[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1992 Introduced in Senate (IS)]

  2d Session
                                S. 1992

To amend the Employee Retirement Income Security Act of 1974 to improve 
 diversification of plan assets for participants in individual account 
plans, to improve disclosure, account access, and accountability under 
           individual account plans, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 6, 2002

 Mr. Kennedy (for himself, Mr. Bingaman, Mr. Corzine, Mrs. Boxer, Mr. 
  Daschle, Mr. Harkin, Ms. Mikulski, Mr. Reed, Mrs. Clinton, and Mr. 
    Durbin) 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 improve 
 diversification of plan assets for participants in individual account 
plans, to improve disclosure, account access, and accountability under 
           individual account plans, and for other purposes.

    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 ``Protecting 
America's Pensions Act of 2002''.
    (b) Table of Contents.--

Sec. 1. Short title and table of contents.
        TITLE I--IMPROVEMENTS IN DIVERSIFICATION OF PLAN ASSETS

Sec. 101. Rules relating to plan investments in employer stock.
Sec. 102. Elimination of employer requirements that assets be invested 
                            in employer securities.
Sec. 103. Fiduciary rules for plan sponsors designating independent 
                            investment advisers.
                  TITLE II--IMPROVEMENTS IN DISCLOSURE

Sec. 201. Pension benefit information.
Sec. 202. Provision to participants and beneficiaries of material 
                            investment information in accurate form.
Sec. 203. Electronic disclosure of insider trading.
          TITLE III--IMPROVEMENTS IN ACCESS AND ACCOUNTABILITY

Sec. 301. Additional fiduciary protections relating to lockdowns.
Sec. 302. Limitation on fiduciary exception during lockdown period.
Sec. 303. Insurance adequate to protect interest of participants and 
                            beneficiaries.
Sec. 304. Liability for breach of fiduciary duty.
Sec. 305. Participation of participants in trusteeship of individual 
                            account plans.
Sec. 306. Preservation of rights or claims.
Sec. 307. Office of Pension Participant Advocacy.
Sec. 308. Study regarding insurance system for individual account 
                            plans.
Sec. 309. Study regarding fees charged by individual account plans.
Sec. 310. Collectively bargained 401(k) plans.
                      TITLE IV--GENERAL PROVISIONS

Sec. 401. General effective date.
Sec. 402. Plan amendments.

        TITLE I--IMPROVEMENTS IN DIVERSIFICATION OF PLAN ASSETS

SEC. 101. RULES RELATING TO PLAN INVESTMENTS IN EMPLOYER STOCK.

    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)(A) Except as provided in this subsection, an individual 
account plan under which a participant or beneficiary is permitted to 
exercise control over assets in his or her account shall provide that 
if the plan (or any other plan maintained by the employer which covers 
the participant or beneficiary) provides for or allows employer 
contributions other than elective deferrals to be invested in employer 
securities or employer real property, the plan may not permit elective 
deferrals to be invested in employer securities or employer real 
property.
    ``(B) A plan which offers as an investment option the purchase of 
stock through an open brokerage account or similar investment vehicle 
shall not be treated as meeting the requirements of subparagraph (A) 
unless the plan provides that such option may not be used to purchase 
employer securities or employer real property.
    ``(2)(A) This subsection shall not apply to an individual account 
plan maintained by an employer for any plan year if the employer 
maintains a qualified defined benefit plan for the plan year.
    ``(B)(i) For purposes of subparagraph (A), the term `qualified 
defined benefit plan' means, with respect to any individual account 
plan, a defined benefit plan--
            ``(I) which covers at least 90 percent of the employees as 
        are covered by the individual account plan, and
            ``(II) with respect to which the accrued benefit of each 
        participant is not less than a benefit which is actuarially 
        equivalent to a percentage of the participant's final average 
        pay equal to 1.5 percent multiplied by the number of years of 
        service (not greater than 20) of the participant.
    ``(ii) In applying subclause (II) of clause (i) to a defined 
benefit plan with respect to which a participant's accrued benefit is 
equal to a fixed dollar amount multiplied by the number of years of 
service--
            ``(I) the participant's pay during the plan year preceding 
        the plan year of the determination shall be used in lieu of 
        final average pay, and
            ``(II) the plan shall be treated as satisfying the 
        requirement of such subclause if the average accrued benefit 
        under the plan of all the participants who are also covered by 
        the individual account plan meets such requirement.
    ``(3) 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 terms `employer securities' and `employer real 
        property' have the meanings given such terms by section 407(d), 
        and
            ``(C) the term `year of service' has the meaning given such 
        term by section 203(b)(2).''

