[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4146 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 4146

To amend title I of the Employee Retirement Income Security Act of 1974 
   to provide for disclosure regarding compensation for services to 
                             pension plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 19, 2009

    Mr. Kline of Minnesota introduced the following bill; which was 
            referred to the Committee on Education and Labor

_______________________________________________________________________

                                 A BILL


 
To amend title I of the Employee Retirement Income Security Act of 1974 
   to provide for disclosure regarding compensation for services to 
                             pension plans.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Sensible Transparency for Retirement 
Plans Act of 2009''.

SEC. 2. DISCLOSURE TO PLAN ADMINISTRATORS OF DEFINED BENEFIT AND 
              DEFINED CONTRIBUTION PENSION PLANS REGARDING COMPENSATION 
              FOR SERVICES.

    Section 408(b)(2) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1108(b)(2)) is amended--
            (1) by inserting ``(A)'' after ``(2)''; and
            (2) by adding at the end the following new subparagraph:
            ``(B) Disclosure to plan administrator of pension plan 
        regarding compensation for services to plan.--
                    ``(i) In general.--A contract or arrangement with a 
                service provider for services described in subparagraph 
                (A) shall not be treated as reasonable for purposes of 
                subparagraph (A) unless, under such arrangement, the 
                service provider is required to disclose to the plan 
                administrator (or any other plan official with 
                contracting authority under the terms of the plan) the 
                services to be provided and the total compensation to 
                be received by the service provider in connection with 
                the arrangement to provide services to the plan. The 
                disclosure of total compensation shall include a 
                disclosure of the direct compensation received by the 
                service provider from the plan or plan sponsor and a 
                disclosure of any indirect compensation received, in 
                connection with the arrangement to provide services to 
                the plan, by the service provider from a person who is 
                not an affiliate.
                    ``(ii) Disclosure of total compensation.--In any 
                case in which a service provider and its affiliates 
                provide multiple services to a plan, or make available 
                plan investment options, under a single arrangement, 
                the service provider that has entered into the 
                arrangement to provide services to the plan shall 
                disclose to the plan administrator the total 
                compensation payable by the plan or plan sponsor in 
                connection with such arrangement (including, for each 
                investment option made available under the arrangement, 
                the total expense ratio or similar measure of the total 
                fees of the investment option).
                    ``(iii) Reliance by service providers and 
                fiduciaries.--
                            ``(I) Reliance on information provided by 
                        regulated entities.--To the extent any of the 
                        information required to be disclosed by a 
                        service provider under this subparagraph is 
                        given to the service provider by a person that 
                        is not an affiliate and that is regulated by 
                        the Federal Government or a State, the service 
                        provider may rely on the completeness and 
                        accuracy of such information unless the service 
                        provider knows or has reason to know that the 
                        information is inaccurate or incomplete.
                            ``(II) Reliance on disclosures.--A 
                        fiduciary may rely on disclosures made pursuant 
                        to the requirements of this subsection, with 
                        respect to a plan service to which the 
                        disclosures relate, for purposes of satisfying 
                        the fiduciary's obligations under section 
                        404(a)(1)(B) as they relate to the requirements 
                        of section 404(a)(1)(A)(ii), and for purposes 
                        of determining whether the compensation paid 
                        for services rendered to a plan are reasonable 
                        for purposes of subparagraph (A) and may treat 
                        such disclosures as sufficient for such 
                        purposes. Nothing in this subclause shall be 
                        construed to exempt a fiduciary from taking 
                        proper notice of any other disclosures that may 
                        be made by the service provider.
                            ``(III) Continued application of fiduciary 
                        standards.--Nothing in this subparagraph shall 
                        be construed to--
                                    ``(aa) alter, amend, or limit the 
                                ability of a fiduciary to satisfy the 
                                requirements of section 404(a) by 
                                considering the aggregate or total cost 
                                of a group of services for the 
                                administration of a plan, or
                                    ``(bb) subject to subclause (II), 
                                otherwise limit the obligations of plan 
                                sponsors and fiduciaries under this 
                                part.
                    ``(iv) Timing of disclosure.--The service provider 
                shall provide the disclosure required by this 
                subparagraph prior to or at the time the arrangement is 
                entered into and within 60 days after the end of each 
                plan year or calendar year thereafter while such 
                arrangement remains in effect. The disclosure may be 
                provided electronically, but only if the administrator 
                may obtain a paper copy upon request.
                    ``(v) Form of disclosure.--A service provider may 
                provide the disclosure required under this 
                subparagraph, regarding any matter in connection with 
                the amount of fees or compensation received for any 
                service, in the form of a reasonable and representative 
                estimate, if the service provider indicates any such 
                estimate as being such an estimate and discloses the 
                basis for such estimate. For purposes of disclosure 
                under this subparagraph, fees and expenses may be 
                expressed as a dollar amount, a percentage of assets, a 
                formula, or other method sufficient to allow the 
                fiduciary to evaluate the total compensation paid under 
                the arrangement.
                    ``(vi) Regulatory authority.--The Secretary shall 
                issue regulations implementing this subparagraph. Such 
                regulations shall require the disclosure to be concise, 
                written in a manner designed to be understood by the 
                typical plan administrator, and calculated to assist 
                the plan administrator in comparing the aggregate 
                compensation received by different service providers 
                for providing similar services and determining what 
                compensation is paid directly or indirectly by the 
                plan. Such regulations may provide for categories of 
                service providers who shall not be subject to this 
                subparagraph if the Secretary determines that such 
                service providers do not provide significant services 
                meriting the disclosure required by this subparagraph.
                    ``(vii) Affiliate.--For purposes of this 
                subparagraph, the term `affiliate' of another entity 
                means an affiliated person of the entity (as defined in 
                section 2(a)(3) of the Investment Company Act of 1940 
                (15 U.S.C. 80a-2(a)(3))).''.

