[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4396 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4396

  To amend title IV of the Employee Retirement Income Security Act of 
    1974 to protect the rights of participants and beneficiaries of 
                       terminated pension plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 4, 1998

 Mr. Schumer introduced the following bill; which was referred to the 
                Committee on Education and the Workforce

_______________________________________________________________________

                                 A BILL


 
  To amend title IV of the Employee Retirement Income Security Act of 
    1974 to protect the rights of participants and beneficiaries of 
                       terminated pension plans.

    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 Plan Participant Protection 
Act of 1998''.

SEC. 2. DUTIES OF THE PENSION BENEFIT GUARANTY CORPORATION WHILE 
              SERVING AS TRUSTEE OF TERMINATED PLAN.

    (a) In General.--Section 4042(d)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1342(d)(3)) is amended--
            (1) by inserting ``(A)'' after ``(3)''; and
            (2) by adding at the end the following new subparagraphs:
    ``(B) The corporation is subject to the same requirements of 
reporting and disclosure in connection with a pension plan for which 
the corporation is serving as trustee pursuant to this section as those 
of any plan administrator of an employee pension benefit plan under 
part 1 of subtitle B of title I.
    ``(C) The corporation is subject to the same fiduciary duties in 
connection with a pension plan for which the corporation is serving as 
trustee pursuant to this section, including the determination and 
payment of plan benefits, as those of any fiduciary of an employee 
pension benefit plan under part 1 of subtitle B of title I. The 
corporation shall maintain such separate books and records and retain 
such separate counsel on its behalf as may be necessary for carrying 
out such duties.
    ``(D) For purposes of applying part 5 of subtitle B of title I in 
the enforcement of subparagraphs (B) and (C)--
            ``(i) any civil monetary penalty which may be assessed by 
        the Secretary of Labor against the corporation under any 
        provision of section 502(c) shall be assessed in the full 
        amount specified in such provision,
            ``(ii) a civil action against the corporation as fiduciary 
        under section 502(a)(2) for relief under section 409 may be 
        brought by any affected party, and, in any such action by an 
        affected party in which the corporation is removed as trustee, 
        the replacement trustee shall be selected by the court from any 
        list of qualified candidates which may be provided by such 
        affected party, and
            ``(iii) any review under section 502 by a district court of 
        the United States of a benefit determination by the corporation 
        shall be de novo.
    ``(E) In any case in which the corporation serves as trustee for a 
terminated pension plan pursuant to this section, the corporation shall 
issue its final determination regarding any benefit payable under the 
plan not later than one year after the date of the corporation's 
appointment as trustee. Any failure by the corporation to comply with 
the requirements of this subparagraph shall be deemed an action of the 
corporation upon which a cause of action may be brought against the 
corporation under section 4003(f)(1).''.
    (b) Conforming Amendment.--Section 4023 of such Act (29 U.S.C. 
1323) is amended--
            (1) by inserting ``(a)'' after ``Sec. 4023.''; and
            (2) by adding at the end the following new subsection:
    ``(b) Subsection (a) shall not apply with respect to the 
corporation while the corporation is serving in its fiduciary capacity 
in accordance with section 4042(d)(3)(B).''.

SEC. 3. PARTICIPANTS' COMMITTEES.

    (a) In General.--Subtitle C of title IV of the Employee Retirement 
Income Security Act of 1974 is amended by inserting after section 4048 
(29 U.S.C. 1348) the following new section:

                       ``participants' committees

    ``Sec. 4049. (a) In General.--
            ``(1) Appointment of committee.--Except as provided in 
        paragraph (3), as soon as practicable after the appointment of 
        a trustee under section 4042, the trustee shall appoint a 
        committee of participants under the plan.
            ``(2) Requests for adequate representation.--On request of 
        an affected party, the court may order the appointment of 
        additional committees of participants if necessary to assure 
        adequate representation of participants. The trustee shall 
        appoint any such committee.
            ``(3) Small businesses.--On request of an affected party in 
        a case in which the plan sponsor is a small business and for 
        cause, the court may order that a committee of participants not 
        be appointed.
    ``(b) Membership.--A committee of participants appointed under 
subsection (a) shall ordinarily consist of the persons, willing to 
serve, that were in pay status under the plan as of the date of the 
termination of the plan and have the seven largest nonforfeitable 
benefits under the plan, or of the members of a committee organized by 
participants before such date, if such committee was fairly chosen and 
is representative of the participants of the plan.
    ``(c) Powers and Duties of Committees.--
            ``(1) Appointment of attorneys, accountants, etc.--At a 
        scheduled meeting of a committee appointed under subsection 
        (a), at which a majority of the members of such committee are 
        present, and with the court's approval, such committee may 
        select and authorize the employment by such committee of one or 
more attorneys, accountants, or other agents to represent or perform 
services for such committee.
            ``(2) Preclusion of conflicts of interest.--An attorney or 
        accountant employed to represent a committee appointed under 
        subsection (a) may not, while employed by such committee, 
        represent any other entity having an adverse interest in 
        connection with the case. Representation of one or more 
        participants of the same class as represented by the committee 
        shall not per se constitute the representation of an adverse 
        interest.
            ``(3) Specific powers.--A committee appointed under 
        subsection (a) may--
                    ``(A) consult with the trustee concerning the 
                administration of the case,
                    ``(B) investigate the acts, conduct, assets, 
                liabilities, and financial condition of the plan, the 
                operation of the plan sponsor's financial operations, 
                and the desirability of the continuance of the plan, 
                and any other matter relevant to the case,
                    ``(C) participate in the formulation of the plan 
                for distribution of plan assets, advise those 
                represented by such committee of such committee's 
                determinations as to any plan for distribution of the 
                plan's assets, and collect and file with the court 
                acceptances or rejections of the plan for distribution 
                of plan assets,
                    ``(D) request the court for the appointment of the 
                committee or any other person as an alternative 
                trustee, and
                    ``(E) perform such other services as are in the 
                interest of plan participants and beneficiaries.
            ``(4) Meeting with trustee.--As soon as practicable after 
        the appointment of a committee under subsection (a), the 
        trustee shall meet with such committee to transact such 
        business as may be necessary and proper.''.
    (b) Conforming Amendment.--The table of contents in section 1 of 
such Act is amended by inserting after the item relating to section 
4048 the following new item:

