts.--
                    ``(A) In general.--The Clearinghouse shall annually 
                engage, on behalf of all individuals for whom an 
                account is maintained, an independent qualified public 
                accountant (within the meaning of section 103(a)(3)(D) 
                who shall conduct an examination of all accounts and 
                other books and records maintained in the 
                administration of this title as the accountant 
                considers necessary to make the determination under 
                subparagraph (B). The examination shall be conducted in 
                accordance with generally accepted auditing standards 
                and shall involve such tests of the accounts, books, 
                and records as the public accountant considers 
                necessary.
                    ``(B) Determination of compliance.--The public 
                accountant conducting an examination under subparagraph 
                (A) shall determine whether the accounts, books, and 
                records referred to in such paragraph have been 
                maintained in conformity with generally accepted 
                accounting principles applied on a basis consistent 
                with the manner in which such principles were applied 
                during the examination conducted during the preceding 
                year. The public accountant shall transmit to the Board 
                and the Comptroller General of the United States a 
                report on such examination and determination.
                    ``(C) Reliance.--In making a determination under 
                subparagraph (B), a public accountant may rely on the 
                correctness of any actuarial matter certified by an 
                enrolled actuary if the public accountant states his 
                reliance in the report to the Board.
    ``(b) Additional Information.--
            ``(1) In general.--The system established under section 
        5011 shall provide for the furnishing of information to 
        employers and employees of the opportunity of establishing 
        Pension ProSave Plans and of transferring amounts to Pension 
        ProSave Accounts.
            ``(2) Account participants.--
                    ``(A) In general.--Such system shall provide that 
                each individual for whom an account is maintained shall 
                be periodically furnished with--
                            ``(i) a statement relating to the 
                        individual's account, and
                            ``(ii) a summary description of the 
                        investment options under the account and an 
                        evaluation of such option during the 5-year 
                        period preceding the evaluation.
                    ``(B) Account valuation.--Such system shall also 
                provide that each individual for whom an account is 
                established shall be entitled, upon request, to a daily 
                valuation of amounts in each fund described in section 
                5031(b) in order to enable the individual to make an 
                election to transfer such amounts between funds.
            ``(3) Investment information.--The Clearinghouse shall also 
        make available to employees information on how to make informed 
        investment decisions and how to achieve retirement objectives.
            ``(4) Information not investment advice.--Information 
        provided under this subsection shall not be treated as 
        investment advice for purposes of any Federal or State law.

``SEC. 5042. ADMINISTRATIVE COSTS.

    ``(a) In General.--Any expense incurred by the Clearinghouse, the 
Board, or the Advisory Council in carrying out their functions under 
this title shall be paid first from the earnings of the funds in 
Pension ProSave Accounts and then from balances in such accounts.
    ``(b) Allocation.--Expenses under subsection (a) shall be allocated 
to each Pension ProSave Account in the manner provided under section 
5041.

``SEC. 5043. FIDUCIARY RESPONSIBILITIES; LIABILITY AND PENALTIES; 
              BONDING; INVESTIGATIVE AUTHORITY.

    ``Except as provided by the Secretary of Labor in regulations, the 
provisions of sections 8477, 8478, 8478a, and 8479(a) of title 5, 
United States Code, shall apply to the Clearinghouse in the same manner 
as such provisions apply to the Thrift Savings Fund.

            ``Subtitle C--Pension Portability Clearinghouse

``SEC. 5051. ESTABLISHMENT OF PENSION PORTABILITY CLEARINGHOUSE.

    ``(a) Establishment.--There is established within the executive 
branch of the Government a body corporate to be known as the Pension 
Portability Clearinghouse.
    ``(b) Administration.--In carrying out its duties under this title, 
the Clearinghouse shall be administered by the Chairman in accordance 
with policies established by the Board.
    ``(c) Powers.--In carrying out its duties under this title--
            ``(1) In general.--The Clearinghouse shall have the powers 
        conferred on a nonprofit corporation under the District of 
        Columbia Nonprofit Corporation Act (chapter 5 of title 29 of 
        the District of Columbia Code (section 29-501 et seq.)).
            ``(2) Specific powers.--The Clearinghouse shall have--
                    ``(A) the specific powers granted to it by this 
                title, and
                    ``(B) powers identical to the powers conferred on 
                the Pension Benefit Guaranty Corporation under 
                paragraphs (1) through (8) of section 4002(b).
    ``(d) Treatment as Qualified Trust.--For purposes of the Internal 
Revenue Code of 1986--
            ``(1) the Clearinghouse shall be treated in the same manner 
        as a trust described in section 401(a) of such Code which is 
        exempt from taxation under section 501(a) of such Code, and
            ``(2) any contribution to, or distribution from, the 
        Clearinghouse shall be treated in the same manner as 
        contributions to, or distributions from, such a trust.

``SEC. 5052. BOARD OF DIRECTORS.