SEC. 3. DISCLOSURE TO PARTICIPANTS AND BENEFICIARIES OF INDIVIDUAL 
              ACCOUNT PLANS REGARDING INVESTMENTS AND FEES.

    (a) In General.--Part 1 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 is amended--
            (1) by redesignating section 111 (29 U.S.C. 1031) as 
        section 112; and
            (2) by inserting after section 110 (29 U.S.C. 1030) the 
        following new section:

``SEC. 111. DISCLOSURES TO PARTICIPANTS AND BENEFICIARIES OF INDIVIDUAL 
              ACCOUNT PLANS.

    ``(a) Disclosure Requirements.--
            ``(1) Advance notice of fees and available investment 
        options.--The plan administrator of an individual account plan 
        which permits a participant or beneficiary to exercise control 
        over the assets in the account of the participant or 
        beneficiary shall provide to the participant or beneficiary--
                    ``(A) a description of the direct fees and expenses 
                that may be charged against the participant or 
                beneficiary's account, and
                    ``(B) a description of the investment options 
                available for election under the plan.
        The notice shall be provided at least 10 business days prior to 
        the earliest date provided for under the plan for the 
        participant's initial investment of any contribution made on 
        behalf of such participant and at least 10 business days prior 
        to the effective date of any material change in the 
        information. In the case of a plan that provides for immediate 
        eligibility or that contains an automatic contribution 
        arrangement (as defined in subparagraphs (A) and (B) of section 
        514(e)(2)), the initial notice may be provided within any 
        reasonable period prior to such initial investment. With 
        respect to the notice required under this paragraph, the 
        Secretary shall prescribe regulations creating exceptions to 
        the 10-day notice requirement in circumstances similar to those 
        described in section 101(i)(2)(C), and such notice may be 
        combined with any similar notice that may be required under 
        section 404(c)(5) or under this section.
            ``(2) Description of account fees.--The notice required 
        under paragraph (1)(A) shall--
                    ``(A) include an explanation of any fees and 
                expenses for plan administrative services that will be 
                charged against the individual account of the 
                participant or beneficiary,
                    ``(B) include an explanation of any fees and 
                expenses that may be charged against the individual 
                account of a participant or beneficiary for services 
                provided on an individual basis, rather than plan 
                basis, including fees and expenses for using plan 
                features or services, and
                    ``(C) if fees of investment options are used to 
                defray costs of plan administration or other plan 
                costs, include a statement describing the fact that 
                fees of investments defray other plan costs.
            ``(3) Description of investment options.--The notice 
        required under paragraph (1)(B) shall--
                    ``(A) set forth, with respect to each available 
                investment option--
                            ``(i) the name of the investment option,
                            ``(ii) the investment objectives and 
                        principal investment strategies of the 
                        investment option,
                            ``(iii) the principal risks associated with 
                        the investment option,
                            ``(iv) the fees associated with the 
                        investment option, including fees for purchase 
                        and sale of the option and the total annual 
                        operating expenses of the option expressed as 
                        percentage,
                            ``(v) the historical return of the 
                        investment option derived net of fees and 
                        expenses for the previous year, 5 years, and 10 
                        years (or since inception if later),
                            ``(vi) whether the investment option is 
                        diversified among various classes of assets so 
                        as to minimize the risk of large losses or 
                        should be combined with other investment 
                        options so as to obtain such diversification,
                            ``(vii) whether the investment option is 
                        actively managed or passively managed in 
                        relation to an index and the difference between 
                        active management and passive management, and