``Sec. 4049. Participants' committees.''.

SEC. 4. TRUSTEESHIP OF TERMINATED PLANS.

    (a) In General.--Section 4042(c) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1342(c)) is amended--
            (1) by inserting ``(1)'' after ``(c)''; and
            (2) by inserting before paragraph (3) the following new 
        paragraph:
    ``(2) The court may appoint the corporation, a participants' 
committee, or any other person to serve as trustee under paragraph (1). 
Upon the application of any two or more of the foregoing to serve as 
trustee, the determination of the court of which to appoint shall be 
based on its determination of which applicant is most qualified to 
carry out the fiduciary duties of the trustee with respect to 
participants and beneficiaries without conflicts of interest.''.
    (b) Payment or Reimbursement of Reasonable Fees and Expenses.--
Section 4042(h) of such Act (29 U.S.C. 1342(h)) is amended by adding at 
the end the following new paragraph:
    ``(3) The reasonable fees and expenses of a trustee appointed under 
this section (other than the corporation), of any participants' 
committee, and of any counsel, accountants, actuaries, and other 
professional service personnel shall be paid, directly or by means of 
reimbursement, from the assets of the terminated plan.''.

SEC. 5. PARTICIPANT'S ADVOCATE.

    (a) In General.--Subtitle D of title IV of the Employee Retirement 
Income Security Act of 1974 is amended by adding after section 4071 (29 
U.S.C. 1371) the following new section:

                   ``office of participant's advocate

    ``(a) In General.--The Secretary of Labor shall establish in the 
Department of Labor an Office of Participant's Advocate, to be headed 
by a Participant's Advocate.
    ``(b) Functions.--The Participant's Advocate shall, upon request of 
participants of terminated pension plans--
            ``(1) counsel participants and beneficiaries of such plans 
        in connection with their rights to benefits thereunder, and
            ``(2) provide legal representation before the corporation 
        and in court to such participants who have been denied benefits 
        by the corporation.
    ``(b) Fees.--The Office shall require only such fees for its 
services as may be prescribed in regulations of the Secretary of Labor.
    ``(c) Staff.--The Participant's Advocate shall appoint such 
attorneys, actuaries, and accountants as may be necessary to assist the 
Participant's Advocate in carrying out the functions of the Office, and 
may appoint such additional personnel as may be necessary to provide 
adequate support for the Office.
    ``(d) Notice.--Each notice of a benefit determination issued by the 
corporation to a participant or beneficiary under a terminated pension 
plan shall include a notice (in such form as shall be prescribed in 
regulations of the Secretary of Labor) describing the services of the 
Participant's Advocate's Office.''.
    (b) Conforming Amendment.--The table of contents in section 1 of 
such Act is amended by inserting after the item relating to section 
4071 the following new item:

``Sec. 4071. Office of Participant's Advocate.''.
    (c) Effective Date.--The Secretary of Labor shall establish the 
Office of Participant's Advocate pursuant to the amendments made by 
this section not later than one year after the date of the enactment of 
this Act.

SEC. 6. RULES GOVERNING TRUSTEESHIP BY THE CORPORATION.

    (a) In General.--Section 4042 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1342) is amended by adding at the end 
the following new subsection:
    ``(i) In any case in which the corporation serves as trustee of a 
terminated pension plan under this section--
            ``(1) the corporation shall segregate assets of the 
        terminated plan from the assets of any other plan or any other 
        assets held by the corporation,
            ``(2) the corporation may not use any assets of the plan 
        for any purpose other than payment of benefits or reasonable 
        administrative expenses directly attributable to the 
        termination and administration of the plan, excluding any 
        generally applicable overhead expenses of the corporation, and
            ``(3) the corporation shall obtain the services of 
        independent contractors in connection with the termination or 
        administration of the plan only through a competitive bidding 
        process.''.

SEC. 7. EFFECTIVE DATE.

    The amendments made by this Act shall apply with respect to plan 
terminations--
            (1) the termination date for which occurs on or after 
        January 1, 1990, and
            (2) for which the final distribution of assets occurs on or 
        after the date of the enactment of this Act.
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