Congressional Record, Volume 148 Issue 39 (Thursday, April 11, 2002)

[Congressional Record Volume 148, Number 39 (Thursday, April 11, 2002)]
[House]
[Pages H1217-H1267]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PENSION SECURITY ACT OF 2002

Mr. BOEHNER. Mr. Speaker, pursuant to House Resolution 386, I call up
the bill (H.R. 3762) to amend title 1 of the Employee Retirement Income
Security Act of 1974 and the Internal Revenue Code of 1986 to provide
additional protections to participants and beneficiaries in individual
account plans from excessive investment in employer securities and to
promote the provision of retirement investment advice to workers
managing their retirement income assets, and to amend the Securities
Exchange Act of 1934 to prohibit insider trades during any suspension
of the ability of plan participants or beneficiaries to direct
investment away from equity securities of the plan sponsor, and ask for
its immediate consideration in the House.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 386, the bill
is considered read for amendment.
The text of H.R. 3762 is as follows:

H.R. 3762

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Pension Security Act of
2002''.

SEC. 2. IMPROVED DISCLOSURE OF PENSION BENEFIT INFORMATION BY
INDIVIDUAL ACCOUNT PLANS.

(a) Pension Benefit Statements Required on Periodic
Basis.--
(1) In general.--Subsection (a) of section 105 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1025) is amended by inserting ``and, in the case of an
applicable individual account plan, shall furnish at least
quarterly to each plan participant (and to each beneficiary
with a right to direct investments),'' after ``who so
requests in writing,''.
(2) Information required from individual account plans.--
Section 105 of such Act (29 U.S.C. 1025) is amended by adding
at the end the following new subsection:
``(e)(1) The quarterly statements required under subsection
(a) shall include (together with the information required in
subsection (a)) the following:
``(A) the value of investments allocated to the individual
account, including 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; and
``(B) 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 well-balanced and
diversified investment portfolio, including a discussion of
the risk of holding substantial portions of a portfolio in
the security of any one entity, such as employer
securities.''.
(3) Definition of applicable individual account plan.--
Section 3 of such Act (29 U.S.C. 1002) is amended by adding
at the end the following new subsection:
``(42) The term `applicable individual account plan' means
any individual account plan, except that such term does not
include an employee stock ownership plan (within the meaning
of section 4975(e)(7) of the Internal Revenue Code of 1986)
unless there are any contributions to such plan (or earnings
thereunder) held within such plan that are subject to
subsection (k)(3) or (m)(2) of section 401 of the Internal
Revenue Code of 1986.''.
(b) Civil Penalties for Failure To Provide Quarterly
Benefit Statements.--Section 502 of such Act (29 U.S.C. 1132)
is amended--
(1) in subsection (a)(6), by striking ``(5), or (6)'' and
inserting ``(5), (6), or (7)'';
(2) by redesignating paragraph (7) of subsection (c) as
paragraph (8); and
(3) 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 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).''.

SEC. 3. PROTECTION FROM SUSPENSIONS, LIMITATIONS, OR
RESTRICTIONS ON ABILITY OF PARTICIPANT OR
BENEFICIARY TO DIRECT OR DIVERSIFY PLAN ASSETS.

(a) In General.--Section 101 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021) is amended--

[[Page H1218]]

(1) by redesignating the second subsection (h) as
subsection (j); and
(2) by inserting after the first subsection (h) the
following new subsection:
``(i) Notice of Suspension, Limitation, or Restriction on
Ability of Participant or Beneficiary To Direct Investments
in Individual Account Plan.--
``(1) In general.--In the case of an applicable individual
account plan, the administrator shall notify participants and
beneficiaries of any action that would have the affect of
suspending, limiting, or restricting the ability of
participants or beneficiaries to direct or diversify assets
credited to their accounts.
``(2) Notice requirements.--
``(A) In general.--The notices described in paragraph (1)
shall--
``(i) be written in a manner calculated to be understood by
the average plan participant and shall include the reasons
for the suspension, limitation, or restriction, an
identification of the investments affected, and the expected
period of the suspension, limitation, or restriction, and
``(ii) be furnished at least 30 days in advance of the
action suspending, limiting, or restricting the ability of
the participants or beneficiaries to direct or diversify
assets.
``(B) Exception to 30-day notice requirement.--In any case
in which--
``(i) a fiduciary of the plan determines, in writing, that
a deferral of the suspension, limitation, or restriction
would violate the requirements of subparagraph (A) or (B) of
section 404(a)(1), or
``(ii) the inability to provide the 30-day advance notice
is due to circumstances beyond the reasonable control of the
plan administrator,

subparagraph (A)(ii) shall not apply, and the notice shall be
furnished as soon as reasonably possible under the
circumstances.
``(3) Changes in expected period of suspension, limitation,
or restriction.--If, following the furnishing of the notice
pursuant to this subsection, there is a change in the
expected period of the suspension, limitation, or restriction
on the right of a participant or beneficiary to direct or
diversify assets, the administrator shall provide affected
participants and beneficiaries advance notice of the change.
Such notice shall meet the requirements of paragraph
(2)(A)(i) in relation to the extended suspension, limitation,
or restriction.''.
(b) Civil Penalties for Failure To Provide Notice.--Section
502 of such Act (as amended by section 2(b)) is amended
further--
(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 $100 a day from the date of the person's
failure or refusal to provide notice to participants and
beneficiaries in accordance with section 101(i). For purposes
of this paragraph, each violation with respect to any single
participant or beneficiary, shall be treated as a separate
violation.''.
(c) Inapplicability of Relief From Fiduciary Liability
During Suspension of Ability of Participant or Beneficiary To
Direct Investments.--Section 404(c)(1) of such Act (29 U.S.C.
1104(c)(1)) is amended--
(1) in subparagraph (B), by inserting before the period the
following: ``, except that this subparagraph shall not apply
for any period during which the ability of a participant or
beneficiary to direct the investment of assets in his or her
individual account is suspended by a plan sponsor or
fiduciary''; and
(2) by adding at the end the following:
``Any limitation or restriction that may govern the frequency
of transfers between investment vehicles shall not be treated
as a suspension referred to in subparagraph (B) to the extent
such limitation or restriction is disclosed to participants
or beneficiaries through the summary plan description or
materials describing specific investment alternatives under
the plan.''.

SEC. 4. LIMITATIONS ON RESTRICTIONS OF INVESTMENTS IN
EMPLOYER SECURITIES.

(a) Amendments to the Employee Retirement Income Security
Act of 1974.--Section 204 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1107) is amended--
(1) by redesignating subsection (j) as subsection (k); and
(2) by inserting after subsection (i) the following new
subsection:
``(j)(1) An applicable individual account plan may not
acquire or hold any employer securities with respect to which
there is any restriction on divestment by a participant or
beneficiary on or after the date on which the participant has
completed 3 years of participation (as defined in subsection
(b)(4)) under the plan or (if the plan so provides) 3 years
of service (as defined in section 203(b)(2)) with the
employer.
``(2) For purposes of paragraph (1), the term `restriction
on divestment' includes--
``(A) any failure to offer at least 3 diversified
investment options in which a participant or beneficiary may
direct the proceeds from the divestment of employer
securities, and
``(B) any restriction on the ability of a participant or
beneficiary to choose from all otherwise available investment
options in which such proceeds may be so directed.''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Subsection (a) of section 401 of the
Internal Revenue Code of 1986 (relating to requirements for
qualification) is amended by inserting after paragraph (34)
the following new paragraph:
``(35) Limitations on restrictions under applicable defined
contribution plans on investments in employer securities.--
``(A) In general.--A trust forming a part of an applicable
defined contribution plan shall not constitute a qualified
trust under this subsection if the plan acquires or holds any
employer securities with respect to which there is any
restriction on divestment by a participant or beneficiary on
or after the date on which the participant has completed 3
years of participation (as defined in section 411(b)(4))
under the plan or (if the plan so provides) 3 years of
service (as defined in section 411(a)(5)) with the employer.
``(B) Definitions.--For purposes of subparagraph (A)--
``(i) Applicable defined contribution plan.--The term
`applicable defined contribution plan' means any defined
contribution plan, except that such term does not include an
employee stock ownership plan (as defined in section
4975(e)(7)) unless there are any contributions to such plan
(or earnings thereunder) held within such plan that are
subject to subsections (k)(3) or (m)(2).
``(ii) Restriction on divestment.--The term `restriction on
divestment' includes--

``(I) any failure to offer at least 3 diversified
investment options in which a participant or beneficiary may
direct the proceeds from the divestment of employer
securities, and
``(II) any restriction on the ability of a participant or
beneficiary to choose from all otherwise available investment
options in which such proceeds may be so directed.''.

(2) Conforming amendment.--Section 401(a)(28)(B) of such
Code (relating to diversification of investments) is amended
by adding at the end the following new clause:
``(v) Exception.--This subparagraph shall not apply to an
applicable defined contribution plan (as defined in paragraph
(35)(B)(i)).''.

SEC. 5. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF
INVESTMENT ADVICE.

[[Page H1219]]

affiliates thereof in the security or other property,
``(iii) of any limitation placed on the scope of the
investment advice to be provided by the fiduciary adviser
with respect to any such sale, acquisition, or holding of a
security or other property,
``(iv) of the types of services provided by the fiduciary
advisor in connection with the provision of investment advice
by the fiduciary adviser, and
``(v) that the adviser is acting as a fiduciary of the plan
in connection with the provision of the advice,
``(B) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition, or
holding of the security or other property, in accordance with
all applicable securities laws,
``(C) the sale, acquisition, or holding occurs solely at
the direction of the recipient of the advice,
``(D) the compensation received by the fiduciary adviser
and affiliates thereof in connection with the sale,
acquisition, or holding of the security or other property is
reasonable, and
``(E) the terms of the sale, acquisition, or holding of the
security or other property are at least as favorable to the
plan as an arm's length transaction would be.
``(2) Standards for presentation of information.--The
notification required to be provided to participants and
beneficiaries under paragraph (1)(A) shall be written in a
clear and conspicuous manner and in a manner calculated to be
understood by the average plan participant and shall be
sufficiently accurate and comprehensive to reasonably apprise
such participants and beneficiaries of the information
required to be provided in the notification.
``(3) Exemption conditioned on continued availability of
required information on request for 1 year.--The requirements
of paragraph (1)(A) shall be deemed not to have been met in
connection with the initial or any subsequent provision of
advice described in paragraph (1) to the plan, participant,
or beneficiary if, at any time during the provision of
advisory services to the plan, participant, or beneficiary,
the fiduciary adviser fails to maintain the information
described in clauses (i) through (iv) of subparagraph (A) in
currently accurate form and in the manner described in
paragraph (2) or fails--
``(A) to provide, without charge, such currently accurate
information to the recipient of the advice no less than
annually,
``(B) to make such currently accurate information
available, upon request and without charge, to the recipient
of the advice, or
``(C) in the event of a material change to the information
described in clauses (i) through (iv) of paragraph (1)(A), to
provide, without charge, such currently accurate information
to the recipient of the advice at a time reasonably
contemporaneous to the material change in information.
``(4) Maintenance for 6 years of evidence of compliance.--A
fiduciary adviser referred to in paragraph (1) who has
provided advice referred to in such paragraph shall, for a
period of not less than 6 years after the provision of the
advice, maintain any records necessary for determining
whether the requirements of the preceding provisions of this
subsection and of subsection (b)(14) have been met. A
transaction prohibited under section 406 shall not be
considered to have occurred solely because the records are
lost or destroyed prior to the end of the 6-year period due
to circumstances beyond the control of the fiduciary adviser.
``(5) Exemption for plan sponsor and certain other
fiduciaries.--
``(A) In general.--Subject to subparagraph (B), a plan
sponsor or other person who is a fiduciary (other than a
fiduciary adviser) shall not be treated as failing to meet
the requirements of this part solely by reason of the
provision of investment advice referred to in section
3(21)(A)(ii) (or solely by reason of contracting for or
otherwise arranging for the provision of the advice), if--
``(i) the advice is provided by a fiduciary adviser
pursuant to an arrangement between the plan sponsor or other
fiduciary and the fiduciary adviser for the provision by the
fiduciary adviser of investment advice referred to in such
section,
``(ii) the terms of the arrangement require compliance by
the fiduciary adviser with the requirements of this
subsection, and
``(iii) the terms of the arrangement include a written
acknowledgment by the fiduciary adviser that the fiduciary
adviser is a fiduciary of the plan with respect to the
provision of the advice.
``(B) Continued duty of prudent selection of adviser and
periodic review.--Nothing in subparagraph (A) shall be
construed to exempt a plan sponsor or other person who is a
fiduciary from any requirement of this part for the prudent
selection and periodic review of a fiduciary adviser with
whom the plan sponsor or other person enters into an
arrangement for the provision of advice referred to in
section 3(21)(A)(ii). The plan sponsor or other person who is
a fiduciary has no duty under this part to monitor the
specific investment advice given by the fiduciary adviser to
any particular recipient of the advice.
``(C) Availability of plan assets for payment for advice.--
Nothing in this part shall be construed to preclude the use
of plan assets to pay for reasonable expenses in providing
investment advice referred to in section 3(21)(A)(ii).
``(6) Definitions.--For purposes of this subsection and
subsection (b)(14)--
``(A) Fiduciary adviser.--The term `fiduciary adviser'
means, with respect to a plan, a person who is a fiduciary of
the plan by reason of the provision of investment advice by
the person to the plan or to a participant or beneficiary and
who is--
``(i) registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or
under the laws of the State in which the fiduciary maintains
its principal office and place of business,
``(ii) a bank or similar financial institution referred to
in section 408(b)(4),
``(iii) an insurance company qualified to do business under
the laws of a State,
``(iv) a person registered as a broker or dealer under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
``(v) an affiliate of a person described in any of clauses
(i) through (iv), or
``(vi) an employee, agent, or registered representative of
a person described in any of clauses (i) through (v) who
satisfies the requirements of applicable insurance, banking,
and securities laws relating to the provision of the advice.
``(B) Affiliate.--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))).
``(C) Registered representative.--The term `registered
representative' of another entity means a person described in
section 3(a)(18) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(18)) (substituting the entity for the broker or
dealer referred to in such section) or a person described in
section 202(a)(17) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2(a)(17)) (substituting the entity for the
investment adviser referred to in such section).''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Exemption from prohibited transactions.--Subsection (d)
of section 4975 of the Internal Revenue Code of 1986
(relating to exemptions from tax on prohibited transactions)
is amended--
(A) in paragraph (14), by striking ``or'' at the end;
(B) in paragraph (15), by striking the period at the end
and inserting ``; or''; and
(C) by adding at the end the following new paragraph:
``(16) any transaction described in subsection (f)(7)(A) in
connection with the provision of investment advice described
in subsection (e)(3)(B), in any case in which--
``(A) the investment of assets of the plan is subject to
the direction of plan participants or beneficiaries,
``(B) the advice is provided to the plan or a participant
or beneficiary of the plan by a fiduciary adviser in
connection with any sale, acquisition, or holding of a
security or other property for purposes of investment of plan
assets, and
``(C) the requirements of subsection (f)(7)(B) are met in
connection with the provision of the advice.''.
(2) Allowed transactions and requirements.--Subsection (f)
of such section 4975 (relating to other definitions and
special rules) is amended by adding at the end the following
new paragraph:
``(7) Provisions relating to investment advice provided by
fiduciary advisers.--
``(A) Transactions allowable in connection with investment
advice provided by fiduciary advisers.--The transactions
referred to in subsection (d)(16), in connection with the
provision of investment advice by a fiduciary adviser, are
the following:
``(i) the provision of the advice to the plan, participant,
or beneficiary;
``(ii) the sale, acquisition, or holding of a security or
other property (including any lending of money or other
extension of credit associated with the sale, acquisition, or
holding of a security or other property) pursuant to the
advice; and
``(iii) the direct or indirect receipt of fees or other
compensation by the fiduciary adviser or an affiliate thereof
(or any employee, agent, or registered representative of the
fiduciary adviser or affiliate) in connection with the
provision of the advice or in connection with a sale,
acquisition, or holding of a security or other property
pursuant to the advice.
``(B) Requirements relating to provision of investment
advice by fiduciary advisers.--The requirements of this
subparagraph (referred to in subsection (d)(16)(C)) are met
in connection with the provision of investment advice
referred to in subsection (e)(3)(B), provided to a plan or a
participant or beneficiary of a plan by a fiduciary adviser
with respect to the plan in connection with any sale,
acquisition, or holding of a security or other property for
purposes of investment of amounts held by the plan, if--
``(i) in the case of the initial provision of the advice
with regard to the security or other property by the
fiduciary adviser to the plan, participant, or beneficiary,
the fiduciary adviser provides to the recipient of the
advice, at a time reasonably contemporaneous with the initial
provision of the advice, a written notification (which may
consist of notification by means of electronic
communication)--

[[Page H1220]]

``(II) of any material affiliation or contractual
relationship of the fiduciary adviser or affiliates thereof
in the security or other property,
``(III) of any limitation placed on the scope of the
investment advice to be provided by the fiduciary adviser
with respect to any such sale, acquisition, or holding of a
security or other property,
``(IV) of the types of services provided by the fiduciary
advisor in connection with the provision of investment advice
by the fiduciary adviser, and
``(V) that the adviser is acting as a fiduciary of the plan
in connection with the provision of the advice,

``(ii) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition, or
holding of the security or other property, in accordance with
all applicable securities laws,
``(iii) the sale, acquisition, or holding occurs solely at
the direction of the recipient of the advice,
``(iv) the compensation received by the fiduciary adviser
and affiliates thereof in connection with the sale,
acquisition, or holding of the security or other property is
reasonable, and
``(v) the terms of the sale, acquisition, or holding of the
security or other property are at least as favorable to the
plan as an arm's length transaction would be.
``(C) Standards for presentation of information.--The
notification required to be provided to participants and
beneficiaries under subparagraph (B)(i) shall be written in a
clear and conspicuous manner and in a manner calculated to be
understood by the average plan participant and shall be
sufficiently accurate and comprehensive to reasonably apprise
such participants and beneficiaries of the information
required to be provided in the notification.
``(D) Exemption conditioned on making required information
available annually, on request, and in the event of material
change.--The requirements of subparagraph (B)(i) shall be
deemed not to have been met in connection with the initial or
any subsequent provision of advice described in subparagraph
(B) to the plan, participant, or beneficiary if, at any
time during the provision of advisory services to the
plan, participant, or beneficiary, the fiduciary adviser
fails to maintain the information described in subclauses
(I) through (IV) of subparagraph (B)(i) in currently
accurate form and in the manner required by subparagraph
(C), or fails--
``(i) to provide, without charge, such currently accurate
information to the recipient of the advice no less than
annually,
``(ii) to make such currently accurate information
available, upon request and without charge, to the recipient
of the advice, or
``(iii) in the event of a material change to the
information described in subclauses (I) through (IV) of
subparagraph (B)(i), to provide, without charge, such
currently accurate information to the recipient of the advice
at a time reasonably contemporaneous to the material change
in information.
``(E) Maintenance for 6 years of evidence of compliance.--A
fiduciary adviser referred to in subparagraph (B) who has
provided advice referred to in such subparagraph shall, for a
period of not less than 6 years after the provision of the
advice, maintain any records necessary for determining
whether the requirements of the preceding provisions of this
paragraph and of subsection (d)(16) have been met. A
transaction prohibited under subsection (c)(1) shall not be
considered to have occurred solely because the records are
lost or destroyed prior to the end of the 6-year period due
to circumstances beyond the control of the fiduciary adviser.
``(F) Exemption for plan sponsor and certain other
fiduciaries.--A plan sponsor or other person who is a
fiduciary (other than a fiduciary adviser) shall not be
treated as failing to meet the requirements of this section
solely by reason of the provision of investment advice
referred to in subsection (e)(3)(B) (or solely by reason of
contracting for or otherwise arranging for the provision of
the advice), if--
``(i) the advice is provided by a fiduciary adviser
pursuant to an arrangement between the plan sponsor or other
fiduciary and the fiduciary adviser for the provision by the
fiduciary adviser of investment advice referred to in such
section,
``(ii) the terms of the arrangement require compliance by
the fiduciary adviser with the requirements of this
paragraph,
``(iii) the terms of the arrangement include a written
acknowledgment by the fiduciary adviser that the fiduciary
adviser is a fiduciary of the plan with respect to the
provision of the advice, and
``(iv) the requirements of part 4 of subtitle B of title I
of the Employee Retirement Income Security Act of 1974 are
met in connection with the provision of such advice.
``(G) Definitions.--For purposes of this paragraph and
subsection (d)(16)--
``(i) Fiduciary adviser.--The term `fiduciary adviser'
means, with respect to a plan, a person who is a fiduciary of
the plan by reason of the provision of investment advice by
the person to the plan or to a participant or beneficiary and
who is--

``(I) registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or
under the laws of the State in which the fiduciary maintains
its principal office and place of business,
``(II) a bank or similar financial institution referred to
in subsection (d)(4),
``(III) an insurance company qualified to do business under
the laws of a State,
``(IV) a person registered as a broker or dealer under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
``(V) an affiliate of a person described in any of
subclauses (I) through (IV), or
``(VI) an employee, agent, or registered representative of
a person described in any of subclauses (I) through (V) who
satisfies the requirements of applicable insurance, banking,
and securities laws relating to the provision of the advice.

``(ii) Affiliate.--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))).
``(iii) Registered representative.--The term `registered
representative' of another entity means a person described in
section 3(a)(18) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(18)) (substituting the entity for the broker or
dealer referred to in such section) or a person described in
section 202(a)(17) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2(a)(17)) (substituting the entity for the
investment adviser referred to in such section).''.

SEC. 6. INSIDER TRADES DURING PENSION PLAN SUSPENSION PERIODS
PROHIBITED.

Section 16 of the Securities Exchange Act of 1934 (15
U.S.C. 78p) is amended by adding at the end the following new
subsection:
``(h) Insider Trades During Pension Plan Suspension Periods
Prohibited.--
``(1) Prohibition.--It shall be unlawful for any such
beneficial owner, director, or officer of an issuer, directly
or indirectly, to purchase (or otherwise acquire) or sell (or
otherwise transfer) any equity security of such issuer (other
than an exempted security), during any pension plan
suspension period with respect to such equity security.
``(2) Remedy.--Any profit realized by such beneficial
owner, director, or officer from any purchase (or other
acquisition) or sale (or other transfer) in violation of this
subsection shall inure to and be recoverable by the issuer
irrespective of any intention on the part of such beneficial
owner, director, or officer in entering into the transaction.
``(3) Rulemaking permitted.--The Commission may issue rules
to clarify the application of this subsection, to ensure
adequate notice to all persons affected by this subsection,
and to prevent evasion thereof.
``(4) Definitions.--For purposes of this subsection--
``(A) Pension plan suspension period.--The term `pension
plan suspension period' means, with respect to an equity
security, any period during which the ability of a
participant or beneficiary under an applicable individual
account plan maintained by the issuer to direct the
investment of assets in his or her individual account away
from such equity security is suspended by the issuer or a
fiduciary of the plan. Such term does not include any
limitation or restriction that may govern the frequency of
transfers between investment vehicles to the extent such
limitation and restriction is disclosed to participants and
beneficiaries through the summary plan description or
materials describing specific investment alternatives under
the plan.
``(B) Applicable individual account plan.--The term
`applicable individual account plan' has the meaning provided
such term in section 3(42) of the Employee Retirement Income
Security Act of 1974.''.

SEC. 7. EFFECTIVE DATES AND RELATED RULES.

(a) In General.--Except as provided in subsection (b), the
amendments made by sections 2, 3, 4, and 6 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.
(c) Plan Amendments.--If the amendments made by sections 2,
3, and 4 of this Act require 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 amendments made by this
Act take effect and before such first plan year, the plan is
operated in accordance with the requirements of such
amendments made by this Act, and
(2) such plan amendment applies retroactively to the period
after such amendments made by this Act take effect and before
such first plan year.
(d) Amendments Relating to Investment Advice.--The
amendments made by section 5 shall apply with respect to
advice referred to in section 3(21)(A)(ii) of the Employee
Retirement Income Security Act of 1974 or section
4975(c)(3)(B) of the Internal Revenue Code of 1986 provided
on or after January 1, 2003.

[[Page H1221]]

The SPEAKER pro tempore. In lieu of the amendment recommended by the
Committee on Education and the Workforce printed in the bill, the
amendment in the nature of a substitute printed in part A of House
Report 107-396 is adopted.
The text of H.R. 3762, as amended pursuant to House Resolution 386,
is as follows:

H.R. 3762

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Pension
Security Act of 2002''.
(b) Table of Contents.--The table of contents is as
follows:

Sec. 1. Short title and table of contents.

TITLE I--IMPROVEMENTS IN PENSION SECURITY

Sec. 101. Periodic pension benefits statements.
Sec. 102. Protection from suspensions, limitations, or restrictions on
ability of participant or beneficiary to direct or
diversify plan assets.
Sec. 103. Informational and educational support for pension plan
fiduciaries.
Sec. 104. Diversification requirements for defined contribution plans
that hold employer securities.
Sec. 105. Prohibited transaction exemption for the provision of
investment advice.
Sec. 106. Study regarding impact on retirement savings of participants
and beneficiaries by requiring consultants to advise plan
fiduciaries of individual account plans.
Sec. 107. Treatment of qualified retirement planning services.
Sec. 108. Insider trades during pension fund blackout periods
prohibited.
Sec. 109. Effective dates of title and related rules.

TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

Sec. 201. Amendments to Retirement Protection Act of 1994.
Sec. 202. Reporting simplification.
Sec. 203. Improvement of Employee Plans Compliance Resolution System.
Sec. 204. Flexibility in nondiscrimination, coverage, and line of
business rules.
Sec. 205. Extension to all governmental plans of moratorium on
application of certain nondiscrimination rules applicable
to State and local plans.
Sec. 206. Notice and consent period regarding distributions.
Sec. 207. Annual report dissemination.
Sec. 208. Technical corrections to Saver Act.
Sec. 209. Missing participants.
Sec. 210. Reduced PBGC premium for new plans of small employers.
Sec. 211. Reduction of additional PBGC premium for new and small plans.
Sec. 212. Authorization for PBGC to pay interest on premium overpayment
refunds.
Sec. 213. Substantial owner benefits in terminated plans.
Sec. 214. Benefit suspension notice.
Sec. 215. Studies.
Sec. 216. Interest rate range for additional funding requirements.
Sec. 217. Provisions relating to plan amendments.

TITLE III--STOCK OPTIONS

Sec. 301. Exclusion of incentive stock options and employee stock
purchase plan stock options from wages.

TITLE IV--SOCIAL SECURITY AND MEDICARE HELD HARMLESS

Sec. 401. Protection of Social Security and Medicare.

TITLE I--IMPROVEMENTS IN PENSION SECURITY

SEC. 101. PERIODIC PENSION BENEFITS STATEMENTS.

(a) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) Requirements.--
(A) 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) to each plan participant at least annually,
``(ii) to each plan beneficiary upon written request, and
``(iii) in the case of an applicable individual account
plan, to each plan participant (and to each beneficiary with
a right to direct investments) at least quarterly.
``(B) The administrator of a defined benefit plan shall
furnish a pension benefit statement--
``(i) at least once every 3 years to each participant with
a nonforfeitable accrued benefit who is employed by the
employer maintaining the plan at the time the statement is
furnished to participants, and
``(ii) to a plan participant or plan beneficiary of the
plan upon written request.
``(2) A pension benefit statement under paragraph (1)--
``(A) shall indicate, on the basis of the latest available
information--
``(i) the total benefits accrued, and
``(ii) the nonforfeitable pension benefits, if any, which
have accrued, or the earliest date on which benefits will
become nonforfeitable,
``(B) shall be written in a manner calculated to be
understood by the average plan participant, and
``(C) may be provided in written form or in electronic or
other appropriate form to the extent that such form is
reasonably accessible to the recipient.
``(3) In the case of an applicable individual account plan,
the requirements of paragraph (1)(A) shall be treated as met
if the quarterly statement (together with the information
required in subparagraphs (A) and (B) of subsection (d)(1))
is available electronically in reasonably accessible form,
and the participant or beneficiary is provided at least once
each year a notice that such statement (together with such
information) is available in such form. Such notice shall be
in written, electronic, or other appropriate form.
``(4)(A) In the case of a defined benefit plan, the
requirements of paragraph (1)(B)(i) shall be treated as met
with respect to a participant if the administrator provides
the participant at least once each year with notice of the
availability of the pension benefit statement and the ways in
which the participant may obtain such statement. Such notice
shall be provided in written, electronic, or other
appropriate form, and may be included with other
communications to the participant if done in a manner
reasonably designed to attract the attention of the
participant.
``(B) The Secretary may provide that years in which no
employee or former employee benefits (within the meaning of
section 410(b) of the Internal Revenue Code of 1986) under
the plan need not be taken into account in determining the 3-
year period under paragraph (1)(B)(i).''.
(B) Conforming amendments.--
(i) Section 105 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1025) is amended by striking
subsection (d).
(ii) 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 of a
plan be entitled to more than one statement described in
clause (i) or (ii) of subsection (a)(1)(A) or clause (i) or
(ii) of subsection (a)(1)(B), whichever is applicable, in any
12-month period. If such report is required under subsection
(a) to be furnished at least quarterly, the requirements of
the preceding sentence shall be applied with respect to each
quarter in lieu of the 12-month period.''.
(2) Information required from applicable individual account
plans.--Section 105 of such Act (as amended by paragraph (1))
is amended further by adding at the end the following new
subsection:
``(d)(1) The statements required to be provided at least
quarterly under subsection (a) shall include (together with
the information required in subsection (a)) the following:
``(A) the value of investments allocated to the individual
account, including 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; and
``(B) 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 well-balanced and
diversified investment portfolio, including a discussion of
the risk of holding more than 25 percent of a portfolio in
the security of any one entity, such as employer securities.
``(2) The value of any employer securities that are not
readily tradable on an established securities market that is
required to be reported under paragraph (1)(A) may be
determined by using the most recent valuation of the employer
securities.
``(3) The Secretary shall issue guidance and model notices
which meet the requirements of this subsection.''.
(3) Definition of applicable individual account plan.--
Section 3 of such Act (29 U.S.C. 1002) is amended by adding
at the end the following new paragraph:
``(42)(A) The term `applicable individual account plan'
means any individual account plan, except that such term does
not include an employee stock ownership plan (within the
meaning of section 4975(e)(7) of the Internal Revenue Code of
1986) unless there are any contributions to such plan (or
earnings thereunder) held within such plan that are subject
to subsection (k)(3) or (m)(2) of section 401 of the Internal
Revenue Code of 1986. Such term shall not include a one-
participant retirement plan.
``(B) The term `one-participant retirement plan' means a
retirement plan that--
``(i) on the first day of the plan year--
``(I) covered only the employer (and the employer's spouse)
and the employer owned the entire business (whether or not
incorporated), or
``(II) covered only one or more partners (and their
spouses) in a business partnership (including partners in an
S or C corporation),
``(ii) meets the minimum coverage requirements of section
410(b) of the Internal Revenue Code of 1986 (as in effect on
the date of

[[Page H1222]]

the enactment of this paragraph) without being combined with
any other plan of the business that covers the employees of
the business,
``(iii) does not provide benefits to anyone except the
employer (and the employer's spouse) or the partners (and
their spouses),
``(iv) does not cover a business that is a member of an
affiliated service group, a controlled group of corporations,
or a group of businesses under common control, and
``(v) does not cover a business that leases employees.''.
(4) 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 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)(iii).''.
(5) Model statements.--The Secretary of Labor shall, not
later than January 1, 2003, issue initial guidance and a
model benefit statement, written in a manner calculated to be
understood by the average plan participant, that may be used
by plan administrators in complying with the requirements of
section 105 of the Employee Retirement Income Security Act of
1974. Not later than 75 days after the date of the enactment
of this Act, the Secretary shall promulgate interim final
rules necessary to carry out the amendments made by this
subsection.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Provision of investment education notices to
participants in certain plans.--Section 414 of the Internal
Revenue Code of 1986 (relating to definitions and special
rules) is amended by adding at the end the following:
``(w) Provision of Investment Education Notices to
Participants in Certain Plans.--
``(1) In general.--The plan administrator of an applicable
pension plan shall provide to each applicable individual an
investment education notice described in paragraph (2) at the
time of the enrollment of the applicable individual in the
plan and not less often than annually thereafter.
``(2) Investment education notice.--An investment education
notice is described in this paragraph if such notice
contains--
``(A) an explanation, for the long-term retirement security
of participants and beneficiaries, of generally accepted
investment principles, including principles of risk
management and diversification, and
``(B) a discussion of the risk of holding substantial
portions of a portfolio in the security of any one entity,
such as employer securities.
``(3) Understandability.--Each notice required by paragraph
(1) shall be written in a manner calculated to be understood
by the average plan participant and shall provide sufficient
information (as determined in accordance with guidance
provided by the Secretary) to allow recipients to understand
such notice.
``(4) Form and manner of notices.--The notices required by
this subsection shall be in writing, except that such notices
may be in electronic or other form (or electronically posted
on the plan's website) to the extent that such form is
reasonably accessible to the applicable individual.
``(5) Definitions.--For purposes of this subsection--
``(A) Applicable individual.--The term `applicable
individual' means--
``(i) any participant in the applicable pension plan,
``(ii) any beneficiary who is an alternate payee (within
the meaning of section 414(p)(8)) under a qualified domestic
relations order (within the meaning of section 414(p)(1)(A)),
and
``(iii) any beneficiary of a deceased participant or
alternate payee.
``(B) Applicable pension plan.--The term `applicable
pension plan' means--
``(i) a plan described in clause (i), (ii), or (iv) of
section 219(g)(5)(A), and
``(ii) an eligible deferred compensation plan (as defined
in section 457(b)) of an eligible employer described in
section 457(e)(1)(A),

which permits any participant to direct the investment of
some or all of his account in the plan or under which the
accrued benefit of any participant depends in whole or in
part on hypothetical investments directed by the participant.
Such term shall not include a one-participant retirement plan
or a plan to which section 105 of the Employee Retirement
Income Security Act of 1974 applies.
``(C) One-participant retirement plan defined.--The term
`one-participant retirement plan' means a retirement plan
that--
``(i) on the first day of the plan year--

``(I) covered only the employer (and the employer's spouse)
and the employer owned the entire business (whether or not
incorporated), or
``(II) covered only one or more partners (and their
spouses) in a business partnership (including partners in an
S or C corporation),

``(ii) meets the minimum coverage requirements of section
410(b) without being combined with any other plan of the
business that covers the employees of the business,
``(iii) does not provide benefits to anyone except the
employer (and the employer's spouse) or the partners (and
their spouses),
``(iv) does not cover a business that is a member of an
affiliated service group, a controlled group of corporations,
or a group of businesses under common control, and
``(v) does not cover a business that leases employees.
``(6) Cross reference.--
``For provisions relating to penalty for failure to provide the
notice required by this section, see section 6652(m).''.
(2) Penalty for failure to provide notice.--Section 6652 of
such Code (relating to failure to file certain information
returns, registration statements, etc.) is amended by
redesignating subsection (m) as subsection (n) and by
inserting after subsection (l) the following new subsection:
``(m) Failure to Provide Investment Education Notices to
Participants in Certain Plans.--In the case of each failure
to provide a written explanation as required by section
414(w) with respect to an applicable individual (as defined
in such section), at the time prescribed therefor, unless it
is shown that such failure is due to reasonable cause and not
to willful neglect, there shall be paid, on notice and demand
of the Secretary and in the same manner as tax, by the person
failing to provide such notice, an amount equal to $100 for
each such failure, but the total amount imposed on such
person for all such failures during any calendar year shall
not exceed $50,000.''.

