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






                                                       Calendar No. 525
107th CONGRESS
  2d Session
                                S. 1992

                          [Report No. 107-226]

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, Mr. Durbin, 
 Mr. Lieberman, Mr. Kerry, Mr. Rockefeller, and Mr. Leahy) introduced 
the following bill; which was read twice and referred to the Committee 
               on Health, Education, Labor, and Pensions

                             July 26, 2002

               Reported by Mr. Kennedy, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 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,

<DELETED>SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.</DELETED>

<DELETED>    (a) Short Title.--This Act may be cited as the 
``Protecting America's Pensions Act of 2002''.</DELETED>
<DELETED>    (b) Table of Contents.--</DELETED>

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

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

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

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

<DELETED>Sec. 401. General effective date.
<DELETED>Sec. 402. Plan amendments.

       <DELETED>TITLE I--IMPROVEMENTS IN DIVERSIFICATION OF PLAN 
                            ASSETS</DELETED>

<DELETED>SEC. 101. RULES RELATING TO PLAN INVESTMENTS IN EMPLOYER 
              STOCK.</DELETED>

<DELETED>    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:</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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--</DELETED>
        <DELETED>    ``(I) which covers at least 90 percent of the 
        employees as are covered by the individual account plan, 
        and</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(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--</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(3) For purposes of this subsection--</DELETED>
        <DELETED>    ``(A) the term `elective deferral' has the meaning 
        given such term by section 402(g)(3) of the Internal Revenue 
        Code of 1986,</DELETED>
        <DELETED>    ``(B) the terms `employer securities' and 
        `employer real property' have the meanings given such terms by 
        section 407(d), and</DELETED>
        <DELETED>    ``(C) the term `year of service' has the meaning 
        given such term by section 203(b)(2).''</DELETED>

<DELETED>SEC. 102. ELIMINATION OF EMPLOYER REQUIREMENTS THAT ASSETS BE 
              INVESTED IN EMPLOYER SECURITIES.</DELETED>

<DELETED>    (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:</DELETED>
        <DELETED>    ``(2)(A) Except as provided in this subsection, an 
        individual account plan to which this paragraph applies shall--
        </DELETED>
                <DELETED>    ``(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,</DELETED>
                <DELETED>    ``(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,</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.''</DELETED>
<DELETED>    (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:</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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--</DELETED>
        <DELETED>    ``(A) setting forth such right under paragraph 
        (2), and</DELETED>
        <DELETED>    ``(B) describing the importance of diversifying 
        the investment of retirement account assets.</DELETED>
<DELETED>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.</DELETED>
<DELETED>    ``(6) For purposes of this subsection--</DELETED>
        <DELETED>    ``(A) the term `elective deferral' has the meaning 
        given such term by section 402(g)(3) of the Internal Revenue 
        Code of 1986,</DELETED>
        <DELETED>    ``(B) the term `employee stock ownership plan' has 
        the meaning given such term by section 4975(e)(7) of such 
        Code,</DELETED>
        <DELETED>    ``(C) the terms `employer securities' and 
        `employer real property' have the meanings given such terms by 
        section 407(d), and</DELETED>
        <DELETED>    ``(D) the term `year of service' has the meaning 
        given such term by section 203(b)(2).''</DELETED>
<DELETED>    (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--</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (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.</DELETED>

<DELETED>SEC. 103. FIDUCIARY RULES FOR PLAN SPONSORS DESIGNATING 
              INDEPENDENT INVESTMENT ADVISERS.</DELETED>