SEC. 102. ELIMINATION OF EMPLOYER REQUIREMENTS THAT ASSETS BE INVESTED 
              IN EMPLOYER SECURITIES.

    (a) In General.--Section 404(e) of Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104(e)), as added by section 101, is 
amended by redesignating paragraphs (2) and (3) as paragraphs (3) and 
(4) and by inserting after paragraph (1) the following new paragraph:
            ``(2)(A) Except as provided in this subsection, an 
        individual account plan to which this paragraph applies shall--
                    ``(i) offer at least 3 investment options (not 
                inconsistent with regulations prescribed by the 
                Secretary) in addition to any option to invest in 
                employer securities or employer real property,
                    ``(ii) provide that a participant or beneficiary 
                has the immediate right to reinvest any employee 
                contributions and elective deferrals invested in 
                employer securities or employer real property (and 
                earnings thereon) in any other investment option 
                provided by the plan,
                    ``(iii) provide that a participant or beneficiary 
                has the right after no more than 3 years of service 
                under the plan to reinvest any employer contributions 
                (other than elective deferrals) of employer securities 
                or employer real property (and earnings thereon) in any 
                other investment option provided by the plan, and
                    ``(iv) meet the requirements of section 409(e)(2) 
                of the Internal Revenue Code of 1986 with respect to 
                employer securities held by the plan which are readily 
                tradable on an established securities market.
            ``(B)(i) Except as provided in clause (ii), this paragraph 
        shall apply to any individual account plan which holds employer 
        securities which are readily tradable on an established 
        securities market.
            ``(ii) This paragraph shall not apply to an employee stock 
        ownership plan if the plan has no contributions (or earnings 
        thereon) which are subject to section 401 (k)(3) or (m) of such 
        Code.''
    (b) Applicable Rules.--Section 404(e) of such Act (29 U.S.C. 
1104(e)), as so added, is amended by striking paragraph (4) (as 
redesignated by subsection (a)) and inserting the following new 
paragraphs:
    ``(4)(A) Except as provided in subparagraph (B), within 30 days 
after the date of any election by a participant or beneficiary under 
paragraph (2) to reinvest, 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 to 
reinvest periodically during prescribed time periods, the 30-day period 
described in subparagraph (A) shall commence at the end of each such 
prescribed period.
    ``(5) Not later than 30 days before the first date on which a 
participant is eligible to exercise the right to reinvest employer 
securities and employer real property under paragraph (2), the plan 
administrator shall provide to such participant and his or her 
beneficiaries a written notice--
            ``(A) setting forth such right under paragraph (2), and
            ``(B) describing the importance of diversifying the 
        investment of retirement account assets.
The Secretary shall prescribe a model notice for purposes of satisfying 
the requirements of this paragraph which shall be in a form calculated 
to be understood by the average plan participant.
    ``(6) 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), 
        and
            ``(D) the term `year of service' has the meaning given such 
        term by section 203(b)(2).''
    (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 as 
to--
            (1) whether section 404(e) of the Employee Retirement 
        Income Security Act of 1974 (as added by section 101 and 
        amended by this section) should apply to employer securities 
        which are not readily tradable on an established securities 
        market, and
            (2) if the Secretary recommends that such section apply to 
        such securities, any legislative changes necessary to reflect 
        differences between such securities and employer securities 
        which are readily tradable on an established securities market.

SEC. 103. FIDUCIARY RULES FOR PLAN SPONSORS DESIGNATING INDEPENDENT 
              INVESTMENT ADVISERS.