                            ``(viii) where, and the manner in which, 
                        additional information regarding the investment 
                        option may be obtained,
                    ``(B) include a statement explaining that 
                investment options should not be evaluated solely on 
                the basis of the charges for each option but should 
                also be based on careful consideration of other key 
                factors, including the risk level of the option, the 
                investment objectives of the option, the principal 
                investment strategies of the option, and historical 
                returns derived by the option,
                    ``(C) be presented in a manner which is designed to 
                be understood by the typical participant and include 
                such information as the Secretary determines necessary 
                to permit participants and beneficiaries to assess the 
                services for which charges will or could be assessed 
                against the account, and
                    ``(D) include, for each investment option, under 
                regulations issued by the Secretary, an illustrative 
                example showing the estimated annual dollar fees and 
                expenses expressed as a percentage of assets for each 
                $1,000 invested.
            ``(4) Model notice.--The Secretary shall prescribe a model 
        notice that may be used for purposes of satisfying the 
        requirements of this subsection.
            ``(5) Estimations.--For purposes of providing the notice 
        required under this subsection, the plan administrator may 
        provide a reasonable and representative estimate of fees and 
        charges, if the plan administrator indicates any such estimate 
        as being an estimate and discloses the basis for the estimate.
    ``(b) Electronic Media.--The disclosure required under this section 
may be provided electronically, but only if the plan administrator 
discloses that the participant or beneficiary may obtain a paper copy 
upon request at no charge and provides a paper copy upon request at no 
charge.
    ``(c) Regulations Regarding Certain Products.--The Secretary shall 
prescribe regulations addressing the disclosure of fees for any 
investment options that provide a contracted guaranteed rate of return 
and that do not identify specific fees. Such regulations shall ensure 
that participants and beneficiaries receive sufficient information to 
allow them to make informed comparisons among the investment options 
available in the plan.''.
    (b) Quarterly Benefit Statements.--Section 105 of such Act (29 
U.S.C. 1025) is amended--
            (1) in subsection (a)(2)--
                    (A) by redesignating subparagraph (C) as 
                subparagraph (G);
                    (B) in subparagraph (B)(ii)--
                            (i) in subclause (II), by striking 
                        ``diversified, and'' and inserting 
                        ``diversified,'';
                            (ii) in subclause (III), by striking the 
                        period and inserting ``, and''; and
                            (iii) by adding after subclause (III) the 
                        following new subclause:
                                    ``(IV) with respect to the portion 
                                of a participant's account for which 
                                the participant has the right to direct 
                                the investment of assets, the 
                                information described in subparagraph 
                                (C).''; and
                    (C) by inserting after subparagraph (B) the 
                following new subparagraphs:
                    ``(C) Periodic account information for participants 
                and beneficiaries.--For purposes of subparagraph 
                (B)(ii)(IV), the information described in this 
                subparagraph consists of the following, indicating the 
                portion of each amount described in clauses (i) though 
                (vii) attributable to each investment option elected in 
                connection with the participant's account:
                            ``(i) the starting balance of the 
                        participant's account,
                            ``(ii) contributions made during the 
                        quarter, itemizing separately totals for 
                        employer and totals for employee contributions,
                            ``(iii) investment earnings or losses on 
                        the account balance during the quarter (if 
                        any),
                            ``(iv) any direct charges to the 
                        participant or beneficiary's account during the 
                        quarter,
                            ``(v) the ending balance of the account,