<DELETED>    (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:</DELETED>
<DELETED>    ``(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--
</DELETED>
        <DELETED>    ``(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),</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(2)(A) For purposes of this section, the term `qualified 
investment adviser' means, with respect to a plan, a person--</DELETED>
        <DELETED>    ``(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;</DELETED>
        <DELETED>    ``(ii) who--</DELETED>
                <DELETED>    ``(I) is registered as an investment 
                adviser under the Investment Advisers Act of 1940 (15 
                U.S.C. 80b-1 et seq.),</DELETED>
                <DELETED>    ``(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,</DELETED>
                <DELETED>    ``(III) is a bank or similar financial 
                institution referred to in section 408(b)(4),</DELETED>
                <DELETED>    ``(IV) is an insurance company qualified 
                to do business under the laws of a State, or</DELETED>
                <DELETED>    ``(V) is any other comparably qualified 
                entity which satisfies such criteria as the Secretary 
                determines appropriate, consistent with the purposes of 
                this subsection, and</DELETED>
        <DELETED>    ``(iii) who meets the requirements of subparagraph 
        (B).</DELETED>
<DELETED>    ``(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--
</DELETED>
        <DELETED>    ``(i) an individual described in subclause (I) or 
        (II) of subparagraph (A)(ii),</DELETED>
        <DELETED>    ``(ii) registered as a broker or dealer under the 
        Securities Exchange Act of 1934 (15 U.S.C. 78a et 
        seq.),</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(iv) any other comparably qualified individual 
        who satisfies such criteria as the Secretary determines 
        appropriate, consistent with the purposes of this 
        subsection.</DELETED>
<DELETED>    ``(3) The requirements of this paragraph are met if--
</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(i) is and remains a qualified 
                investment adviser,</DELETED>
                <DELETED>    ``(ii) acknowledges that the investment 
                adviser is a fiduciary with respect to the plan and is 
                solely responsible for its investment advice,</DELETED>
                <DELETED>    ``(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,</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(v) has the necessary insurance coverage 
                (as determined by the Secretary) for any claim by any 
                plan participant or beneficiary,</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(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:</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.''</DELETED>
<DELETED>    (b) Fiduciary Liability.--Section 404(c)(1)(B) is amended 
by inserting ``(other than a qualified investment adviser)'' after 
``fiduciary''.</DELETED>
<DELETED>    (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.</DELETED>

        <DELETED>TITLE II--IMPROVEMENTS IN DISCLOSURE</DELETED>

<DELETED>SEC. 201. PENSION BENEFIT INFORMATION.</DELETED>

<DELETED>    (a) Pension Benefit Statements Required on Periodic 
Basis.--</DELETED>
        <DELETED>    (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:</DELETED>
<DELETED>    ``(a)(1)(A) The administrator of an individual account 
plan shall furnish a pension benefit statement--</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(ii) to a plan participant or beneficiary upon 
        written request.</DELETED>
<DELETED>    ``(B) The administrator of a defined benefit plan shall 
furnish a pension benefit statement--</DELETED>
        <DELETED>    ``(i) at least once every 3 years to each 
        participant, and</DELETED>
        <DELETED>    ``(ii) to a participant or beneficiary of the plan 
        upon written request.</DELETED>
<DELETED>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.</DELETED>
<DELETED>    ``(2)(A) A pension benefit statement under paragraph (1)--
</DELETED>
        <DELETED>    ``(i) shall indicate, on the basis of the latest 
        available information--</DELETED>
                <DELETED>    ``(I) the total benefits accrued, 
                and</DELETED>
                <DELETED>    ``(II) the nonforfeitable pension 
                benefits, if any, which have accrued, or the earliest 
                date on which benefits will become 
                nonforfeitable,</DELETED>
        <DELETED>    ``(ii) shall be written in a manner calculated to 
        be understood by the average plan participant, and</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(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))--</DELETED>
        <DELETED>    ``(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,</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.''</DELETED>
        <DELETED>    (2) Civil penalties for failure to provide 
        quarterly benefit statements.--Section 502 of such Act (29 
        U.S.C. 1132) is amended--</DELETED>
                <DELETED>    (A) in subsection (a)(6), by striking 
                ``(5), or (6)'' and inserting ``(5), (6), or 
                (7)'';</DELETED>
                <DELETED>    (B) by redesignating paragraph (7) of 
                subsection (c) as paragraph (8); and</DELETED>
                <DELETED>    (C) by inserting after paragraph (6) of 
                subsection (c) the following new paragraph:</DELETED>
<DELETED>    ``(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).''</DELETED>
        <DELETED>    (3) Model statement.--Section 105 of such Act (29 
        U.S.C. 1025), is amended by adding at the end the following new 
        subsection:</DELETED>
<DELETED>    ``(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.''</DELETED>
        <DELETED>    (4) Conforming amendment.--Section 105(b) of such 
        Act (29 U.S.C. 1025(b)) is amended to read as 
        follows:</DELETED>
<DELETED>    ``(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.''</DELETED>
<DELETED>    (b) Disclosure of Benefit Calculations.--</DELETED>
        <DELETED>    (1) In general.--Section 105 of such Act (as 
        amended by subsection (a)) is amended further--</DELETED>
                <DELETED>    (A) by redesignating subsections (b), (c), 
                (d), and (e) as subsections (c), (d), (e), and (f), 
                respectively; and</DELETED>
                <DELETED>    (B) by inserting after subsection (a) the 
                following new subsection:</DELETED>
<DELETED>    ``(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--</DELETED>
        <DELETED>    ``(A) notify each participant or beneficiary of 
        the availability of, and the right to request, the information 
        described in paragraph (2), and</DELETED>
        <DELETED>    ``(B) provide to the participant or beneficiary 
        the information described in paragraph (2) upon the written 
        request of the participant or beneficiary.</DELETED>
<DELETED>    ``(2) The information described in this paragraph 
includes--</DELETED>
        <DELETED>    ``(A) a worksheet explaining how the amount of the 
        distribution was calculated and stating the assumptions used 
        for such calculation,</DELETED>
        <DELETED>    ``(B) upon written request of the participant or 
        beneficiary, any plan documents relating to the calculation (if 
        available), and</DELETED>
        <DELETED>    ``(C) such other information as the Secretary may 
        prescribe.''</DELETED>
        <DELETED>    (2) Conforming amendments.--</DELETED>
                <DELETED>    (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)''.</DELETED>
                <DELETED>    (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)''.</DELETED>
                <DELETED>    (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''.</DELETED>