SEC. 102. PROTECTION FROM SUSPENSIONS, LIMITATIONS, OR
RESTRICTIONS ON ABILITY OF PARTICIPANT OR
BENEFICIARY TO DIRECT OR DIVERSIFY PLAN ASSETS.

(a) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) Notice requirements.--
(A) In general.--Section 101 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021) is amended--
(i) by redesignating the second subsection (h) as
subsection (j); and
(ii) by inserting after the first subsection (h) the
following new subsection:
``(i) Notice of Suspension, Limitation, or Restriction on
Ability of Participant or Beneficiary To Direct Investments
in Individual Account Plan.--
``(1) Duties of plan administrator.--
``(A) In general.--In the case of any action having the
effect of temporarily suspending, limiting, or restricting
any ability of participants or beneficiaries under an
applicable individual account plan, which is otherwise
available under the terms of such plan, to direct or
diversify assets credited to their accounts, if such
suspension, limitation, or restriction is for any period of
more than 3 consecutive business days, the plan administrator
shall--
``(i) in advance of taking such action, determine, in
accordance with the requirements of part 4, that the expected
period of suspension, limitation, or restriction is
reasonable, and
``(ii) after making the determination under subparagraph
(A) and in advance of taking such action, notify the plan
participants and beneficiaries who are affected by such
action in accordance with this subsection.
``(B) Exceptions.--Subparagraph (A) does not apply in
connection with any suspension, limitation, or restriction--
``(i) which occurs by reason of the application of the
securities laws (as defined in section 3(a)(47) of the
Securities Exchange Act of 1934), or
``(ii) to the extent the suspension, limitation, or
restriction is a change to the terms of the plan disclosed to
participants or beneficiaries through the summary plan
description or materials describing specific investment
alternatives under the plan.
``(C) Business day.--For purposes of subparagraph (A),
under regulations prescribed by the Secretary, the term
`business day' means--
``(i) in the case of a security which is traded on an
established security market, any day on which such security
may be traded on the principal securities market of such
security, and
``(ii) in the case of a security which is not traded on an
established security market, any calendar day.
``(2) Notice requirements.--
``(A) In general.--The notices described in paragraph (1)
shall be written in a manner calculated to be understood by
the average plan participant and shall include--
``(i) the reasons for the suspension, limitation, or
restriction,
``(ii) an identification of the investments affected,
``(iii) the expected period of the suspension, limitation,
or restriction,
``(iv) a statement that the plan administrator has
evaluated the reasonableness of the expected period of
suspension, limitation, or restriction,
``(v) a statement that the participant or beneficiary
should evaluate the appropriateness of their current
investment decisions in light of their inability to direct or
diversify assets credited to their accounts during the
expected period of suspension, limitation, or restriction,
and
``(vi) such other matters as the Secretary may include in
the model notices issued under subparagraph (E).
``(B) Provision of notice.--Except as otherwise provided in
this subsection, notices described in paragraph (1) shall be
furnished to all participants and beneficiaries under

[[Page H1223]]

the plan at least 30 days in advance of the action
suspending, limiting, or restricting the ability of the
participants or beneficiaries to direct or diversify assets.
``(C) Exception to 30-day notice requirement.--In any case
in which--
``(i) a fiduciary of the plan determines, in writing, that
a deferral of the suspension, limitation, or restriction
would violate the requirements of subparagraph (A) or (B) of
section 404(a)(1), or
``(ii) the inability to provide the 30-day advance notice
is due to events that were unforeseeable or circumstances
beyond the reasonable control of the plan administrator,

subparagraph (B) shall not apply, and the notice shall be
furnished to all participants and beneficiaries under the
plan as soon as reasonably possible under the circumstances
unless such a notice in advance of the termination of the
suspension, limitation, or restriction is impracticable.
``(D) Written notice.--The notice required to be provided
under this subsection shall be in writing, except that such
notice may be in electronic or other form to the extent that
such form is reasonably accessible to the recipient.
``(E) Model notices.--The Secretary shall issue model
notices which meet the requirements of this paragraph.
``(3) Exception for suspensions, limitations, or
restrictions with limited applicability.--In any case in
which the suspension, limitation, or restriction described in
paragraph (1)--
``(A) applies only to 1 or more individuals, each of whom
is the participant, an alternate payee (as defined in section
206(d)(3)(K)), or any other beneficiary pursuant to a
qualified domestic relations order (as defined in section
206(d)(3)(B)(i)), or
``(B) applies only to 1 or more participants or
beneficiaries in connection with a merger, acquisition,
divestiture, or similar transaction involving the plan or
plan sponsor and occurs solely in connection with becoming or
ceasing to be a participant or beneficiary under the plan by
reason of such merger, acquisition, divestiture, or
transaction,

the requirement of this subsection that the notice be
provided to all participants and beneficiaries shall be
treated as met if the notice required under paragraph (1) is
provided to all the individuals referred to in subparagraph
(A) or (B) to whom the suspension, limitation, or restriction
applies as soon as reasonably practicable.
``(4) Changes in period of suspension, limitation, or
restriction.--If, following the furnishing of the notice
pursuant to this subsection, there is a change in the period
of the suspension, limitation, or restriction (specified in
such notice pursuant to paragraph (2)(A)(iii)) on the right
of a participant or beneficiary to direct or diversify
assets, the administrator shall provide affected participants
and beneficiaries notice of the change as soon as reasonably
practicable. In relation to the extended suspension,
limitation, or restriction, such notice shall meet the
requirements of paragraph (2)(D) and shall specify any
material change in the matters referred to in clauses (i)
through (vi) of paragraph (2)(A).
``(5) Regulatory exceptions.--The Secretary may provide by
regulation for additional exceptions to the requirements of
this subsection which the Secretary determines are in the
interests of participants and beneficiaries.
``(6) Guidance and model notices.--The Secretary shall
issue guidance and model notices which meet the requirements
of this subsection.''.
(B) Issuance of initial guidance and model notice.--The
Secretary of Labor shall issue initial guidance and a model
notice pursuant to section 101(i)(6) of the Employee
Retirement Income Security Act of 1974 (as added by this
subsection) not later than January 1, 2003. Not later than 75
days after the date of the enactment of this Act, the
Secretary shall promulgate interim final rules necessary to
carry out the amendments made by this subsection.
(2) Civil penalties for failure to provide notice.--Section
502 of such Act (as amended by section 101(a)(4)) is amended
further--
(A) in subsection (a)(6), by striking ``(6), or (7)'' and
inserting ``(6), (7), or (8)'';
(B) by redesignating paragraph (8) of subsection (c) as
paragraph (9); and
(C) by inserting after paragraph (7) of subsection (c) the
following new paragraph:
``(8) The Secretary may assess a civil penalty against a
plan administrator of up to $100 a day from the date of the
plan administrator's failure or refusal to provide notice to
participants and beneficiaries in accordance with section
101(i). For purposes of this paragraph, each violation with
respect to any single participant or beneficiary shall be
treated as a separate violation.''.
(3) Inapplicability of relief from fiduciary liability
during suspension of ability of participant or beneficiary to
direct investments.--Section 404(c)(1) of such Act (29 U.S.C.
1104(c)(1)) is amended--
(A) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and by inserting ``(A)'' after
``(c)(1)'';
(B) in subparagraph (A)(ii) (as redesignated by
subparagraph (A)), by inserting before the period the
following: ``, except that this clause shall not apply in
connection with such participant or beneficiary for any
period during which the ability of such participant or
beneficiary to direct the investment of the assets in his or
her account is suspended by a plan sponsor or fiduciary'';
and
(C) by adding at the end the following new subparagraphs:
``(B) If the person referred to in subparagraph (A)(ii)
meets the requirements of this title in connection with
authorizing the suspension, such person shall not be liable
under this title for any loss occurring during the suspension
as a result of any exercise by the participant or beneficiary
of control over assets in his or her account prior to the
suspension. Matters to be considered in determining whether
such person has satisfied the requirements of this title
include whether such person--
``(i) has considered the reasonableness of the expected
period of the suspension as required under section
101(i)(1)(A)(i),
``(ii) has provided the notice required under section
101(i)(1)(A)(ii), and
``(iii) has acted in accordance with the requirements of
subsection (a) in determining whether to enter into the
suspension.
``(C) 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
(A)(ii) 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) Amendments to the Internal Revenue Code of 1986.--
(1) Excise tax on failure of pension plans to provide
notice of transaction restriction periods.--
(A) In general.--Chapter 43 of the Internal Revenue Code of
1986 (relating to qualified pension, etc., plans) is amended
by adding at the end the following new section:

``SEC. 4980H. FAILURE OF APPLICABLE PLANS TO PROVIDE NOTICE
OF TRANSACTION RESTRICTION PERIODS.

``(a) Imposition of Tax.--There is hereby imposed a tax on
the failure of any applicable pension plan to meet the
requirements of subsection (e) with respect to any applicable
individual.
``(b) Amount of Tax.--The amount of the tax imposed by
subsection (a) on any failure with respect to any applicable
individual shall be $100.
``(c) Limitations on Amount of Tax.--
``(1) Tax not to apply to failures corrected as soon as
reasonably practicable.--No tax shall be imposed by
subsection (a) on any failure if--
``(A) any person subject to liability for the tax under
subsection (d) exercised reasonable diligence to meet the
requirements of subsection (e), and
``(B) such person provides the notice described in
subsection (e) as soon as reasonably practicable after the
first date such person knew, or exercising reasonable
diligence should have known, that such failure existed and at
least 1 business day before the beginning of the transaction
restriction period.
``(2) Tax not to apply when providing notice not reasonably
practicable.--No tax shall be imposed by subsection (a) if,
in the case of the occurrence of an unforeseeable event, it
is not reasonably practicable to provide such notice before
the beginning of the transaction restriction period.
``(3) Overall limitation for unintentional failures.--
``(A) In general.--If the person subject to liability for
tax under subsection (d) exercised reasonable diligence to
meet the requirements of subsection (e), the tax imposed by
subsection (a) for failures during the taxable year of the
employer (or, in the case of a multiemployer plan, the
taxable year of the trust forming part of the plan) shall not
exceed $500,000. For purposes of the preceding sentence, all
multiemployer plans of which the same trust forms a part
shall be treated as 1 plan.
``(B) Taxable years in the case of certain controlled
groups.--For purposes of this paragraph, if all persons who
are treated as a single employer for purposes of this section
do not have the same taxable year, the taxable years taken
into account shall be determined under principles similar to
the principles of section 1561.
``(4) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of such tax
would be excessive or otherwise inequitable relative to the
failure involved.
``(d) Liability for Tax.--The following shall be liable for
the tax imposed by subsection (a):
``(1) In the case of a plan other than a multiemployer
plan, the employer.
``(2) In the case of a multiemployer plan, the plan.
``(e) Notice of Transaction Restriction Period.--
``(1) In general.--The plan administrator of an applicable
pension plan shall provide written notice of any transaction
restriction period to each applicable individual to whom the
transaction restriction period applies (and to each employee
organization representing such applicable individuals).
``(2) Understandability.--The notice required by paragraph
(1) shall be written in a manner calculated to be understood
by the average plan participant and shall provide sufficient
information (as determined in accordance with guidance
provided by the Secretary) to allow recipients to understand
the timing and effect of such transaction restriction period.

[[Page H1224]]

``(3) Timing of notice.--
``(A) In general.--Except as provided in subparagraph (B),
the notice required by paragraph (1) shall be provided at
least 30 days before the beginning of the transaction
restriction period.
``(B) Disposition of stock or assets.--
``(i) In general.--If, in connection with the major
corporate disposition by a corporation maintaining an
applicable pension plan, there is the possibility of a
transaction restriction period--

``(I) the notice required by paragraph (1) shall be
provided at least 30 days before the date of such
disposition, and
``(II) no other notice shall be required by paragraph (1)
with respect to such period if notice is provided pursuant to
subclause (I) and such period begins not more than 30 days
after the date of such disposition.

Subclause (I) shall not apply if the plan administrator has a
substantial basis to believe that there will be no
transaction restriction period in connection with the
disposition.
``(ii) Major corporate disposition.--For purposes of clause
(i), the term `major corporate disposition' means, with
respect to a corporation--

``(I) the disposition of substantially all of the stock of
such corporation or a subsidiary thereof, or
``(II) the disposition of substantially all of the assets
used in a trade or business of such corporation or
subsidiary.

``(iii) Noncorporate entities.--Rules similar to the rules
of this subparagraph shall apply to entities that are not
corporations.
``(4) Form and manner of notice.--The notice required by
this subsection shall be in writing, except that such notice
may be in electronic or other form to the extent that such
form is reasonably accessible to the applicable individual.
``(f ) Definitions and Special Rules.--For purposes of this
section--
``(1) Applicable individual.--The term `applicable
individual' means--
``(A) any participant in the applicable pension plan, and
``(B) any beneficiary who is an alternate payee (within the
meaning of section 414(p)(8)) under a qualified domestic
relations order (within the meaning of section 414(p)(1)(A)),
and
``(C) any beneficiary of a deceased participant or
alternate payee.
``(2) Applicable pension plan.--
``(A) In general.--The term `applicable pension plan'
means--
``(i) a plan described in clause (i), (ii), or (iv) of
section 219(g)(5)(A), and
``(ii) an eligible deferred compensation plan (as defined
in section 457(b)) of an eligible employer described in
section 457(e)(1)(A),

which maintains accounts for participants under the plan or
under which the accrued benefit of any participant depends in
whole or in part on hypothetical investments directed by the
participant.
``(B) Exception.--Such term shall not include a one-
participant retirement plan (as defined in section
4980G(f)(3)).
``(3) Transaction restriction period.--
``(A) In general.--The term `transaction restriction
period' means, with respect to an applicable pension plan, a
period beginning on a day in which there is a substantial
reduction in rights described in subparagraph (B) which are
not restored as of the beginning of the 3rd day following the
day of such reduction.
``(B) Rights described.--For purposes of this paragraph,
rights described in this section with respect to an
applicable pension plan are rights under such plan of 1 or
more applicable individuals to direct investments in such
plan, to obtain loans from such plan, or to obtain
distributions from such plan.
``(C) Special rule for employer securities.--For purposes
of this paragraph--
``(i) In general.--In the case of rights relating to
directing investments out of employer securities, such rights
shall be treated as substantially reduced if such rights are
significantly restricted for at least 3 consecutive business
days.
``(ii) Business day.--For purposes of clause (i), under
regulations prescribed by the Secretary, the term `business
day' means--

``(I) in the case of a security which is traded on an
established security market, any day on which such security
may be traded on the principal securities market of such
security, and
``(II) in the case of a security which is not traded on an
established security market, any calendar day.

``(iii) Employer securities.--For purposes of this
subparagraph, the term `employer securities' shall have the
meaning given such term by section 407(d)(1) of the Employee
Retirement Income Security Act of 1974.
``(D) Exceptions.--Rights which are substantially reduced
by reason of the application of securities laws or other
circumstances specified by the Secretary in regulations shall
not be taken into account for purposes of this paragraph.''.
(2) Clerical amendment.--The table of sections for chapter
43 of such Code is amended by adding at the end the following
new item:

``Sec. 4980H. Failure of applicable plans to provide notice of
transaction restriction periods.''.

(3) Guidance.--The Secretary of the Treasury, in
consultation with the Secretary of Labor, shall issue
guidance in carrying out section 4980H of the Internal
Revenue Code of 1986 (as added by this section). Such
guidance--
(A) in the case of a reduction of rights relating to the
direction of investments out of employer securities, shall be
issued by November 1, 2002 (or, if later, the 60th day after
the date of the enactment of this Act), and
(B) in any other case, shall be issued not later than 120
days after the date of the enactment of this Act.

SEC. 103. INFORMATIONAL AND EDUCATIONAL SUPPORT FOR PENSION
PLAN FIDUCIARIES.

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) The Secretary shall establish a program under which
information and educational resources shall be made available
on an ongoing basis to persons serving as fiduciaries under
employee pension benefit plans so as to assist such persons
in diligently and effectively carrying out their fiduciary
duties in accordance with this part.''.

SEC. 104. DIVERSIFICATION REQUIREMENTS FOR DEFINED
CONTRIBUTION PLANS THAT HOLD EMPLOYER
SECURITIES.

(a) Amendment to the Employee Retirement Income Security
Act of 1974.--Section 204 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1054) is amended--
(1) by redesignating subsection (j) as subsection (k); and
(2) by inserting after subsection (i) the following new
subsection:
``(j) Diversification Requirements for Individual Account
Plans that Hold Employer Securities.--
``(1) In general.--An applicable individual account plan
shall meet the requirements of paragraphs (2) and (3).
``(2) Employee contributions and elective deferrals
invested in employer securities.--In the case of the portion
of the account attributable to employee contributions and
elective deferrals which is invested in employer securities,
a plan meets the requirements of this paragraph if each
applicable individual may elect to direct the plan to divest
any such securities in the individual's account and to
reinvest an equivalent amount in other investment options
which meet the requirements of paragraph (4).
``(3) Employer contributions invested in employer
securities.--
``(A) In general.--In the case of the portion of the
account attributable to employer contributions (other than
elective deferrals to which paragraph (2) applies) which is
invested in employer securities, a plan meets the
requirements of this paragraph if, under the plan--
``(i) each applicable individual with a benefit based on 3
years of service may elect to direct the plan to divest any
such securities in the individual's account and to reinvest
an equivalent amount in other investment options which meet
the requirements of paragraph (4), or
``(ii) with respect to any employer security allocated to
an applicable individual's account during any plan year, such
applicable individual may elect to direct the plan to divest
such employer security after a date which is not later than 3
years after the end of such plan year and to reinvest an
equivalent amount in other investment options which meet the
requirements of paragraph (4).
``(B) Applicable individual with benefit based on 3 years
of service.--For purposes of subparagraph (A), an applicable
individual has a benefit based on 3 years of service if such
individual would be an applicable individual if only
participants in the plan who have completed at least 3 years
of service (as determined under section 203(b)) were taken
into account under paragraph (6)(B)(i).
``(4) Investment options.--The requirements of this
paragraph are met if--
``(A) the plan offers not less than 3 investment options,
other than employer securities, to which an applicable
individual may direct the proceeds from the divestment of
employer securities pursuant to this subsection, each of
which is diversified and has materially different risk and
return characteristics, and
``(B) the plan permits the applicable individual to choose
from any of the investment options made available under the
plan to which such proceeds may be so directed, subject to
such restrictions as may be provided by the plan limiting
such choice to periodic, reasonable opportunities occurring
no less frequently than on a quarterly basis.
``(5) Definitions and rules.--For purposes of this
subsection--
``(A) Applicable individual account plan.--The term
`applicable individual account plan' means any individual
account plan, except that such term does not include an
employee stock ownership plan (within the meaning of section
4975(e)(7) of the Internal Revenue Code of 1986) unless there
are any contributions to such plan (or earnings thereon) held
within such plan that are subject to subsection (k)(3) or
(m)(2) of section 401 of the Internal Revenue Code of 1986.
``(B) Applicable individual.--The term `applicable
individual' means--
``(i) any participant in the plan, and
``(ii) any beneficiary of a participant referred to in
clause (i) who has an account under the plan with respect to
which the beneficiary is entitled to exercise the rights of
the participant.
``(C) Elective deferral.--The term `elective deferral'
means an employer contribution described in section
402(g)(3)(A) of the Internal Revenue Code of 1986 (as in
effect on

[[Page H1225]]

the date of the enactment of this subsection).
``(D) Employer security.--The term `employer security'
shall have the meaning given such term by section 407(d)(1)
of this Act (as in effect on the date of the enactment of
this subsection).
``(E) Employee stock ownership plan.--The term `employee
stock ownership plan' shall have the same meaning given to
such term by section 4975(e)(7) of the Internal Revenue Code
of 1986 (as in effect on the date of the enactment of this
subsection).
``(F) Elections.--Elections under this subsection may be
made not less frequently than quarterly.
``(6) Exception where there is no readily tradable stock.--
This subsection shall not apply with respect to a plan if
there is no class of stock issued by any employer maintaining
the plan (or by a corporation which is an affiliate of any
such employer, as defined in section 407(d)(7) as in effect
on the date of the enactment of this subsection) that is
readily tradable on an established securities market.
``(7) Transition rule.--
``(A) In general.--In the case of any individual account
plan which, on the first day of the first plan year to which
this subsection applies, holds employer securities of any
class that were acquired before such date and on which there
is a restriction on diversification otherwise precluded by
this subsection, this subsection shall apply to such
securities of such class held in any plan year only with
respect to the number of such securities equal to the
applicable percentage of the total number of such securities
of such class held on such date.
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be as follows:

Applicable percentage: provisions are effective:
1st plan year...............................................20 percent.
2nd plan year...............................................40 percent.
3rd plan year...............................................60 percent.
4th plan year...............................................80 percent.
5th plan year or thereafter................................100 percent.
``(C) Elective deferrals treated as separate plan not
individual account plan.--For purposes of subparagraph (A),
the applicable percentage shall be 100 percent with respect
to--
``(i) employee contributions to a plan under which any
portion attributable to elective deferrals is treated as a
separate plan under section 407(b)(2) as of the date of the
enactment of this paragraph, and
``(ii) such elective deferrals.
``(D) Coordination with prior elections.--In any case in
which a divestiture of investment in employer securities of
any class held by an employee stock ownership plan prior to
the effective date of this subsection was undertaken pursuant
to other applicable Federal law prior to such date, the
applicable percentage (as determined without regard to
this subparagraph) in connection with such securities
shall be reduced to the extent necessary to account for
the amount to which such election applied.
``(8) Regulations.--The Secretary of the Treasury shall
prescribe regulations under this subsection in consultation
with the Secretary of Labor.''
(b) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Section 401(a) of the Internal Revenue
Code of 1986 (relating to requirements for qualification) is
amended by inserting after paragraph (34) the following new
paragraph:
``(35) Diversification requirements for defined
contribution plans that hold employer securities.--
``(A) In general.--An applicable defined contribution plan
shall meet the requirements of subparagraphs (B) and (C).
``(B) Employee contributions and elective deferrals
invested in employer securities.--In the case of the portion
of the account attributable to employee contributions and
elective deferrals which is invested in employer securities,
a plan meets the requirements of this subparagraph if each
applicable individual in such plan may elect to direct the
plan to divest any such securities in the individual's
account and to reinvest an equivalent amount in other
investment options which meet the requirements of
subparagraph (D).
``(C) Employer contributions invested in employer
securities.--
``(i) In general.--In the case of the portion of the
account attributable to employer contributions (other than
elective deferrals to which subparagraph (B) applies) which
is invested in employer securities, a plan meets the
requirements of this subparagraph if, under the plan--

``(I) each applicable individual with a benefit based on 3
years of service may elect to direct the plan to divest any
such securities in the individual's account and to reinvest
an equivalent amount in other investment options which meet
the requirements of subparagraph (D), or
``(II) with respect to any employer security allocated to
an applicable individual's account during any plan year, such
applicable individual may elect to direct the plan to divest
such employer security after a date which is not later than 3
years after the end of such plan year and to reinvest an
equivalent amount in other investment options which meet the
requirements of subparagraph (D).

``(ii) Applicable individual with benefit based on 3 years
of service.--For purposes of clause (i), an applicable
individual has a benefit based on 3 years of service if such
individual would be an applicable individual if only
participants in the plan who have completed at least 3 years
of service (as determined under section 411(a)) were taken
into account under subparagraph (F)(ii)(I).
``(D) Investment options.--The requirements of this
subparagraph are met if--
``(i) the plan offers not less than 3 investment options,
other than employer securities, to which an applicable
individual may direct the proceeds from the divestment of
employer securities pursuant to this paragraph, each of which
is diversified and has materially different risk and return
characteristics, and
``(ii) the plan permits the applicable individual to choose
from any of the investment options made available under the
plan to which such proceeds may be so directed, subject to
such restrictions as may be provided by the plan limiting
such choice to periodic, reasonable opportunities occurring
no less frequently than on a quarterly basis.
``(E) Definitions and rules.--For purposes of this
paragraph--
``(i) Applicable defined contribution plan.--The term
`applicable defined contribution plan' means any defined
contribution plan, except that such term does not include an
employee stock ownership plan (within the meaning of section
4975(e)(7)) unless there are any contributions to such plan
(or earnings thereon) held within such plan that are subject
to subsection (k)(3) or (m)(2).
``(ii) Applicable individual.--The term `applicable
individual' means--

``(I) any participant in the plan, and
``(II) any beneficiary of a participant referred to in
clause (i) who has an account under the plan with respect to
which the beneficiary is entitled to exercise the rights of
the participant.

``(iii) Elective deferral.--The term `elective deferral'
means an employer contribution described in section
402(g)(3)(A) (as in effect on the date of the enactment of
this paragraph).
``(iv) Employer security.--The term `employer security'
shall have the meaning given such term by section 407(d)(1)
of the Employee Retirement Income Security Act of 1974 (as in
effect on the date of the enactment of this paragraph).
``(v) Employee stock ownership plan.--The term `employee
stock ownership plan' shall have the same meaning given to
such term by section 4975(e)(7) of the Internal Revenue Code
of 1986 (as in effect on the date of the enactment of this
paragraph).
``(vi) Elections.--Elections under this paragraph may be
made not less frequently than quarterly.
``(F) Exception where there is no readily tradable stock.--
This paragraph shall not apply with respect to a plan if
there is no class of stock issued by any employer maintaining
the plan that is readily tradable on an established
securities market.
``(G) Transition rule.--
``(i) In general.--In the case of any defined contribution
plan which, on the effective date of this subsection, holds
employer securities of any class that were acquired before
such date and on which there is a restriction on
diversification otherwise precluded by this paragraph, this
paragraph shall apply to such securities of such class held
in any plan year only with respect to the number of such
securities equal to the applicable percentage of the total
number of such securities of such class held on such date.
``(ii) Applicable percentage.--For purposes of clause (i),
the applicable percentage shall be as follows:

``(iii) Elective deferrals treated as separate plan not
individual account plan.--For purposes of clause (i), the
applicable percentage shall be 100 percent with respect to--

``(I) employee contributions to a plan under which any
portion attributable to elective deferrals is treated as a
separate plan under section 407(b)(2) of the Employee
Retirement Income Security Act of 1974 as of the date of the
enactment of this paragraph, and
``(II) such elective deferrals.

``(iv) Contributions held within an esop.--In the case of
contributions (other than elective deferrals and employee
contributions) held within an employee stock ownership plan,
in the case of the 1st and 2nd plan years referred to in the
table in clause (ii), the applicable percentage shall be the
greater of the amount determined under clause (ii) or the
percentage determined under paragraph (28) (determined as if
paragraph (28) applied to a plan described in this
paragraph).
``(v) Coordination with prior elections under paragraph
(28).--In any case in which a divestiture of investment in
employer securities of any class held by an employee stock
ownership plan prior to the effective date of this paragraph
was undertaken pursuant to an election under paragraph (28)
prior to such date, the applicable percentage (as determined
without regard to this clause) in connection with such
securities shall be reduced to the extent necessary to
account

[[Page H1226]]

for the amount to which such election applied.
``(H) Regulations.--The Secretary shall prescribe
regulations under this paragraph in consultation with the
Secretary of Labor.''.
(2) Conforming amendments.--
(A) Section 401(a)(28) of such Code is amended by adding at
the end the following new subparagraph:
``(D) Application.--This paragraph shall not apply to a
plan to which paragraph (35) applies.''.
(B) Section 409(h)(7) of such Code is amended by inserting
before the period at the end ``or subparagraph (B) or (C) of
section 401(a)(35)''.
(C) Section 4980(c)(3)(A) of such Code is amended by
striking ``if--'' and all that follows and inserting ``if the
requirements of subparagraphs (B), (C), and (D) are met.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2) and
section 109, the amendments made by this section shall apply
to plan years beginning after December 31, 2002, and with
respect to employer securities allocated to accounts before,
on, or after the date of the enactment of this Act.
(2) Exception.--The amendments made by this section shall
not apply to employer securities held by an employee stock
ownership plan which are acquired before January 1, 1987.

SEC. 105. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION
OF INVESTMENT ADVICE.