    (a) In General.--Section 404 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104), as amended by sections 101 and 
102, is amended by adding at the end the following new subsection:
    ``(f)(1) In the case of an individual account plan which permits a 
plan participant or beneficiary to exercise control over the assets in 
his or her account, if a plan sponsor or other person who is a 
fiduciary designates and monitors a qualified investment adviser 
pursuant to the requirements of paragraph (3), such fiduciary--
            ``(A) shall be deemed to have satisfied the requirements 
        under this section for the prudent designation and periodic 
        review of an investment adviser with whom the plan sponsor or 
        other person who is a fiduciary enters into an arrangement for 
        the provision of advice referred to in section 3(21)(A)(ii),
            ``(B) shall not be liable under this section for any loss, 
        or by reason of any breach, with respect to the provision of 
        investment advice given by such adviser to any plan participant 
        or beneficiary, and
            ``(C) shall not be liable for any co-fiduciary liability 
        under subsections (a)(2) and (b) of section 405 with respect to 
the provision of investment advice given by such adviser to any plan 
participant or beneficiary.
    ``(2)(A) For purposes of this section, the term `qualified 
investment adviser' means, with respect to a plan, a person--
            ``(i) who is a fiduciary of the plan by reason of the 
        provision of investment advice by such person to a plan 
        participant or beneficiary;
            ``(ii) who--
                    ``(I) is registered as an investment adviser under 
                the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et 
                seq.),
                    ``(II) is registered as an investment adviser under 
                the laws of the State in which such adviser maintains 
                the principal office and place of business of such 
                adviser, but only if such State has an examination 
                requirement to qualify for such registration,
                    ``(III) is a bank or similar financial institution 
                referred to in section 408(b)(4),
                    ``(IV) is an insurance company qualified to do 
                business under the laws of a State, or
                    ``(V) is any other comparably qualified entity 
                which satisfies such criteria as the Secretary 
                determines appropriate, consistent with the purposes of 
                this subsection, and
            ``(iii) who meets the requirements of subparagraph (B).
    ``(B) The requirements of this subparagraph are met if every 
individual employed (or otherwise compensated) by a person described in 
subparagraph (A)(ii) who provides investment advice on behalf of such 
person to any plan participant or beneficiary is--
            ``(i) an individual described in subclause (I) or (II) of 
        subparagraph (A)(ii),
            ``(ii) registered as a broker or dealer under the 
        Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
            ``(iii) a registered representative as described in section 
        3(a)(18) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78c(a)(18)) or section 202(a)(17) of the Investment Advisers 
        Act of 1940 (15 U.S.C. 80b-2(a)(17)), or
            ``(iv) any other comparably qualified individual who 
        satisfies such criteria as the Secretary determines 
        appropriate, consistent with the purposes of this subsection.
    ``(3) The requirements of this paragraph are met if--
            ``(A) the plan sponsor or other person who is a fiduciary 
        in designating a qualified investment adviser receives at the 
        time of the designation, and annually thereafter, a written 
        verification from the qualified investment adviser that the 
        investment adviser--
                    ``(i) is and remains a qualified investment 
                adviser,
                    ``(ii) acknowledges that the investment adviser is 
                a fiduciary with respect to the plan and is solely 
                responsible for its investment advice,
                    ``(iii) has reviewed the plan documents (including 
                investment options) and has determined that its 
                relationship with the plan and the investment advice 
                provided to any plan participant or beneficiary, 
                including any fees or other compensation it will 
                receive, will not constitute a violation of section 
                406,
                    ``(iv) will, in providing investment advice to any 
                participant or beneficiary, consider any employer 
                securities or employer real property allocated to his 
                or her account, and
                    ``(v) has the necessary insurance coverage (as 
                determined by the Secretary) for any claim by any plan 
                participant or beneficiary,
            ``(B) the plan sponsor or other person who is a fiduciary 
        in designating a qualified investment adviser reviews the 
        documents described in paragraph (4) provided by such adviser 
        and determines that there is no material reason not to enter 
        into an arrangement for the provision of advice by such 
        qualified investment adviser, and
            ``(C) the plan sponsor or other person who is a fiduciary 
        in designating a qualified investment adviser determines 
        whether or not to continue the designation of the investment 
        adviser as a qualified investment adviser within 30 days of 
        having information brought to its attention that the investment 
        adviser is no longer qualified or that a substantial number of 
        plan participants or beneficiaries have raised concerns about 
        the services being provided by the investment adviser.
    ``(4) A qualified investment adviser shall provide the following 
documents to the plan sponsor or other person who is a fiduciary in 
designating the adviser:
            ``(A) The contract with the plan sponsor or other person 
        who is a fiduciary for the services to be provided by the 
        investment adviser to the plan participants and beneficiaries.
            ``(B) A disclosure as to any fees or other compensation 
        that will be received by the investment adviser for the 
        provision of such investment advice.
            ``(C) The Uniform Application for Investment Adviser 
        Registration as filed with the Securities and Exchange 
        Commission or a substantially similar disclosure application as 
        determined by and filed with the Secretary.
    ``(5) Any qualified investment adviser that acknowledges it is a 
fiduciary pursuant to paragraph (3)(A)(ii) shall be deemed a fiduciary 
under this part with respect to the provision of investment advice to a 
plan participant or beneficiary.''
    (b) Fiduciary Liability.--Section 404(c)(1)(B) is amended by 
inserting ``(other than a qualified investment adviser)'' after 
``fiduciary''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to advisers designated after the date of the enactment of 
this Act.