<DELETED>SEC. 202. PROVISION TO PARTICIPANTS AND BENEFICIARIES OF 
              MATERIAL INVESTMENT INFORMATION IN ACCURATE 
              FORM.</DELETED>

<DELETED>    (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:</DELETED>
<DELETED>    ``(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.''</DELETED>
<DELETED>    (b) Enforcement.--Section 502 of such Act (29 U.S.C. 
1132), as amended by section 201, is amended--</DELETED>
        <DELETED>    (1) in subsection (a)(6), by striking ``(6), or 
        (7)'' and inserting ``(6), (7), or (8)'';</DELETED>
        <DELETED>    (2) by redesignating paragraph (8) of subsection 
        (c) as paragraph (9); and</DELETED>
        <DELETED>    (3) by inserting after paragraph (7) of subsection 
        (c) the following new paragraph:</DELETED>
<DELETED>    ``(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.''</DELETED>

<DELETED>SEC. 203. ELECTRONIC DISCLOSURE OF INSIDER TRADING.</DELETED>

<DELETED>    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:</DELETED>
<DELETED>    ``(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--</DELETED>
        <DELETED>    ``(A) to the Commission by the officer, director, 
        or affiliated person, before the end of the calendar day on 
        which the transaction occurs;</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.''</DELETED>

<DELETED>TITLE III--IMPROVEMENTS IN ACCESS AND ACCOUNTABILITY</DELETED>

<DELETED>SEC. 301. ADDITIONAL FIDUCIARY PROTECTIONS RELATING TO 
              LOCKDOWNS.</DELETED>

<DELETED>    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:</DELETED>
<DELETED>    ``(g)(1) In the case of any eligible individual account 
plan (as defined in section 407(d)(3))--</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(B) any lockdown may not continue for an 
        unreasonable period.</DELETED>
<DELETED>    ``(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).''</DELETED>

<DELETED>SEC. 302. LIMITATION ON FIDUCIARY EXCEPTION DURING LOCKDOWN 
              PERIOD.</DELETED>

<DELETED>    (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--</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
<DELETED>``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.''</DELETED>
<DELETED>    (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).</DELETED>

<DELETED>SEC. 303. INSURANCE ADEQUATE TO PROTECT INTEREST OF 
              PARTICIPANTS AND BENEFICIARIES.</DELETED>

<DELETED>    (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:</DELETED>
<DELETED>    ``(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.''</DELETED>
<DELETED>    (b) Effective Dates.--</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (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.</DELETED>

<DELETED>SEC. 304. LIABILITY FOR BREACH OF FIDUCIARY DUTY.</DELETED>

<DELETED>    (a) Liability for Participating in or Concealing Fiduciary 
Breach.--</DELETED>
        <DELETED>    (1) In general.--Section 409(a) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1109(a)) is 
        amended--</DELETED>
                <DELETED>    (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'';</DELETED>
                <DELETED>    (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;</DELETED>
                <DELETED>    (C) by inserting ``or such other person'' 
                after ``profits of such fiduciary'' and ``by the 
                fiduciary'';</DELETED>
                <DELETED>    (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</DELETED>
                <DELETED>    (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).''</DELETED>
        <DELETED>    (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))''.</DELETED>
<DELETED>    (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)''.</DELETED>