(a) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) Exemption from prohibited transactions.--Section 408(b)
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1108(b)) is amended by adding at the end the following
new paragraph:
``(14)(A) Any transaction described in subparagraph (B) in
connection with the provision of investment advice described
in section 3(21)(A)(ii), in any case in which--
``(i) the investment of assets of the plan is subject to
the direction of plan participants or beneficiaries,
``(ii) the advice is provided to the plan or a participant
or beneficiary of the plan by a fiduciary adviser in
connection with any sale, acquisition, or holding of a
security or other property for purposes of investment of plan
assets, and
``(iii) the requirements of subsection (g) are met in
connection with the provision of the advice.
``(B) The transactions described in this subparagraph are
the following:
``(i) the provision of the advice to the plan, participant,
or beneficiary;
``(ii) the sale, acquisition, or holding of a security or
other property (including any lending of money or other
extension of credit associated with the sale, acquisition, or
holding of a security or other property) pursuant to the
advice; and
``(iii) the direct or indirect receipt of fees or other
compensation by the fiduciary adviser or an affiliate thereof
(or any employee, agent, or registered representative of the
fiduciary adviser or affiliate) in connection with the
provision of the advice or in connection with a sale,
acquisition, or holding of a security or other property
pursuant to the advice.''.
(2) Requirements.--Section 408 of such Act is amended
further by adding at the end the following new subsection:
``(g) Requirements Relating to Provision of Investment
Advice by Fiduciary Advisers.--
``(1) In general.--The requirements of this subsection are
met in connection with the provision of investment advice
referred to in section 3(21)(A)(ii), provided to an employee
benefit plan or a participant or beneficiary of an employee
benefit plan by a fiduciary adviser with respect to the plan
in connection with any sale, acquisition, or holding of a
security or other property for purposes of investment of
amounts held by the plan, if--
``(A) in the case of the initial provision of the advice
with regard to the security or other property by the
fiduciary adviser to the plan, participant, or beneficiary,
the fiduciary adviser provides to the recipient of the
advice, at a time reasonably contemporaneous with the initial
provision of the advice, a written notification (which may
consist of notification by means of electronic
communication)--
``(i) of all fees or other compensation relating to the
advice that the fiduciary adviser or any affiliate thereof is
to receive (including compensation provided by any third
party) in connection with the provision of the advice or in
connection with the sale, acquisition, or holding of the
security or other property,
``(ii) of any material affiliation or contractual
relationship of the fiduciary adviser or affiliates thereof
in the security or other property,
``(iii) of any limitation placed on the scope of the
investment advice to be provided by the fiduciary adviser
with respect to any such sale, acquisition, or holding of a
security or other property,
``(iv) of the types of services provided by the fiduciary
adviser in connection with the provision of investment advice
by the fiduciary adviser,
``(v) that the adviser is acting as a fiduciary of the plan
in connection with the provision of the advice, and
``(vi) that a recipient of the advice may separately
arrange for the provision of advice by another adviser, that
could have no material affiliation with and receive no fees
or other compensation in connection with the security or
other property,
``(B) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition, or
holding of the security or other property, in accordance with
all applicable securities laws,
``(C) the sale, acquisition, or holding occurs solely at
the direction of the recipient of the advice,
``(D) the compensation received by the fiduciary adviser
and affiliates thereof in connection with the sale,
acquisition, or holding of the security or other property is
reasonable, and
``(E) the terms of the sale, acquisition, or holding of the
security or other property are at least as favorable to the
plan as an arm's length transaction would be.
``(2) Standards for presentation of information.--
``(A) In general.--The notification required to be provided
to participants and beneficiaries under paragraph (1)(A)
shall be written in a clear and conspicuous manner and in a
manner calculated to be understood by the average plan
participant and shall be sufficiently accurate and
comprehensive to reasonably apprise such participants and
beneficiaries of the information required to be provided in
the notification.
``(B) Model form for disclosure of fees and other
compensation.--The Secretary shall issue a model form for the
disclosure of fees and other compensation required in
paragraph (1)(A)(i) which meets the requirements of
subparagraph (A).
``(3) Exemption conditioned on making required information
available annually, on request, and in the event of material
change.--The requirements of paragraph (1)(A) shall be deemed
not to have been met in connection with the initial or any
subsequent provision of advice described in paragraph (1) to
the plan, participant, or beneficiary if, at any time during
the provision of advisory services to the plan, participant,
or beneficiary, the fiduciary adviser fails to maintain the
information described in clauses (i) through (iv) of
subparagraph (A) in currently accurate form and in the manner
described in paragraph (2) or fails--
``(A) to provide, without charge, such currently accurate
information to the recipient of the advice no less than
annually,
``(B) to make such currently accurate information
available, upon request and without charge, to the recipient
of the advice, or
``(C) in the event of a material change to the information
described in clauses (i) through (iv) of paragraph (1)(A), to
provide, without charge, such currently accurate information
to the recipient of the advice at a time reasonably
contemporaneous to the material change in information.
``(4) Maintenance for 6 years of evidence of compliance.--A
fiduciary adviser referred to in paragraph (1) who has
provided advice referred to in such paragraph shall, for a
period of not less than 6 years after the provision of the
advice, maintain any records necessary for determining
whether the requirements of the preceding provisions of this
subsection and of subsection (b)(14) have been met. A
transaction prohibited under section 406 shall not be
considered to have occurred solely because the records are
lost or destroyed prior to the end of the 6-year period due
to circumstances beyond the control of the fiduciary adviser.
``(5) Exemption for plan sponsor and certain other
fiduciaries.--
``(A) In general.--Subject to subparagraph (B), a plan
sponsor or other person who is a fiduciary (other than a
fiduciary adviser) shall not be treated as failing to meet
the requirements of this part solely by reason of the
provision of investment advice referred to in section
3(21)(A)(ii) (or solely by reason of contracting for or
otherwise arranging for the provision of the advice), if--
``(i) the advice is provided by a fiduciary adviser
pursuant to an arrangement between the plan sponsor or other
fiduciary and the fiduciary adviser for the provision by the
fiduciary adviser of investment advice referred to in such
section,
``(ii) the terms of the arrangement require compliance by
the fiduciary adviser with the requirements of this
subsection, and
``(iii) the terms of the arrangement include a written
acknowledgment by the fiduciary adviser that the fiduciary
adviser is a fiduciary of the plan with respect to the
provision of the advice.
``(B) Continued duty of prudent selection of adviser and
periodic review.--Nothing in subparagraph (A) shall be
construed to exempt a plan sponsor or other person who is a
fiduciary from any requirement of this part for the prudent
selection and periodic review of a fiduciary adviser with
whom the plan sponsor or other person enters into an
arrangement for the provision of advice referred to in
section 3(21)(A)(ii). The plan sponsor or other person who is
a fiduciary has no duty under this part to monitor the
specific investment advice given by the fiduciary adviser to
any particular recipient of the advice.
``(C) Availability of plan assets for payment for advice.--
Nothing in this part shall be construed to preclude the use
of plan assets to pay for reasonable expenses in providing
investment advice referred to in section 3(21)(A)(ii).
``(6) Definitions.--For purposes of this subsection and
subsection (b)(14)--
``(A) Fiduciary adviser.--The term `fiduciary adviser'
means, with respect to a plan, a person who is a fiduciary of
the plan by reason of the provision of investment advice

[[Page H1227]]

by the person to the plan or to a participant or beneficiary
and who is--
``(i) registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or
under the laws of the State in which the fiduciary maintains
its principal office and place of business,
``(ii) a bank or similar financial institution referred to
in section 408(b)(4), but only if the advice is provided
through a trust department of the bank or similar financial
institution which is subject to periodic examination and
review by Federal or State banking authorities,
``(iii) an insurance company qualified to do business under
the laws of a State,
``(iv) a person registered as a broker or dealer under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
``(v) an affiliate of a person described in any of clauses
(i) through (iv), or
``(vi) an employee, agent, or registered representative of
a person described in any of clauses (i) through (v) who
satisfies the requirements of applicable insurance, banking,
and securities laws relating to the provision of the advice.
``(B) Affiliate.--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))).
``(C) Registered representative.--The term `registered
representative' of another entity means a person described in
section 3(a)(18) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(18)) (substituting the entity for the broker or
dealer referred to in such section) or a person described in
section 202(a)(17) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2(a)(17)) (substituting the entity for the
investment adviser referred to in such section).''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Exemption from prohibited transactions.--Subsection (d)
of section 4975 of the Internal Revenue Code of 1986
(relating to exemptions from tax on prohibited transactions)
is amended--
(A) in paragraph (14), by striking ``or'' at the end;
(B) in paragraph (15), by striking the period at the end
and inserting ``; or''; and
(C) by adding at the end the following new paragraph:
``(16) any transaction described in subsection (f)(7)(A) in
connection with the provision of investment advice described
in subsection (e)(3)(B), in any case in which--
``(A) the investment of assets of the plan is subject to
the direction of plan participants or beneficiaries,
``(B) the advice is provided to the plan or a participant
or beneficiary of the plan by a fiduciary adviser in
connection with any sale, acquisition, or holding of a
security or other property for purposes of investment of plan
assets, and
``(C) the requirements of subsection (f)(7)(B) are met in
connection with the provision of the advice.''.
(2) Allowed transactions and requirements.--Subsection (f)
of such section 4975 (relating to other definitions and
special rules) is amended by adding at the end the following
new paragraph:
``(7) Provisions relating to investment advice provided by
fiduciary advisers.--
``(A) Transactions allowable in connection with investment
advice provided by fiduciary advisers.--The transactions
referred to in subsection (d)(16), in connection with the
provision of investment advice by a fiduciary adviser, are
the following:
``(i) the provision of the advice to the plan, participant,
or beneficiary;
``(ii) the sale, acquisition, or holding of a security or
other property (including any lending of money or other
extension of credit associated with the sale, acquisition, or
holding of a security or other property) pursuant to the
advice; and
``(iii) the direct or indirect receipt of fees or other
compensation by the fiduciary adviser or an affiliate thereof
(or any employee, agent, or registered representative of the
fiduciary adviser or affiliate) in connection with the
provision of the advice or in connection with a sale,
acquisition, or holding of a security or other property
pursuant to the advice.
``(B) Requirements relating to provision of investment
advice by fiduciary advisers.--The requirements of this
subparagraph (referred to in subsection (d)(16)(C)) are met
in connection with the provision of investment advice
referred to in subsection (e)(3)(B), provided to a plan or a
participant or beneficiary of a plan by a fiduciary adviser
with respect to the plan in connection with any sale,
acquisition, or holding of a security or other property for
purposes of investment of amounts held by the plan, if--
``(i) in the case of the initial provision of the advice
with regard to the security or other property by the
fiduciary adviser to the plan, participant, or beneficiary,
the fiduciary adviser provides to the recipient of the
advice, at a time reasonably contemporaneous with the initial
provision of the advice, a written notification (which may
consist of notification by means of electronic
communication)--

``(I) of all fees or other compensation relating to the
advice that the fiduciary adviser or any affiliate thereof is
to receive (including compensation provided by any third
party) in connection with the provision of the advice or in
connection with the sale, acquisition, or holding of the
security or other property,
``(II) of any material affiliation or contractual
relationship of the fiduciary adviser or affiliates thereof
in the security or other property,
``(III) of any limitation placed on the scope of the
investment advice to be provided by the fiduciary adviser
with respect to any such sale, acquisition, or holding of a
security or other property,
``(IV) of the types of services provided by the fiduciary
adviser in connection with the provision of investment advice
by the fiduciary adviser,
``(V) that the adviser is acting as a fiduciary of the plan
in connection with the provision of the advice, and
``(VI) that a recipient of the advice may separately
arrange for the provision of advice by another adviser, that
could have no material affiliation with and receive no fees
or other compensation in connection with the security or
other property,

``(ii) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition, or
holding of the security or other property, in accordance with
all applicable securities laws,
``(iii) the sale, acquisition, or holding occurs solely at
the direction of the recipient of the advice,
``(iv) the compensation received by the fiduciary adviser
and affiliates thereof in connection with the sale,
acquisition, or holding of the security or other property is
reasonable, and
``(v) the terms of the sale, acquisition, or holding of the
security or other property are at least as favorable to the
plan as an arm's length transaction would be.
``(C) Standards for presentation of information.--The
notification required to be provided to participants and
beneficiaries under subparagraph (B)(i) shall be written in a
clear and conspicuous manner and in a manner calculated to be
understood by the average plan participant and shall be
sufficiently accurate and comprehensive to reasonably apprise
such participants and beneficiaries of the information
required to be provided in the notification.
``(D) Exemption conditioned on making required information
available annually, on request, and in the event of material
change.--The requirements of subparagraph (B)(i) shall be
deemed not to have been met in connection with the initial or
any subsequent provision of advice described in subparagraph
(B) to the plan, participant, or beneficiary if, at any time
during the provision of advisory services to the plan,
participant, or beneficiary, the fiduciary adviser fails to
maintain the information described in subclauses (I) through
(IV) of subparagraph (B)(i) in currently accurate form and in
the manner required by subparagraph (C), or fails--
``(i) to provide, without charge, such currently accurate
information to the recipient of the advice no less than
annually,
``(ii) to make such currently accurate information
available, upon request and without charge, to the recipient
of the advice, or
``(iii) in the event of a material change to the
information described in subclauses (I) through (IV) of
subparagraph (B)(i), to provide, without charge, such
currently accurate information to the recipient of the advice
at a time reasonably contemporaneous to the material change
in information.
``(E) Maintenance for 6 years of evidence of compliance.--A
fiduciary adviser referred to in subparagraph (B) who has
provided advice referred to in such subparagraph shall, for a
period of not less than 6 years after the provision of the
advice, maintain any records necessary for determining
whether the requirements of the preceding provisions of this
paragraph and of subsection (d)(16) have been met. A
transaction prohibited under subsection (c)(1) shall not be
considered to have occurred solely because the records are
lost or destroyed prior to the end of the 6-year period due
to circumstances beyond the control of the fiduciary adviser.
``(F) Exemption for plan sponsor and certain other
fiduciaries.--A plan sponsor or other person who is a
fiduciary (other than a fiduciary adviser) shall not be
treated as failing to meet the requirements of this section
solely by reason of the provision of investment advice
referred to in subsection (e)(3)(B) (or solely by reason of
contracting for or otherwise arranging for the provision of
the advice), if--
``(i) the advice is provided by a fiduciary adviser
pursuant to an arrangement between the plan sponsor or other
fiduciary and the fiduciary adviser for the provision by the
fiduciary adviser of investment advice referred to in such
section,
``(ii) the terms of the arrangement require compliance by
the fiduciary adviser with the requirements of this
paragraph,
``(iii) the terms of the arrangement include a written
acknowledgment by the fiduciary adviser that the fiduciary
adviser is a fiduciary of the plan with respect to the
provision of the advice, and
``(iv) the requirements of part 4 of subtitle B of title I
of the Employee Retirement Income Security Act of 1974 are
met in connection with the provision of such advice.
``(G) Definitions.--For purposes of this paragraph and
subsection (d)(16)--
``(i) Fiduciary adviser.--The term `fiduciary adviser'
means, with respect to a plan, a person who is a fiduciary of
the plan by reason of the provision of investment advice by
the person to the plan or to a participant or beneficiary and
who is--

[[Page H1228]]

``(I) registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or
under the laws of the State in which the fiduciary maintains
its principal office and place of business,
``(II) a bank or similar financial institution referred to
in subsection (d)(4), but only if the advice is provided
through a trust department of the bank or similar financial
institution which is subject to periodic examination and
review by Federal or State banking authorities,
``(III) an insurance company qualified to do business under
the laws of a State,
``(IV) a person registered as a broker or dealer under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
``(V) an affiliate of a person described in any of
subclauses (I) through (IV), or
``(VI) an employee, agent, or registered representative of
a person described in any of subclauses (I) through (V) who
satisfies the requirements of applicable insurance, banking,
and securities laws relating to the provision of the advice.

SEC. 106. STUDY REGARDING IMPACT ON RETIREMENT SAVINGS OF
PARTICIPANTS AND BENEFICIARIES BY REQUIRING
CONSULTANTS TO ADVISE PLAN FIDUCIARIES OF
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 costs and benefits to participants and
beneficiaries of requiring independent consultants to advise
plan fiduciaries in connection with individual account plans.
In conducting such study, the Secretary shall consider--
(1) the benefits to plan participants and beneficiaries of
engaging independent advisers to provide investment and other
advice regarding the assets of the plan to persons who have
fiduciary duties with respect to the management or
disposition of such assets,
(2) the extent to which independent advisers are currently
retained by plan fiduciaries,
(3) the availability of assistance to fiduciaries from
appropriate Federal agencies,
(4) the availability of qualified independent consultants
to serve the needs of individual account plan fiduciaries in
the United States,
(5) the impact of the additional fiduciary duty of an
independent advisor on the strict fiduciary obligations of
plan fiduciaries,
(6) the impact of new requirements (consulting fees,
reporting requirements, and new plan duties to prudently
identify and contract with qualified independent consultants)
on the availability of individual account plans, and
(7) the impact of a new requirement on the plan
administration costs per participant for small and mid-size
employers and the pension plans they sponsor.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Labor shall report
the results of the study undertaken pursuant to this section,
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. 107. TREATMENT OF QUALIFIED RETIREMENT PLANNING
SERVICES.

(a) In General.--Subsection (m) of section 132 of the
Internal Revenue Code of 1986 (defining qualified retirement
services) is amended by adding at the end the following new
paragraph:
``(4) No constructive receipt.--No amount shall be included
in the gross income of any employee solely because the
employee may choose between any qualified retirement planning
services provided by a qualified investment advisor and
compensation which would otherwise be includible in the gross
income of such employee. The preceding sentence shall apply
to highly compensated employees only if the choice described
in such sentence is available on substantially the same terms
to each member of the group of employees normally provided
education and information regarding the employer's qualified
employer plan.''.
(b) Conforming Amendments.--
(1) Section 403(b)(3)(B) of such Code is amended by
inserting ``132(m)(4),'' after ``132(f)(4),''.
(2) Section 414(s)(2) of such Code is amended by inserting
``132(m)(4),'' after ``132(f)(4),''.
(3) Section 415(c)(3)(D)(ii) of such Code is amended by
inserting ``132(m)(4),'' after ``132(f)(4),''.
(c) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2002.

SEC. 108. INSIDER TRADES DURING PENSION FUND BLACKOUT PERIODS
PROHIBITED.

(a) Prohibition.--It shall be unlawful for any person who
is directly or indirectly the beneficial owner of more than
10 percent of any class of any equity security (other than an
exempted security) which is registered under section 12 of
the Securities Exchange Act of 1934 (15 U.S.C. 78l) or who is
a director or an officer of the issuer of such security,
directly or indirectly, to purchase (or otherwise acquire) or
sell (or otherwise transfer) any equity security of any
issuer (other than an exempted security), during any blackout
period with respect to such equity security.
(b) Remedy.--Any profit realized by such beneficial owner,
director, or officer from any purchase (or other acquisition)
or sale (or other transfer) in violation of this section
shall inure to and be recoverable by the issuer irrespective
of any intention on the part of such beneficial owner,
director, or officer in entering into the transaction. Suit
to recover such profit may be instituted at law or in equity
in any court of competent jurisdiction by the issuer, or by
the owner of any security of the issuer in the name and in
behalf of the issuer if the issuer shall fail or refuse to
bring such suit within 60 days after request or shall fail
diligently to prosecute the same thereafter; but no such suit
shall be brought more than 2 years after the date such profit
was realized. This subsection shall not be construed to cover
any transaction where such beneficial owner was not such both
at the time of the purchase and sale, or the sale and
purchase, of the security or security-based swap (as defined
in section 206B of the Gramm-Leach-Bliley Act) involved, or
any transaction or transactions which the Commission by rules
and regulations may exempt as not comprehended within the
purposes of this subsection.
(c) Rulemaking Permitted.--The Commission may issue rules
to clarify the application of this subsection, to ensure
adequate notice to all persons affected by this subsection,
and to prevent evasion thereof.
(d) As used in this section:
(1) Beneficial owner.--The term ``beneficial owner'' has
the meaning provided such term in rules or regulations issued
by the Commission under section 16 of the Securities Exchange
Act of 1934 (15 U.S.C. 78p).
(2) Blackout period.--The term ``blackout period'' with
respect to the equity securities of any issuer--
(A) means any period during which the ability of at least
fifty percent of the participants or beneficiaries under all
applicable individual account plans maintained by the issuer
to purchase (or otherwise acquire) or sell (or otherwise
transfer) an interest in any equity of such issuer is
suspended by the issuer or a fiduciary of the plan; but
(B) does not include--
(i) a period in which the employees of an issuer may not
allocate their interests in the individual account plan due
to an express investment restriction--

(I) incorporated into the individual account plan; and
(II) timely disclosed to employees before joining the
individual account plan or as a subsequent amendment to the
plan;

(ii) any suspension described in subparagraph (A) that is
imposed solely in connection with persons becoming
participants or beneficiaries, or ceasing to be participants
or beneficiaries, in an applicable individual account plan by
reason of a corporate merger, acquisition, divestiture, or
similar transaction.
(3) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(4) Individual account plan.--The term ``individual account
plan'' has the meaning provided such term in section 3(34) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(34)).
(5) Issuer.--The term ``issuer'' shall have the meaning set
forth in section 2(a)(4) of the Securities Act of 1933 (15
U.S.C. 77b(a)(4)).

SEC. 109. EFFECTIVE DATES OF TITLE AND RELATED RULES.

(a) In General.--Except as otherwise provided in this title
or in subsection (b), the amendments made by this title 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.
(c) Plan Amendments.--If the amendments made by sections
101, 102, 103, and 104 of this Act require 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 amendments made by such
sections take effect and before such first plan year, the
plan is operated in accordance with the requirements of such
amendments made by such sections, and

[[Page H1229]]

(2) such plan amendment applies retroactively to the period
after such amendments made by such sections take effect and
before such first plan year.
(d) Amendments Relating to Investment Advice.--The
amendments made by section 104 shall apply with respect to
advice referred to in section 3(21)(A)(ii) of the Employee
Retirement Income Security Act of 1974 or section
4975(c)(3)(B) of the Internal Revenue Code of 1986 provided
on or after January 1, 2003.

TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

SEC. 201. AMENDMENTS TO RETIREMENT PROTECTION ACT OF 1994.

(a) Transition Rule Made Permanent.--Paragraph (1) of
section 769(c) of the Retirement Protection Act of 1994 is
amended--
(1) by striking ``transition'' each place it appears in the
heading and the text, and
(2) by striking ``for any plan year beginning after 1996
and before 2010''.
(b) Special Rules.--Paragraph (2) of section 769(c) of the
Retirement Protection Act of 1994 is amended to read as
follows:
``(2) Special rules.--The rules described in this paragraph
are as follows:
``(A) For purposes of section 412(l)(9)(A) of the Internal
Revenue Code of 1986 and section 302(d)(9)(A) of the Employee
Retirement Income Security Act of 1974, the funded current
liability percentage for any plan year shall be treated as
not less than 90 percent.
``(B) For purposes of section 412(m) of the Internal
Revenue Code of 1986 and section 302(e) of the Employee
Retirement Income Security Act of 1974, the funded current
liability percentage for any plan year shall be treated as
not less than 100 percent.
``(C) For purposes of determining unfunded vested benefits
under section 4006(a)(3)(E)(iii) of the Employee Retirement
Income Security Act of 1974, the mortality table shall be the
mortality table used by the plan.''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2001.

SEC. 202. REPORTING SIMPLIFICATION.

(a) Simplified Annual Filing Requirement for Owners and
Their Spouses.--
(1) In general.--The Secretary of the Treasury and the
Secretary of Labor shall modify the requirements for filing
annual returns with respect to one-participant retirement
plans to ensure that such plans with assets of $250,000 or
less as of the close of the plan year need not file a return
for that year.
(2) One-participant retirement plan defined.--For purposes
of this subsection, the term ``one-participant retirement
plan'' means a retirement plan that--
(A) on the first day of the plan year--
(i) covered only the employer (and the employer's spouse)
and the employer owned the entire business (whether or not
incorporated); or
(ii) covered only one or more partners (and their spouses)
in a business partnership (including partners in an S or C
corporation);
(B) meets the minimum coverage requirements of section
410(b) of the Internal Revenue Code of 1986 without being
combined with any other plan of the business that covers the
employees of the business;
(C) does not provide benefits to anyone except the employer
(and the employer's spouse) or the partners (and their
spouses);
(D) does not cover a business that is a member of an
affiliated service group, a controlled group of corporations,
or a group of businesses under common control; and
(E) does not cover a business that leases employees.
(3) Other definitions.--Terms used in paragraph (2) which
are also used in section 414 of the Internal Revenue Code of
1986 shall have the respective meanings given such terms by
such section.
(4) Effective date.--The provisions of this subsection
shall apply to plan years beginning on or after January 1,
2002.
(b) Simplified Annual Filing Requirement for Plans With
Fewer Than 25 Employees.--In the case of plan years beginning
after December 31, 2003, the Secretary of the Treasury and
the Secretary of Labor shall provide for the filing of a
simplified annual return for any retirement plan which covers
less than 25 employees on the first day of a plan year and
which meets the requirements described in subparagraphs (B),
(D), and (E) of subsection (a)(2).

SEC. 203. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION
SYSTEM.

The Secretary of the Treasury shall continue to update and
improve the Employee Plans Compliance Resolution System (or
any successor program) giving special attention to--
(1) increasing the awareness and knowledge of small
employers concerning the availability and use of the program;
(2) taking into account special concerns and circumstances
that small employers face with respect to compliance and
correction of compliance failures;
(3) extending the duration of the self-correction period
under the Self-Correction Program for significant compliance
failures;
(4) expanding the availability to correct insignificant
compliance failures under the Self-Correction Program during
audit; and
(5) assuring that any tax, penalty, or sanction that is
imposed by reason of a compliance failure is not excessive
and bears a reasonable relationship to the nature, extent,
and severity of the failure.
The Secretary of the Treasury shall have full authority to
effectuate the foregoing with respect to the Employee Plans
Compliance Resolution System (or any successor program) and
any other employee plans correction policies, including the
authority to waive income, excise, or other taxes to ensure
that any tax, penalty, or sanction is not excessive and bears
a reasonable relationship to the nature, extent, and severity
of the failure.

SEC. 204. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND
LINE OF BUSINESS RULES.

(a) Nondiscrimination.--
(1) In general.--The Secretary of the Treasury shall, by
regulation, provide that a plan shall be deemed to satisfy
the requirements of section 401(a)(4) of the Internal Revenue
Code of 1986 if such plan satisfies the facts and
circumstances test under section 401(a)(4) of such Code, as
in effect before January 1, 1994, but only if--
(A) the plan satisfies conditions prescribed by the
Secretary to appropriately limit the availability of such
test; and
(B) the plan is submitted to the Secretary for a
determination of whether it satisfies such test.
Subparagraph (B) shall only apply to the extent provided by
the Secretary.
(2) Effective dates.--
(A) Regulations.--The regulation required by paragraph (1)
shall apply to years beginning after December 31, 2003.
(B) Conditions of availability.--Any condition of
availability prescribed by the Secretary under paragraph
(1)(A) shall not apply before the first year beginning not
less than 120 days after the date on which such condition is
prescribed.
(b) Coverage Test.--
(1) In general.--Section 410(b)(1) of the Internal Revenue
Code of 1986 (relating to minimum coverage requirements) is
amended by adding at the end the following:
``(D) In the case that the plan fails to meet the
requirements of subparagraphs (A), (B) and (C), the plan--
``(i) satisfies subparagraph (B), as in effect immediately
before the enactment of the Tax Reform Act of 1986,
``(ii) is submitted to the Secretary for a determination of
whether it satisfies the requirement described in clause (i),
and
``(iii) satisfies conditions prescribed by the Secretary by
regulation that appropriately limit the availability of this
subparagraph.
Clause (ii) shall apply only to the extent provided by the
Secretary.''.
(2) Effective dates.--
(A) In general.--The amendment made by paragraph (1) shall
apply to years beginning after December 31, 2003.
(B) Conditions of availability.--Any condition of
availability prescribed by the Secretary under regulations
prescribed by the Secretary under section 410(b)(1)(D) of the
Internal Revenue Code of 1986 shall not apply before the
first year beginning not less than 120 days after the date on
which such condition is prescribed.
(c) Line of Business Rules.--The Secretary of the Treasury
shall, on or before December 31, 2003, modify the existing
regulations issued under section 414(r) of the Internal
Revenue Code of 1986 in order to expand (to the extent that
the Secretary determines appropriate) the ability of a
pension plan to demonstrate compliance with the line of
business requirements based upon the facts and circumstances
surrounding the design and operation of the plan, even though
the plan is unable to satisfy the mechanical tests currently
used to determine compliance.

SEC. 205. EXTENSION TO ALL GOVERNMENTAL PLANS OF MORATORIUM
ON APPLICATION OF CERTAIN NONDISCRIMINATION
RULES APPLICABLE TO STATE AND LOCAL PLANS.

(a) In General.--
(1) Subparagraph (G) of section 401(a)(5) of the Internal
Revenue Code of 1986 and subparagraph (H) of section
401(a)(26) of such Code are each amended by striking
``section 414(d))'' and all that follows and inserting
``section 414(d)).''.
(2) Subparagraph (G) of section 401(k)(3) of the Internal
Revenue Code of 1986 and paragraph (2) of section 1505(d) of
the Taxpayer Relief Act of 1997 are each amended by striking
``maintained by a State or local government or political
subdivision thereof (or agency or instrumentality thereof)''.
(b) Conforming Amendments.--
(1) The heading for subparagraph (G) of section 401(a)(5)
of such Code is amended to read as follows: ``Governmental
plans.--''.
(2) The heading for subparagraph (H) of section 401(a)(26)
of such Code is amended to read as follows: ``Exception for
governmental plans.--''.
(3) Subparagraph (G) of section 401(k)(3) of such Code is
amended by inserting ``Governmental plans.--'' after ``(G)''.
(c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2002.

SEC. 206. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

(a) Expansion of Period.--
(1) Amendment of internal revenue code.--
(A) In general.--Subparagraph (A) of section 417(a)(6) of
the Internal Revenue Code of 1986 is amended by striking
``90-day'' and inserting ``180-day''.
(B) Modification of regulations.--The Secretary of the
Treasury shall modify the regulations under sections 402(f),
411(a)(11), and 417 of the Internal Revenue Code of 1986 to
substitute ``180 days'' for ``90 days'' each

[[Page H1230]]

place it appears in Treasury Regulations sections 1.402(f)-1,
1.411(a)-11(c), and 1.417(e)-1(b).
(2) Amendment of erisa.--
(A) In general.--Section 205(c)(7)(A) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1055(c)(7)(A)) is amended by striking ``90-day'' and
inserting ``180-day''.
(B) Modification of regulations.--The Secretary of the
Treasury shall modify the regulations under part 2 of
subtitle B of title I of the Employee Retirement Income
Security Act of 1974 to the extent that they relate to
sections 203(e) and 205 of such Act to substitute ``180
days'' for ``90 days'' each place it appears.
(3) Effective date.--The amendments made by paragraphs
(1)(A) and (2)(A) and the modifications required by
paragraphs (1)(B) and (2)(B) shall apply to years beginning
after December 31, 2002.
(b) Consent Regulation Inapplicable to Certain
Distributions.--
(1) In general.--The Secretary of the Treasury shall modify
the regulations under section 411(a)(11) of the Internal
Revenue Code of 1986 and under section 205 of the Employee
Retirement Income Security Act of 1974 to provide that the
description of a participant's right, if any, to defer
receipt of a distribution shall also describe the
consequences of failing to defer such receipt.
(2) Effective date.--
(A) In general.--The modifications required by paragraph
(1) shall apply to years beginning after December 31, 2002.
(B) Reasonable notice.--In the case of any description of
such consequences made before the date that is 90 days after
the date on which the Secretary of the Treasury issues a safe
harbor description under paragraph (1), a plan shall not be
treated as failing to satisfy the requirements of section
411(a)(11) of such Code or section 205 of such Act by reason
of the failure to provide the information required by the
modifications made under paragraph (1) if the Administrator
of such plan makes a reasonable attempt to comply with such
requirements.

SEC. 207. ANNUAL REPORT DISSEMINATION.

(a) Report Available Through Electronic Means.--Section
104(b)(3) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1024(b)(3)) is amended by adding at the end
the following new sentence: ``The requirement to furnish
information under the previous sentence with respect to an
employee pension benefit plan shall be satisfied if the
administrator makes such information reasonably available
through electronic means or other new technology.''.
(b) Effective Date.--The amendment made by this section
shall apply to reports for years beginning after December 31,
2002.

SEC. 208. TECHNICAL CORRECTIONS TO SAVER ACT.

Section 517 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1147) is amended--
(1) in subsection (a), by striking ``2001 and 2005 on or
after September 1 of each year involved'' and inserting
``2002, 2006, and 2010'';
(2) in subsection (b), by adding at the end the following
new sentence: ``To effectuate the purposes of this paragraph,
the Secretary may enter into a cooperative agreement,
pursuant to the Federal Grant and Cooperative Agreement Act
of 1977 (31 U.S.C. 6301 et seq.), with any appropriate,
qualified entity.'';
(3) in subsection (e)(2)--
(A) by striking ``Committee on Labor and Human Resources''
in subparagraph (D) and inserting ``Committee on Health,
Education, Labor, and Pensions'';
(B) by striking subparagraph (F) and inserting the
following:
``(F) the Chairman and Ranking Member of the Subcommittee
on Labor, Health and Human Services, and Education of the
Committee on Appropriations of the House of Representatives
and the Chairman and Ranking Member of the Subcommittee on
Labor, Health and Human Services, and Education of the
Committee on Appropriations of the Senate;'';
(C) by redesignating subparagraph (G) as subparagraph (J);
and
(D) by inserting after subparagraph (F) the following new
subparagraphs:
``(G) the Chairman and Ranking Member of the Committee on
Finance of the Senate;
``(H) the Chairman and Ranking Member of the Committee on
Ways and Means of the House of Representatives;
``(I) the Chairman and Ranking Member of the Subcommittee
on Employer-Employee Relations of the Committee on Education
and the Workforce of the House of Representatives; and'';
(4) in subsection (e)(3)--
(A) by striking ``There shall be not more than 200
additional participants.'' in subparagraph (A) and inserting
``The participants in the National Summit shall also include
additional participants appointed under this subparagraph.'';
(B) by striking ``one-half shall be appointed by the
President,'' in subparagraph (A)(i) and inserting ``not more
than 100 participants shall be appointed under this clause by
the President,'';
(C) by striking ``one-half shall be appointed by the
elected leaders of Congress'' in subparagraph (A)(ii) and
inserting ``not more than 100 participants shall be appointed
under this clause by the elected leaders of Congress'';
(D) by redesignating subparagraph (B) as subparagraph (C);
and
(E) by inserting after subparagraph (A) the following new
subparagraph:
``(B) Presidential authority for additional appointments.--
The President, in consultation with the elected leaders of
Congress referred to in subsection (a), may appoint under
this subparagraph additional participants to the National
Summit. The number of such additional participants appointed
under this subparagraph may not exceed the lesser of 3
percent of the total number of all additional participants
appointed under this paragraph, or 10. Such additional
participants shall be appointed from persons nominated by an
organization referred to in subsection (b) which is made up
of private sector businesses and associations partnered with
Government entities to promote long term financial security
in retirement through savings and with which the Secretary is
required thereunder to consult and cooperate and shall not be
Federal, State, or local government employees.'';
(5) in subsection (e)(3)(C) (as redesignated), by striking
``January 31, 1998'' and inserting ``3 months before the
convening of each summit;''
(6) in subsection (f)(1)(C), by inserting ``, no later than
90 days prior to the date of the commencement of the National
Summit,'' after ``comment'';
(7) in subsection (g), by inserting ``, in consultation
with the congressional leaders specified in subsection
(e)(2),'' after ``report'' the first place it appears;
(8) in subsection (i)--
(A) by striking ``for fiscal years beginning on or after
October 1, 1997,''; and
(B) by adding at the end the following new paragraph:
``(3) Reception and representation authority.--The
Secretary is hereby granted reception and representation
authority limited specifically to the events at the National
Summit. The Secretary shall use any private contributions
accepted in connection with the National Summit prior to
using funds appropriated for purposes of the National Summit
pursuant to this paragraph.''; and
(9) in subsection (k)--
(A) by striking ``shall enter into a contract on a sole-
source basis'' and inserting ``may enter into a contract on a
sole-source basis''; and
(B) by striking ``in fiscal year 1998''.

SEC. 209. MISSING PARTICIPANTS.

(a) In General.--Section 4050 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1350) is amended by
redesignating subsection (c) as subsection (e) and by
inserting after subsection (b) the following new subsections:
``(c) Multiemployer Plans.--The corporation shall prescribe
rules similar to the rules in subsection (a) for
multiemployer plans covered by this title that terminate
under section 4041A.
``(d) Plans Not Otherwise Subject to Title.--
``(1) Transfer to corporation.--The plan administrator of a
plan described in paragraph (4) may elect to transfer a
missing participant's benefits to the corporation upon
termination of the plan.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (4) shall, upon termination of the
plan, provide the corporation information with respect to
benefits of a missing participant if the plan transfers such
benefits--
``(A) to the corporation, or
``(B) to an entity other than the corporation or a plan
described in paragraph (4)(B)(ii).
``(3) Payment by the corporation.--If benefits of a missing
participant were transferred to the corporation under
paragraph (1), the corporation shall, upon location of the
participant or beneficiary, pay to the participant or
beneficiary the amount transferred (or the appropriate
survivor benefit) either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in regulations of
the corporation.
``(4) Plans described.--A plan is described in this
paragraph if--
``(A) the plan is a pension plan (within the meaning of
section 3(2))--
``(i) to which the provisions of this section do not apply
(without regard to this subsection), and
``(ii) which is not a plan described in paragraphs (2)
through (11) of section 4021(b), and
``(B) at the time the assets are to be distributed upon
termination, the plan--
``(i) has missing participants, and
``(ii) has not provided for the transfer of assets to pay
the benefits of all missing participants to another pension
plan (within the meaning of section 3(2)).
``(5) Certain provisions not to apply.--Subsections (a)(1)
and (a)(3) shall not apply to a plan described in paragraph
(4).''.
(b) Conforming Amendments.--Section 206(f) of such Act (29
U.S.C. 1056(f)) is amended--
(1) by striking ``title IV'' and inserting ``section
4050''; and
(2) by striking ``the plan shall provide that,''.
(c) Effective Date.--The amendment made by this section
shall apply to distributions made after final regulations
implementing subsections (c) and (d) of section 4050 of the
Employee Retirement Income Security Act of 1974 (as added by
subsection (a)), respectively, are prescribed.

[[Page H1231]]

SEC. 210. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL
EMPLOYERS.