                  TITLE II--IMPROVEMENTS IN DISCLOSURE

SEC. 201. PENSION BENEFIT INFORMATION.

    (a) Pension Benefit Statements Required on Periodic Basis.--
            (1) In general.--Section 105(a) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to 
        read as follows:
    ``(a)(1)(A) The administrator of an individual account plan shall 
furnish a pension benefit statement--
            ``(i) at least once each calendar quarter to a plan 
        participant of an individual account plan which permits a 
        participant or beneficiary to exercise control over the assets 
        in his or her account, and
            ``(ii) to a plan participant or beneficiary upon written 
        request.
    ``(B) The administrator of a defined benefit plan shall furnish a 
pension benefit statement--
            ``(i) at least once every 3 years to each participant, and
            ``(ii) to a participant or beneficiary of the plan upon 
        written request.
Information furnished under subparagraph (B) to a participant (other 
than at the request of the participant) may be based on reasonable 
estimates determined under regulations prescribed by the Secretary.
    ``(2)(A) A pension benefit statement under paragraph (1)--
            ``(i) shall indicate, on the basis of the latest available 
        information--
                    ``(I) the total benefits accrued, and
                    ``(II) the nonforfeitable pension benefits, if any, 
                which have accrued, or the earliest date on which 
                benefits will become nonforfeitable,
            ``(ii) shall be written in a manner calculated to be 
        understood by the average plan participant, and
            ``(iii) may be provided in written, electronic, or other 
        appropriate form to the extent that such form is reasonably 
        accessible to the participant or beneficiary.
    ``(B) In the case of an individual account plan, the pension 
benefit statement under paragraph (1) shall include (together with the 
information required in subparagraph (A))--
            ``(i) the value of any assets held in the form of employer 
        securities, without regard to whether such securities were 
        contributed by the plan sponsor or acquired at the direction of 
        the plan or of the participant or beneficiary, and an 
        explanation of any limitations or restrictions on the right of 
        the participant or beneficiary to direct an investment,
            ``(ii) an explanation, written in a manner calculated to be 
        understood by the average plan participant, of the importance, 
        for the long-term retirement security of participants and 
        beneficiaries, of a diversified investment portfolio, including 
        a statement of the risk of holding substantial portions of a 
        portfolio in the securities of any 1 entity, such as employer 
        securities, and
            ``(iii) in the case of an individual account plan, if 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, 
        exceeds 20 percent of the total account, a warning that the 
        account may be overinvested in employer securities and employer 
        real property.''
            (2) Civil penalties for failure to provide quarterly 
        benefit statements.--Section 502 of such Act (29 U.S.C. 1132) 
        is amended--
                    (A) in subsection (a)(6), by striking ``(5), or 
                (6)'' and inserting ``(5), (6), or (7)'';
                    (B) by redesignating paragraph (7) of subsection 
                (c) as paragraph (8); and
                    (C) by inserting after paragraph (6) of subsection 
                (c) the following new paragraph:
    ``(7) The Secretary may assess a civil penalty against any plan 
administrator of an individual account plan of up to $1,000 a day from 
the date of such plan administrator's failure or refusal to provide 
participants or beneficiaries with a benefit statement on at least a 
quarterly basis in accordance with section 105(a)(1)(A)(i).''
            (3) 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 notice shall be in a form 
calculated to be understood by the average plan participant.''
            (4) Conforming amendment.--Section 105(b) of such Act (29 
        U.S.C. 1025(b)) is amended to read as follows:
    ``(b) In no case shall a participant or beneficiary or beneficiary 
of a plan be entitled to more than 1 statement described in subsection 
(a)(1) (A)(ii) or (B)(ii), whichever is applicable, in any 12-month 
period.''
    (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 a defined 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 plan documents relating to the calculation (if 
        available), and
            ``(C) such other information as the Secretary may 
        prescribe.''
            (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. 202. 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 or her 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 to investors in 
connection with such an investment under applicable securities laws. 
The provision by the plan sponsor or plan administrator of any 
materially misleading investment information shall be treated as a 
violation of this paragraph.''
    (b) Enforcement.--Section 502 of such Act (29 U.S.C. 1132), as 
amended by section 201, is amended--
            (1) in subsection (a)(6), by striking ``(6), or (7)'' and 
        inserting ``(6), (7), or (8)'';
            (2) by redesignating paragraph (8) of subsection (c) as 
        paragraph (9); and
            (3) by inserting after paragraph (7) of subsection (c) the 
        following new paragraph:
    ``(8) 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.''