<DELETED>SEC. 305. PARTICIPATION OF PARTICIPANTS IN TRUSTEESHIP OF 
              INDIVIDUAL ACCOUNT PLANS.</DELETED>

<DELETED>    (a) In General.--Section 403(a) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1103(a)) is amended--</DELETED>
        <DELETED>    (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively;</DELETED>
        <DELETED>    (2) by inserting ``(1)'' after ``(a)''; 
        and</DELETED>
        <DELETED>    (3) by adding at the end the following new 
        paragraph:</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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).</DELETED>
<DELETED>    ``(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).</DELETED>
<DELETED>    ``(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.''</DELETED>
<DELETED>    (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.</DELETED>

<DELETED>SEC. 306. PRESERVATION OF RIGHTS OR CLAIMS.</DELETED>

<DELETED>    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:</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(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.''</DELETED>

<DELETED>SEC. 307. OFFICE OF PENSION PARTICIPANT ADVOCACY.</DELETED>

<DELETED>    (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:</DELETED>

<DELETED>``Subtitle D--Office of Pension Participant Advocacy</DELETED>

<DELETED>``SEC. 3051. OFFICE OF PENSION PARTICIPANT ADVOCACY.</DELETED>

<DELETED>    ``(a) Establishment.--</DELETED>
        <DELETED>    ``(1) In general.--There is established in the 
        Department of Labor an office to be known as the `Office of 
        Pension Participant Advocacy'.</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) have demonstrated experience in the 
                area of pension participant assistance, and</DELETED>
                <DELETED>    ``(B) be selected by the Secretary after 
                consultation with pension participant advocacy 
                organizations.</DELETED>
        <DELETED>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.</DELETED>
<DELETED>    ``(b) Functions of Office.--It shall be the function of 
the Office of Pension Participant Advocacy to--</DELETED>
        <DELETED>    ``(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--
        </DELETED>
                <DELETED>    ``(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,</DELETED>
                <DELETED>    ``(B) identifying significant problems for 
                pension plan participants and the capabilities of the 
                Federal Government, business, and such organizations to 
                address such problems, and</DELETED>
                <DELETED>    ``(C) developing proposals for changes in 
                such policies and activities to correct such problems, 
                and communicating such changes to the appropriate 
                officials,</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) enlisting the cooperation of the 
                public and private sectors in disseminating 
                information, and</DELETED>
                <DELETED>    ``(B) forming private-public partnerships 
                and other efforts to assist pension plan participants 
                in receiving their benefits,</DELETED>
        <DELETED>    ``(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,</DELETED>
        <DELETED>    ``(4) give priority to the special needs of low- 
        and moderate-income participants,</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(c) Reports.--</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) identify significant problems the 
                Advocate has identified,</DELETED>
                <DELETED>    ``(B) include specific legislative and 
                regulatory changes to address the problems, 
                and</DELETED>
                <DELETED>    ``(C) identify any actions taken to 
                correct problems identified in any previous 
                report.</DELETED>
        <DELETED>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.</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(d) Specific Powers.--</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(2) Appearances.--The Pension Participant 
        Advocate may--</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) contract with any person to acquire 
                statistical information with respect to pension plan 
                participants, and</DELETED>
                <DELETED>    ``(B) conduct direct surveys of pension 
                plan participants.''</DELETED>
<DELETED>    (b) Conforming Amendment.--The table of contents for title 
III of such Act is amended by adding at the end the 
following:</DELETED>

     <DELETED>``Subtitle D--Office of Pension Participant Advocacy

<DELETED>``3051. Office of Pension Participant Advocacy.''
<DELETED>    (c) Effective Date.--The amendment made by this section 
shall take effect on January 1, 2003.</DELETED>