(a) In General.--Subparagraph (A) of section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1306(a)(3)(A)) is amended--
(1) in clause (i), by inserting ``other than a new single-
employer plan (as defined in subparagraph (F)) maintained by
a small employer (as so defined),'' after ``single-employer
plan,'',
(2) in clause (iii), by striking the period at the end and
inserting ``, and'', and
(3) by adding at the end the following new clause:
``(iv) in the case of a new single-employer plan (as
defined in subparagraph (F)) maintained by a small employer
(as so defined) for the plan year, $5 for each individual who
is a participant in such plan during the plan year.''.
(b) Definition of New Single-Employer Plan.--Section
4006(a)(3) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end
the following new subparagraph:
``(F)(i) For purposes of this paragraph, a single-employer
plan maintained by a contributing sponsor shall be treated as
a new single-employer plan for each of its first 5 plan years
if, during the 36-month period ending on the date of the
adoption of such plan, the sponsor or any member of such
sponsor's controlled group (or any predecessor of either) did
not establish or maintain a plan to which this title applies
with respect to which benefits were accrued for substantially
the same employees as are in the new single-employer plan.
``(ii)(I) For purposes of this paragraph, the term `small
employer' means an employer which on the first day of any
plan year has, in aggregation with all members of the
controlled group of such employer, 100 or fewer employees.
``(II) In the case of a plan maintained by two or more
contributing sponsors that are not part of the same
controlled group, the employees of all contributing sponsors
and controlled groups of such sponsors shall be aggregated
for purposes of determining whether any contributing sponsor
is a small employer.''.
(c) Effective Date.--The amendments made by this section
shall apply to plans first effective after December 31, 2002.

SEC. 211. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND
SMALL PLANS.

(a) New Plans.--Subparagraph (E) of section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1306(a)(3)(E)) is amended by adding at the end the
following new clause:
``(v) In the case of a new defined benefit plan, the amount
determined under clause (ii) for any plan year shall be an
amount equal to the product of the amount determined under
clause (ii) and the applicable percentage. For purposes of
this clause, the term `applicable percentage' means--
``(I) 0 percent, for the first plan year.
``(II) 20 percent, for the second plan year.
``(III) 40 percent, for the third plan year.
``(IV) 60 percent, for the fourth plan year.
``(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as
defined in section 3(35)) maintained by a contributing
sponsor shall be treated as a new defined benefit plan for
each of its first 5 plan years if, during the 36-month period
ending on the date of the adoption of the plan, the sponsor
and each member of any controlled group including the sponsor
(or any predecessor of either) did not establish or maintain
a plan to which this title applies with respect to which
benefits were accrued for substantially the same employees as
are in the new plan.''.
(b) Small Plans.--Paragraph (3) of section 4006(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)), as amended by section 210(b), is amended--
(1) by striking ``The'' in subparagraph (E)(i) and
inserting ``Except as provided in subparagraph (G), the'',
and
(2) by inserting after subparagraph (F) the following new
subparagraph:
``(G)(i) In the case of an employer who has 25 or fewer
employees on the first day of the plan year, the additional
premium determined under subparagraph (E) for each
participant shall not exceed $5 multiplied by the number of
participants in the plan as of the close of the preceding
plan year.
``(ii) For purposes of clause (i), whether an employer has
25 or fewer employees on the first day of the plan year is
determined by taking into consideration all of the employees
of all members of the contributing sponsor's controlled
group. In the case of a plan maintained by two or more
contributing sponsors, the employees of all contributing
sponsors and their controlled groups shall be aggregated for
purposes of determining whether the 25-or-fewer-employees
limitation has been satisfied.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to plans first effective after December 31, 2002.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to plan years beginning after December 31, 2002.

SEC. 212. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM
OVERPAYMENT REFUNDS.

(a) In General.--Section 4007(b) of the Employment
Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is
amended--
(1) by striking ``(b)'' and inserting ``(b)(1)'', and
(2) by inserting at the end the following new paragraph:
``(2) The corporation is authorized to pay, subject to
regulations prescribed by the corporation, interest on the
amount of any overpayment of premium refunded to a designated
payor. Interest under this paragraph shall be calculated at
the same rate and in the same manner as interest is
calculated for underpayments under paragraph (1).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to interest accruing for periods beginning not
earlier than the date of the enactment of this Act.

SEC. 213. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

(a) Modification of Phase-In of Guarantee.--Section
4022(b)(5) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
``(5)(A) For purposes of this paragraph, the term `majority
owner' means an individual who, at any time during the 60-
month period ending on the date the determination is being
made--
``(i) owns the entire interest in an unincorporated trade
or business,
``(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, 50 percent or more of either the
capital interest or the profits interest in such partnership,
or
``(iii) in the case of a corporation, owns, directly or
indirectly, 50 percent or more in value of either the voting
stock of that corporation or all the stock of that
corporation.
For purposes of clause (iii), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of 1986
shall apply (determined without regard to section
1563(e)(3)(C)).
``(B) In the case of a participant who is a majority owner,
the amount of benefits guaranteed under this section shall
equal the product of--
``(i) a fraction (not to exceed 1) the numerator of which
is the number of years from the later of the effective date
or the adoption date of the plan to the termination date, and
the denominator of which is 10, and
``(ii) the amount of benefits that would be guaranteed
under this section if the participant were not a majority
owner.''.
(b) Modification of Allocation of Assets.--
(1) Section 4044(a)(4)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by
striking ``section 4022(b)(5)'' and inserting ``section
4022(b)(5)(B)''.
(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is
amended--
(A) by striking ``(5)'' in paragraph (2) and inserting
``(4), (5),'', and
(B) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively, and by inserting
after paragraph (2) the following new paragraph:
``(3) If assets available for allocation under paragraph
(4) of subsection (a) are insufficient to satisfy in full the
benefits of all individuals who are described in that
paragraph, the assets shall be allocated first to benefits
described in subparagraph (A) of that paragraph. Any
remaining assets shall then be allocated to benefits
described in subparagraph (B) of that paragraph. If assets
allocated to such subparagraph (B) are insufficient to
satisfy in full the benefits described in that subparagraph,
the assets shall be allocated pro rata among individuals on
the basis of the present value (as of the termination date)
of their respective benefits described in that
subparagraph.''.
(c) Conforming Amendments.--
(1) Section 4021 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1321) is amended--
(A) in subsection (b)(9), by striking ``as defined in
section 4022(b)(6)'', and
(B) by adding at the end the following new subsection:
``(d) For purposes of subsection (b)(9), the term
`substantial owner' means an individual who, at any time
during the 60-month period ending on the date the
determination is being made--
``(1) owns the entire interest in an unincorporated trade
or business,
``(2) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either the
capital interest or the profits interest in such partnership,
or
``(3) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in value of either the
voting stock of that corporation or all the stock of that
corporation.
For purposes of paragraph (3), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of 1986
shall apply (determined without regard to section
1563(e)(3)(C)).''.
(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7))
is amended by striking ``section 4022(b)(6)'' and inserting
``section 4021(d)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan
terminations--
(A) under section 4041(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1341(c)) with respect to
which notices of intent to terminate are provided under
section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after
December 31, 2002, and
(B) under section 4042 of such Act (29 U.S.C. 1342) with
respect to which proceedings are instituted by the
corporation after such date.
(2) Conforming amendments.--The amendments made by
subsection (c) shall take effect on January 1, 2003.

[[Page H1232]]

SEC. 214. BENEFIT SUSPENSION NOTICE.

(a) Modification of Regulation.--The Secretary of Labor
shall modify the regulation under subparagraph (B) of section
203(a)(3) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1053(a)(3)(B)) to provide that the
notification required by such regulation in connection with
any suspension of benefits described in such subparagraph--
(1) in the case of an employee who returns to service
described in section 203(a)(3)(B)(i) or (ii) of such Act
after commencement of payment of benefits under the plan,
shall be made during the first calendar month or the first 4
or 5-week payroll period ending in a calendar month in which
the plan withholds payments, and
(2) in the case of any employee who is not described in
paragraph (1)--
(A) may be included in the summary plan description for the
plan furnished in accordance with section 104(b) of such Act
(29 U.S.C. 1024(b)), rather than in a separate notice, and
(B) need not include a copy of the relevant plan
provisions.
(b) Effective Date.--The modification made under this
section shall apply to plan years beginning after December
31, 2002.

SEC. 215. STUDIES.

(a) Model Small Employer Group Plans Study.--As soon as
practicable after the date of the enactment of this Act, the
Secretary of Labor, in consultation with the Secretary of the
Treasury, shall conduct a study to determine--
(1) the most appropriate form or forms of--
(A) employee pension benefit plans which would--
(i) be simple in form and easily maintained by multiple
small employers, and
(ii) provide for ready portability of benefits for all
participants and beneficiaries,
(B) alternative arrangements providing comparable benefits
which may be established by employee or employer
associations, and
(C) alternative arrangements providing comparable benefits
to which employees may contribute in a manner independent of
employer sponsorship, and
(2) appropriate methods and strategies for making pension
plan coverage described in paragraph (1) more widely
available to American workers.
(b) Matters To Be Considered.--In conducting the study
under subsection (a), the Secretary of Labor shall consider
the adequacy and availability of existing employee pension
benefit plans and the extent to which existing models may be
modified to be more accessible to both employees and
employers.
(c) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretary of Labor shall report
the results of the study under subsection (a), together with
the Secretary's recommendations, to the Committee on
Education and the Workforce and the Committee on Ways and
Means of the House of Representatives and the Committee on
Health, Education, Labor, and Pensions and the Committee on
Finance of the Senate. Such recommendations shall include one
or more model plans described in subsection (a)(1)(A) and
model alternative arrangements described in subsections
(a)(1)(B) and (a)(1)(C) which may serve as the basis for
appropriate administrative or legislative action.
(d) Study on Effect of Legislation.--Not later than 5 years
after the date of the enactment of this Act, the Secretary of
Labor shall submit 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 a
report on the effect of the provisions of this Act and title
VI of the Economic Growth and Tax Relief Reconciliation Act
of 2001 on pension plan coverage, including any change in--
(1) the extent of pension plan coverage for low and middle-
income workers,
(2) the levels of pension plan benefits generally,
(3) the quality of pension plan coverage generally,
(4) workers' access to and participation in pension plans,
and
(5) retirement security.

SEC. 216. INTEREST RATE RANGE FOR ADDITIONAL FUNDING
REQUIREMENTS.

(a) In General.--Subclause (III) of section 412(l)(7)(C)(i)
of the Internal Revenue Code of 1986 is amended--
(1) by striking ``2002 or 2003'' in the text and inserting
``2001, 2002, or 2003'', and
(2) by striking ``2002 and 2003'' in the heading and
inserting ``2001, 2002, and 2003''.
(b) Special Rule.--Subclause (III) of section
302(d)(7)(C)(i) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1082(d)(7)(C)(i)) is amended--
(1) by striking ``2002 or 2003'' in the text and inserting
``2001, 2002, or 2003'', and
(2) by striking ``2002 and 2003'' in the heading and
inserting ``2001, 2002, and 2003''.
(c) PBGC.--Subclause (IV) of section 4006(a)(3)(E)(iii) of
such Act (29 U.S.C. 1306(a)(3)(E)(iii)) is amended to read as
follows--
``(IV) In the case of plan years beginning after December
31, 2001, and before January 1, 2004, subclause (II) shall be
applied by substituting `100 percent' for `85 percent' and by
substituting `115 percent' for `100 percent'. Subclause (III)
shall be applied for such years without regard to the
preceding sentence. Any reference to this clause or this
subparagraph by any other sections or subsections (other than
sections 4005, 4010, 4011 and 4043) shall be treated as a
reference to this clause or this subparagraph without regard
to this subclause.''.
(d) Effective Date.--The amendments made by this section
shall take effect as if included in the amendments made by
section 405 of the Job Creation and Worker Assistance Act of
2002.

SEC. 217. PROVISIONS RELATING TO PLAN AMENDMENTS.

(a) In General.--If this section applies to any plan or
contract amendment--
(1) such plan or contract shall be treated as being
operated in accordance with the terms of the plan during the
period described in subsection (b)(2)(A), and
(2) except as provided by the Secretary of the Treasury,
such plan shall not fail to meet the requirements of section
411(d)(6) of the Internal Revenue Code of 1986 and section
204(g) of the Employee Retirement Income Security Act of 1974
by reason of such amendment.
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any plan or annuity contract which is made--
(A) pursuant to any amendment made by this title or title
VI of the Economic Growth and Tax Relief Reconciliation Act
of 2001, or pursuant to any regulation issued by the
Secretary of the Treasury or the Secretary of Labor under
this title or such title VI, and
(B) on or before the last day of the first plan year
beginning on or after January 1, 2005.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2007'' for ``2005''.
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative or regulatory
amendment described in paragraph (1)(A) takes effect (or in
the case of a plan or contract amendment not required by such
legislative or regulatory amendment, the effective date
specified by the plan), and
(ii) ending on the date described in paragraph (1)(B) (or,
if earlier, the date the plan or contract amendment is
adopted),
the plan or contract is operated as if such plan or contract
amendment were in effect; and
(B) such plan or contract amendment applies retroactively
for such period.

TITLE III--STOCK OPTIONS

SEC. 301. EXCLUSION OF INCENTIVE STOCK OPTIONS AND EMPLOYEE
STOCK PURCHASE PLAN STOCK OPTIONS FROM WAGES.

(a) Exclusion From Employment Taxes.--
(1) Social security taxes.--
(A) Section 3121(a) of the Internal Revenue Code of 1986
(relating to definition of wages) is amended by striking
``or'' at the end of paragraph (20), by striking the period
at the end of paragraph (21) and inserting ``; or'', and by
inserting after paragraph (21) the following new paragraph:
``(22) remuneration on account of--
``(A) a transfer of a share of stock to any individual
pursuant to an exercise of an incentive stock option (as
defined in section 422(b)) or under an employee stock
purchase plan (as defined in section 423(b)), or
``(B) any disposition by the individual of such stock.''.
(B) Section 209(a) of the Social Security Act is amended by
striking ``or'' at the end of paragraph (17), by striking the
period at the end of paragraph (18) and inserting ``; or'',
and by inserting after paragraph (18) the following new
paragraph:
``(19) Remuneration on account of--
``(A) a transfer of a share of stock to any individual
pursuant to an exercise of an incentive stock option (as
defined in section 422(b) of the Internal Revenue Code of
1986) or under an employee stock purchase plan (as defined in
section 423(b) of such Code), or
``(B) any disposition by the individual of such stock.''.
(2) Railroad retirement taxes.--Subsection (e) of section
3231 of such Code is amended by adding at the end the
following new paragraph:
``(11) Qualified stock options.--The term `compensation'
shall not include any remuneration on account of--
``(A) a transfer of a share of stock to any individual
pursuant to an exercise of an incentive stock option (as
defined in section 422(b)) or under an employee stock
purchase plan (as defined in section 423(b)), or
``(B) any disposition by the individual of such stock.''.
(3) Unemployment taxes.--Section 3306(b) of such Code
(relating to definition of wages) is amended by striking
``or'' at the end of paragraph (16), by striking the period
at the end of paragraph (17) and inserting ``; or'', and by
inserting after paragraph (17) the following new paragraph:
``(18) remuneration on account of--
``(A) a transfer of a share of stock to any individual
pursuant to an exercise of an incentive stock option (as
defined in section 422(b)) or under an employee stock
purchase plan (as defined in section 423(b)), or
``(B) any disposition by the individual of such stock.''.
(b) Wage Withholding Not Required on Disqualifying
Dispositions.--Section 421(b) of such Code (relating to
effect of disqualifying dispositions) is amended by adding at

[[Page H1233]]

the end the following new sentence: ``No amount shall be
required to be deducted and withheld under chapter 24 with
respect to any increase in income attributable to a
disposition described in the preceding sentence.''.
(c) Wage Withholding Not Required on Compensation Where
Option Price Is Between 85 Percent and 100 Percent of Value
of Stock.--Section 423(c) of such Code (relating to special
rule where option price is between 85 percent and 100 percent
of value of stock) is amended by adding at the end the
following new sentence: ``No amount shall be required to be
deducted and withheld under chapter 24 with respect to any
amount treated as compensation under this subsection.''.
(d) Effective Date.--The amendments made by this section
shall apply to stock acquired pursuant to options exercised
after the date of the enactment of this Act.

TITLE IV--SOCIAL SECURITY AND MEDICARE HELD HARMLESS

SEC. 401. PROTECTION OF SOCIAL SECURITY AND MEDICARE.

The amounts transferred to any trust fund under the Social
Security Act shall be determined as if this Act had not been
enacted.

The SPEAKER pro tempore. After 2 hours of debate on the bill, as
amended, it shall be in order to consider a further amendment printed
in part B of the report, if offered by the gentleman from California
(Mr. George Miller), or the gentleman from New York (Mr. Rangel), or a
designee, which shall be considered read, and shall be debatable for 1
hour, equally divided and controlled by the proponent and an opponent.
The gentleman from Ohio (Mr. Boehner), the gentleman from California
(Mr. George Miller), the gentleman from California (Mr. Thomas), and
the gentleman from New York (Mr. Rangel) each will control 30 minutes
of debate on the bill.
The Chair recognizes the gentleman from California (Mr. Thomas) for
30 minutes.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
There has been a quiet revolution going on in the United States, and
it was so quiet that a lot of people did not notice. One of the
fundamental tenets of Marxism was that there was a separation between
those who own the means of production and those who labored at that
production; as Marx said in the Communist Manifesto, the capitalists
and the proletariat. And there was a belief, still somewhat attempted
to be carried on by some folks, that there is a significant and
fundamental class difference, an economic difference, which produces a
cultural difference between ``classes,'' the captains of industry, the
big corporate folk and the workers that to a certain extent, this
political argument is perpetuated today.
The quiet revolution that I am talking about is the change that has
occurred over the last half century, speeding up significantly in the
last third of the 20th century, and really culminating in part for why
we are on the floor today; and that is, there is becoming less and less
of a distinction between workers and owners. As a matter of fact, based
upon legislation in the 1970s, more and more companies are being owned
by the workers.
If my colleagues do not think that shows a fundamental flaw in
Marxism and a significant and historic modification of capitalism, talk
to any worker who has a 401(k), who owns shares in the stock market.
And, frankly, that is becoming more and more your everyday American
because, at the same time, the concept that one was supposed to go to
work for a company and be employed for 20 years, 30 years, a lifetime,
and that if they committed themselves to that company, they were
rewarded by a pension or a decent retirement payment, exemplified, for
example, a gold watch for loyalty.
Today, not only are individuals working a number of different jobs in
their lifetime, they wind up oftentimes with several different careers
in their lifetime. And what is most remarkable about being on the floor
today is that all of this occurred without a significant or heavy hand
of government trying to make it happen. It just kind of occurred. There
was an enlightenment that management ought to allow workers to
participate as owners, and workers thought it might be a good idea to
get a piece of the action.
Frankly, since it developed to a very great extent below the radar
screen and it was not going to be focused on until there were some
problems that occurred, and obviously Enron as a focal point could be
described as a problem, we are here today to make modest adjustments to
a system that needs to continue to evolve largely in the private
sector, not controlled or dictated to by government.

{time} 1215

However, in the chairman's opinion, government ought to watch very
carefully what is occurring in this area because I believe there are a
number of successful models that can be examined to help us in our
dilemma of one of the key safety nets, the entitlement of Social
Security, where over the next several years we are going to have to
make several decisions about how we modify the Social Security system.
It is, I think, significant that we are here today to put into place
modest, but appropriate, changes in that structure in which workers
have become owners, part or whole.
Mr. Speaker, I yield to the gentleman from Arizona (Mr. Shadegg) for
the purpose of a colloquy pointing to the fact that there is a
difference between certain types of employee-owned companies, commonly
known because of the law, as ESOPs.
Mr. SHADEGG. Mr. Speaker, will the gentleman yield?
Mr. THOMAS. I yield to the gentleman from Arizona.
Mr. SHADEGG. Mr. Speaker, first I would like to clarify that the
diversification requirements in the legislation do not apply to
privately owned corporations, but only to those corporations whose
securities are tradeable or traded on an established securities market.
Mr. THOMAS. Mr. Speaker, the gentleman is correct. The
diversification rules exempt privately held companies. Only public
companies are subject to the rules.
Mr. SHADEGG. Mr. Speaker, secondly, a company may continue to make
contributions to such an employee stock ownership plan, an ESOP, for
purposes of meeting the safe harbor provisions of the nondiscrimination
test established by section 401(k), and that such contributions would
not be subject to the diversification requirement established by this
legislation.
Mr. THOMAS. Mr. Speaker, the gentleman is correct. Employer
contributions used to satisfy the 401(k) safe harbor test will not be
subject to the diversification rules, as long as the contributions are
made to a so-called pure ESOP, which is defined as an ESOP which holds
no employee contributions, no employer-matching contributions, and no
employer contributions used to meet the nondiscrimination test.
Mr. Speaker, I reserve the balance of my time.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, first, I thank the distinguished chairman for that
eloquent essay against communism. It is refreshing to know that this
bill is trying to minimize the class differences that we have in this
Nation between the captains of industry and employees, that this gap is
being closed.
Most of us thought this was a question about the Enron scandal. Most
of us thought, like the President, that we ought to repair the damages
that have been made to see that it does not happen to employees in the
future. Most of us thought that this was a tax issue since the 401(k)s,
that so many employees, rank and file employees, got hurt by with
Enron, that we on the Committee on Ways and Means would be providing
the leadership for the House in order to repair the code so that these
things would not happen again.
Instead, the debate is led off by the Committee on Education and the
Workforce by the gentleman from Ohio (Mr. Boehner). It is good to know
that things are getting better and the gap is getting closed, but to
say that we do not know what is in this bill is similar to a statement
we heard yesterday, nobody knew what was in the taxpayer bill.
When the day is over, the vote is going to be which side were Members
on. Were Members with the executives that managed to protect their
pensions and not pay taxes on it; or were Members with employees that,
as the President said, as the sailors of this ship, they should have
the same rights as the captains do?
Here we find that the captains of the Enron ship jumped ship and took
the lifeboats with them, took the lifesavers

[[Page H1234]]

with them, and employees sunk and lost their life savings. We want to
know what we do about it today. Of course the Member says modest
adjustments. That is code words for we do nothing about it today.
Some of us on the committee voted for it because we were under the
impression that we could work out our differences and really put some
teeth in this, and to try in some way to bring to the floor a
bipartisan bill so the American people would believe as it relates to
pension, there was some equity, some parity between how we treat
executives and how we treat the rank and file.
We see here that the issue is not communism versus capitalism, it is
campaign contributions versus doing the right thing.
I hope as the question was put to us yesterday, whether or not we
should maintain loopholes for people to make campaign contributions
that we thought we had closed, or whether or not people want to do the
right thing, that we do not have people walking in lockstep to party
leaders, but we have Members doing the right thing because that is what
is expected of us. The closer we get to election, the more honestly we
will be seeing our votes.
Mr. Speaker, I ask Members to listen not to the virtues of capitalism
that we all really treasure, support, adore and want to maintain, and
not in attacking communism because I think we have won that argument,
but which side are Members on: the highly paid executives or protecting
the rank-and-file employees.
Mr. Speaker, I reserve the balance of my time.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I find it ironic that the gentleman closed his statement
right along the same class lines that I said have been blurred
significantly. I was not talking about communism; I was talking about
Marxism.
The gentleman's reference that the captains of industry get to be
treated differently than their employees is one of the reasons we are
here today. If the gentleman would turn to page 75 of the bill, the
gentleman would find section 108, which clearly prohibits the so-called
captains from participating in activities that the employees are
denied. Exactly the point that the gentleman makes is contained in the
legislation.
In addition to that, the reason we are here today with a shared
committee responsibility is because in 1974 Congress passed, and the
President signed, the Employer Retirement Income Security Act, known as
ERISA. The jurisdiction of the Committee on Ways and Means is to the
Tax Code. The jurisdiction of the Committee on Education and the
Workforce is to that portion of the law known as ERISA. As is
oftentimes the case, there are two different sections of the law.
Mr. Speaker, if the gentleman would wish that the Committee on Ways
and Means also controlled the ERISA portion of the code, the Chair
would reach out to the gentleman, and we could try to figure out a way
to put that under our jurisdiction as well. But at least temporarily,
it is under the jurisdiction of the Committee on Education and the
Workforce. They have to be accommodated since that is their
jurisdiction.
It was a pleasure to work with the chairman of that committee, the
gentleman from Ohio (Mr. Boehner), in putting together this package.
Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from New York
(Mr. Houghton), who is someone who understands the relationship between
owners and workers and the change that has occurred over time in that
relationship, the chairman of the Subcommittee on Oversight of the
Committee on Ways and Means.
Mr. HOUGHTON. Mr. Speaker, I would like to support the pension
improvements in this legislation, and I want to talk briefly about
three issues.
First of all, payroll taxes on stock options: for over 30 years,
since 1971, the IRS has taken the position that employee purchases of
company stock and stock options do not give rise to employment tax
obligations. Now the IRS is totally reversing its position, and
employees I am sure will consider this a tax increase.
What this bill does is to preserve that 30-year policy which we have
been operating under for so many years. In addition to higher taxes,
several adverse consequences, I feel, are likely to flow from the
failure to address the problem.
First of all, employee stock purchases will be depressed, reversing
the trend in recent years toward greater ownership. Also, because
employment taxes are higher until an employee reaches the maximum
Social Security wage base of approximately $85,000, the change will
also tend to harm those earning below the maximum wage base more than
those earning above it. For the same reason, it is going to become more
expensive for companies to award stock options to the average worker
because employers will bear half the burden of employment taxes. By
enacting this legislation, we will preserve existing laws on the
incentive stock options.
Secondly, some outside the process have criticized other aspects of
the bill for creating loopholes. I do not believe that. Democrats have
joined Republicans in calling these loopholes reform. I hope they are
reforms. What this does is fix mechanical rules that produce irrational
results.
The simplification provision that is now criticized merely directs
the Department of Treasury and Department of Labor to develop
simplified annual reporting requirements for businesses with fewer than
25 employees. I have a feeling that the Democratic substitute, although
well intentioned, is likely to have the unintended consequence of
sharply restricting the availability of the 401(k) plans. Right now the
401(k) plans are a critical part of the structure of incentives for
individual savings that we have built into our tax codes. These
incentives can only be offered to employees if employers participate.
The Enron fraud has taught us the need for diversification to protect
a workers' plan. This substitute would impose tough conditions on plan
administrators that the best-run companies will have to reevaluate
their decision to offer these tax-favored saving plans. They are all
voluntary. I do not believe this is what was intended by this
particular legislation.
Mr. Speaker, I support the pension improvement plan. I support the
security plan, H.R. 3762.
Mr. RANGEL. Mr. Speaker, I ask unanimous consent to yield the balance
of my time to the gentleman from California (Mr. Stark) for purposes of
control.
The SPEAKER pro tempore (Mr. Latham). Is there objection to the
request of the gentleman from New York?
There was no objection.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from Texas
(Mr. Green).
Mr. GREEN of Texas. Mr. Speaker, I appreciate the opportunity to
speak, as I am not on either the Committee on Ways and Means or the
Committee on Education and the Workforce, but when Enron started to
collapse, many people in Houston saw their life savings evaporate
before their eyes.
My constituents' hands were tied because Enron executives prevented
them from touching the 401(k)s, even though these same executives were
able to unload their stock by other means as it continued to spiral
down. Innocent employees and investors lost all their investments while
the CEO and executives cut their losses with their stock losses and
deferred compensation. Congress should be able to stand up to these
folks who take free enterprise and abuse it, these corporate insiders
who took advantage of their employees' trust.
This legislation, as I look at it, and I know that we have two
different committees working on it, does little to help the average
rank-and-file worker who could do nothing to prevent what was happening
at Enron. This reminds me of a saying from Texas that we can put
earrings and lipstick on a pig and call her Monique, but it is still a
pig. Even with earrings and lipstick, this bill does not do much to
prevent future Enrons.
Mr. Speaker, I do not want to throw out the baby with the bath water,
and I agree that we need to continue the efforts for stock options and
ESOPs; but somehow we have to send the message by legislation that we
will not have what has happened at Enron ever happen again.
The President said he wanted the CEOs treated the same as the
workers.

[[Page H1235]]

The Democratic substitute does that. It makes sure that executives play
on the same field as their workers and investors. If employees are
prohibited from selling their stock, executives should be, too, without
any special dealings or deferred-compensation ways that they can get to
their stock, and that is what the Republican bill that we have today
does not do. The majority bill, even with the earrings and lipstick, is
still no beauty.

{time} 1230

Mr. THOMAS. Mr. Speaker, I ask unanimous consent that the gentleman
from Ohio (Mr. Portman) control the remainder of the time on this side.
The SPEAKER pro tempore (Mr. Latham). Is there objection to the
request of the gentleman from California?
There was no objection.
Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Washington (Ms. Dunn) who has been instrumental in ensuring that we
have broad coverage under our 401(k) plans.
Ms. DUNN. Mr. Speaker, today I rise in support of the Pension
Security Act of 2002. This bill does have strong bipartisan support in
the Committee on Ways and Means and it adheres to the principles
outlined by President Bush. Most importantly, it will provide
protections for employee-investors without impinging on employers' own
abilities to establish, support and have some degree of control over
their own retirement plans. Media hype notwithstanding, we cannot allow
the unfortunate actions of a few, who will be penalized, to ruin a
successful program that has created trillions of dollars in wealth for
millions of Americans.
I want to highlight two important changes that are in this bill to
protect employees. First, we included sensible diversification
requirements for employee investments. We know that one of the
principles of retirement security is personal control over a
diversified portfolio. Our bill prohibits employers from requiring
employees to invest their own money in company stock. Companies would
be required to offer at least three investment options to their
employees. And employees would also be given advice in plain English
about the benefits of diversification of their investments.
Secondly, I want also to mention how we address employee stock
purchase plans, or ESPPs. For decades, ESPPs have been exempt from
payroll taxes because they were not considered wages. However, a recent
IRS ruling overturned this longstanding practice. Our bill reaffirms
that ESPPs are exempt. This is an important clarification that protects
rank-and-file employees from a huge tax increase. Without this
provision, you would have the very ironic situation of a junior
programmer at Microsoft being forced to sell stock just to pay the
payroll tax. Without this provision, small companies, which have used
ESPPs to attract and to reward young workers, would be discouraged from
offering these plans.
Our private retirement system is a great success, Mr. Speaker. It
should make us all proud. Let us continue that tradition by passing
this very important bill.
Mr. STARK. Mr. Speaker, I yield 4 minutes to the gentleman from
Maryland (Mr. Cardin).
Mr. CARDIN. Mr. Speaker, let me thank my friend from California for
yielding me this time.
Mr. Speaker, I am disappointed. I think today we have missed an
opportunity to pass legislation on a bipartisan basis that would have
gone a long way to helping America's workers. If the Committee on Rules
would have allowed the work product of the Committee on Ways and Means
to come forward, the gentlewoman from Washington was correct, we passed
that by a strong bipartisan vote in our committee, and we would be here
today, Democrats and Republicans, urging the passage of that
legislation. That was not to be the case.
Instead, the Committee on Rules brought forward the product of the
Committee on Education and the Workforce and included some provisions
that I believe should not be enacted. Therefore, I find it regrettable
that I cannot support this legislation.
Mr. Speaker, there are some very important provisions in the
legislation before us that we need to make sure gets enacted into law.
There are certain protections for employees to be able to diversify
their investment portfolio, to be able to take company stock and to put
it into a more diversified portfolio for their retirement. Particularly
in these days as we are changing from defined benefit plans to defined
contribution plans, those changes are important.
The legislation was basically worked out in a bipartisan way. I thank
the gentleman from Ohio (Mr. Portman). The two of us have combined
together a lot of pension legislation, including many of the provisions
that were included in the Ways and Means bill but unfortunately have
gotten clouded in the legislation before us. It includes notice, for
example, of blackout periods and that employees should diversify their
investment portfolios. It includes tax incentives so that individuals
can get tax advice. It includes help for small business that was not
included in last year's tax bill because of the rules in the other
body. That is the good stuff that is in the bill. That is what was
worked out in a bipartisan way. That is what I had hoped would have
been before us. That is what I had asked the Committee on Rules to make
in order. But that is not the bill before us.
The bill before us includes other provisions, including a restriction
on diversification that I do not think is workable, that requires
employees to wait 3 years after every new contribution by an employer
of company stock before they can diversify it. How many of us look at
our portfolios every year and set up plans for diversification every
year? I think that is asking employees to do too much. How many of us
can plan how much we are going to have available for retirement if we
do not have complete control over our decisions? The legislation before
us does not give that to us.
More importantly, the legislation before us opens up certain conflict
situations on giving advice by making an exception to the prohibited
transaction rules under ERISA. I supported change in that rule. I went
to the Committee on Education and the Workforce and tried to work with
them on sensible restrictions in opening this up so that the manager of
the investment plan would at least be required to offer options and
choice to the participants. But that amendment was not adopted.
Instead, there is just a blanket exemption to the ERISA statute.
I regret that I will not be able to support a bill that I worked very
hard with with the gentleman from Ohio (Mr. Portman) to bring forward
today. I do hope that as this legislation works its way through the
other body and through conference that we will be able to bring back a
bipartisan process, one in which the Committee on Ways and Means
participated in, and have a bipartisan bill that can enjoy broad
support in this body and that we can send to the President and get
enacted into law. That is not the legislation before us. I hope we will
have that when it returns from the other body.
Mr. PORTMAN. Mr. Speaker, I yield myself 30 seconds.
I would like to thank the gentleman from Maryland (Mr. Cardin) for
the good work he did on this legislation. As he says, the majority of
this legislation is the product of the Committee on Ways and Means and
the Portman-Cardin legislation.
He indicated that there were two areas he had disagreements: The
workability of the 3-year rolling provision, that of course can be done
as an option for the company. Second, he talked about his concern about
the conflict situation of giving investment advice. We are very close
on that one as well. I just want to underline the fact that we are very
close in this legislation. I think, in fact, that this legislation is
bipartisan still. I assume it will be. I look forward to working with
him into the future to addressing those relatively small concerns in a
good bill.
Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Arizona
(Mr. Hayworth).
Mr. HAYWORTH. Mr. Speaker, I thank my colleague from Ohio for
yielding me the time, and I appreciate the comments from my good friend
from Maryland. If you listened closely, while there were some
disagreements as to what is transpiring in the bill that my friend from
Ohio addressed, there seems to be more of a concern

[[Page H1236]]

about process, and we have joint jurisdiction with the Committee on
Education and the Workforce and some of these questions of process can
be worked out in the course of the legislation.
But what we do in this bill is address a definite need. This is an
example where the House of Representatives responds to a challenge that
confronts the American people. It is precisely because of the
diversification rights that I would recommend this legislation. Plans
would be required to offer at least three investment options other than
company stock and to allow employees to change investment options at
least quarterly. Employees must have the option of investing their own
contributions in any investment option offered by the plan. Employers
would be allowed to match in the form of company stock. However,
employees would be allowed to sell this stock and diversify into other
assets according to a couple of different options, a 3-year service
option or a 3-year rolling option.
Another concern addressed by this legislation is that it strikes a
balance. Mr. Speaker, many folks in Arizona have come to me about ESOPs
and what goes on there, and it is important to note that the new
diversification rules would apply only to plans that hold publicly
traded employer securities and to plans that are not pure ESOPs. A pure
ESOP does not hold any employee contributions, employer matching
contributions, or employer contributions used to meet nondiscrimination
tests.
As you take a look at this legislation, it actually enlarges and
improves access to retirement security. It would make it easier for
small businesses to start and maintain pension plans. It will simplify
reporting requirements for pension plans with fewer than 25
participants.
If the question is access to pension security, it only makes sense to
enlarge the possibilities for small business, and we should really
redefine that as essential business since more Americans are employed
by small businesses than all the corporations of the United States, we
are able to set up a mechanism so that they can actually come up with
their own plans, with their own pension programs, and it will provide
for discounted insurance premiums that small businesses pay to the
Pension Benefit Guaranty Corporation.
On balance, this legislation strikes a balance. It is an appropriate
first step. I urge passage of the legislation.
Mr. STARK. Mr. Speaker, I yield myself 4 minutes.
As many speakers who have gone before suggest, this bill points out
so clearly the difference between the Republicans and the Democrats.
Not only is this bill terribly unfair to the average working person and
abundantly generous to rich and high-paid executives and to the
insurance industry who are contributing to the authors of this plan for
the munificent tax loopholes it creates, but in structuring the plan in
the dead of night, there were provisions put back into the bill in the
Committee on Ways and Means which further discriminate against the
average worker in the small business.
This is not about creating plans which, of course, is what the
Republicans would like to do, to create plans for the rich executives.
This is about fairness in coverage. This is how many people are covered
by the plan in a fair way.
We have had for many years antidiscrimination laws which this bill
attempts to eliminate. These have been a subject of contention time and
time again as the Republicans, if you choose to support that
philosophy, would give tax loopholes to the very rich and ignore the
average working person. This has been the interest of the people
selling the plan, selling the investments, selling the insurance or
selling the service, is to line the pockets of the rich who, of course,
will continue their contributions to the Republican campaigns at the
expense of the average working person who will get precious little from
these plans.
Why we should continue to think that we can say this helps anybody to
retire, it helps a very small percentage of very rich people or small
business owners to retire. And who pays for that? The average taxpayer
pays for that. We pay for that tax loophole. And the price that we were
previously extracting was that that small business owner had to give an
equivalent protection to every employee in his or her business. This
bill eviscerates that idea.
There is some claptrappy language in here that will turn it over to
the Secretary of the Treasury, but if the Secretary of the Treasury
does nothing, there will be no requirement for antidiscrimination laws.
And guess who will have won? The Republican Party and their rich
friends and the people who sell these plans, the investment brokers and
the insurance agents who do it. What is worse is that it was brought
into the bill in the dead of night without the knowledge of the
Democrats on the committee. To me, this is underhanded, it is sneaky,
and it is indeed the operating procedure of the Republican Party.
I cannot help but suggest, because our chairman brought up the idea
of Marxism, and I guess he used to teach history or something like that
at some junior college, and he might remember that it was in a European
country in the thirties that the fascist leader of that country
enlisted the corporate executives to support a war effort in the fight
against Marxism and, in the process, enslaved the workers. This seems
to be the pattern that the Republicans in this House are following
today, by sneaking through in the dead of night, not telling us the
truth about what is in the bill, and harming the average working
American to the benefit of the very rich business owners. That is
wrong, that is obscene, that is immoral.
Vote ``no'' on the bill.

