[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>