<DELETED>SEC. 308. STUDY REGARDING INSURANCE SYSTEM FOR INDIVIDUAL 
              ACCOUNT PLANS.</DELETED>

<DELETED>    (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--</DELETED>
        <DELETED>    (1) the feasibility of such a system,</DELETED>
        <DELETED>    (2) the problem with insuring investments in 
        employer securities, and</DELETED>
        <DELETED>    (3) options for developing such a 
        system.</DELETED>
<DELETED>    (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.</DELETED>

<DELETED>SEC. 309. STUDY REGARDING FEES CHARGED BY INDIVIDUAL ACCOUNT 
              PLANS.</DELETED>

<DELETED>    (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--</DELETED>
        <DELETED>    (1) how the fees compare to fees charged for 
        similar services provided to investors not in individual 
        account plans, and</DELETED>
        <DELETED>    (2) whether participants or beneficiaries are 
        adequately notified of the fees.</DELETED>
<DELETED>    (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.</DELETED>

<DELETED>SEC. 310. COLLECTIVELY BARGAINED 401(K) PLANS.</DELETED>

<DELETED>    (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:</DELETED>
                <DELETED>    ``(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.''</DELETED>
<DELETED>    (b) Effective Date.--The amendment made by this section 
shall apply to plan years beginning after the date of the enactment of 
this Act.</DELETED>

            <DELETED>TITLE IV--GENERAL PROVISIONS</DELETED>

<DELETED>SEC. 401. GENERAL EFFECTIVE DATE.</DELETED>

<DELETED>    (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.</DELETED>
<DELETED>    (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--</DELETED>
        <DELETED>    (1) the later of--</DELETED>
                <DELETED>    (A) January 1, 2004, or</DELETED>
                <DELETED>    (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</DELETED>
        <DELETED>    (2) January 1, 2005.</DELETED>

<DELETED>SEC. 402. PLAN AMENDMENTS.</DELETED>

<DELETED>    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--
</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (2) such plan amendment applies retroactively to 
        the period after such amendment made by this Act takes effect 
        and before such first plan year.</DELETED>

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. Elimination of employer requirements that assets be invested 
                            in employer securities.
Sec. 102. Rules relating to plan investments in employer stock.
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 pension 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. Provisions relating to whistleblower actions involving 
                            pension plans.
Sec. 311. Plans required to provide adequate information to individuals 
                            offered choice of lump sum distribution.

                      TITLE IV--GENERAL PROVISIONS

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

        TITLE I--IMPROVEMENTS IN DIVERSIFICATION OF PLAN ASSETS

SEC. 101. 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)(A) 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 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.
    ``(C)(i) Except as provided in clause (ii), within 30 days after 
the date of any election by a participant or beneficiary under this 
paragraph to reinvest (or as otherwise provided in regulations), the 
plan administrator shall take such actions as are necessary to 
effectuate such reinvestment.
    ``(ii) In any case in which the plan provides for elections to 
reinvest periodically during prescribed time periods, the 30-day period 
described in clause (i) shall commence at the end of each such 
prescribed period.
    ``(D) 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 this paragraph, the plan 
administrator shall provide to such participant and his or her 
beneficiaries a notice--
            ``(i) setting forth such right under this paragraph, and
            ``(ii) 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 subparagraph which shall be in a form 
calculated to be understood by the average plan participant. The notice 
required by this subparagraph may be provided in written, electronic, 
or other appropriate form to the extent that such form is reasonably 
accessible to the participant or beneficiary.
    ``(2) 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).''
    (b) 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 this section and 
        amended by section 102) 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. 102. RULES RELATING TO PLAN INVESTMENTS IN EMPLOYER STOCK.

    Section 404(e) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1104), as added by section 101, is amended by 
redesignating paragraph (2) as paragraph (3) and by adding after 
paragraph (1) the following new paragraph:
    ``(2)(A)(i) Except as provided in this paragraph, 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) requires 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.
    ``(ii) This paragraph 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 (as defined in subparagraph (C)) for the 
plan year.
    ``(B)(i) 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 which 
are to be held by the plan.
    ``(ii) A plan shall not be treated as failing to meet the 
requirements of subparagraph (A) merely because elective deferrals are 
invested in employer securities or employer real property by reason of 
an investment in a pooled investment vehicle. For purposes of this 
clause, a pooled investment vehicle is an investment option of the plan 
which is comprised of plan assets and which is not designed to invest 
primarily in employer securities or employer real property.
    ``(C)(i) For purposes of subparagraph (A)(ii), 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, payable at normal retirement age under the plan, 
        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.
If a plan provides for benefits payable prior to normal retirement age, 
the requirements of subclause (II) shall not be treated as met unless 
such benefits are at least equal to the actuarial equivalent of the 
normal retirement benefit under the plan.
    ``(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.''