{time} 1245

Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, that was pretty good theater, and I guess I have to
compliment the gentleman for his partisanship, but there was no basis
in fact for almost anything he just said.
This was done without the Democrats knowing about it? It is the
Portman-Cardin legislation that has been voted five times on the floor
of this House. You have voted for it, sir. There was a 36-to-2 vote out
of the Committee on Ways and Means. It was in H.R. 10. It was in all
the previous legislation that has come before this floor. It was passed
by this House by over 400 votes. It has been fully vetted.
The way in which the gentleman described it is, frankly, inaccurate.
Let me quote the gentleman: ``There is no requirement for any
nondiscrimination testing.''
Where does that come from? The gentleman from Maryland (Mr. Cardin)
is on the floor here, as is the gentleman from North Dakota (Mr.
Pomeroy) on the other side of the aisle. They have worked well on a
bipartisan basis with us to put forward this legislation over the
years. Frankly I am, again, very disappointed that we cannot have a
debate on the merits.
Let us talk about the facts. I know the gentleman has a disagreement
with some of the facts. I know the gentleman is not for the investment
advice part of this bill. The gentleman from Maryland (Mr. Cardin) made
it clear he is not. I respect that.
But I would urge on both sides of the aisle that we try to stick to
the facts as we are talking about pension reform, not that we should
not on every issue, but this one has been historically bipartisan, and
it is so important to the workers of this country, including the 55
million people who now take advantage of defined contribution plans.
It is the 70 million Americans who have no plan, primarily because
small businesses do not offer them, that need our help. That is what
this relatively modest provision that the gentleman referenced as being
``a Republican idea that was brought up in the dark of the night'' is
all about. It is one that has been supported by Democrats and
Republicans alike, it is one that was fully vetted over a 5-year
period, it is one that has been the subject of hearings and markups; it
is one that will help small businesses to be able to offer plans by
giving them just a little relief from the rules, the regulations, the
costs and burdens under the pension rules, and it does not, does not, I
repeat, eliminate the need for nondiscrimination testing.
Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr.
Weller).

[[Page H1237]]

(Mr. WELLER asked and was given permission to revise and extend his
remarks.)
Mr. WELLER. Mr. Speaker, I rise in support of this legislation,
legislation which has so much bipartisan work invested in this
legislation, the Pension Security Act of 2002. I commend the gentleman
from Ohio (Mr. Portman) and the gentleman from California (Mr. Thomas)
and the gentleman from Ohio (Mr. Boehner), who have led this effort to
bring this legislation to the floor.
We have all learned over the last several months of some terrible
things that occurred in Enron and Global Crossing and how they have
impacted the retirement savings of the workers of those companies, and
certainly we want to find a solution. We are going to hear the rhetoric
of some who are going to choose to seize this as an opportunity for
name calling and partisanship and class warfare.
We are also going to see Members of this House who are going to rise
up and do the right thing, and that is offer a solution, a solution
that does what we want to achieve, and that is to protect workers and
to strengthen retirement savings.
That is what this is all about, pension security. That is why I stand
in strong support of this legislation.
Let us look at what this bill does for America's workers. It empowers
employees. Employee rights and protections are enhanced without further
burdensome regulations. The bill also gives employees more control over
the investment of their accounts once they own or become fully vested
with that money. It also requires employers to notify workers in
advance of a blackout so that employees have the same opportunity to
make changes before the restrictions come into effect.
I would also note that employees are given the opportunity for
investment education, something that many employees have told me they
are looking for, because we give them in this legislation the
opportunity for investor education and access to professional
investment advice, and that is all improved with this bill.
We also help employers, because we want to encourage employers to
provide pension benefits, because we want to encourage, particularly
smaller employers, to provide retirement savings opportunities for
their employees because they are the ones, frankly, that have a harder
time doing it because of the regulatory and administrative costs. And
this House has worked so hard with the leadership of the gentleman from
Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin) to make
it easier for small employers to offer pensions.
This bill also reduces costs and regulatory burdens for employers who
voluntarily sponsor pension plans. I would note that thanks to the
leadership of the gentleman from New York (Mr. Houghton), this
legislation prevents the IRS and the Federal Government from imposing
further taxes on employee stock options. If we do not pass this
legislation, workers who have employee stock options may suffer payroll
taxes. We do not want that to happen.
This legislation deserves bipartisan support. It would make it easier
for small employers to provide retirement savings opportunities for
their workers. We empower employees. It is a bipartisan bill and
deserves bipartisan support. Let us do the right thing. We have a
solution. I urge support.
Mr. STARK. Mr. Speaker, I yield 4\1/4\ minutes to the gentleman from
Texas (Mr. Doggett).
Mr. DOGGETT. Mr. Speaker, I thank the gentleman for yielding me time.
In the aftermath of the Enron-Andersen fiasco, certainly we should be
concerned about activity that was lawless. But I believe we here in
Congress need to be equally concerned about activity that was lawful,
but simply awful, in its impact on American families.
This is a scandal involving the deliberate decisions of policymakers
in this House of Representatives to allow and overlook loopholes,
shortcuts, back doors, exemptions, and exceptions that riddle our laws,
that provide special protection and special opportunities to special
interests that devote such energy to lobbying us here in Washington. It
works to the detriment of blameless employees at Andersen and Enron and
at companies across this country, the blameless participation of
retirees and investors and of taxpayers who work hard to contribute to
make this the great country that it is.
And for those Enron employees who lost all their life savings, for
those taxpayers that are out there completing their tax return and
wondering why it was that Enron did not pay a dime in taxes, for all
those people across America who are saying ``there ought to be a law to
do something about this, those folks do not need to look any further
than the House Committee on Ways and Means that has responsibility for
people paying their taxes and for protecting pensions, to ask why did
they not do something about it. Why do they continue to enable and
facilitate and encourage companies like Enron to not pay a dime on
their taxes, while Americans are working hard to pay for the costs of
the security of this country? Why have they been so indifferent to
ordinary workers that are concerned about their pension security?
This bill is not about the protection of pensions for hard-working
employees; it is about political cover for Members of Congress who have
not done very much about these kinds of problems in the past. It is
based on the premise of how very little can this Congress do and still
go out with a straight face and say they have done something about this
problem.
Let me tell you, if your family's future is dependent upon an
employee pension plan, and you are asking what is this Congress doing
to protect me, to protect my family, what is this Congress doing to
prevent another Enron-type debacle from destroying our retirement
security, the answer is practically nothing.
That is not just my assessment, that was the assessment of the
American Association of Retired Persons when this bill came out of
committee, and I am proud to have voted against it. That was also the
assessment of the New York Times on the front page yesterday--serious
concerns that have not been answered by supporters of this bill.
In fact, a former Treasury official said the bill opens the door to
discrimination between executive and lower-paid workers.
While its proponent did not have time to take care of ordinary folks,
they could certainly provide new favors for highly-paid workers.
If management tells you to buy more company stock while they are
selling theirs, does management have to tell even the pension plan that
it made these sales? No, not under this bill. If management continues
to stuff your retirement plan with company stock, is that illegal? Not
only is it lawful, they give a tax break to the company if they do
that. And they tell us a company can give some advice to people: ``We
will let Jeff Skilling go out and hire a consultant to advise people to
sell their Enron stock.'' If you believe that, I am sure the Brooklyn
Bridge is available for you.
A company under this bill can continue to encourage employee
contributions of company stock and hire an advisor to give advice
limited to other investment issues. It is more conflicted interests
atop the very kind of conflicted interests we have had in the past.
I am so pleased that the gentleman from California (Chairman Thomas)
brought up Marx, because I am a real fan of their movies. I can tell
you that what this bill does in the way of pension protection for
American families is just about as much as if we turned the job over to
Groucho, Harpo and Chico.
Mr. PORTMAN. Mr. Speaker, I yield myself 1\1/2\ minutes.
Mr. Speaker, the gentleman said that there is a New York Times
article that has not been responded to. We have spent a good part of
today responding to it and its inaccuracies.
Just to do it once more, because the gentleman said we had not
responded, the provision we are talking about is to be able to use a
facts-and-circumstances test at the Department of Treasury when a plan
is fair on its face. It is entirely within the discretion of the
Department of Treasury to determine the procedures for that. It is
entirely within their discretion to say even though your plan is fair,
even though it treats everybody the same, even though you have a
uniform benefit all the way through, still you do not meet the test.
There are circumstances where a plan is perfectly fair. In fact, you
could

[[Page H1238]]

have a uniform benefit for every level of paid worker in the plan, but
because one of the workers at the middle or higher level came on to the
plan at an earlier age, it might not meet the specific mathematical
tests that the Treasury Department uses.
There needs to be some kind of test, but tests are just that; they
are mathematical, they are specific. Sometimes they do not work to
determine whether something is fair or not. Should there not be some
safety valve? The junior senator from New York thinks there should. It
is in the Grassley bill that she has cosponsored. It has passed this
House five times, by votes of over 400 votes it has passed this House.
It is something that has been totally bipartisan from the start. This
is nothing new.
I would just like to be clear, finally, that the legislation before
us does address problems that have arisen because of what happened at
Enron, but it affects all folks who are in defined contribution plans
in this country. It does make significant steps forward.

announcement by the speaker pro tempore

The SPEAKER pro tempore (Mr. Latham). Members are reminded that
improper references to members of the other body are to be avoided.
Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Brady).
Mr. BRADY of Texas. Mr. Speaker, I am a Houston area Congressman.
Many of the Enron employees are my neighbors. They are good people, and
they have lost their jobs and they have lost their retirement through
no fault of their own. They do not have time to sit around thinking of
clever movie titles to stick into their speeches. They are too busy
finding jobs and trying to rebuild their homes and their lives.
I am ashamed of those in Congress who continue to try to score
political points off the misery of these workers from Enron. The fact
of the matter is the biggest threat to future retirement plans is not
the prospect of future Enrons. The biggest threat is political
grandstanding here in Washington that destroys companies' incentives to
share their wealth with the workers who helped achieve it.
The fact is these are thoughtful safeguards today to give workers
more control over their retirement plans, while encouraging companies
to help them build up their nest egg for retirement.
This legislation does not satisfy the business community, it does not
satisfy all the workers. It certainly does not satisfy the lawyers who
would like to sue everybody. But when combined with needed accounting
reforms, stiffer penalties for corporate fraud and a healthy dose of
buyer beware for anyone looking to invest in stock, this should help to
prevent the Enrons of the future, and this is a sound balance that we
need.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from New
Jersey (Mr. Pascrell).
(Mr. PASCRELL asked and was given permission to revise and extend his
remarks.)
Mr. PASCRELL. Mr. Speaker, I have heard it all today. I really have.
When my friend from Arizona says that what we need is a balanced
approach, at this time of the game? You tell that to Wayne and Kathy
Stevens, who in their 401(k) had $720,000 in savings wiped away.

{time} 1300

You tell them what they need is a balanced approach. We are beyond a
balanced approach. Besides someone going to jail, those people need
relief; and they are not getting it in this legislation. My colleagues
may think that is theatrics. You tell that to them, that couple out in
Washington State.
This legislation includes no bona fide structural changes that will
create protection. It does not require equal representation of
employers and employees on the 401(k) plan management boards. It does
not create equity between the claims of workers and the executives if
the company files for bankruptcy. It does not mandate that independent,
unbiased investment advice be provided to rank-and-file employees. In
other words, this bill is at worst, a placebo; at best, a Band-Aid on a
deep wound.
For these reasons and for what the bill does not do, I urge my
colleagues to vote against the Republican bill and for the Democratic
substitute. We know who brought you to the dance; but you do not have
to keep on saying yes, yes, yes.
Our substitute levels the playing field. It gives rank-and-file
employees the same pension protection as the executives. For us to ask
anything less, we will not do a service to all Americans, just a few.
The way I see it is certain assets of the company that I have
invested in, if I am part of the pension plan, are the property of the
employees.
In conclusion, Mr. Speaker, I think our substitute does a better job
in trying to address the problem.
Mr. STARK. Mr. Speaker, I am happy to yield 3 minutes to the
gentleman from North Dakota (Mr. Pomeroy).
Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me this
time.
The security of retirement programs of America's workers is about as
important a thing as I think we are going to tackle. It has been my
pleasure to work with people on both sides of the aisle on this issue
for many years. I want to commend, in particular, the gentleman from
Ohio (Mr. Portman) for the substantive and serious-minded work he has
put into this topic. He is truly one of the experts in the Congress,
House and Senate, on this issue; and his leadership has been important.
Let us look at where we are today. Only half the people in the
workforce today have access to workplace retirement savings. We have
absolutely a collapse in the number of defined benefit plans providing
reliable pensions to workers. The plans are not collapsing; they are
converting to defined contribution plans, a different arrangement, in
my opinion, over the long run, one not likely to serve the worker quite
as well. We have 401(k) choices, a bewildering array, facing workers,
without having provided them sufficient information to best steer their
interests in light of their new responsibilities. And, obviously, as
the Enron case has so sadly shown, we have insufficient protections
that protect workers from the kind of abuse that occurred by an
employer acting in what, I believe, will be very actionable ways in the
Enron circumstance.
So what we have before us are two approaches to try and fix some of
these issues. Sometimes the choices before us are dumb and dumber.
Today, I think they are good and better. I am going to vote for the
underlying bill. I am going to vote for the substitute, in any event. I
think we are making a step forward with the passage of either one of
these choices today.
Let us take a look at, first, the underlying bill. It allows
diversification protection that we do not have today. The 3-year
rolling average is not as good as the Committee on Ways and Means' 3-
year provision, which is a distinct advantage in the underlying
substitute; but it is an advantage, and it will protect workers, allow
them to be able to put a more healthy investment balance into their
retirement funds; the 30-day notice on blackout periods and an absolute
guarantee they will have a right to trade and diversify within that
period of time. That was in the underlying bill that was obviously
tragically not in the Enron circumstance, to the abuse of many of those
employees. A big step forward with that one.
A big step forward in my opinion on providing investment advise, much
greater availability of investment advice to workers facing these
401(k) choices. I am very pleased that the gentleman from Ohio (Mr.
Boehner), the chairman of the Committee on Education and the Workforce,
incorporated into this draft changes that I proposed that make sure
that a fiduciary standard applies in the providing of that advice; and
it discloses fees in a clear and uniform way, and that it has all of
the advisors providing this advice, subject to administrative penalties
in those circumstances where they have a vested interest in the sale.
I believe that this will go a long way in a very secure format to
provide them the advice they need.
This is a choice; two good choices. Yes on the substitute is the
preferred choice. The other one is good too.
Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio
(Mr. Kucinich).
Mr. KUCINICH. Mr. Speaker, what is at stake here today is the faith
of the

[[Page H1239]]

American people in their economic system and in this Congress. The
American dream is work hard, get ahead, give your life to a company,
get a secure, decent retirement pension. Well, that dream is being
destroyed by corporate executives who are cheating people out of their
hard-earned retirement benefits.
As the Nation watched enormous corporate bankruptcies unfold at Enron
and Global Crossing, and as the people of my district watched Chapter
11 proceedings at LTV Steel, we see the plot thicken around one major
theme. There are two sets of rules. Executives get one set of rules and
the employees have to play under a different set of rules. Corporate
executives get special treatment, including more investment choices, no
lockdown restrictions, generous deferred compensation plans that are
not required to be disclosed, guaranteed rates of return on pension
investments, and a golden parachute of retention bonuses and other
benefits when a company goes under.
Employees, on the other hand, have barriers to information, fewer
options, more restrictions on investment, and no guaranteed returns.
The most egregious disparity is that during a bankruptcy, executive
pension plans are totally protected from creditors, and executives can
count on cashing in their entire package. On the other hand, employee
protections are not protected from creditors. Employees stand at the
end of the line and must wait behind other creditors to claim what
rightfully belongs to them for compensation that is already earned.
Finally, if employees do get to make a claim, that claim is capped at a
mere $4,650.
At the end of the Enron debacle, Ken Lay still receives $475,000 each
year for the rest of his life and a prepaid $12 million insurance
policy; but the employees' 401(k)s are drained, and they will be lucky
if they get their $4,650 maximum severance pay.
This bill does nothing to protect employee pensions in a bankruptcy.
It fails to give equal protection to the employee pension as the law
currently provides to executive pensions. I urge a ``no'' vote on this
bill.
Mr. PORTMAN. Mr. Speaker, I yield 1 minute to the gentleman from
Florida (Mr. Foley), a valued member of the Committee on Ways and
Means.
Mr. FOLEY. Mr. Speaker, I thank the gentleman for yielding me this
time. Let me commend the gentleman from Ohio (Mr. Portman) for his hard
work on this legislation. He has been at this for many, many years; and
I salute him.
What this bill says loudly and clearly: if it is good for the brass,
it ought to be the same for the middle class. We are taking care of
employees; we are defining benefits; we are giving investment advice;
we are providing advanced notice of blackouts; we are giving
diversification; we are taking off, if you will, the corporate
handcuffs that have locked many employees in their employee stock
option plans. It improves access to retirement planning services so the
average line worker, or the CEO, can take advantage of up-to-date,
latest investment advice.
I am encouraged by the action of this House, and I applaud the
leadership on this issue. There is no question that Americans need
security and safety in their pensions. This is a fantastic step in that
direction. I salute all who have participated. I urge my colleagues, as
they prepare to leave this Capitol, that when they vote for this bill,
they are giving an underlying security to the pensions of all American
workers.
Mr. PORTMAN. Could we have a division of time, Mr. Speaker.
The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman
from Ohio (Mr. Portman) has 5\1/2\ minutes remaining; the gentleman
from California (Mr. Stark) has 4\3/4\ minutes remaining.
Mr. PORTMAN. Mr. Speaker, I yield 1 minute to the gentleman from
Michigan (Mr. Camp).
Mr. CAMP. Mr. Speaker, I want to thank the gentleman for yielding me
this time; and I also want to commend him on his efforts on not only
this bill, but years' long efforts on making sure that retirement
security is a reality for all Americans.
This legislation really does address in the right kind of way the
problems that we have seen so much in the press lately. Employee rights
and protections are enhanced. We do not have burdensome regulations to
affect investment and keep people from investing. We will see pension
benefit statements; we will see investment education notices. The bill
will give employees more control over the investment of their accounts
once they own them, or become vested in that money. They will have
three investment options to choose from, and that will be required
under this bill. There will be an advanced notification to workers if
there is a blackout period so that employees have the same opportunity
to make changes as anyone else does that is involved in that plan
before the restrictions come into effect.
Investor education and access to retirement planning and professional
investment advice are improved under this legislation. This bill will
reduce the cost of regulatory burdens for employers who voluntarily
sponsor these plans.
This clarifies current law treatment by making stock options not
subject to payroll tax, and it is a good bill, and I urge its passage.
Mr. STARK. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the distinguished
gentleman from California for yielding and for his leadership.
Mr. Speaker, I had hoped that we could have come to this floor in a
bipartisan manner and supported either the Committee on Ways and Means
proposal on this issue, the total Committee on Ways and Means proposal,
or the complete Committee on Ways and Means proposal and/or the Miller
substitute. Let me share with my colleagues why, Mr. Speaker.
I live with this every day. The 18th Congressional District has Enron
in its district. I am hoping for rehabilitation and reconstruction and
the opportunity for a new entity to grow and thrive, but I live every
day with the heartfelt tragedies of employees who now still are in
foreclosure, who cannot have health care, whose pension benefits, along
with the retirees, are long gone.
When they ask me what are we doing, they are asking for a
comprehensive and inclusive response. They wonder if the hearings of
these past months, where there was great drama, whether this Congress
had come together in a bipartisan way.
I would say to my colleagues, Mr. Speaker, that I am very sad that as
a member of the Committee on the Judiciary, the Committee on Rules did
not see fit to establish some parameters to give penalties to the
destruction of documents. It answers the concerns of Andersen
employees, and it answers the concerns of ex-Enron employees; but it
does not answer the concerns that we would never want this to happen
again.
Mr. Speaker, I wanted to vote for this legislation today; and I want
my constituents to know why I am not going to vote for it, because this
pension bill does not answer the concerns. It does not give independent
advice that is needed for these employees. It does not give them the
opportunity to fully diversify their company stock, and fails to give
workers a voice in administering and protecting their retirement
savings through employee representation on pension boards; and for the
first time since this bill was enacted, the Republican pension bill
provides employees with biased and conflicted investment advice.
Mainly, let me share with my colleagues a story that is ongoing. The
Creditors Committee refuses to give a legal severance pay to these
employees, Mr. Speaker, as I close. Why? Because these are the big
guys, and the little guys do not get heard. We need to pass legislation
where the little guys will be heard. I ask my colleagues to reject this
legislation.
I thank the distinguished gentleman from California for yielding and
for his leadership.
Mr. Speaker, I had hoped that we could have come to this floor in a
bipartisan manner and supported either the Committee on Ways and Means
proposal on this issue, the total Committee on Ways and Means proposal,
or the complete Committee on Ways and Means proposal and/or the Miller
substitute. Let me share with my colleagues why, Mr. Speaker.
I live with this every day. The 18th Congressional District has Enron
in its district. I am hoping for rehabilitation and reconstruction and
the opportunity for a new entity to grow

[[Page H1240]]

and thrive, but I live every day with the heartfelt tragedies of
employees who now have homes in foreclosure, who cannot pay for health
care, whose pension benefits, along with the retirees, are long gone.
When they ask me what are we doing, they are asking for a
comprehensive and inclusive response. They wonder if the hearings of
these past months, where there was great drama, whether this Congress
had come together in a bipartisan way to do something effective. This
legislation today is not effective.
I would say to my colleagues, Mr. Speaker, that I am very sad that as
a member of the Committee on the Judiciary, the Committee on Rules did
not see fit to allow an amendment that would establish some parameters
and add criminal penalties to the destruction of documents. That would
answer the concerns of the Andersen employees, and it answers the
concerns of ex-Enron employees; but the legislation today is not the
tough reform it should be.
Mr. Speaker, I wanted to vote for this legislation today; and I want
my constituents to know why I am not going to vote for it, because this
pension bill does nothing serious. It does not give independent advice
that is needed for these employees in these in investment choices. It
does not give them the opportunity to fully diversify their company
stock, and fails to give workers a voice in administering and
protecting their retirement savings through employee representation on
pension boards; and the bill does not give notices to employees if
executives are dumping their stock. This bill provides employees with
biased and conflicted investment advice.
Mainly, let me share with my colleagues a story that is ongoing
regarding ex Enron employers. They hope to fight a Creditors Committee
that refuses to give a legal severance pay to these employees, Mr.
Speaker, as I close. Why? Because these are the big guys, and the
little guys do not get heard. We need to pass legislation where the
little guys will be heard. I ask my colleagues to reject this
legislation, and fight for and with the little guys!
Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Sam Johnson), who is chairman of the Subcommittee on
Employer-Employee Relations of the Committee on Education and the
Workforce, as well as serving on the Committee on Ways and Means.
(Mr. SAM JOHNSON of Texas asked and was given permission to revise
and extend his remarks.)
Mr. SAM JOHNSON of Texas. Mr. Speaker, I hate to tell everybody this,
but there is independent advice authorized in this bill; and it is for
everybody, not just the bottom, but the top and the bottom.
I thank the gentleman for yielding time to me.
The Pension Security Act contains some important provisions that will
modernize pension legislation. The gentleman from California (Mr.
Thomas), the chairman of the Committee on Ways and Means, also included
in this bill a very important pension-related provision that will
overturn a new IRS position on employee stock purchase plans.
I have received a number of calls, letters, and e-mails from
constituents regarding the new IRS position that is overturning 30
years of tax policy, that was, the employee stock purchase plans are
not subject to payroll tax. The IRS overturned that 1971 policy just
recently. Imposing payroll taxes for Social Security and unemployment
on employee stock purchase plans is just wrong, just as imposing
payroll taxes on contributions to 401(k) plans would be wrong. At least
the IRS did not go that far.
I hope the IRS sees we are serious about this matter and they do the
right thing and simply make this issue go away. This IRS ruling
penalizes hard-working people and is just wrong. Again, I want to thank
the gentleman from California (Mr. Thomas) for his dedication to this
issue and for making sure that America's pension plans are safe and
secure.
Mr. STARK. Mr. Speaker, I yield myself the balance of our time. I
will try and summarize. Admittedly, this bill will encourage more
plans.

{time} 1315

The best way to encourage plans is to have no restriction on them at
all, and then the very rich will have plans, but they will not cover
the employees.
Professor Halperin at the Harvard Law School has written and
suggested that this really solves a minor problem by creating a
loophole through which we could march an elephant, or a donkey, too,
perhaps, to be bipartisan in the closing minutes of this debate.
But the fact is that this is a bill written to satisfy rich
contributors to the Republican Party, and it gives assistance to major
corporations and to owners of small businesses without any regard to
protecting the employees who are under them.
And it is couched in some language that will say there is a little
bit here and there, but the fact is that we give the Treasury the right
to make the decision of whether the plans meet the antidiscrimination
rules, and then give the Treasury no direction. So if the Secretary of
the Treasury does not act, there are no antidiscrimination rules.
Mr. Speaker, this is a bad bill. It is a bill that is unfair. It is a
bill that helps only the very rich and the owners of businesses, but
leaves the workers with less protection than they start with now.
I guess that is what we have to expect from a Republican-controlled
House. That is what they have been doing at every step of the way.
There is the tax bill, which only gives 90 percent of the benefits to
2 percent of the richest people in this country. That is a Republican
operation.
There is a bill that talks about education, but does not fund it.
That is a Republican plan.
So one more step in a Republican-controlled House to hammer down the
working people and the average person in this country to the benefit of
the few rich people, the few extreme right-wing radicals who will
support the Republican Party and their blatant, blatant, obsequious
bowing to the wealthy and the large corporations in this country.
It is something that should shame them. I do not know what they are
going to tell their children some day: I came to Congress and helped
the rich, and I destroyed the poor. I destroyed pension plans by
supporting Enron. I took a lot of money from Enron, and I destroyed the
pension plans of those workers. I denied seniors medical care coverage.
I refused to give a pharmaceutical benefit.
What a wonderful way to take their pension money that they are going
to get, far better than any workers are going to get, and then sit and
tell their children and grandchildren what they did for this country. I
hope they enjoy that retirement, because the average working person in
this country is not going to enjoy it if he is subject to the rules
that are written in this law by the Republican majority in this House.
Vote no on the bill.
Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
I am so glad my colleague, the gentleman from California, did not get
too partisan there at the end, as he said he would not. I do not know
how he could be much more partisan than that.
Again, I think it is a sad day on the floor of the House when we have
that kind of rhetoric over legislation that traditionally has been
bipartisan, and that in fact is commonsense legislation that helps
working people.
I do want to apologize to the gentleman because earlier I said I had
thought he had voted for the provision he was talking about. It passed
the House 407 to 24. It has passed the House five times, as he knows.
But he was not one of the people who voted for that, and I apologize
for saying that.
Earlier speakers have said there are no bona fide structural changes
in this bill. The gentleman from California (Mr. Stark) has just talked
about it in strictly political terms.
Let me tell Members what the bill does. It provides more education,
it provides more information, and it provides more choice to workers.
That is what it does. All of that leads to more security in retirement.
In terms of education, it says to workers that we are now going to
allow them to get pre-tax advice. They can take pre-tax dollars, and go
out and get their own advice. I think that is a good thing. There is a
bipartisan consensus in the pension world that that is one of the
things we need to focus on now is giving better information so they can
make informed choices.
It also provides for investment advice the employer can provide to
the employee. It also provides for the first time a requirement that
employers, as people enter 401(k)s or other retirement plans, send a
statement which provides generally-accepted investment principles that
say, you ought to diversify. To put all your eggs in one

[[Page H1241]]

basket, as in the case of Enron, is a bad idea. That notice is good. We
want to do that for the workers.
It provides more information. For the first time ever, we are going
to say that if there is a black-out period, that is when they cannot
change their stock because that is when we are changing plan managers
or plan administrators, they ought to know about that. We provide for a
30-day notice period. It is not in current law. That is an important
change. It lets people get out of the stock if they want to.
In terms of choice, right now if you are in a 401(k) plan, your
employer can tie you with the employer-matched stock until you retire.
At Enron, it was age 50. In an ESOP it could be up to age 55 plus 10
years particpation. We say no, it ought to be 3 years. Once you are
there 3 years, you ought to be able to make that choice with better
education, with better information; to be able to sell that stock you
have gotten through an employer match.
That is what this bill does. It has been mischaracterized today.
There has been a lot of rhetoric on the floor, but those are the facts.
Those are substantial changes from current law. Those are structural
changes to the law that are going to give the workers in this country
more security in their retirement by giving them better information to
make choices, by giving them educational tools, and by giving them
choice, and empowering them to make decisions for their own retirement.
The SPEAKER pro tempore (Mr. Miller of Florida). All time for debate
by the Committee on Ways and Means has expired.
Under the rule, the gentleman from Ohio (Mr. Boehner) and the
gentleman from California (Mr. George Miller) each will control 30
minutes of debate.
The Chair recognizes the gentleman from Ohio (Mr. Boehner).
Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, late last year, thousands of Americans employed by Enron
Corporation watched helplessly as their company collapsed, and their
retirement savings were lost with it. Today we are here to restore
worker confidence in our Nation's pension system.
Enron workers may be the victims of criminal wrongdoing. We do not
know that yet. But we already know they are victims of an outdated
Federal pension law. The bill before us today will modernize our
Nation's pension law and help promote security, education, and freedom
for employees who have worked and saved all of their lives for a safe
and secure retirement.
President Bush followed up his State of the Union speech this year by
outlining a series of bipartisan reforms that could have made a
critical difference for Enron workers who lost their retirement
savings. The bipartisan Pension Security Act of 2002 is based on those
reform principles.
But let us be very clear: Congress should take action to protect
Americans' retirement benefits, not endanger them. One of the great
strengths of our country is that employees of companies can own stock
in their place of business and become part of the corporate ownership.
This has allowed workers who stock shelves at Wal-Mart and run the
checkout counters at Target, not just the top-level management, allow
these other workers to build wealth and significantly enhance their own
requirement security.
On a bipartisan basis, we have consistently rejected efforts to place
arbitrary caps on a company's stock because Congress should encourage
employers to provide matching contributions to their workers, not enact
extreme proposals that could jeopardize Americans' retirement security,
or spell the death of 401(k) plans altogether.
The bipartisan Pension Security Act takes a balanced approach by
expanding worker access to investment advice and including new
safeguards to help workers preserve and enhance their own requirement
security, such as giving employees new freedoms to diversify their own
portfolios.
But it also insists on greater accountability from senior company
insiders. We believe it is unfair for workers to be denied the
opportunity to sell company stock in their 401(k) accounts during
blackout periods, while corporate insiders can sell off their
investments and preserve their own savings. Enron insiders got away
with this, and we are going to change it.
The Pension Security Act before us gives rank and file workers parity
with senior company executives. It also strengthens the notice
requirements by requiring companies to give 30 days' notice before a
blackout period can begin.
The bill also empowers workers to hold company insiders accountable
for abuses by clarifying the company is responsible for worker savings
during blackout periods when workers cannot make changes to their
401(k) plans.
Under the Pension Security Act, as under current law, workers can sue
company pension officials if they violate their fiduciary duty to act
solely in the interest of 401(k) participants.
Enron barred workers from selling company stock until age 50. The
bill gives workers new freedoms to sell their company stock within 3
years of receiving it in their 401(k) plan if they get company stock as
a match. The benefits of diversification will help workers better plan
and save for their own future over the long term.
As we all know it, defined contribution 401(k) type plans have become
a primary vehicle for retirement savings. Yet today, the vast majority
of American workers receive no investment advice on how best to
structure their 401(k) retirement plans, and most cannot afford to pay
for it on their own like the company insiders can.
I think it is time to fix outdated Federal rules that discourage
employers from giving workers access to professional investment advice.
Like most U.S. companies, Enron did not provide its workers with access
to this type of advice. This type of investment guidance would have
alerted Enron workers to the need to diversify their accounts, and
enable many of them to preserve their retirement nest eggs.
The pension act today that we have changes these outdated Federal
rules and encourages employers to provide quality investment advice for
their workers. We need to give investors more choices and more
information to choose wisely, so that they are better able to navigate
their way through the volatile markets and maximize the potential of
their hard-earned retirement savings.
Workers must also be fully protected and fully prepared with the
tools they need to protect and enhance their retirement security. The
Pension Security Act accomplishes these goals.
I want to thank my colleague and the chairman of our subcommittee,
the gentleman from Texas (Mr. Johnson), who is also a member of the
Committee on Ways and Means, for all of the work that he has done at
both of our committees to enhance the bills that we have before us, and
for the important role he played in the process.
Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 4\1/2\
minutes.
Mr. Speaker, the challenge today is whether or not the House of
Representatives is prepared to take the lessons of the Enron scandal
and use those lessons to apply to greater security of the millions of
workers' 401(k) plans across the country.
I would suggest that, in the Republican bill, they have failed to do
that. Later, we will offer a Democratic substitute that I believe
provides for that greater security, greater control, and greater say by
the employees of the assets that belong to them that make up much of
their retirement nest egg, so we do not again see, as we saw on Enron,
where, because of unethical behavior by corporate executives, where
because of greedy behavior by corporate executives, where because of
illegal behavior by corporate executives, where because of conflicts of
interest by corporate executives, the employees lost everything.
They were never given advance notice. They were never told what was
really happening with the corporation. They never had a representative
on the pension board which was controlling the assets which 100 percent
belonged to the employees.
So we will have an opportunity with that substitute to reject the
Republican bill that fails to learn any lessons and provide those
greater protections to the workers of this country, and to, in its
place, provide for an employee representative, a rank and file employee
representative, on the pension

[[Page H1242]]

boards so we do not have the situation that we had at Enron and other
corporations where members of the pension board who were executive vice
presidents have a conflict of interest between their career track and
taking care of the beneficiaries, the employees, of the corporation;
where they sold their stock but never told the pension beneficiaries
that they were selling, or that they thought it was the right thing to
do.
We are going to make sure that a rank and file member is a member, so
they will have access to the information and they will be able to make
determinations for their fellow employees.
We are going to make sure that, after 3 years, they have a complete
right to divest, so if they want to diversify their portfolio, if they
want to make other decisions about their retirement, they will be free
to do it.