SEC. 203. ELECTRONIC DISCLOSURE OF INSIDER TRADING.

    Section 101 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1021) is amended by redesignating the second subsection (h) 
as subsection (j) and by inserting after the first subsection (h) the 
following new subsection:
    ``(i)(1) Except as specifically provided in this Act, and 
notwithstanding any other provision of law, any disclosure required by 
the Commission of the sale of any securities by an officer or director 
or other affiliated person of the issuer of the securities shall be 
made available in electronic form--
            ``(A) to the Commission by the officer, director, or 
        affiliated person, before the end of the calendar day on which 
        the transaction occurs;
            ``(B) to the public by the Commission, before the end of 
        the business day on which the disclosure is received under 
        subparagraph (A) but only to the extent such public disclosure 
        is allowed under applicable law; and
            ``(C) on any corporate website the issuer maintains which 
        is accessible only internally, before the end of the calendar 
        day on which the transaction occurs.
If there are employees of an issuer who do not have access to the 
corporate website described in subparagraph (C), the information 
required to be provided under this paragraph shall be provided to the 
employees in written, electronic, or other appropriate form to the 
extent that such form is reasonably accessible to them.
    ``(2) The Commission may provide that the requirement under this 
subsection of disclosure in electronic form will be in lieu of any 
other form of such disclosure that may be required by the Commission or 
under any other Federal law.
    ``(3) In this subsection, the terms `affiliated person', 
`Commission', `issuer', and `securities' have the same meanings as in 
section 3 of the Securities Exchange Act of 1934.''

          TITLE III--IMPROVEMENTS IN ACCESS AND ACCOUNTABILITY

SEC. 301. ADDITIONAL FIDUCIARY PROTECTIONS RELATING TO LOCKDOWNS.

    Section 404 of the Employee Retirement Income Security Act of 1974 
(as amended by this Act) is amended further by adding at the end the 
following new subsection:
    ``(g)(1) In the case of any eligible individual account plan (as 
defined in section 407(d)(3))--
            ``(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 an unreasonable 
        period.
    ``(2) For purposes of this subsection, the term `lockdown' means 
any suspension, restriction, or similar limitation which is imposed on 
the ability of a participant or beneficiary to exercise control over 
the assets in his or her account as otherwise generally provided under 
the terms of the plan (as determined under regulations of the 
Secretary).''

SEC. 302. LIMITATION ON FIDUCIARY EXCEPTION DURING LOCKDOWN PERIOD.