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 reasonably 
        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.
Employer securities and employer real property held by a plan by reason 
of a pooled investment vehicle described in section 404(e)(2)(B)(ii) 
shall be excluded for purposes of clause (iii) from the calculation of 
the assets in an account that consist of 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 language.--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 model language which may 
be used by plan administrators in complying with the requirements of 
subsection (a). Such language 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 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 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 subsection (b)'' after ``(B)(ii)''.
                    (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 of assets in his or her account in employer 
securities, is provided with all material investment information 
regarding investment of such assets in employer securities  to the 
extent that such information is generally required to be provided 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, if the Commission requires 
any disclosure of the sale or purchase of any securities by an officer 
or director or other affiliated person of any issuer of the securities 
that--
            ``(A) sponsors an individual account plan, and
            ``(B) permits elective deferrals (as defined in section 
        402(g)(3) of the Internal Revenue Code of 1986) to be invested 
        in employer securities and employer real property,
the issuer shall, within 2 business days after disclosure to the 
Commission, make such disclosure available on any individual account 
plan website the issuer maintains which is accessible only by plan 
participants and beneficiaries. If there are participants or 
beneficiaries of an individual account plan sponsored by an issuer who 
do not have access to such a website, the information required to be 
provided under this paragraph shall be provided to the participants and 
beneficiaries 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--
            ``(A) the terms `affiliated person', `Commission', 
        `issuer', and `securities' have the same meanings as in section 
        3 of the Securities Exchange Act of 1934, and
            ``(B) the terms `employer securities' and `employer real 
        property' have the meanings given such terms by section 
        407(d).''.

          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 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 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) The notice required by this subsection may be provided in 
written, electronic, or other appropriate form to the extent that such 
form is reasonably accessible to the participant or beneficiary.
    ``(3) 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). Any limitation or restriction that may govern the frequency 
of transfers between investment vehicles shall not be treated as a 
suspension referred to in the preceding sentence 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.''.

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 
        with respect to any participant or beneficiary for any period 
        during which the ability of the 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). In issuing such 
guidance, the Secretary shall establish safe harbors which a fiduciary 
may rely on in determining whether such duties are being met.

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) Application to participants and beneficiaries of 401(k) 
        plans.--
                    (A) In general.--Part 4 of subtitle B of title I of 
                the Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1101 et seq.) is amended by adding after section 
                409 the following new section:

``SEC. 409A. LIABILITY FOR BREACH OF FIDUCIARY DUTY IN 401(K) PLANS.

    ``(a) Any person who is a fiduciary with respect to an individual 
account plan that includes a qualified cash or deferred arrangement 
under section 401(k) of the Internal Revenue Code of 1986 who breaches 
any of the responsibilities, obligations, or duties imposed upon 
fiduciaries by this title shall be personally liable to make good to 
each participant and beneficiary of the plan any losses to such 
participant or beneficiary resulting from each such breach, and to 
restore to such participant or beneficiary any profits of such 
fiduciary which have been made through use of assets of the plan by the 
fiduciary, and shall be subject to such other equitable or remedial 
relief as the court may deem appropriate, including removal of such 
fiduciary. A fiduciary may also be removed for a violation of section 
411 of this Act.
    ``(b) The right of participants and beneficiaries under subsection 
(a) to sue for breach of fiduciary duty with respect to an individual 
account plan that includes a qualified cash or deferred arrangement 
under section 401(k) of such Code shall be in addition to all existing 
rights that participants and beneficiaries have under section 409, 
section 502, and any other provision of this title, and shall not be 
construed to give rise to any inference that such rights do not already 
exist under section 409, section 502, or any other provision of this 
title.
    ``(c) No fiduciary shall be liable with respect to a breach of 
fiduciary duty under this title if such breach was committed before he 
or she became a fiduciary or after he or she ceased to be a 
fiduciary.''.
                    (B) Conforming amendment.--The table of contents 
                for part 4 of subtitle B of title I of such Act is 
                amended by inserting the following new item after the 
                item relating to section 409:

                              ``Sec. 409A. Liability for breach of 
                                        fiduciary duty in 401(k) 
                                        plans.''.
            (2) Insider liability.--
                    (A) In general.--Section 409 of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 1109) 
                is amended by redesignating subsection (b) as 
                subsection (c) and by inserting after subsection (a) 
                the following new subsection:
    ``(b)(1)(A) If an insider with respect to the plan sponsor of an 
employer individual account plan that holds employer securities that 
are readily tradable on an established securities market--
            ``(i) knowingly participates in a breach of fiduciary 
        responsibility to which subsection (a) applies, or
            ``(ii) knowingly undertakes to conceal such a breach,
such insider shall be personally liable under this subsection for such 
breach in the same manner as the fiduciary who commits such breach.
    ``(B) For purposes of subparagraph (A), the term `insider' means, 
with respect to any plan sponsor of a plan to which subparagraph (A) 
applies--
            ``(i) any officer or director with respect to the plan 
        sponsor, or
            ``(ii) any independent qualified public accountant of the 
        plan or of the plan sponsor.
    ``(3) Any relief provided under this subsection or section 409A--
            ``(A) to an individual account plan shall inure to the 
        individual accounts of the affected participants or 
        beneficiaries, and
            ``(B) to a participant or beneficiary shall be payable to 
        the individual account plan on behalf of such participant or 
        beneficiary unless such plan has been terminated.''.
                    (B) Conforming amendment.--Section 409(c) of such 
                Act (29 U.S.C. 1109(c)), as redesignated by 
                subparagraph (A), is amended by inserting before the 
                period the following: ``, unless such liability arises 
                under subsection (b)''.
    (b) Maintenance of Fiduciary Liability.--Section 404(c)(1)(B) of 
such Act (29 U.S.C. 1104(c)(1)(B)), as amended by section 302(a), is 
amended by inserting before the period the following: ``and 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 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 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 PENSION 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 pension 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 relating to a pension plan under this title 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. PROVISIONS RELATING TO WHISTLEBLOWER ACTIONS INVOLVING 
              PENSION PLANS.

    (a) Authority To Bring Actions.--Section 502(a) of the Employee 
Retirement Income Security Act of 1974 (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 in connection with a pension plan, or
                    ``(B) to obtain appropriate equitable or legal 
                relief to redress such violation or to enforce section 
                510 in connection with a pension plan.''.
    (b) Additional Actions Which May Be Brought.--The second sentence 
of section 510 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1140) is amended by striking ``person because he'' and 
inserting ``other person because such other person has opposed any 
practice in connection with a pension plan that is made unlawful by 
this title or''.

SEC. 311. PLANS REQUIRED TO PROVIDE ADEQUATE INFORMATION TO INDIVIDUALS 
              OFFERED CHOICE OF LUMP SUM DISTRIBUTION.

    Section 205 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1055) is amended by redesignating subsection (l) as 
subsection (m) and by inserting after subsection (k) the following new 
subsection:
    ``(l)(1) If a pension plan with more than 100 participants provides 
a participant, spouse, or surviving spouse with the option to elect to 
have any nonforfeitable benefit paid in the form of a lump sum 
distribution, or provides for other optional forms of benefits, the 
plan administrator shall provide, within a reasonable period of time 
before the individual is required to make the election, a statement 
comparing the relative values of each form of benefit payment.
    ``(2) The statement under paragraph (1) shall include such 
information as the Secretary of the Treasury determines appropriate to 
enable a participant, spouse, or surviving spouse to make an informed 
decision as to what form of benefit to elect. Such information shall be 
provided in a form calculated to be understood by the average plan 
participant and shall include--
            ``(A) the interest rate and mortality assumptions used in 
        determining the relative values, an explanation of how such 
        assumptions compare to the assumptions used under subsection 
        (g) or to any other assumptions specified by the Secretary, and 
        one or more illustrations using dollar amounts to show the 
        relative values of the benefits on a comparable basis, and
            ``(B) any factors (including early retirement subsidies) 
        which are taken into account in determining the value of one 
        form of payment but not taken into account in determining the 
        other form of payment.''.

                      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.




                                                       Calendar No. 525

107th CONGRESS

  2d Session

                                S. 1992

                          [Report No. 107-226]

_______________________________________________________________________

                                 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.

_______________________________________________________________________

                             July 26, 2002

                       Reported with an amendment