{time} 1330

In the Republican bill, which you see, it takes 5 years to be fully
able to diversify; and every 3 years a new period starts with a new
contribution. Three years ago we were in the throws of a bull market,
the greatest bull market in modern history. And today, many of those
same people have lost much of their retirement because they were locked
into it. Three years is a very long time, and a rolling 3-year period
is an unacceptable time to lock up people's assets that belong to them
so they cannot make a determination about their retirement.
We will also make sure people are treated equally. What we see in
Enron and many corporations today is that the retirement plans are
ensured for the executives. The retirement plans are guaranteed. The
benefits of the 401(k) plans are guaranteed for the executives but not
for the employees. So while Enron or other corporations go into
bankruptcy, the executives are taken care of. They are taken care of.
They walk away with millions. The employee, they have to walk around
the corner and stand in line at the bankruptcy courts and hope that
there is something left over at the end to see if they can put back
together their retirement.
This is really about a fundamental test, about the workers of this
Nation who now have got a rude awakening call; and through the tragedy
of the workers at Enron that their 401(k) plan that they are being
required to lean on more and more for their retirement as vulnerable
beyond their expectations, is far more vulnerable than they were led to
believe.
Finally, we say yes, investment advice is important; but that advice
should not be conflicted.
We have just witnessed this week once again the incredible conflicts
in the financial institutions of the country where Merrill Lynch was
offering retail advice to people to buy their stocks; and in their e-
mail traffic they were making jokes about the stock. They were raising
ethical concerns about offering these stocks for sale because they knew
their company was conflicted because it was earning fees as an
investment bank from the very clients whose stock it was touting. The
investment advice can be offered and it can be helpful, but it cannot
be conflicted. The Republican bill allows that investment advice to
continue to be conflicted.
Mr. Speaker, I reserve the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield 4 minutes to the gentleman from
Texas (Mr. Sam Johnson), the chairman of the Subcommittee on Employer-
Employee Relations of the Committee on Education and the Workforce.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I thank the gentleman for
yielding me time.
Mr. Speaker, conflicted advice, we keep hearing about; but there is
not any conflicted advice when you have somebody who is recognized as a
professional stock or option advisor being concerned.
I have been concerned about many of the pension proposals that have
been introduced aimed at protecting Americans from themselves. If
history is any guide, Congress should very well protect Americans by
simply destroying another successful pension plan. Just look at what
happened with the government's over-regulation of the defined benefit
pension system. Congress killed those plans with kindness. Let us not
repeat those mistakes here.
The bill we are debating here is moving pension reforms cautiously in
the right direction, and it is balanced and fair. And I want to commend
the gentleman from Ohio (Mr. Boehner) and the gentleman from California
(Mr. Thomas) for their hard work in putting together this bill.
As a subcommittee chairman for the Committee on Education and the
Workforce, I will focus on those sections of the bill. First, I believe
that the rolling 3-year diversification rights for employees who are
given company stock as a match in their 401(k) is as important an
improvements as any in this proposed legislation. Rolling
diversification will preserve employees' ownership ethics as
stockholders, but will also permit individuals to diversify into other
investments as they see fit.
Next, I am glad that we have clarified the issue of employer
liability for stock market fluctuations in a 401(k) plan during a
black-out period. We heard a lot of testimony in my subcommittee on
this subject. Under the bill reported by the full committee, employers
are not responsible for market swings and 401(k) accounts during a
black-out period, as long as they provide 30 days' notice in advance
and make sure they have a legitimate reason for doing the black out.
The bill today also exempts privately held businesses from being
subjected to the diversification mandates and permits them to use their
most recent annual valuation for reporting stock value on 401(k) stock
benefit statements.
I probably sat through more hours of hearings on pension benefit
issues in this session of Congress than any other Member.
One thing that has been confirmed for me during these hearings is
that employees want, need and deserve to receive professional
investment advice for their 401(k) plans. This bill does this.
Last month, Mr. Dary Ebright was a witness before the Committee on
Ways and Means; and he told his personal story about the horrors of
putting all your eggs in one basket. His personal tragedy could have
been prevented if he had received professional investment advice.
He had invested 60 percent of his 401(k) into Enron stock, and then
he cashed out his traditional pension plan and bought Enron stock. His
defined benefit pension would have paid him roughly $2,000 per month
for the rest of his life. But instead, at the age of 54, the only
retirement savings that he has left is the portion of his 401(k) that
was diversified.
I asked if he received any professional advice on these decisions. He
said he did not. Too many workers lack access to quality investment
advice on how to invest their hard-earned savings. Without a doubt,
investment advice must become law soon, and I urge Members to vote for
this sensible bill which does that. It educates. It provides
investments advice. It provides diversification, and it stops big
executives from selling their stock during a black-out period.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from New Jersey (Mr. Andrews).
(Mr. ANDREWS asked and was given permission to revise and extend his
remarks.)
Mr. ANDREWS. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, we should not replace no advice for workers with bad
advice for workers. A few days ago, the attorney general for New York
alleged a scheme involving the Merrill Lynch firm that worked like
this: one part of the Merrill Lynch house, he alleged, was collecting
huge fees for raising capital for Internet companies. The other side of
the Merrill Lynch house was giving investment advice to individual
clients, telling those individual clients that these Internet companies
were the way to go with their money, encouraging them to buy the stock.
This is not what these advisors were telling each other, though, in
private e-mails and conversations that the attorney general of New York
later found. What they were telling each other was these stocks were a
joke; these stocks were a disaster. They were using words that should
not be used in mixed company or on the House floor.

[[Page H1243]]

This bill wants to take the quality of investment advice the New York
attorney general alleged those people were receiving and offer it to
the pensioners of this country. No advice should not be replaced with
bad advice. The proposal would enshrine into the law, would legalize
and legitimize the opportunity of unscrupulous advisors to offer advice
which benefits them but not the pensioners to whom the advice is
offered.
Employees do need advice. They should be given a full array of
choices. They should be made aware, and as the Democratic substitute
does, made available as to how to pay for the offering and receipt of
independent advice. One of the many flaws in the majority's bill is
that it enshrines into law the practice of authorizing and permitting
the giving of advice by people who have more to look out for themselves
than for the pensioners to whom the advice is offered.
For this and many other reasons the underlying bill should be
defeated and the Democratic Miller substitute should be adopted.
Mr. BOEHNER. Mr. Speaker, I yield 3 minutes to my colleague and
friend, the gentleman from California (Mr. McKeon).
Mr. McKEON. Mr. Speaker, I rise today in strong support of H.R. 3762,
the Pension Security Act; and I thank the gentleman from Ohio (Mr.
Boehner) and the gentleman from California (Mr. Thomas) for their hard
work on this legislation.
In his State of the Union address, President George W. Bush called on
Congress to enact important new safeguards to protect the pensions of
millions of American workers. The President called on Congress to move
quickly to enact these important reforms so that people who work hard
and save for their retirement can have full confidence in our
retirement system.
In response to the President's call, Congress immediately took action
by holding several hearings on the Enron collapse and its implications
for worker retirement security.
Mr. Speaker, we have listened to both workers who have lost or are at
risk of losing their retirement savings, and we have listened to
employers who voluntarily offer their employees retirement savings
plans. After listening to employees and employers, I am pleased to
announce that the House is here today to provide new safeguards to help
workers preserve and enhance their retirement savings. At the same
time, it will still allow employers to have the incentive to provide
retirement benefits by refraining from overprecipitous regulation.
The Pension Security Act provides workers with the tools they need to
protect their retirement savings. For example, the bill gives workers
freedom to diversify their investment options, creates parity between
senior corporate executives and rank-and-file workers, clarifies the
fiduciary duty of employers, gives workers better information about
their pensions, and enhances worker access to quality investment
advice.
Mr. Speaker, H.R. 3762 promotes security, education and freedom for
America's workers who have saved all of their lives for a secure
retirement. I, therefore, encourage all of my colleagues to join me in
strongly supporting it.
I would like to use the balance of my time, Mr. Speaker, to engage
with the chairman in a colloquy.
Mr. Speaker, I am very concerned that the diversification provision
of the act not be applied in the case of a nonpublicly traded employer
with affiliates that may have a limited amount of publicly traded stock
outstanding. I do not believe it is the intent of the legislation to
have the diversification provision apply in such a situation; and I
would ask the distinguished chairman if he would confirm my
understanding, and if he would be prepared to work with me to clarify
the application of the provision in this respect as this legislation
moves.
Mr. BOEHNER. Mr. Speaker, if the gentleman will yield, I would say to
my colleague that the act is not intended to apply to diversification
provision in the indication of a nonpublicly traded employer with
affiliates that have only a limited amount of publicly traded stock
outstanding. In this special case, as in others that may arise, I would
be pleased to work with my colleague to clarify the application of the
provision to reflect this intent and to provide for flexibility that
may be necessary to clarify the intent of the legislation.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from Massachusetts (Mr. Tierney).
Mr. TIERNEY. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, clearly this morning when I spoke on the rule I think I
made a point worth repeating here and that is that the majority did not
want to have a rule that allowed for individual amendments to be made
because that would allow us to set up each aspect of this bill side by
side so that the public would have an education and an informed debate
on the provisions of the respective bill versus the substitute bill.
Frankly speaking, we have executive accountability in the Democratic
substitute. The other bill does not. We have honest, accurate and
timely information for employees provided in the substitute. The bill
does not have adequate provisions for that.
We provide for unbiased, independent investment advice. The main bill
specifically allows for biased, conflicted advice. And there is no
reason on the planet why that should ever be the case. There are more
than ample resources out there to give unbiased, unconflicted advice.
Employers only want to make sure that they are not held liable when
they take the precautions to get proper advisors in there, and all
bills can do that. But, simply, even after Enron's Ken Lay was advising
people against their interests, when we see news articles as recently
as yesterday about Merrill Lynch having a conflict of interest that
works against employees' rights right on down the line, this bill still
goes up and hails the fact that they are bringing in conflicted advice
as if that is the only way they can get advice for employees, and that
is simply not the case.
The Democratic substitute takes care of lock-out restrictions and
provisions. It lets employees know that if they are locked out, the
executives will not be taking advantage of that period of time to their
benefit. We give parity of benefits for executives and rank-and-file
workers to make sure that everybody is treated fairly. The substitute
gives employees control over their retirement savings in much greater
degree than does the bill itself. And we have additional protections
for workers' pension benefits and a representative of employees on the
pension board; and history shows us that when that happens the pension
itself does better.
All of these things are lacking and found wanting in the Republican
bill itself. That is why we do not have a rule that allows us to bring
up individual motions. That is why we are not allowed to stand here and
side by side, motion by motion sit here and tell the public why the
provisions of the substitute are in fact much better than those
provisions of the bill.

{time} 1345

Mr. BOEHNER. Mr. Speaker, I am pleased to yield 3 minutes to the
gentleman from Kentucky (Mr. Fletcher).
Mr. FLETCHER. Mr. Speaker, certainly I think it is very important in
light of a lot of the discussion we have heard about Enron about a
number of people losing investments over a number of years because of
the ill-advice, because of the way Enron reported its financing, and
because of the lack of financial advice, I want to say I encourage
everyone to support 3762, the Pension Security Act of 2002, because it
includes new safeguards and options to help workers preserve and
enhance their retirement security.
It insists on greater accountability from companies and senior
corporate executives during blackout periods when rank-and-file workers
are unable to change investments in their retirement accounts. Workers
must be fully protected and fully prepared with the tools they need to
protect and enhance their retirement savings.
This bill gives workers freedom to diversify. We have heard it gives
employers options to allow sale of company stock after 3 years, the 3-
year rolling diversification, or allows workers to sell company stock
after 3 years of service, the 3-year diversification cliff.

[[Page H1244]]

It prohibits companies from forcing worker investment in company stock.
Opponents of the bill, in the bill that will be offered as an option
here, allow actually the employees to self-direct stock and money that
actually is not theirs but it may belong in the future to other
employees for several years, and I think that is a major problem in
consistency that exists with the other proposals here.
This bill creates parity between senior corporate executives and
rank-and-file workers, the captain and sailor equity provisions the
President has talked about. It prevents senior executives from selling
stock during blackout periods because workers are unable to sell stocks
in the plans during these periods, and it requires a 30-day notice to
workers before the start of a blackout period.
It clarifies that employers are responsible for workers' savings
during blackouts. It clarifies that companies have a fiduciary
responsibility for workers' savings during a blackout period and does
outline situations where they may not be liable for losses in
individually directed accounts.
It enhances worker access to quality investment advice. It includes
the Retirement Security Advice Act which was passed since the 106th
Congress. This provision allows workers access to information and
advice about their 401(k) plans, which is greatly needed to ensure the
growth we have seen in the last two decades in the defined contribution
retirement plans, and as my colleagues will recall, the House passed
this legislation in November with a strongly bipartisan bill, but the
Senate has failed to act on this bill as of yet.
There are three reasons, I think, or three important differences with
the opponent's bill. It does not include investment advice access,
which is one of the provisions that would actually have helped Enron
employees. It does not rely on education. Rather, it relies on
overregulation.
It increases the regulatory red tape that I believe will discourage
these types of defined contribution plans.
Lastly, their answer always seems to be, let us sue for some redress.
Let us not give the personal freedom, responsibility, and the choice
along with the education.
I encourage the passage of 3762.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentlewoman from Connecticut (Ms. DeLauro).
Ms. DeLAURO. Mr. Speaker, until the collapse of Enron, most Americans
felt that their pensions would be there for them when they retired.
They felt their savings earned from a lifetime of hard work were
protected.
We know better now. We know that our pension rules do not do enough
to protect helpless employees from being locked out of their pension
plans while their life savings go down the drain. They are not
protected from venal executives who took their money and ran.
Two years ago, employees from a Westbrook, Connecticut lighting
company learned a similar lesson. The company lost $2 million from
their pension plan. I met with these men and women as we worked
together to win back their hard-earned retirement savings, and no one
should ever have to go through what those families did.
This Republican bill does virtually nothing to prevent what happened
there or at Enron. It fails to allow employees the right to fully
diversify their stock. It fails to hold executives who are fiduciaries
of the pension plan accountable if they violate the law; and Ken Lay
has to be accountable. It continues to allow employers to give the same
conflicted financial advice the Republicans tried to push on the
American workers last fall before the Enron scandal broke.
We have an opportunity today to do something worthwhile for middle-
class Americans, for working men and women in this country. We can tell
them today that, yes, we want to protect your pensions because your
life's work has to be there for you and your family when you retire.
That is what this country is built on. That is what our values are.
That is the direction we should go in.
I urge my colleagues to vote against this flawed Republican bill and
vote for the Democratic substitute.
Mr. BOEHNER. Mr. Speaker, I am pleased to yield 3 minutes to the
gentleman from Georgia (Mr. Isakson).
Mr. ISAKSON. Mr. Speaker, I thank the distinguished chairman of the
Committee on Education and the Workforce for this opportunity.
Pension security has two components. First is protecting the workers'
investment but also is preserving that investment to exist at all. As
we deal with the ramifications of the immoral and possibly illegal
actions of Enron executives, and the loss to their employees, we must
be very careful not to react in such a way that we destroy the benefits
that most Americans have and the wealth that most have created.
We have talked a lot about Enron, and some people have painted with a
pretty broad brush. It has become almost a corporate America statement.
The gentleman from California (Mr. George Miller), the distinguished
ranking member in our committee, brought us a chart during the debate
to raise the question about the disproportionate investment in some
401(k) plans by employees, and a couple of those companies were in
Atlanta, Georgia. They were in my district.
As we talk about Enron, we must also remember the Coca-Cola Company
and Home Depot. Coca-Cola, with 83 percent of the value of its 401(k)
in Coca-Cola stock, and Home Depot is 73 percent, and the risk that the
gentleman from California (Mr. Stark) kept criticizing about a half an
hour ago happened to be rank-and-file Coca-Cola and rank-and-file Home
Depot employees who invested in their company and became millionaires
because of a program that we in this Congress created to create pension
security.
Were there bad actors at Enron? Yes. Were there loopholes that need
to be closed? Yes. This bill closes those loopholes and brings about
responsibility, but we have to be very careful not to throw the baby
out with the bath water. We do not need to paint a broad brush that
destroys pension security by destroying any incentive for businesses to
have pensions and 401(k)s, and we have to be very careful about who we
castigate as being rich because, in fact, most of America's wealth has
been earned by people who have invested in the sweat and the blood of
their businesses and their companies, and they have been treated right.
There are bad actors. The Merrill Lynch example sounds bad, but it
does not mean that every advice any professional ever gave was
conflicted, nor should we sell the American worker short that they are
not capable of giving information and making an intelligent decision.
I commend the President, the chairman of our committee, the chairman
of the Committee on Ways and Means, and this Congress for dealing
deliberately in closing the loophole that Enron used, holding corporate
executives example, allowing people to diversify and allowing people
the ability to get unconflicted and accurate advice.
Let us not castigate all of corporate America nor the great benefits
that most American workers have gained by this important program. Let
us not throw the baby out with the bath water. Let us not adopt a
Democratic substitute. Let us adopt the House pension security plan.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to
the gentleman from Virginia (Mr. Scott) for the purposes of his remarks
and entering into a colloquy with the chairman of the committee.
Mr. SCOTT. Mr. Speaker, I rise today to talk about an amendment I
offered in committee to conduct a study looking into whether and how
insurance could be provided for defined contribution plans. A defined
benefit plan is one that defines the benefits one will get at
retirement. But a defined contribution plan only speaks to the amount
of money one can put into the plan, says nothing about what will be
there for someone's retirement.
ERISA provided many protections, including guarantees for defined
benefit plans but not for defined contribution plans. The Enron
accounts we have heard so much about were defined contribution plans
and, therefore, were not guaranteed.
In 1974 when ERISA was enacted, the contribution plans represented an
insignificant portion of the plans, but today they constitute almost
half of all plans, and because those plans are not insured, those
employees have no assurances that their money will actually be there
when they retire.

[[Page H1245]]

That is why I have been pleased to work with the gentleman from Ohio
(Mr. Boehner), the chairman of the committee, to include a study which
will explore the feasibility of developing an insurance program for
defined contribution plans, just as we have for defined benefit plans.
The study could recommend, for example, a procedure for private
insurance paid for with the premium on assets. To put that potential
cost in context, a defined benefit insurance now costs about $19 a year
per account.
The study could also show what kinds of assets could be insured; for
example, broadly based index funds, or AAA bonds could be insured,
whereas individual stocks or junk bonds may not. The recommendation of
the study could protect future employees from losing their retirement
funds because stock prices collapse or because the funds in their
account have been lost to fraud or theft.
I would like to engage the gentleman from Ohio (Mr. Boehner), the
chairman of the committee, the primary sponsor of the legislation, in a
colloquy for the purposes of clarifying the importance of including the
study I have offered on insurance for defined contribution plans, and I
would like his comments on the importance in including that study in
the bill.
Mr. BOEHNER. Mr. Speaker, will the gentleman yield?
Mr. SCOTT. I yield to the gentleman from Ohio.
Mr. BOEHNER. Mr. Speaker, I want to thank the gentleman for his work
on this issue, and I want to state that we, too, believe that his study
could be important in informing future public policy positions on this
issue. And we regret that there was not enough time to finish out the
few remaining details of the study to include his provision in this
bill at this time. It is our intention to continue working with him,
the other committee of jurisdiction on this issue, and the other body,
as this issue goes to conference.
Mr. SCOTT. Mr. Speaker, reclaiming my time, I thank the gentleman for
his assurance and look forward to working with him.
Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, can the Chair tell us
how much time each side has remaining?
The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman
from California (Mr. George Miller) has 16\1/2\ minutes remaining, and
the gentleman from Ohio (Mr. Boehner) has 12 minutes remaining.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from Michigan (Mr. Kildee), a senior member of the
committee.
Mr. KILDEE. Mr. Speaker, I thank the gentleman from California for
yielding me the time.
Mr. Speaker, I rise in opposition to H.R. 3762 and in strong support
of the Miller-Rangel substitute. The Enron disaster has illustrated a
number of glaring loopholes in our pension system that led to some
15,000 Enron employees losing more than $1.3 billion from their 401(k)
retirement accounts.
Testimony in our committee indicated that the actions of some Enron
executives went beyond simple misfeasance to actual malfeasance. The
Miller-Rangel substitute ensures that employees will receive honest,
accurate information by providing, first, regular benefit statements to
workers that would include information regarding the importance of
diversification; second, employees will be provided representation on
pension boards; third, the substitute also provides for independent,
nonconflicted investment advice when company stock is offered as an
investment option; and finally, it ensures that executives are not
given special treatment over rank-and-file employees.
Mr. Speaker, the collapse of Enron has revealed a number of serious
flaws in our pension system. This substitute is a major step forward in
addressing those flaws. I urge my colleagues to support the Miller-
Rangel substitute.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to
the gentlewoman from California (Ms. Solis).
Ms. SOLIS. Mr. Speaker, I thank the gentleman from California for
this time.
Mr. Speaker, I rise today in strong opposition to the Republican's
misnamed pension protection bill. Rather than prevent future Enrons,
the Republican version of their plan only weakens our current pension
laws and ignores the very basic reforms that Enron's disaster created
for us.

{time} 1400

Mr. Speaker, unlike the Republican version of pension reform, our
bill would give employees a voice about their pension plans. It
requires a employee representative to serve on pension boards. What a
great idea.
I am sure that the Enron employees who recently lost their life
savings would have loved to have had an opportunity to be at the table
to discuss how their pension plan funds would be spent.
Eliminating the disparity between employer and employee pension
protection goes way beyond just making up the composition of a board.
We must also close the loopholes that provide greater legal protections
for executive retirement plans. Because of this loophole, Enron
executives not only rescued their money from a sinking ship, but they
were also able to shield their luxurious homes and other assets from
attacks by general creditors during the bankruptcy. Once again, the
hard-working rank-and-file men and women of Enron do not enjoy such
protections. Instead, they are vulnerable and left to defend for
themselves.
Mr. Speaker, the Democratic substitute eliminates this special
treatment for executives and levels the playing field for employees. I
urge my colleagues to support the Democratic substitute.
Mr. BOEHNER. Mr. Speaker, I yield 2 minutes to the gentleman from
Nebraska (Mr. Osborne).
Mr. OSBORNE. Mr. Speaker, I join my colleagues in support of the
Pension Security Act. The district that I represent is very rural,
small towns and small businesses; and I think it is important to point
out that most of the business done in this country is done by small
businesses, not by Fortune 500 companies. My father was a small
businessman, and my brother currently runs one.
The number one complaint that I hear is that government regulation is
so burdensome that many small businesses are damaged or driven out of
business entirely. Examples of this would be parts of the Tax Code,
ergonomic regulation, health care paperwork, and retirement plan
paperwork.
The President's plan addresses the major issues that resulted in the
loss of retirement benefits of Enron employees without adding
significant regulatory burdens. I think it strikes a good balance. The
Pension Security Act allows employees to sell stock within 3 years. One
of the major problems at Enron was an employee had to be 55 years of
age or more and had to be employed for 10 years or more.
It prohibits senior executives from selling stock during blackout
periods, and requires 30 days' notice before declaring blackouts.
Neither of these were true in the Enron case.
In addition, the plan requires companies to give regular financial
reports on the value of the stock. Also the President's plan includes
the Retirement Security Advice Act, which has already passed the House,
which provides for increased availability of investment advisers to
assist plan participants in making good decisions about their
investments. Currently, only 16 percent of businesses provide this
advice; and in most cases small businesses do not provide it at all,
whereas roughly 75 percent of employees would like such advice. I think
this would be very helpful.
So the greatest concern I have is that this well-intentioned
substitute, and I am sure it is motivated from good intentions, will
provide safeguards that will really eliminate pension plans, and that
is absolutely something that helps no one.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentlewoman from California (Ms. Sanchez).
Ms. SANCHEZ. Mr. Speaker, as a former investment banker and a small
business owner, I am well aware of the complexities that are involved
with pensions and with private investments. I believe that most bankers
and business owners try to do a good job for their clients and
employees; but many Americans invest too much of their

[[Page H1246]]

money in their company's stock, unaware of the type of problems that
arise, like the ones that we have seen with Enron.
The Pension Security Act opens a dangerous loophole that allows self-
interested people at investment firms to serve as principal financial
advisers to employees and to offer conflicted advice. We saw this as an
example in the Merrill Lynch case detailed in the Washington Post and
other major newspapers.
The Miller-Rangel substitute would offer employees independent
financial advice when company stock is offered as an investment option
under their pension plan. This is just one example of how the Miller-
Rangel substitute offers real reform to our pension system and how the
base bill fails to give employees control over their money.
Mr. Speaker, employees have already lost too much. We must pass
legislation that gives them more security for their retirement, and I
urge my colleagues to reject the base bill and to vote for the Miller-
Rangel substitute.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to
the gentleman from Ohio (Mr. Kucinich).
Mr. KUCINICH. Mr. Speaker, I went to a grade school in suburban
Cleveland about a month ago to talk about current affairs, and I asked
for a show of hands of about 300 grade schoolers, How many have heard
of Enron? Every hand went up. These are first through sixth graders.
And then I asked, What do you know about Enron? Some of the sixth
graders actually knew there were workers who were cheated out of their
pensions. These were sixth graders.
I think it is fair to say just about everybody in America knows about
Enron, and most adults certainly know about the fact that people were
cheated out of their pensions. Everyone in America knows this except
some Members in the House of Representatives. It is as if Enron never
happened.
Mr. Speaker, the bill that we consider today continues special
treatment for company executive pension plans at the expense of the
employees. It is like Enron never happened.
It is just like Enron was some passing fancy, instead of it being
symptomatic of something that is wrong at the core of this system, and
that is that workers do not get fair treatment.
The Miller substitute is the only bill that addresses the inequity
between executives and employees. A vote for the Miller substitute is a
vote for fair treatment for workers. The Miller substitute would
prohibit plans for executives from receiving greater protections under
the law than the 401(k)-type plans that employees have.
As Enron began to implode in a wave of accounting scandals, company
executives not only cashed out millions in company stock, but also
protected themselves through a number of executive-type plans. Enron
employees stand as general creditors to recover 401(k) losses from the
misconduct of the corporation. Enron executives prefunded deferred
compensation plans that were immune from claims of general creditors
once the company went into bankruptcy.
Meanwhile, executive savings plans operate under different rules from
the employees' 401(k) plans. Executive savings plans afford executives
more choice, more protection of assets, and guarantee more money. Most
companies offer these plans. As shown in the 2000 study of Fortune 1000
companies, 86 percent of companies surveyed already had those plans,
with the remainder considering adding one. Enron set up an executive
savings plan that lets participating executives contribute 25 percent
of their salaries and 100 percent of cash bonuses each year. Executives
were guaranteed a 9 percent rate of return on the first 2 years of the
plan, and allowed to put money in a variety of investments. Executives
were not limited to just Enron stock.
In addition, Ken Lay holds a pension that will pay $475,000 each year
for the rest of his life and a prepaid, $12 million life insurance
policy. Think about the workers at Enron. Think about how they have to
worry about making ends meet, how they may not be able to make mortgage
payments, and about how they may not be able to send their kids to
college or have bread on the table. Meanwhile, the executives walk away
wealthier than ever.
Enron executives had similar pension or insurance agreements, but
employees' 401(k)s are drained. They will be lucky if they get their
$4,650 maximum severance pay. The lack of a consistent set of rules
between employees and executives is unjust and unfair, and it should be
illegal. Only the Miller substitute makes it so because executive plans
have legal protections that put a barrier between the money and the
general creditors. Enron executives were protected from losing their
retirement. Employees were totally exposed. It is time we stood up for
the American workers here.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from New Jersey (Mr. Holt).
Mr. HOLT. Mr. Speaker, it is really quite simple. We have learned
some very simple lessons; perhaps we should have learned them a long
time ago, but we certainly should learn them now in light of Enron. The
employees have been left holding the bag, while the corporate
executives, sometimes in a very duplicitous way, walk away with their
options, walk away with their bundles.
We have such a good opportunity here to get things right. But the
bill before us, the underlying bill, fails to give employees notice
when executives are dumping company stock. It fails to hold the plan
fiduciaries accountable and limits the ability of the employees to
collect damages resulting from misconduct under the pension plan. It
denies employees a spot on the pension board. How simple could that be?
Yet the bill fails to do that.
Mr. Speaker, it also continues special treatment of executives. In
other words, executives could continue to have their savings set aside
and protected through their stock options and so forth when a company
fails, while rank and file would be at the end of the line in
bankruptcy holding this empty bag.
Perhaps most important, it fails to give employees early control of
their assets. Anybody's standard financial advice would be to
diversify, and yet the employees are denied the opportunity to
diversify for at least 5 years under the underlying bill. Ordinary
employees would be prevented from diversifying while corporate
executives would be allowed to sell the stock they receive in stock
options. We are missing a real opportunity here to help the employees.
Mr. GEORGE MILLER of California. Mr. Speaker, I have no further
requests for time, and I yield back the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me close with our section on the general debate and
thank my colleagues on both sides of the aisle for their contributions
to this process.
Members on both sides of the aisle believe it is important to protect
retirement security of American workers, and Members need to understand
that there are outdated Federal laws that need to be dealt with.
A bipartisan group of Members believes that the bill, the Pension
Security Act, the base bill today, is the reasonable approach to deal
with this issue in a balanced way that protects the rights of employees
further than it does under current law without driving employers out of
the pension business or discouraging employers from setting up new
pensions; nor does it restrict the ability of employees to make
decisions with regard to their own accounts.
I believe my colleagues on the other side of the aisle want to go too
far, too far that will have unintended consequences. As we get into the
substitute in a few minutes, we will have an opportunity to talk about
those differences and shortcomings.
Mr. MOORE. Mr. Speaker, I rise today to express my reasons for voting
against H.R. 3762, the Pension Security Act, and the Miller-Rangel
substitute to this legislation.
During my time in Congress, I have strongly supported legislation
that would help employees prepare for their retirement. Pension reform
legislation affects all working Americans, and as such both parties in
Congress have a responsibility to work together in a thoughtful and
conscientious manner on this issue. To that end, I am a cosponsor of
the bipartisan Employee Savings Bill of Rights Act, which empowers
employees to take control of their retirement plan investments and
gives workers substantial new rights to avoid over-concentration in the
stock of their own company. By