    (a) In General.--Section 404(c)(1) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1104(c)(1)) is amended--
            (1) in subparagraph (B), by inserting before the period the 
        following: ``, except that this subparagraph shall not apply 
        for any period during which the ability of a participant or 
        beneficiary to direct the investment of assets in his or her 
        individual account is suspended by a plan sponsor or 
        fiduciary''; and
            (2) by adding at the end the following:
``Any limitation or restriction that may govern the frequency of 
transfers between investment vehicles shall not be treated as a 
suspension referred to in subparagraph (B) to the extent such 
limitation or restriction is disclosed to participants or beneficiaries 
through the summary plan description or materials describing specific 
investment alternatives under the plan.''
    (b) Guidance.--The Secretary of Labor shall, not later than the 
180th day after the date of the enactment of this Act, issue guidance 
as to what actions a fiduciary may take to meet his or her fiduciary 
duties during a period during which section 404(c)(1)(B) of the 
Employee Retirement Income Security Act of 1974 does not apply by 
reason of the amendments made by subsection (a).

SEC. 303. INSURANCE ADEQUATE TO PROTECT INTEREST OF PARTICIPANTS AND 
              BENEFICIARIES.

    (a) In General.--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 which covers more than 100 
participants shall be insured, in accordance with regulations 
prescribed by the Secretary, to provide reasonable coverage for 
failures to meet the requirements of this part.''
    (b) Effective Dates.--
            (1) In general.--The amendment made by this section shall 
        take effect on the date on which the regulations required to be 
        promulgated under section 412(f) of the Employee Retirement 
        Income Security Act of 1974 become final.
            (2) Regulations.--The Secretary of Labor shall prescribe 
        the regulations necessary to carry out section 412(f) of the 
        Employee Retirement Income Security Act of 1974, as added by 
        this section, not later than one year after the date of the 
        enactment of this Act.

SEC. 304. 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'';
                    (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''; and
                    (E) by adding at the end the following new 
                sentence: ``This subsection shall not apply to any 
                claim by a participant or beneficiary which relates to 
                a claim or request for benefits under the plan and 
                which may be brought under section 502(a).''
            (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) 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. 305. 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) The assets of a single-employer plan which is an 
individual account plan which covers more than 100 participants 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)(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 an election process 
organized by the plan for all plan participants.
    ``(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 elected by the participants in accordance with 
regulations of the Secretary. 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. 306. 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. 307. 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) advocate for the full attainment of the rights of 
        pension plan participants, including by making pension plan 
        sponsors and fiduciaries aware of their responsibilities,
            ``(4) give priority to the special needs of low- and 
        moderate-income participants,
            ``(5) develop 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) if the Advocate determines appropriate, pursue claims 
        on behalf of participants and beneficiaries (including, upon 
        request of any participant or beneficiary, bringing any civil 
        action on behalf of the participant or beneficiary which the 
        participant or beneficiary is entitled to bring under section 
        502(a)(1)(B)) and provide 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 by 
        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--
                    ``(A) 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, and
                    ``(B) upon request of a participant or beneficiary, 
                represent the participant or beneficiary in any civil 
                action which the participant or beneficiary is entitled 
                to bring under section 502(a)(1)(B).
            ``(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 D--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. 308. 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,
            (2) the problem with insuring investments in employer 
        securities, and
            (3) options for developing such a system.
    (b) Report.--Not later than 2 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. 309. STUDY REGARDING FEES CHARGED BY INDIVIDUAL ACCOUNT PLANS.

    (a) Study.--As soon as practicable after the date of the enactment 
of this Act, the Secretary of Labor shall undertake a study of the 
administrative and transaction fees incurred by participants and 
beneficiaries in connection with the investment of assets in their 
accounts under individual account plans. In conducting such study, the 
Secretary shall consider--
            (1) how the fees compare to fees charged for similar 
        services provided to investors not in individual account plans, 
        and
            (2) whether participants or beneficiaries are adequately 
        notified of the fees.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Secretary 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. 310. COLLECTIVELY BARGAINED 401(K) PLANS.

    (a) In General.--Section 401(k)(4) of the Internal Revenue Code of 
1986 (relating to other requirements) is amended by adding at the end 
the following new subparagraph:
                    ``(D) Benefits subject to bargaining.--For purposes 
                of this subsection, employees described in section 
                410(b)(3)(A) may be excluded from a qualified cash or 
                deferred arrangement maintained by an eligible employer 
                only if they are covered under any other collectively 
                bargained plan with respect to which the trust forming 
                part of such plan is a qualified trust under this 
                section.''
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after the date of the enactment of this Act.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. 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. 402. 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 good faith compliance 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>