    ``(a) Appointment.--The board of directors of the Pension 
Portability Clearinghouse shall be composed of 5 members appointed by 
the President, of whom 1 shall be designated by the President as 
Chairman.
    ``(b) Advice and Consent.--Appointments under subsection (a) shall 
be made by and with the advice and consent of the Senate.
    ``(c) Expertise.--Members of the Board shall have substantial 
experience, training, and expertise in the management of financial 
investments and pension benefit plans.
    ``(d) Terms.--
            ``(1) In general.--A member of the Board shall be appointed 
        for a term of 3 years, except that of the members first 
        appointed--
                    ``(A) the Chairman shall be appointed for a term of 
                3 years,
                    ``(B) 2 members shall be appointed for a term of 2 
                years, and
                    ``(C) 2 members shall be appointed for a term of 1 
                year.
            ``(2) Vacancies.--A vacancy on the Board shall be filled in 
        the same manner in which the original appointment was made. Any 
        individual so appointed shall serve for the unexpired term of 
        the member replaced.
            ``(3) Successors required.--The term of any member shall 
        not expire before the date on which the member's successor 
        takes office.
    ``(e) General Duties and Powers.--
            ``(1) General rule.--The Board shall--
                    ``(A) establish policies for the establishment and 
                management of the system described in section 5011,
                    ``(B) establish policies for the investment and 
                management of the amounts in Pension ProSave Accounts,
                    ``(C) review the performance of investments made 
                for the Clearinghouse, and
                    ``(D) review and approve the budgets of the 
                Clearinghouse and the Board.
            ``(2) Oversight of clearinghouse.--The Board may--
                    ``(A) provide for the hiring of employees of the 
                Clearinghouse, including the appointment of the 
                Executive Director,
                    ``(B) direct the Executive Director to take such 
                actions as the Board considers necessary to carry out 
                the provisions of this title,
                    ``(C) upon the concurring votes of 4 members of the 
                Board, remove the Executive Director for cause, and
                    ``(D) take such other actions as may be necessary 
                to carry out the functions of the Board.
            ``(3) Responsibilities.--
                    ``(A) In general.--The members of the Board shall 
                discharge their responsibilities solely in the 
                interests of participants and beneficiaries under 
                Pension ProSave Accounts.
                    ``(B) Investments.--The Board may not direct the 
                Clearinghouse to invest or cause to be invested any 
                sums in a specific asset or to dispose or cause to be 
                disposed of any specific asset.
            ``(4) Investment policies.--Any investment policies adopted 
        under paragraph (1)(B) shall provide for--
                    ``(A) prudent investments suitable for accumulating 
                funds for payment of retirement income, and
                    ``(B) low administrative costs.
            ``(5) Budgets.--The Board shall prepare and submit to the 
        President, and, at the same time, to the appropriate committees 
        of Congress, an annual budget of the expenses and other items 
        relating to the Board which shall be included as a separate 
        item in the budget required to be transmitted to the Congress 
        under section 1105 of title 31, United States Code.
            ``(6) Legislative recommendations.--The Board may submit to 
        the President, and, at the same time, shall submit to each 
        House of Congress, any legislative recommendations of the Board 
        relating to any of its functions under this title or any other 
        provision of law.
    ``(f) Administrative Provisions.--
            ``(1) Meetings.--The Board shall meet not less than once 
        during each month and at additional times at the call of the 
        Chairman.
            ``(2) Quorums.--
                    ``(A) In general.--The Board shall perform its 
                duties and exercise its powers on a majority vote of a 
                quorum of the Board.
                    ``(B) Vacancy.--A vacancy on the Board shall not 
                impair the authority of a quorum of the Board to 
                perform its duties and exercise its powers.
                    ``(C) Quorum.--3 members of the Board shall 
                constitute a quorum for the transaction of business.
            ``(3) Compensation.--
                    ``(A) In general.--Each member of the Board who is 
                not an officer or employee of the Federal Government 
                shall be compensated at the daily rate of basic pay for 
                level IV of the Executive Schedule under title 5, 
                United States Code, for each day such member is 
                performing the duties of the Board.
                    ``(B) Travel and per diem.--A member of the Board 
                shall be paid travel, per diem, and other necessary 
                expenses under subchapter I of chapter 57 of title 5, 
                United States Code, while traveling away from such 
                member's home or regular place of business in the 
                performance of the duties of the Board.
            ``(4) Executive director.--
                    ``(A) Appointment.--The chief executive officer of 
                the Clearinghouse shall be the Executive Director 
                appointed under subsection (e).
                    ``(B) Duties.--The Executive Director shall--
                            ``(i) carry out policies established by the 
                        Board, and
                            ``(ii) administer the Clearinghouse, 
                        including--
                                    ``(I) appointing such personnel as 
                                may be necessary to carry out the 
                                duties of the Clearinghouse,
                                    ``(II) subject to approval by the 
                                Board, procure the services of experts 
                                and consultants, and
                                    ``(III) pay compensation and other 
                                expenses of the Clearinghouse from 
                                funds in the Clearinghouse.

``SEC. 5053. PENSION PORTABILITY CLEARINGHOUSE ADVISORY COUNCIL.