[[Page H1247]]

modifying the rules that apply to the 401(k) plans and Employee Stock
Ownership Plans (ESOPs) of publicly-traded companies, the Employee
Savings Bill of Rights provides workers with needed control over their
retirement plan investments while preserving the opportunity for
employee ownership. Through new diversification rights, new disclosure
requirements and new tax incentives for retirement education, this
legislation would help employees achieve retirement security through
their 401(k) plans and ESOPs.
I have serious concerns with both H.R. 3762 and the Miller-Rangel
substitute to this legislation. I am disappointed that the House has
not been able to come together on this issue to advance reasonable,
much needed pension reform that will benefit working Americans.
Unfortunately, the substitute overreacts to the unfortunate
circumstances surrounding Enron's historic bankruptcy. Congress has a
duty to the American people to enact responsible legislation that will
benefit employees rather than impose new administrative burdens on
millions of retirement plans.
The substitute would thwart bipartisan efforts to reduce
administrative burdens on employers who voluntarily sponsor retirement
plans by imposing new, expensive rules on such plans. The substitute's
provision that would require retirement plans to insure against vaguely
defined plan asset losses would increase the cost of these retirement
plans, creating a disincentive for employers to offer their employees a
pension plan.
Additionally, under the substitute, a plan participant is allowed to
divest of company stock held in an account after just one year. The
bipartisan Employee Savings Bill of Rights Act, of which I am
cosponsor, requires only current holdings to be diversified out over
five years. The substitute's one-year diversification provision runs
the significant risk of causing disruptions in both plan administration
and the markets.
Further, the substitute would require employers to create joint
employer-employee retirement plan trusteeships. Employers in Kansas's
Third District have assured me that this provision has the potential to
complicate plan administration to the point that some employers may
drop their plans altogether. The working people of this country deserve
a more thoughtful, careful process from their federal representatives.
While the substitute goes too far in seeking to ensure reasonable
safeguards on employer-sponsored retirement plans, the so-called
Pension Security Act does not go far enough in protecting working
Americans. Additionally, I am extremely disappointed that the House
leadership decided to schedule this legislation for floor consideration
instead of the bipartisan Employee Savings Bill of Rights. Last month,
the Ways & Means Committee approved this legislation by a near-
unanimous vote of 36-2. I am frustrated, though not surprised, at the
House leadership's unwillingness to address the important issue of
pension reform in a bipartisan fashion.
I will continue to support bipartisan efforts to reform our nation's
retirement system in a manner that benefits both employers and
employees. I urge my colleagues to do the same.
Mr. ETHERIDGE. Mr. Speaker, I rise in opposition to H.R. 3762, the
Pension Security Act and in support of the Miller Substitute. Today, we
have an important opportunity to protect our working families and their
retirement security from greedy, unscrupulous corporate wrongdoers.
But, Mr. Speaker the Republican Leadership has wasted that opportunity.
Earlier this year, the Ways and Means Committee passed a truly
bipartisan pension reform bill. But, the Republican Majority chose to
merge that bipartisan measure with a controversial bill passed by the
Education and Workforce Committee. The product of that merger, H.R.
3762, does not protect employee pensions, fails to prevent future
scandals like Enron, and opens a new loophole that jeopardizes employee
savings. H.R. 3762 also establishes complicated diversification rules
that do not allow workers substantial control over their retirement
investments. Under the Miller Substitute employees would be able to
diversify company-matched stock after three years of participation in a
401K plan.
Under current law, employees are allowed to receive independent,
comprehensive investment information as a part of their employee
benefits package. H.R. 3762 would overturn current law, and allow
employers to offer conflicted investment advice to their employees.
Financial institutions should not be able to give an employee
investment advice if the financial institution stands to profit from
that advice. About 15,000 Enron employees lost their retirement savings
because Ken Lay and other Enron executives assured their employees that
Enron stock was a sound investment. Ken Lay and his cronies lined their
pockets while they misled their employees with bad advice. The
conflicted investment advice provisions in this bill would set workers
up for another Enron. Mr. Speaker, we know all too well the corrupting
power of greed.
In contrast the Miller Substitute would offer employees honest,
accurate, and timely investment information. It would prohibit pension
plans from giving misleading information, require that workers receive
regular benefit statements and are notified of plan lockdowns at least
30-days in advance.
As more Americans turn to 401K and other retirement plans to help
them prepare for their golden years, we must act to prevent future
Enrons. The Republican Leadership had an opportunity to act in
bipartisan manner to protect the retirement security of working
families, but they chose not do so. H.R. 3762 fails to solve our
pension law problems. In fact, the bill would actually create new ones.
The Miller Substitute protects workers and their investments from
greedy corporate entities, provides unbaised, independent investment
advice, and gives employees control over their retirement savings.
I urge my colleagues to oppose H.R. 3762 and to vote for the Miller
Substitute.
Mr. BLUMENAUER. Mr. Speaker, I rise today in strong opposition to
H.R. 3762, the Republican leadership's missed opportunity to address
concerns for the security of working Americans' pension plans. I fully
support the Democratic substitute amendment, which makes an honest
attempt to correct the problems apparent in the wake of the Enron
debacle.
I represent as many Enron survivors as anyone outside of Houston.
Portland, Oregon is the home of Portland General Electric (PGE), a
stable utility company founded in 1889 that has provided steady
employment to 2,700 employees. Enron purchased PGE in 1997. PGE line
employees did not volunteer for this takeover. They were working for a
profitable and respected company, earning a fair salary and saving for
retirement in a stable pension plan. After Enron's purchase of PGE, it
was only a few years before the stability of Enron. PGE and their
employee's retirement savings began to unravel. Enron executives
continued to encourage employee investment in Enron stock and spoke of
the integrity of the comapny's financial position, while they sold
their personal holdings of Enron stock and drove the company into
bankruptcy proceedings.
I have seen the pain and disbelief of PGE employees firsthand. Dozens
of people I know personally have had dreams shattered, been forced to
postpone life decisions and delay retirement. Those involved in the
Enron debacle have failed and abused honest hardworking employees in my
district and across the country.
Sadly, it may yet be determined that past Congressional and
governmental actions contributed to the betrayal of these honest
employees. Today, we have the opportunity to pass legislation that can
help to prevent the destruction of working families' lives and
retirement savings in the future. It would be tragic if Congress fails
American workers again, which will surely happen under the Republican
leadership's proposal. The Republican pension bill not only falls short
of improving an obviously flawed pension system, but actually weakens
current law by providing employees with biased and conflicted
investment advice without access to an independent alternative.
To provide true security for retirement savings, pension reform must:
hold corporate executives accountable for their actions,
give employees control over their own retirement dollars.
ensure workers a voice on management pension boards, and
provide independent advice for workers.
I strongly support the Democratic substitute amendment, which will
provide these needed reforms and help protect workers' retirement
savings from the misdeeds of executives and corporations. The pain I
have witnessed firsthand among the PGE employees in my district demands
that Congress provide true pension security.
Mr. MEEHAN. Mr. Speaker, today, the House voted on H.R. 3762, the
Pension Security Act. Had I been present, I would have voted in favor
of the Democratic substitute authored by Representatives Miller and
Rangel and against final passage of H.R. 3762, the so-called Pension
Security Act.
I would have opposed H.R. 3762, the Republican proposal, because it
would have done little to prevent future ``Enron'' scenarios, where
executives and pension administrators withheld financial information
from the employees of that company. Without the necessary information
about the financial status of the company, Enron's non-executive
employees then lost the bulk of their retirement sayings when the value
of the company's stock fell through the floor.
H.R. 3762 fails to require anyone to alert employees when company
officials begin dumping company stock, as Enron executives did just
before the value of Enron stock dropped dramatically on the market.
H.R. 3762 also fails to hold fiduciaries of pension plans accountable
if they violate the law. Furthermore, under H.R. 3762, employees

[[Page H1248]]

would not have the option to fully diversify their stock in a timely
manner, nor would they have a voice in the administration and
protection of their retirement savings. Combined, these failings would
leave future workers vulnerable to the same type of financial disaster
facing Enron's employees today.
I would have supported the Democratic substitute to H.R. 3762 because
I believe it would go a long way towards preventing a future ``Enron''
situation from occurring. The Democratic substitute to H.R. 3762 would
arm employees with the same access to information as corporate
executives, giving employees the tolls they need to make informed
investment decisions regarding their pension plans. Moreover, H.R. 3762
would give employees representation on the boards that manage pension
plans and a say in the administration and protection of those plans. I
would have also supported the Democratic substitute because it would
require executives to notify the pension plan when they are selling
large amounts of company stock, and it would give the employees the
right to diversify their investments as soon as they are vested in the
funds.
I was unable to vote for the Democratic plan and against H.R. 3762
because of a compelling obligation in my Congressional district
occurring at the time of the votes. Former Mayor of New York City
Rudolph Guiliani is giving remarks in Lowell, Massachusetts today--
which is located in my Congressional District. Mayor Giuliani
demonstrated superb and heralded leadership immediately following the
September 11th terrorist attacks on the World Trade Center in New York
City. Tragically, 30 of my constituents lost their lives in those
attacks, as they were on the American Airlines jet which was one of two
airplanes that crashed into the Twin Towers. Their families continue to
mourn the loss of parents, children and siblings and every day feel the
pain that terrorism has visited upon them. Mayor Giuliani has provided
unique comfort to families who lost loved ones on September 11th
because of his boundless compassion, tremendous leadership in the face
of unspeakable tragedy, and unstinting efforts to help these families
overcome the financial and emotional difficulties caused by this
terrible event. I have accordingly arranged for the Mayor to meet
privately with these families at my residence and will miss these votes
to attend that gathering.
As I was unable to vote for the Democratic substitute today, I am
looking forward to having the opportunity to vote for a balanced and
effective pension reform bill that I hope will be the result of a
House-Senate compromise on this critical issue.
Ms. HARMAN. Mr. Speaker, the collapse of Enron and its impact on
employees' retirement plans underscores the need to enact additional
federal protections.
The bill before us is a step in that direction. It is far from
perfect--but perfection is not an option. Forward progress is.
Similarly, the substitute amendment offered by my colleagues, George
Miller and Charles Rangel, is not perfect either. While making some
improvements over the committee bill, it too has some features that may
have the effect of discouraging employers from providing retirement
benefits to employees.
Striking the right balance is often a difficult task. But it is
especially difficult in an area like defined contribution pension plans
where a poor investment or management decision may cause untold
financial hardship on individuals in or near their retirement years.
We clearly need to move the process of reform forward--hopefully
combining the best features of both the bill and substitute and more
thoroughly vetting the more problematic features of each.
Mr. Speaker, we don't have the luxury of doing nothing. We have long
recognized the outdated nature of many of our pension laws. Enron's
collapse has provided the impetus for action.
Protecting workers' retirement benefits and encouraging the expansion
of pension plans to more companies and workers are positive goals in
the abstract. But writing the rules is always more difficult.
We should proceed carefully.
Mr. KIND. Mr. Speaker, this past winter, thousands of ENRON
employees, stockholders, and their families saw their life savings
disappear. While their nest eggs were being crushed, top executives
were selling stock at top dollar and the auditors were shredding
documents. The ENRON debacle shook the foundation of our country's
private pension system and caused many people to wonder if the same
thing could happen to them. Today, 46 million Americans participate in
401(k) and other pension programs with more than $4 trillion invested
in the private pension system.
Congress has a responsibility to improve retirement security and
restore confidence in the pension system for millions of Americans. In
1974, Congress enacted the Employee Retirement Income Security Act
(ERISA) to provide protection of pension benefits for American's
private sector employees. While ERISA made great strides, the growth of
401(k) plans and increased participation in the securities markets call
for improved safeguards to protect these individually controlled
pension accounts.
Our Democratic substitute includes important provisions that should
be included in the underlying bill. For example, the Miller bill would
provide employees a voice on their pension board where critical
decisions about workers' retirement security are made. In addition, the
substitute seeks parity of benefits for executives and rank-and-file
workers by closing a current loophole that gives special treatment for
executive pension plans.
While I would prefer that the legislation on the floor today contain
some of the provisions included in the Miller substitute, the Pension
Security Act, is a step in the right direction to provide employees
more control and decision making over their 401(k) plans. Pension
reform must be carefully done so as not to impose such onerous new
restrictions that employers would be unwilling to offer pension plans,
or might be encouraged to discontinue the plans they already offer.
Specifically HR 3762 would:
Allow employees to sell their company-contributed stock after three
years.
Ensures that corporate executives are held to the same restrictions
as average American workers during ``lockdown'' periods.
Provide workers quarterly statements about their investments and
their rights to diversify them.
Ensure that employers assume full fiduciary responsibility during
``lockdown'' periods.
Expand workers' access to investment advice.
These are common sense reforms that will help employees make better,
more informed investment choices to prepare for their golden years. The
ENRON scandal exposed weaknesses in our pension laws that could
jeopardize these retirement savings. Hardworking Americans should not
lose all of their retirement savings due to the wrong doing of
corporate executives and loopholes in our pension laws. The
legislation, while not perfect, will bring much needed improvements to
our private pension system and help millions of American workers save
for a happy and healthy retirement.
Mr. BOEHNER. Mr. Speaker, I yield back the balance of my time.

Amendment in the Nature of a Substitute Offered by Mr. George Miller of
California

Mr. GEORGE MILLER of California. Mr. Speaker, I offer an amendment in
the nature of a substitute.
The SPEAKER pro tempore (Mr. Dan Miller of Florida). The Clerk will
designate the amendment in the nature of a substitute.
The text of the amendment in the nature of a substitute is as
follows:

Amendment in the nature of a substitute offered by Mr.
George Miller of California:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Employee
Pension Freedom Act of 2002''.
(b) Table of Contents.--The table of contents is as
follows:

Sec. 1. Short title and table of contents.

TITLE I--IMPROVEMENTS IN DISCLOSURE

Sec. 101. Pension benefit information.
Sec. 102. Immediate warning of excessive stock holdings.
Sec. 103. Additional fiduciary protections relating to lockdowns.
Sec. 104. Report to participants and beneficiaries of trades in
employer securities.
Sec. 105. Provision to participants and beneficiaries of material
investment information in accurate form.
Sec. 106. Enforcement of information and disclosure requirements.

TITLE II--DIVERSIFICATION REQUIREMENTS

Sec. 201. Freedom to make investment decisions with plan assets.
Sec. 202. Effective date of title.

TITLE III--EMPLOYEE REPRESENTATION

Sec. 301. Participation of participants in trusteeship of individual
account plans.

TITLE IV--EXECUTIVE PARITY

Sec. 401. Inclusion in gross income of funded deferred compensation of
corporate insiders if corporation funds defined
contribution plan with employer stock.
Sec. 402. Insider trades during pension fund blackout periods
prohibited.

TITLE V--INCREASED ACCOUNTABILITY

Sec. 501. Bonding or insurance adequate to protect interest of
participants and beneficiaries.
Sec. 502. Liability for breach of fiduciary duty.
Sec. 503. Preservation of rights or claims.
Sec. 504. Office of Pension Participant Advocacy.

[[Page H1249]]

Sec. 505. Additional criminal penalties.
Sec. 506. Study regarding insurance system for individual account
plans.

TITLE VI--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

Sec. 601. Independent investment advice.
Sec. 602. Tax treatment of qualified retirement planning services.

TITLE VII--GENERAL PROVISIONS

Sec. 701. General effective date.
Sec. 702. Plan amendments.

TITLE I--IMPROVEMENTS IN DISCLOSURE

SEC. 101. PENSION BENEFIT INFORMATION.

(a) Pension Benefit Statements Required on Periodic
Basis.--
(1) In general.--Subsection (a) of section 105 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1025) is amended--
(A) by striking ``shall furnish to any plan participant or
beneficiary who so requests in writing,'' and inserting
``shall furnish at least once every 3 years, in the case of a
participant in a defined benefit plan who has attained age
35, and annually, in the case of an individual account plan,
to each plan participant, and shall furnish to any plan
participant or beneficiary who so requests,'', and
(B) by adding at the end the following flush sentence:

``Information furnished under the preceding sentence to a
participant in a defined benefit plan (other than at the
request of the participant) may be based on reasonable
estimates determined under regulations prescribed by the
Secretary.''.
(2) Model statement.--Section 105 of such Act (29 U.S.C.
1025) is amended by adding at the end the following new
subsection:
``(e)(1) The Secretary of Labor shall develop a model
benefit statement which shall be used by plan administrators
in complying with the requirements of subsection (a). Such
statement shall include--
``(A) the amount of nonforfeitable accrued benefits as of
the statement date which is payable at normal retirement age
under the plan,
``(B) the amount of accrued benefits which are forfeitable
but which may become nonforfeitable under the terms of the
plan,
``(C) the amount or percentage of any reduction due to
integration of the benefit with the participant's Social
Security benefits or similar governmental benefits,
``(D) information on early retirement benefit and joint and
survivor annuity reductions, and
``(E) the percentage of the net return on investment of
plan assets for the preceding plan year (or, with respect to
investments directed by the participant, the net return on
investment of plan assets for such year so directed),
itemized with respect to each type of investment, and, stated
separately, the administrative and transaction fees incurred
in connection with each such type of investment, and
``(F) in the case of an individual account plan, the amount
and 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.
``(2) The Secretary shall also develop a separate notice,
which shall be included by the plan administrator with the
information furnished pursuant to subsection (a), which
advises participants and beneficiaries of generally accepted
investment principles, including principles of risk
management and diversification for long-term retirement
security and the risks of holding substantial asssets in a
single asset such as employer securities.''.
(3) Rule for multiemployer plans.--Subsection (d) of
section 105 of such Act (29 U.S.C. 1025) is amended to read
as follows:
``(d) Each administrator of a plan to which more than 1
unaffiliated employer is required to contribute shall furnish
to any plan participant or beneficiary who so requests in
writing, a statement described in subsection (a).''.
(b) Disclosure of Benefit Calculations.--
(1) In general.--Section 105 of such Act (as amended by
subsection (a)) is amended further--
(A) by redesignating subsections (b), (c), (d), and (e) as
subsections (c), (d), (e), and (f), respectively; and
(B) by inserting after subsection (a) the following new
subsection:
``(b)(1) In the case of a participant or beneficiary who is
entitled to a distribution of a benefit under an employee
pension benefit plan, the administrator of such plan shall
provide to the participant or beneficiary the information
described in paragraph (2) upon the written request of the
participant or beneficiary.
``(2) The information described in this paragraph
includes--
``(A) a worksheet explaining how the amount of the
distribution was calculated and stating the assumptions used
for such calculation,
``(B) upon written request of the participant or
beneficiary, any documents relating to the calculation (if
available), and
``(C) such other information as the Secretary may
prescribe.

Any information provided under this paragraph shall be in a
form calculated to be understood by the average plan
participant.''.
(2) Conforming amendments.--
(A) Section 101(a)(2) of such Act (29 U.S.C. 1021(a)(2)) is
amended by striking ``105(a) and (c)'' and inserting
``105(a), (b), and (d)''.
(B) Section 105(c) of such Act (as redesignated by
paragraph (1)(A) of this subsection) is amended by inserting
``or (b)'' after ``subsection (a)''.
(C) Section 106(b) of such Act (29 U.S.C. 1026(b)) is
amended by striking ``sections 105(a) and 105(c)'' and
inserting ``subsections (a), (b), and (d) of section 105''.
(c) Amendments to Internal Revenue Code of 1986.--
(1) Excise tax on failure of defined contribution plans to
provide notice of generally accepted investment principles.--
Chapter 43 of the Internal Revenue Code of 1986 (relating to
qualified pension, etc., plans) is amended by adding at the
end the following new section:

``SEC. 4980I. FAILURE OF DEFINED CONTRIBUTION PLANS TO
PROVIDE NOTICE OF GENERALLY ACCEPTED INVESTMENT
PRINCIPLES.

``(a) Imposition of Tax.--There is hereby imposed a tax on
the failure of any defined contribution plan to meet the
requirements of subsection (e) with respect to any
participant or beneficiary.
``(b) Amount of Tax.--The amount of the tax imposed by
subsection (a) on any failure with respect to any participant
or beneficiary shall be $1,000 for each day on which such
failure is not corrected.
``(c) Limitations on Amount of Tax.--
``(1) Tax not to apply to failures corrected as soon as
reasonably practicable.--No tax shall be imposed by
subsection (a) on any failure if--
``(A) any person subject to liability for the tax under
subsection (d) exercised reasonable diligence to meet the
requirements of subsection (e), and
``(B) such person provides the notice described in
subsection (e) as soon as reasonably practicable after the
first date such person knew, or exercising reasonable
diligence should have known, that such failure existed.
``(2) Overall limitation for unintentional failures.--
``(A) In general.--If the person subject to liability for
tax under subsection (d) exercised reasonable diligence to
meet the requirements of subsection (e), the tax imposed by
subsection (a) for failures during the taxable year of the
employer (or, in the case of a multiemployer plan, the
taxable year of the trust forming part of the plan) shall not
exceed $500,000. For purposes of the preceding sentence, all
multiemployer plans of which the same trust forms a part
shall be treated as 1 plan.
``(B) Taxable years in the case of certain controlled
groups.--For purposes of this paragraph, if all persons who
are treated as a single employer for purposes of this section
do not have the same taxable year, the taxable years taken
into account shall be determined under principles similar to
the principles of section 1561.
``(3) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of such tax
would be excessive or otherwise inequitable relative to the
failure involved.
``(d) Liability for Tax.--The following shall be liable for
the tax imposed by subsection (a):
``(1) In the case of a plan other than a multiemployer
plan, the employer.
``(2) In the case of a multiemployer plan, the plan.
``(e) Requirements Relating to Notice of Generally Accepted
Investment Principles.--The plan administrator of any defined
contribution plan shall provide annually a separate notice
which advises participants and beneficiaries of generally
accepted investment principles, including principles of risk
management and diversification for long-term retirement
security and the risks of holding substantial assets in a
single asset such as employer securities.''.
(2) Clerical amendment.--The table of sections for chapter
43 of such Code is amended by adding at the end the following
new item:2

``SEC. 4980I. FAILURE OF DEFINED CONTRIBUTION PLANS TO
PROVIDE NOTICE OF GENERALLY ACCEPTED INVESTMENT
PRINCIPLES.''.

SEC. 102. IMMEDIATE WARNING OF EXCESSIVE STOCK HOLDINGS.

Section 105 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1025) (as amended by section 101 of this
Act) is amended further by adding at the end the following
new subsection:
``(g)(1) Upon receipt of information by the plan
administrator of an individual account plan indicating that
the individual account of any participant which had not been
excessively invested in employer securities is excessively
invested in such securities (or that such account, as
initially invested, is excessively invested in employer
securities), the plan administrator shall immediately provide
to the participant a separate, written statement--
``(A) indicating that the participant's account has become
excessively invested in employer securities,
``(B) setting forth the notice described in subsection
(e)(7), and
``(C) referring the participant to investment education
materials and investment advice which shall be made available
by or under the plan.

In any case in which such a separate, written statement is
required to be provided to a

[[Page H1250]]

participant under this paragraph, each statement issued to
such participant pursuant to subsection (a) thereafter shall
also contain such separate, written statement until the plan
administrator is made aware that such participant's account
has ceased to be excessively invested in employer securities
or the employee, in writing, waives the receipt of the notice
and acknowledges understanding the importance of
diversification.
``(2) Each notice required under this subsection shall be
provided in a form and manner which shall be prescribed in
regulations of the Secretary. Such regulations shall provide
for inclusion in the notice a prominent reference to the
risks of large losses in assets available for retirement from
excessive investment in employer securities.
``(3) For purposes of paragraph (1), a participant's
account is `excessively invested' in employer securities if
more than 10 percent of the balance in such account is
invested in employer securities (as defined in section
407(d)(1)).''.

SEC. 103. ADDITIONAL FIDUCIARY PROTECTIONS RELATING TO
LOCKDOWNS.

(a) Amendment to Employee Retirement Income Security Act of
1974.--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) In the case of any eligible individual account
plan (as defined in section 407(d)(3)) 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 to each employee organization
representing any such participant).
``(2) Subject to such regulations as the Secretary may
prescribe, the requirements of paragraph (1) shall not apply
in cases of emergency.
``(3) A plan described in paragraph (1) shall provide that
each participant and beneficiary required to receive a notice
under paragraph (1)(A) is entitled to direct the plan to
divest within 3 business days (but in no event later than the
beginning of the lockdown) any security or other property in
which any assets allocated to the account of such individual
are invested and to reinvest such assets in any other
investment option offered under the plan.
``(4) For purposes of this subsection, the term `lockdown'
means any temporary lockdown, blackout, or freeze with
respect to, suspension of, or similar limitation on the
ability of a participant or beneficiary to exercise control
over the assets in his or her account as otherwise generally
provided under the plan (as determined under regulations of
the Secretary), including the ability to direct investments,
obtain loans, or obtain distributions.''.
(b) Amendments to Internal Revenue Code of 1986.--
(1) Excise tax on failures with respect to lockdowns.--
Chapter 43 of the Internal Revenue Code of 1986 (relating to
qualified pension, etc., plans) is amended by adding at the
end the following new section:

``SEC. 4980G. FAILURE OF DEFINED CONTRIBUTION PLANS WITH
RESPECT TO LOCKDOWNS.

``(a) Imposition of Tax.--There is hereby imposed a tax on
the failure of any defined contribution plan to meet the
requirements of subsection (e) with respect to any
participant or beneficiary.
``(b) Amount of Tax.--The amount of the tax imposed by
subsection (a) on any failure with respect to any participant
or beneficiary shall be $100.
``(c) Limitations on Amount of Tax.--
``(1) Tax not to apply to failures corrected as soon as
reasonably practicable.--No tax shall be imposed by
subsection (a) on any failure if--
``(A) any person subject to liability for the tax under
subsection (d) exercised reasonable diligence to meet the
requirements of subsection (e), and
``(B) such person meets the requirements of subsection (e)
as soon as reasonably practicable after the first date such
person knew, or exercising reasonable diligence should have
known, that such failure existed.
``(2) Overall limitation for unintentional failures.--
``(A) In general.--If the person subject to liability for
tax under subsection (d) exercised reasonable diligence to
meet the requirements of subsection (e), the tax imposed by
subsection (a) for failures during the taxable year of the
employer (or, in the case of a multiemployer plan, the
taxable year of the trust forming part of the plan) shall not
exceed $500,000. For purposes of the preceding sentence, all
multiemployer plans of which the same trust forms a part
shall be treated as 1 plan.
``(B) Taxable years in the case of certain controlled
groups.--For purposes of this paragraph, if all persons who
are treated as a single employer for purposes of this section
do not have the same taxable year, the taxable years taken
into account shall be determined under principles similar to
the principles of section 1561.
``(3) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of such tax
would be excessive or otherwise inequitable relative to the
failure involved.
``(d) Liability for Tax.--The following shall be liable for
the tax imposed by subsection (a):
``(1) In the case of a plan other than a multiemployer
plan, the employer.
``(2) In the case of a multiemployer plan, the plan.
``(e) Requirements Relating to Lockdowns.--
``(1) In general.--In the case of any defined contribution
plan no lockdown may take effect until at least 30 days after
written notice of such lockdown is provided by the plan
administrator to each participant or beneficiary (and to each
employee organization representing any such participant).
``(2) Exception for emergency.--Subject to such regulations
as the Secretary may prescribe, the requirements of paragraph
(1) shall not apply in cases of emergency.
``(3) Requirement relating to divestment.--A plan described
in paragraph (1) shall provide that each participant and
beneficiary required to receive a notice under paragraph
(1)(A) is entitled to direct the plan to divest within 3
business days (but in no event later than the beginning of
the lockdown) any security or other property in which any
assets allocated to the account of such individual are
invested and to reinvest such assets in any other investment
option offered under the plan.
``(4) Lockdown defined.--For purposes of this subsection,
the term `lockdown' means any temporary lockdown, blackout,
or freeze with respect to, suspension of, or similar
limitation on the ability of a participant or beneficiary to
exercise control over the assets in his or her account as
otherwise generally provided under the plan (as determined
under regulations of the Secretary), including the ability to
direct investments, obtain loans, or obtain distributions.''.
(2) Clerical amendment.--The table of sections for chapter
43 of such Code is amended by adding at the end the following
new item:

``SEC. 4980G. FAILURE OF DEFINED CONTRIBUTION PLANS WITH
RESPECT TO LOCKDOWNS.''.

SEC. 104. REPORT TO PARTICIPANTS AND BENEFICIARIES OF TRADES
IN EMPLOYER SECURITIES.

(a) In General.--Section 104 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1024) is amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following new
subsection:
``(d)(1) In any case in which assets in the individual
account of a participant or beneficiary under an individual
account plan include employer securities, if any person
engages in a transaction constituting a direct or indirect
purchase or sale of employer securities and--
``(A) such transaction is required under section 16 of the
Securities Exchange Act of 1934 to be reported by such person
to the Securities and Exchange Commission, or
``(B) such person is a named fiduciary of the plan,
such person shall comply with the requirements of paragraph
(2).
``(2) A person described in paragraph (1) complies with the
requirements of this paragraph in connection with a
transaction described in paragraph (1) if such person
provides to the plan administrator of the plan a written
notification of the transaction not later than 1 business day
after the date of the transaction.
``(3)(A) If the plan administrator is made aware, on the
basis of notifications received pursuant to paragraph (2) or
otherwise, that the proceeds from any transaction described
in paragraph (1), constituting direct or indirect sales of
employer securities by any person described in paragraph (1),
exceed $100,000, the plan administrator of the plan shall
provide to each participant and beneficiary a notification of
such transaction. Such notification shall be in writing,
except that such notification may be in electronic or other
form to the extent that such form is reasonably accessible to
the participant or beneficiary.
``(B) In any case in which the proceeds from any
transaction described in paragraph (1) (with respect to which
a notification has not been provided pursuant to this
paragraph), together with the proceeds from any other such
transaction or transactions described in paragraph (1)
occurring during the preceding one-year period, constituting
direct or indirect sales of employer securities by any person
described in paragraph (1), exceed (in the aggregate)
$100,000, such series of transactions by such person shall be
treated as a transaction described in subparagraph (A) by
such person.
``(C) Each notification required under this paragraph shall
be provided as soon as practicable, but not later than 3
business days after receipt of the written notification or
notifications indicating that the transaction (or series of
transactions) requiring such notice has occurred.
``(4) Each notification required under paragraph (2) or (3)
shall be made in such form and manner as may be prescribed in
regulations of the Secretary and shall include the number of
shares involved in each transaction and the price per share,
and the notification required under paragraph (3) shall be
written in language designed to be understood by the average
plan participant. The Secretary may provide by regulation, in
consultation with the Securities and Exchange Commission, for
exemptions from the requirements of this subsection with
respect to specified types of transactions to the extent that
such exemptions are consistent with the best interests of
plan participants and beneficiaries. Such exemptions may
relate to transactions involving reinvestment plans, stock
splits, stock dividends, qualified domestic relations orders,
and similar matters.

[[Page H1251]]

``(5) For purposes of this subsection, the term `employer
security' has the meaning provided in section 407(d)(1).''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to transactions occurring on or
after July 1, 2002.

SEC. 105. PROVISION TO PARTICIPANTS AND BENEFICIARIES OF
MATERIAL INVESTMENT INFORMATION IN ACCURATE
FORM.

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 have a fiduciary duty
to ensure that each participant and beneficiary under the
plan, in connection with the investment by the participant or
beneficiary of plan assets in the exercise of his or her
control over assets in his account, is provided with all
material investment information regarding investment of such
assets to the extent that the provision of 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 misleading investment
information shall be treated as a violation of this
paragraph.''.

SEC. 106. ENFORCEMENT OF INFORMATION AND DISCLOSURE
REQUIREMENTS.

(a) In General.--Section 502(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1132(c)) is amended--
(1) by redesignating paragraph (7) as paragraph (8); and
(2) by inserting after paragraph (6) the following new
paragraph:
``(7) The Secretary may assess a civil penalty against any
person required to provide any notification under the
provisions of section 104(d), any statement under the
provisions of subsection (a), (d), or (f) of section 105, any
information under the provisions of section 404(c)(4), or any
notice under the provisions of section 404(f)(1) of up to
$1,000 a day from the date of any failure by such person to
provide such notification, statement, information, or notice
in accordance with such provisions.''.
(b) Conforming Amendment.--Section 502(a)(6) of such Act
(29 U.S.C. 1132(a)(6)) (as amended by section 102(b)) is
amended further by striking ``(5), or (6)'' and inserting
``(5), (6), or (7)''.

TITLE II--DIVERSIFICATION REQUIREMENTS

SEC. 201. FREEDOM TO MAKE INVESTMENT DECISIONS WITH PLAN
ASSETS.

(a) Amendments to the Employee Retirement Income Security
Act of 1974.--Section 404 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104) (as amended by section
103) is amended further by adding at the end the following
new subsection:
``(f)(1)(A)(i) Subject to clause (ii), 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--
``(I) any such participant or beneficiary has the right to
allocate all assets in his or her account (and any portion
thereof) attributable to employee contributions to any
investment option provided under the plan, and
``(II) any such participant who has completed 3 years of
service (as defined in section 203(b)(2)) with the employer,
or any such beneficiary of such a participant, has the right
to allocate all assets in his or her account (and any portion
thereof) attributable to employer contributions to any
investment option provided under the plan.