                            ``(vi) the participant's asset allocation 
                        to each investment option as of the end of the 
                        quarter, expressed as an amount and as a 
                        percentage, and
                            ``(vii) a copy of the most recently updated 
                        information described in subparagraphs (A)(iv), 
                        (A)(v), and (D) of section 111(a)(3).
                    ``(D) Estimations.--For purposes of providing the 
                notice required under this subsection, the plan 
                administrator may provide a reasonable and 
                representative estimate of fees and charges, but only 
                if the plan administrator indicates any estimate as 
                being an estimate and discloses the basis for the 
                estimate.
                    ``(E) Model statement.--The Secretary shall 
                prescribe a model pension benefit statement that may be 
                used for purposes of satisfying the requirements of 
                this subparagraph and subparagraph (B)(ii).
                    ``(F) Annual compliance for small plans and with 
                respect to certain information.--In the case of a plan 
                providing for investment as described in paragraph 
                (1)(A)(i)--
                            ``(i) if the plan has 100 or fewer 
                        participants and beneficiaries, the plan may 
                        provide the pension benefit statement under 
                        paragraph (1) on an annual rather than a 
                        quarterly basis, and
                            ``(ii) the plan may comply with the 
                        requirements of subparagraph (B)(ii)(IV) on an 
                        annual rather than a quarterly basis.''; and
            (2) by adding at the end the following new subsections:
    ``(d) Assistance to Employers and Plan Participants and 
Beneficiaries.--The Secretary shall make available to employers 
educational and compliance materials designed to assist such employers 
in complying with the requirements of this section and make available 
to participants and beneficiaries educational materials designed to 
assist participants and beneficiaries in understanding the disclosures 
provided by this section.
    ``(e) Electronic Media.--The disclosure required under this section 
may be provided electronically, but only if the plan administrator 
discloses that the participant or beneficiary may obtain a paper copy 
upon request at no charge and provides a paper copy upon request at no 
charge.''.
    (c) Enforcement.--Section 502(c)(7) of such Act (29 U.S.C. 
1132(c)(7)) is amended--
            (1) by inserting ``(A)'' after ``(7)''; and
            (2) adding at the end the following new subparagraph:
    ``(B)(i) Any plan administrator or other person who fails or 
refuses to provide a statement to participants and beneficiaries in 
accordance with section 105(a)(2)(B)(ii) or 111(b) shall be assessed by 
the Secretary a civil penalty of up to $100 a day from the date of the 
failure or refusal to the date on which such statement or notice is so 
provided.
    ``(ii) For purposes of this subparagraph, each violation with 
respect to any single participant, beneficiary, or plan administrator 
shall be treated as a separate violation. The Secretary may compromise, 
modify, or remit any civil penalty imposed on any person under this 
subparagraph if the Secretary determines--
            ``(I) that the person acted reasonably and in good faith or 
        that severe financial hardship would otherwise occur to the 
        plan sponsor, and
            ``(II) that such compromise, modification, or remission is 
        in the interests of participants and beneficiaries.
    ``(iii) No penalty shall be assessed under this subparagraph 
against any person solely because the person relied upon information 
provided to such person by an unaffiliated person which is regulated by 
the Federal Government or a State, unless the person knows or has 
reason to know that the information is inaccurate or incomplete.''.
    (d) Clerical Amendment.--The table of contents in section 1 of such 
Act is amended by striking the item relating to section 111 and 
inserting the following new items:

``Sec. 111. Disclosures to participants and beneficiaries of individual 
                            account plans.
``Sec. 112. Repeal and effective date.''.

SEC. 4. EFFECTIVE DATE.

    The Secretary shall issue proposed and then final regulations under 
sections 2 and 3 within one year after the date of the enactment of 
this Act. The amendments made by section 2 shall apply to contracts 
entered into in plan years beginning at least one year after the date 
of the issuance of the final regulations. The amendments made by 
section 3 shall apply to plan years beginning at least one year after 
the date of the issuance of the final regulations.
                                 <all>