    ``(a) Appointment.--There is hereby established the Pension 
Portability Clearinghouse Advisory Council which shall consist of 15 
members appointed by the President, from among individuals who have 
substantial experience, training, and expertise in the management of 
financial investments and pension benefit plans, including 
representatives of--
            ``(1) the insurance industry,
            ``(2) the fields of accounting, actuarial science, and 
        investment counseling and management,
            ``(3) mutual funds,
            ``(4) organized labor, small plan sponsors, pension 
        advocacy organizations, and retiree groups, and
            ``(5) the general public.
    ``(b) Terms.--
            ``(1) In general.--A member of the Advisory Council shall 
        be appointed for a term of 3 years, except that of the members 
        first appointed--
                    ``(A) 5 shall be appointed for a term of 3 years,
                    ``(B) 5 shall be appointed for a term of 2 years, 
                and
                    ``(C) 5 shall be appointed for a term of 1 year.
            ``(2) Vacancies.--A vacancy on the Advisory Council shall 
        be filled in the same manner in which the original appointment 
        was made. Any individual so appointed shall serve for the 
        unexpired term of the member replaced.
            ``(3) Successor required.--The term of any member shall not 
        expire before the date on which the member's successor takes 
        office.
    ``(c) Actions.--The Advisory Council shall act by resolution of a 
majority of its members.
    ``(d) Duties.--The Advisory Council shall--
            ``(1) advise the Board on the establishment of the Pension 
        ProSave system under subtitle B,
            ``(2) advise the Board on matters relating to--
                    ``(A) investment policies for the Clearinghouse, 
                including standards for limiting amounts administered 
                by any asset manager, and
                    ``(B) the administration of this title, and
            ``(3) perform such other duties as the Board may request.''
    (b) Clerical Amendment.--Section 1 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1001 note) is amended by adding 
at the end the following new items:

                   ``TITLE V--PENSION PROSAVE SYSTEM

                  ``Subtitle A--Pension ProSave Plans

``Sec. 5001. Easy access for all employers.
``Sec. 5002. Pension Prosave Plans.
         ``Subtitle B--Establishment of Pension ProSave System

                         ``Part 1--Definitions

``Sec. 5010. Definitions.
           ``Part 2--Est``subpart a--in generalrosave System
``Sec. 5011. E``subpart b--contributions and distributions
``Sec. 5021. Contributions to Pension Prosave Accounts.
``Sec. 5022. Requirements relating to distributions.
``Sec. 5023. Loan``subpart c--clearinghouse investments
``S``subpart d--administrative provisions; fiduciary responsibilities
``Sec. 5041. Accounting and information.
``Sec. 5042. Administrative costs.
``Sec. 5043. Fiduciary responsibilities; liability and penalties; 
                            bonding; investigative authority.
            ``Subtitle C--Pension Portability Clearinghouse

``Sec. 5051. Establishment of Pension Portability Clearinghouse.
``Sec. 5052. Board of directors.
``Sec. 5053. Pension Portability Clearinghouse Advisory Council.''

SEC. 3. OTHER MODIFICATIONS TO ERISA.

    (a) Reporting Requirements.--Section 101 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1021) is amended by 
redesignating subsection (g) as subsection (h) and by inserting after 
subsection (f) the following new subsection:
    ``(g) Notification and Disclosure.--
            ``(1) In general.--Except as provided in this subsection, 
        the reporting and disclosure requirements of title I with 
        respect to any Pension ProSave Plan shall apply to the Pension 
        Portability Clearinghouse and not to the plan sponsor.
            ``(2) Employee notification.--The plan sponsor shall notify 
        each participant immediately before the period for which an 
        election may be made of the participant's opportunity to make 
        such election. Such notice shall include a copy of the summary 
        plan description required under section 102 and shall indicate 
        the level of employer nonelective contributions which will be 
        made for the year (or portion thereof) for which the election 
        may be made. This paragraph shall not apply to an election 
        under section 5002(c)(3)(B)(ii).''
    (b) Fiduciary Duties.--Section 404 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1104) is amended by 
redesignating subsection (d) as subsection (e) and by adding after 
subsection (c) the following new subsection:
    ``(d) In the case of a Pension ProSave Plan under title V--
            ``(1) no plan sponsor who is otherwise a fiduciary shall be 
        liable under this part for any loss, or by reason of any 
        breach, which results from the manner in which the assets in a 
        Pension ProSave Account are invested, and
            ``(2) if--
                    ``(A) a participant ceases to be an eligible 
                employee (within the meaning of section 5002(f)(3)) 
                with respect to such plan, and
                    ``(B) the plan sponsor has made all required 
                contributions with respect to such participant under 
                such plan,
        the trustee of the Pension ProSave Account established for such 
        participant and his beneficiaries shall be the sole fiduciary 
        with respect to such participant and beneficiaries in 
        connection with such plan.''

SEC. 4. EFFECTIVE DATE.

    The Pension ProSave system established under this Act shall take 
effect on the first day of the sixth month following the month in which 
final regulations described in section 5011 of the Employee Retirement 
Income Security Act of 1974 are published in the Federal Register.
                                 <all>