The application of any penalty or any restriction based on
age or years of service in connection with any exercise of
such right as provided under this clause shall be construed
as a violation of this clause.
``(ii) Clause (i) shall apply only to so much of a
nonforfeitable accrued benefit as consists of employer
securities which are readily tradable on an established
securities market.
``(B)(i) Except as provided in clause (ii), within 5 days
after the date of any election by a participant or
beneficiary allocating his or her nonforfeitable accrued
benefit to any investment option provided under the plan, the
plan administrator shall take such actions as are necessary
to effectuate such allocation.
``(ii) In any case in which the plan provides for elections
periodically during prescribed periods, the 5-day period
described in clause (i) shall commence at the end of each
such prescribed period.
``(C) Nothing in this paragraph shall be construed to limit
the authority of a plan to impose limitations on the portion
of plan assets in any account which may be invested in
employer securities to the extent that any such limitation is
consistent with this title and not more restrictive than is
permitted under this title.
``(2) Not later than 30 days prior to the date on which the
right of a participant under an individual account plan to
his or her accrued benefit becomes nonforfeitable, the plan
administrator shall provide to such participant and his or
her beneficiaries a written notice--
``(A) setting forth their rights under this section with
respect to the accrued benefit, and
``(B) describing the importance of diversifying the
investment of account assets.''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Excise tax on failure to permit diversification of
employer securities.--Chapter 43 of the Internal Revenue Code
of 1986 (relating to qualified pension, etc., plans) is
amended by adding at the end the following new section:

``SEC. 4980H. FAILURE OF DEFINED CONTRIBUTION PLANS TO PERMIT
DIVERSIFICATION OF EMPLOYER SECURITIES.

``(a) Imposition of Tax.--There is hereby imposed a tax on
the failure of any defined contribution plan to meet the
requirements of subsection (e) with respect to any
participant or beneficiary.
``(b) Amount of Tax.--The amount of the tax imposed by
subsection (a) on any failure with respect to any participant
or beneficiary shall be $1,000 for each day for which the
failure is not corrected.
``(c) Limitations on Amount of Tax.--
``(1) Tax not to apply to failures corrected as soon as
reasonably practicable.--No tax shall be imposed by
subsection (a) on any failure if--
``(A) any person subject to liability for the tax under
subsection (d) exercised reasonable diligence to meet the
requirements of subsection (e), and
``(B) such person meets the requirements of subsection (e)
as soon as reasonably practicable after the first date such
person knew, or exercising reasonable diligence should have
known, that such failure existed.
``(2) Overall limitation for unintentional failures.--
``(A) In general.--If the person subject to liability for
tax under subsection (d) exercised reasonable diligence to
meet the requirements of subsection (e), the tax imposed by
subsection (a) for failures during the taxable year of the
employer (or, in the case of a multiemployer plan, the
taxable year of the trust forming part of the plan) shall not
exceed $500,000. For purposes of the preceding sentence, all
multiemployer plans of which the same trust forms a part
shall be treated as 1 plan.
``(B) Taxable years in the case of certain controlled
groups.--For purposes of this paragraph, if all persons who
are treated as a single employer for purposes of this section
do not have the same taxable year, the taxable years taken
into account shall be determined under principles similar to
the principles of section 1561.
``(3) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of such tax
would be excessive or otherwise inequitable relative to the
failure involved.
``(d) Liability for Tax.--The following shall be liable for
the tax imposed by subsection (a):
``(1) In the case of a plan other than a multiemployer
plan, the employer.
``(2) In the case of a multiemployer plan, the plan.
``(e) Requirements Relating to Diversification of Employer
Security.--
``(1) In general.--The requirements of this subsection are
the requirements of paragraphs (2), (3), and (4).
``(2) Right to direct investments.--
``(A) In general.--Subject to subparagraph (B), a plan
meets the requirements of this paragraph if, under the plan--
``(i) any participant or beneficiary who is permitted to
exercise control over assets in his or her account has the
right to allocate all assets in his or her account (and any
portion thereof) attributable to employee contributions to
any investment option provided under the plan, and
``(ii) any such participant who has completed 3 years of
service (as defined in section 411(a)(5)) with the employer,
or any such beneficiary of such a participant, has the right
to allocate all assets in his or her account (and any portion
thereof) attributable to employer contributions to any
investment option provided under the plan.

The application of any penalty or any restriction based on
age or years of service in connection with any exercise of
such right as provided under this clause shall be construed
as a violation of this clause.
``(B) Limitation to readily tradable employer securities.--
Subparagraph (A) shall apply only to so much of a
nonforfeitable accrued benefit as consists of employer
securities which are readily tradable on an established
securities market.
``(3) Prompt compliance with directions to allocate
investments.--
``(A) In general.--Except as provided in subparagraph (B),
a plan meets the requirements of this paragraph if the plan
provides that, within 5 days after the date of any election
by a participant or beneficiary allocating his or her
nonforfeitable accrued benefit to any investment option
provided under the plan, the plan administrator shall take
such actions as are necessary to effectuate such allocation.
``(B) Special rule for periodic elections.--In any case in
which the plan provides for elections periodically during
prescribed periods, the 5-day period described in
subparagraph (A) shall commence at the end of each such
prescribed period.
``(4) Notice of rights and of importance of
diversification.--A plan meets the requirements of this
paragraph if the plan provides that, not later than 30 days
prior to the date on which the right of a participant under
the plan to his or her accrued benefit

[[Page H1252]]

becomes nonforfeitable, the plan administrator shall provide
to such participant and his or her beneficiaries a written
notice--
``(A) setting forth their rights under this section with
respect to the accrued benefit, and
``(B) describing the importance of diversifying the
investment of account assets.
``(5) Preservation of authority of plan to limit
investment.--Nothing in this subsection shall be construed to
limit the authority of a plan to impose limitations on the
portion of plan assets in any account which may be invested
in employer securities.''.
(2) Clerical amendment.--The table of sections for chapter
43 of such Code is amended by adding at the end the following
new item:

``SEC. 4980H. FAILURE OF DEFINED CONTRIBUTION PLANS TO PERMIT
DIVERSIFICATION OF EMPLOYER SECURITIES.''.

(c) Recommendations Relating to Non-Publicly Traded
Stock.--Within 1 year after the date of the enactment of this
Act, the Secretary of Labor and the Secretary of the Treasury
shall jointly transmit to the Committee on Education and the
Workforce and the Committee on Ways and Means of the House of
Representatives and the Committee on Health, Education,
Labor, and Pensions and the Committee on Finance of the
Senate their recommendations regarding legislative changes
relating to treatment, under section 404(e) of the Employee
Retirement Income Security Act of 1974 and section 401(a)(35)
of the Internal Revenue Code of 1986 (as added by this
section), of individual account plans under which a
participant or beneficiary is permitted to exercise control
over assets in his or her account, in cases in which such
assets do not include employer securities which are readily
tradable under an established securities market.

SEC. 202. EFFECTIVE DATE OF TITLE.

(a) In General.--Subject to subsection (b), the amendments
made by this title shall apply with respect to plan years
beginning on or after January 1, 2003.
(b) Delayed Effective Date for Existing Holdings.--In any
case in which a portion of the nonforfeitable accrued benefit
of a participant or beneficiary is held in the form of
employer securities (as defined in section 407(d)(1) of the
Employee Retirement Income Security Act of 1974) immediately
before the first date of the first plan year to which the
amendments made by this title apply, such portion shall be
taken into account only with respect to plan years beginning
on or after January 1, 2004.

TITLE III--EMPLOYEE REPRESENTATION

SEC. 301. 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 and under which some or all of the
assets are derived from employee contributions 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
and having equal voting rights.
``(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 selected by the plan participants in accordance with
regulations of the Secretary.
``(C) 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).
``(D) The Secretary shall provide by regulation for the
appointment of a neutral individual, 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.

TITLE IV--EXECUTIVE PARITY

SEC. 401. INCLUSION IN GROSS INCOME OF FUNDED DEFERRED
COMPENSATION OF CORPORATE INSIDERS IF
CORPORATION FUNDS DEFINED CONTRIBUTION PLAN
WITH EMPLOYER STOCK.

(a) In General.--Subpart A of part I of subchapter D of
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:

``SEC. 409A. DENIAL OF DEFERRAL FOR FUNDED DEFERRED
COMPENSATION OF CORPORATE INSIDERS IF
CORPORATION FUNDS DEFINED CONTRIBUTION PLAN
WITH EMPLOYER STOCK.

``(a) In General.--If an employer maintains a defined
contribution plan to which employer contributions are made in
the form of employer stock and such employer maintains a
funded deferred compensation plan--
``(1) compensation of any corporate insider which is
deferred under such funded deferred compensation plan shall
be included in the gross income of the insider or beneficiary
for the 1st taxable year in which there is no substantial
risk of forfeiture of the rights to such compensation, and
``(2) the tax treatment of any amount made available under
the plan to a corporate insider or beneficiary shall be
determined under section 72 (relating to annuities, etc.).
``(b) Funded Deferred Compensation Plan.--For purposes of
this section--
``(1) In general.--The term `funded deferred compensation
plan' means any plan providing for the deferral of
compensation unless--
``(A) the employee's rights to the compensation deferred
under the plan are no greater than the rights of a general
creditor of the employer, and
``(B) all amounts set aside (directly or indirectly) for
purposes of paying the deferred compensation, and all income
attributable to such amounts, remain (until made available to
the participant or other beneficiary) solely the property of
the employer (without being restricted to the provision of
benefits under the plan), and
``(C) the amounts referred to in subparagraph (B) are
available to satisfy the claims of the employer's general
creditors at all times (not merely after bankruptcy or
insolvency).

Such term shall not include a qualified employer plan.
``(2) Special rules.--
``(A) Employee's rights.--A plan shall be treated as
failing to meet the requirements of paragraph (1)(A) unless,
under the written terms of the plan--
``(i) the compensation deferred under the plan is paid only
upon separation from service, death, or at a specified time
(or pursuant to a fixed schedule), and
``(ii) the plan does not permit the acceleration of the
time such deferred compensation is paid by reason of any
event.

If the employer and employee agree to a modification of the
plan that accelerates the time for payment of any deferred
compensation, then all compensation previously deferred under
the plan shall be includible in gross income for the taxable
year during which such modification takes effect and the
taxpayer shall pay interest at the underpayment rate on the
underpayments that would have occurred had the deferred
compensation been includible in gross income in the taxable
years deferred.
``(B) Creditor's rights.--A plan shall be treated as
failing to meet the requirements of paragraph (1)(B) with
respect to amounts set aside in a trust unless--
``(i) the employee has no beneficial interest in the trust,
``(ii) assets in the trust are available to satisfy claims
of general creditors at all times (not merely after
bankruptcy or insolvency), and
``(iii) there is no factor (such as the location of the
trust outside the United States) that would make it more
difficult for general creditors to reach the assets in the
trust than it would be if the trust assets were held directly
by the employer in the United States.
``(c) Corporate Insider.--For purposes of this section, the
term `corporate insider' means, with respect to a
corporation, any individual who is subject to the
requirements of section 16(a) of the Securities Exchange Act
of 1934 with respect to such corporation.
``(d) Other definitions.--For purposes of this section--
``(1) Plan includes arrangements, etc.--The term `plan'
includes any agreement or arrangement.
``(2) Substantial risk of forfeiture.--The rights of a
person to compensation are subject to a substantial risk of
forfeiture if such person's rights to such compensation are
conditioned upon the future performance of substantial
services by any individual.''
(b) Clerical Amendment.--The table of sections for such
subpart A is amended by adding at the end the following new
item:

``SEC. 409A. DENIAL OF DEFERRAL FOR FUNDED DEFERRED
COMPENSATION OF CORPORATE INSIDERS IF
CORPORATION FUNDS DEFINED CONTRIBUTION PLAN
WITH EMPLOYER STOCK.''

(b) Effective Date.--The amendments made by this section
shall apply to amounts deferred after the date of the
enactment of this Act.

SEC. 402. INSIDER TRADES DURING PENSION FUND BLACKOUT PERIODS
PROHIBITED.

(a) Prohibition.--It shall be unlawful for any person who
is directly or indirectly the

[[Page H1253]]

beneficial owner of more than 10 percent of any class of any
equity security (other than an exempted security) which is
registered under section 12 of the Securities Exchange Act of
1934 (15 U.S.C. 78l) or who is a director or an officer of
the issuer of such security, directly or indirectly, to
purchase (or otherwise acquire) or sell (or otherwise
transfer) any equity security of any issuer (other than an
exempted security), during any blackout period with respect
to such equity security.
(b) Remedy.--Any profit realized by such beneficial owner,
director, or officer from any purchase (or other acquisition)
or sale (or other transfer) in violation of this section
shall inure to and be recoverable by the issuer irrespective
of any intention on the part of such beneficial owner,
director, or officer in entering into the transaction. Suit
to recover such profit may be instituted at law or in equity
in any court of competent jurisdiction by the issuer, or by
the owner of any security of the issuer in the name and in
behalf of the issuer if the issuer shall fail or refuse to
bring such suit within 60 days after request or shall fail
diligently to prosecute the same thereafter; but no such suit
shall be brought more than 2 years after the date such profit
was realized. This subsection shall not be construed to cover
any transaction where such beneficial owner was not such both
at the time of the purchase and sale, or the sale and
purchase, of the security or security-based swap (as defined
in section 206B of the Gramm-Leach-Bliley Act) involved, or
any transaction or transactions which the Commission by rules
and regulations may exempt as not comprehended within the
purposes of this subsection.
(c) Rulemaking Permitted.--The Commission may issue rules
to clarify the application of this subsection, to ensure
adequate notice to all persons affected by this subsection,
and to prevent evasion thereof.
(d) As used in this section:
(1) Beneficial owner.--The term ``beneficial owner'' has
the meaning provided such term in rules or regulations issued
by the Commission under section 16 of the Securities Exchange
Act of 1934 (15 U.S.C. 78p).
(2) Blackout period.--The term ``blackout period'' with
respect to the equity securities of any issuer--
(A) means any period during which the ability of at least
fifty percent of the participants or beneficiaries under all
applicable individual account plans maintained by the issuer
to purchase (or otherwise acquire) or sell (or otherwise
transfer) an interest in any equity of such issuer is
suspended by the issuer or a fiduciary of the plan; but
(B) does not include--
(i) a period in which the employees of an issuer may not
allocate their interests in the individual account plan due
to an express investment restriction--

(I) incorporated into the individual account plan; and
(II) timely disclosed to employees before joining the
individual account plan or as a subsequent amendment to the
plan;

TITLE V--INCREASED ACCOUNTABILITY

SEC. 501. BONDING OR INSURANCE ADEQUATE TO PROTECT INTEREST
OF PARTICIPANTS AND BENEFICIARIES.

Section 412 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1112) is amended by adding at the end the
following new subsection:
``(f) Notwithstanding the preceding provisions of this
section, each fiduciary of an individual account plan shall
be bonded or insured, in accordance with regulations which
shall be prescribed by the Secretary, in an amount sufficient
to ensure coverage by the bond or insurance of financial
losses due to any failure to meet the requirements of this
part.''.

SEC. 502. 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)) is amended
by inserting before the period the following: ``, except that
this subparagraph shall not be construed to exempt any
fiduciary from liability for any violation of subsection (e)
or (f)''.

SEC. 503. PRESERVATION OF RIGHTS OR CLAIMS.

Section 502 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1132) is amended by adding at the end the
following new subsection:
``(n)(1) The rights under this title (including the right
to maintain a civil action) may not be waived, deferred, or
lost pursuant to any agreement not authorized under this
title with specific reference to this subsection.
``(2) Paragraph (1) shall not apply to an agreement
providing for arbitration or participation in any other
nonjudicial procedure to resolve a dispute if the agreement
is entered into knowingly and voluntarily by the parties
involved after the dispute has arisen or is pursuant to the
terms of a collective bargaining agreement.''.

SEC. 504. 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:
``(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.

[[Page H1254]]

``(b) Functions of Office.--It shall be the function of the
Office of Pension Participant Advocacy to--
``(1) evaluate the efforts of the Federal Government,
business, and financial, professional, retiree, labor,
women's, and other appropriate organizations in assisting and
protecting pension plan participants, including--
``(A) serving as a focal point for, and actively seeking
out, the receipt of information with respect to the policies
and activities of the Federal Government, business, and such
organizations which affect such participants,
``(B) identifying significant problems for pension plan
participants and the capabilities of the Federal Government,
business, and such organizations to address such problems,
and
``(C) developing proposals for changes in such policies and
activities to correct such problems, and communicating such
changes to the appropriate officials,
``(2) promote the expansion of pension plan coverage and
the receipt of promised benefits by increasing the awareness
of the general public of the value of pension plans and by
protecting the rights of pension plan participants,
including--
``(A) enlisting the cooperation of the public and private
sectors in disseminating information, and
``(B) forming private-public partnerships and other efforts
to assist pension plan participants in receiving their
benefits,
``(3) advocating for the full attainment of the rights of
pension plan participants, including by making pension plan
sponsors and fiduciaries aware of their responsibilities,
``(4) giving priority to the special needs of low and
moderate income participants,
``(5) developing needed information with respect to pension
plans, including information on the types of existing pension
plans, levels of employer and employee contributions, vesting
status, accumulated benefits, benefits received, and forms of
benefits, and
``(6) pursuing claims on behalf of participants and
beneficiaries and providing appropriate assistance in the
resolution of disputes between participants and beneficiaries
and pension plans, including assistance in obtaining
settlement agreements.
``(c) Reports.--
``(1) Annual report.--Not later than December 31 of each
calendar year, the Pension Participant Advocate shall report
to the Committee on Education and the Workforce of the House
of Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate on its activities during
the fiscal year ending in the calendar year. Such report
shall--
``(A) identify significant problems the Advocate has
identified,
``(B) include specific legislative and regulatory changes
to address the problems, and
``(C) identify any actions taken to correct problems
identified in any previous report.

The Advocate shall submit a copy of such report to the
Secretary and any other appropriate official at the same time
it is submitted to the committees of Congress.
``(2) Specific reports.--The Pension Participant Advocate
shall report to the Secretary or any other appropriate
official any time the Advocate identifies a problem which may
be corrected by the Secretary or such official.
``(3) Reports to be submitted directly.--The report
required under paragraph (1) shall be provided directly to
the committees of Congress without any prior review or
comment than the Secretary or any other Federal officer or
employee.
``(d) Specific Powers.--
``(1) Receipt of information.--Subject to such
confidentiality requirements as may be appropriate, the
Secretary and other Federal officials shall, upon request,
provide such information (including plan documents) as may be
necessary to enable the Pension Participant Advocate to carry
out the Advocate's responsibilities under this section.
``(2) Appearances.--The Pension Participant Advocate may
represent the views and interests of pension plan
participants before any Federal agency, including, upon
request of a participant, in any proceeding involving the
participant.
``(3) Contracting authority.--In carrying out
responsibilities under subsection (b)(5), the Pension
Participant Advocate may, in addition to any other authority
provided by law--
``(A) contract with any person to acquire statistical
information with respect to pension plan participants, and
``(B) conduct direct surveys of pension plan
participants.''
(b) Conforming Amendment.--The table of contents for title
III of such Act is amended by adding at the end the
following:

``Subtitle C--Office of Pension Participant Advocacy

``3051. Office of Pension Participant Advocacy.''.

SEC. 505. ADDITIONAL CRIMINAL PENALTIES.

Section 501 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1131) is amended--
(1) by inserting ``(a)'' after ``Sec. 501.'';
(2) by striking ``$5,000'' and inserting ``$50,000'' and by
striking ``$100,000'' and inserting ``$500,000'';
(2) by adding at the end the following new subsection:
``(b) Any person described in subsection (a) of 402 of the
Employee Pension Freedom Act of 2002 who willfully violates
such section or section 104(d) or causes an individual
account plan to fail to meet the requirements of section 409A
of the Internal Revenue Code of 1986 shall upon conviction be
fined not more than $500,000 or imprisoned not more than one
year, or both.''.

SEC. 506. 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 contract to carry out 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 and impact of such a system, and
(2) options for developing such a system.
(b) Report.--Not later than 3 years after the date of the
enactment of this Act, the Corporation shall report the
results of its study, together with any recommendations for
legislative changes, to the Committee on Education and the
Workforce and the Committee on Ways and Means of the House of
Representatives and the Committee on Health, Education,
Labor, and Pensions and the Committee on Finance of the
Senate.

TITLE VI--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

SEC. 601. INDEPENDENT INVESTMENT ADVICE.

(a) In General.--Section 404(c)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(1))
(as amended by section 102(c)) is amended further--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and by inserting ``(A)'' after
``(c)(1)''; and
(2) by adding at the end the following new subparagraphs:
``(B)(i) In the case of a pension plan described in
subparagraph (A) which provides investment in employer
securities as at least one option for investment of plan
assets at the direction of the participant or beneficiary,
such plan shall make available to the participant or
beneficiary the services of a qualified fiduciary adviser for
purposes of providing investment advice described in section
3(21)(A)(ii) regarding investment in such securities.
``(ii) No person who is otherwise a fiduciary shall be
liable by reason of any investment advice provided by a
qualified fiduciary adviser pursuant to a request under
clause (i) if--
``(I) the plan provides for selection and monitoring of
such adviser in a prudent and effective manner, and
``(II) such adviser is a named fiduciary under the plan in
connection with the provision of such advice.
``(C) For purposes of subparagraph (B)--
``(i) The term `qualified fiduciary adviser' means, with
respect to a plan, a person who--
``(I) is a fiduciary of the plan by reason of the provision
of qualified investment advice by such person to a
participant or beneficiary,
``(II) has no material interest in, and no material
affiliation or contractual relationship with any third party
having a material interest in, the security or other property
with respect to which the person is providing the advice,
``(III) meets the qualifications of clause (ii), and
``(IV) meets the additional requirements of clause (iii).
``(ii) A person meets the qualifications of this
subparagraph if such person--
``(I) is registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.),
``(II) if not registered as an investment adviser under
such Act by reason of section 203A(a)(1) of such Act (15
U.S.C. 80b-3a(a)(1)), is registered under the laws of the
State in which the fiduciary maintains its principal office
and place of business, and, at the time the fiduciary last
filed the registration form most recently filed by the
fiduciary with such State in order to maintain the
fiduciary's registration under the laws of such State, also
filed a copy of such form with the Secretary,
``(III) is registered as a broker or dealer under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
``(IV) is a bank or similar financial institution referred
to in section 408(b)(4),
``(V) is an insurance company qualified to do business
under the laws of a State, or
``(VI) is any other comparable entity which satisfies such
criteria as the Secretary determines appropriate.
``(iii) A person meets the additional requirements of this
clause if every individual who is employed (or otherwise
compensated) by such person and whose scope of duties
includes the provision of qualified investment advice on
behalf of such person to any participant or beneficiary is--
``(I) a registered representative of such person,
``(II) an individual described in subclause (I), (II), or
(III) of clause (i), or
``(III) such other comparable qualified individual as may
be designated in regulations of the Secretary.''.
(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

[[Page H1255]]

subparagraph shall not be construed to exempt any fiduciary
from liability for any violation of this section''.

SEC. 602. TAX TREATMENT OF QUALIFIED RETIREMENT PLANNING
SERVICES.

TITLE VII--GENERAL PROVISIONS

SEC. 701. 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. 702. 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 the
effective date specified in section 601, if--
(1) during the period after such amendment made by this Act
takes effect and before such first plan year, the plan is
operated in accordance with the requirements of such
amendment made by this Act, and
(2) such plan amendment applies retroactively to the period
after such amendment made by this Act takes effect and before
such first plan year.

The SPEAKER pro tempore. Pursuant to House Resolution 386, the
gentleman from California (Mr. George Miller) and the gentleman from
Ohio (Mr. Boehner) each will control 30 minutes.
The Chair recognizes the gentleman from California (Mr. George
Miller).
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, we have heard a great deal today and over these past
many months about the Enron scandal. I think there is general agreement
throughout the halls of Congress and throughout this Nation that it
was, in fact, a scandal; that we saw the very worst in human behavior
with respect to corporate responsibility, and the responsibility of
employers to employees, of the corporation to its shareholders, of the
corporation to the general public.

{time} 1415

But this legislation is more than about Enron, because Enron is in
bankruptcy. Enron may very well cease to exist as an ongoing financial
entity. Its parts are being sold off. Its parts are being salvaged and
people are trying to get hold of their lives again after the financial
collapse. But Enron was also a beacon of warning to millions of
American workers about what their particular situation might or might
not be with respect to the security of their 401(k) plan; a 401(k) plan
of which the workers are being told over and over again they are going
to have to rely on more and more for their retirement because companies
refuse to provide a defined benefit plan which would provide them much
more security and much more future security with their retirement,
something that they could count on.
So what have we learned from Enron? We learned from Enron that many
employees did not have control over that part of the stock that was
contributed by the corporation. We also found out that many employees
were prevented from having any control over that stock until age 50 or
55. But we also found out that that was not unique to Enron. That was
true of many corporations, of the Fortune 500 and unnamed corporations
that we do not know a lot about, but that was true of them and a
holding period for the employees not to divest themselves of the stock.
That was done for the convenience of the corporation. That was done
because the corporation believed it made their employees more loyal.
But when the plans went wrong with their financial future, the company
went wrong, we found out that the employees were locked into a
situation from which they could not extract themselves.
So this legislation takes the Enron lesson and says we ought not let
that happen to other employees in other corporations. So we say that
after 3 years of employment, you ought to be able to diversify your
401(k), your 401(k), in a manner which you think is best for your
retirement. The 3 years is a maximum period of time which you ought to
be able to force the employee to hold onto the stock, because markets
move fast, financial markets move fast, and the future of corporations
changes all the time. The Republicans do not do that. They have a
rolling 3 years. They have a 5-year phaseout. We do not think that that
is fair to the worker. We think the worker ought to have that control.
It is interesting now that as corporations review their plans, they
are moving toward the Democratic bill. Chevron, in its merger with
Texaco, decided that people could diversify immediately. Time Warner
decided that people in AOL could diversify immediately. Walt Disney,
Gillette, Quest Communications, Procter & Gamble, McDonald's, Coca-
Cola, Pfizer, Abbot Laboratories. So this is not a radical approach.
People realize this is what workers are entitled to now because the
401(k) is made up, 100 percent, of the assets that belong to the
worker.
We also said that if this is the employees' assets, if this is their
money, this is their stock portfolio, this is their retirement, maybe
they ought to have a say on the board. At Enron we saw that they had no
say on the board, that the board was made up of executive vice
presidents who did not want to deliver any bad news to the corporation,
who when they found out bad news did not tell the employees, did not
tell the pension board, went off and privately sold their own stock.
But we have also seen that that has been true in other corporations
beyond Enron. We have seen that family members have been selling stock
when the corporations are in trouble. Obviously somebody whispered to
their son or daughter, ``The company is not doing so well, sell the
stock.''
Why should the employees not have that information? We believe there
should be a rank-and-file member on the pension board since the pension
represents 100 percent of the employees' money. Research has shown us
that where we have rank-and-file members on the pension board, people
tend to invest more in their retirement plans and they do a little
better on the rate of return. We think that that is important. That is
a lesson of Enron that is important for other corporations and for the
employees.
We also saw the situation where employers were dumping stock, where
Ken Lay was telling people in e-mails that he was buying stock. But he
was not really buying stock, he was trading stock and, in fact, he was
selling the stock to liquidate the large loans, personal loans, that he
had taken from the Enron Corporation.
Again, as we have seen the fortunes of companies change over the last
several months in a down economy, in a changed dot-com society, we have
seen that many employers have been dumping stock. We think that maybe
the employee ought to know that when the corporate heads of the company
decide to dump the stock, that they ought to be told about that. Today
you can hide that sale of stock for 6 months or a year. Six months or a
year can be an economic disaster for the employees if you are caught
behind that wave. So

[[Page H1256]]

we say when you sell $100,000 of shares, inform the pension board,
inform the employees. What is it that we cannot trust these employees
to understand? They will make the decision if they want to also sell
their stock, like the CEOs and the FAO of the corporations.
We also decided and we learned from Enron that there was much
corporate misconduct, where the employees who were devastated by that
conduct had no right to proceed against those people who defrauded
them, who had looted the companies. Again, tragically, not unique to
Enron, but we have seen the same instances in a number of other
corporations, so we said those people ought to be able to proceed to
recover their retirement nest egg, to recover their financial future,
to recover the plans that they have made for themselves and their
families because somebody acted in an illegal fashion.
Today those people can do that. And under ERISA there is no right of
recovery, so this is beyond the Enron employees. This is about the
millions of other employees who are out there in this same situation.
What else did we learn from Enron? We learned that the employees had
one plan, a 401(k) plan, and that the executives had another 401(k)
plan. The executives' plan was insured. It was guaranteed. So as Enron
goes on the rocks, as it becomes bankrupt, the executives leave with
life preservers in the lifeboat. The employees leave with nothing.
We think that if you are going to insure the executives' plan, insure
the employees' plan. Both of them are contributing to making the wealth
of the company. Both of them are creating the earnings of the company.
It is not like the Enron employees were not working hard in this
company. They just did not get a chance to be protected like the
executives.
So this is really about whether or not we are going to continue to
accept a system where we have an elite group of executives that get
insured pension plans, get incredible compensation, are able to buy
multimillion-dollar homes in Florida or in Texas that are exempt from
bankruptcy, that can have insurance plans that guarantee a payout, and
then there are the employees who go to work every day, who build the
financial future of the company, who do the job for which they were
hired and can be left with nothing.
This really is about equity. This is about fairness. This is about
what we owe the workers in these companies. Mind you, these very same
companies made a decision that this was really good for the executives,
for the top corporate elite, that these were all good things to do. But
now when you suggest that maybe you should do them for the employees,
for the rank-and-file people who are on the line working every day,
that somehow it is radical or it is un-American or it is against the
free enterprise system.
I think President Bush got it about right. In his first public
statement after the Enron case down in North Carolina, I believe it was
at a naval base, he said, ``What is good for the captain should be good
for the sailor.'' That is what the Democratic substitute says. It says
that we ought to recognize the dignity and the hard work of the
employees and they should not be put in a position of disadvantage.
They should not be put in a position where they could lose everything
when the executives are in a position of losing nothing. That is a very
important principle. It is a very important principle for this Nation.
The President recognized it, but the Republican bill does not.
The Republican bill concentrates on getting the employees better
investment advice, and that is a good idea. Clearly, even the Enron
employees did not understand the real value of diversification. So good
investment advice makes sense as people are trying to plan for their
retirement. We believe that that advice should not be conflicted. The
Republican bill does not provide for that kind of protection.

We recognize, as we have seen, where Arthur Andersen was deeply
conflicted between the commissions it was making on consulting from
Enron and auditing the books they were presenting to the public, to the
shareholders, and to the employees about the health of the company.
We have now seen all of the labyrinth of commissions and fees and
financial arrangements that had distorted the financial marketplace,
the most recent of which is Merrill Lynch, where Merrill Lynch was
seeking to make millions, tens of millions of dollars as an investment
bank, but it was doing business with the same people whose stock it was
touting, so it did not want to say ``don't buy ABC stock'' when it was
trying to negotiate a commission worth tens of millions of dollars, so
it had its people keep saying ``buy ABC stock'' and even those people
said, ``That is lousy stock. It's no good.'' They were conflicted.
Yes, investment advice is good, but it ought to be independent. It
ought to be independent of those commissions, of those holdings, of
those conflicts. And they run throughout the financial markets.
If America got any lesson from Enron, through Arthur Andersen,
through Global Crossing, through so many others, they learned that
there really are two systems; a system for the privileged, for the
elite, for the executives, and another system for the employees who are
investing in these companies.
That is why we have introduced the substitute, because half of the
Republican bill is missing. Yes, it deals with investment advice, but
it does not deal with the lessons of Enron. It does not deal with the
peril of millions of Americans who are leaning very hard on their
401(k) to help provide for their retirement. It does not deal with the
unethical behavior of corporate executives who are not in Enron. It
does not deal with the ability of corporate executives to hide their
transactions from their employees and from the investors. And it does
not deal with the fairness of the treatment of those two parts of the
corporation.
The Democratic substitute does it. It does it in a way that does not
place a burden on the system. It is really about disclosure. It is
really about fairness. And it is making sure that as we walk away from
the Enron disaster, that we really in fact have changed the manner in
which we are doing business to make sure that there is fairness in
treatment and there is protection for the American worker. The bill as
presented to us today is incomplete in that fashion. The Democratic
substitute will complete that part of the story, to provide that kind
of protection for the American worker.
I will hope that our colleagues in this House on both sides of the
aisle will embrace this substitute and discharge their obligation that
we have to provide for the retirement future and protection of the
American worker.
Mr. Speaker, I reserve the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
As I said earlier, with all due respect to my colleagues, some on the
other side who believe that the base bill before us does not go far
enough, I would argue that the proposal offered by my good friend, the
gentleman from California (Mr. George Miller), does in fact go way too
far.
Let me point out several of those differences. As the gentleman said,
when it comes to company-matched stock in a 401(k) plan, companies
today can require you to hold that until such time as you retire, not
allowing you to take the company match and to convert it into some
other type of stock or bond, or cash for that matter, within the
account. And so the gentleman from California has a 3-year limit that
would go into effect at the signing of the bill, but after that there
is no holding period at all.

{time} 1430

The underlying bill, beyond the 5-year phase-in, has a 3-year rolling
average. Any new matched company stock, the maximum it could be
required to be held by the company is 3 years. Many employers are
already doing it on their own, doing 1 year, doing quicker time frames.
But why do we have a 3-year rolling average? Because we do not want
to discourage companies from offering the company match that many do in
stock today. They find that this is a perfect way of trying to retain
employees, to encourage employees to stay with the company. And I am
concerned that in a proposal similar to the one the gentleman from
California (Mr. George Miller) is proposing, that many employers would
in fact eliminate the

[[Page H1257]]

match of company stock that they do today. We do not want to do
anything in this bill that would hurt the ability of employees to
maximize their employment security.
Another problem we see with the substitute being offered is that we
expand remedies. We expand more remedies, more lawsuits for those who
may have just made a mistake. I am not talking about criminal behavior
here, we will get into that in a moment. But to expand remedies is a
nice big red flag for employers that says, if you open a pension plan,
you are going to be opening yourselves to expanded liability.
What that is going to do, plain and simple, is discourage, especially
small companies, from setting up a pension plan for their employees, at
a time when we have worked for years here to try to encourage more
employers to offer these plans to their employees. I think there are
sufficient remedies today within ERISA and within the code, and
expanding those remedies at this time I think is a very big mistake.
Let me also say that the substitute creates criminal penalties that
do lead to personal liability again for mere mistakes that someone
might make. Again, there is another red flag. If I am an employer
looking at setting up a plan or maintaining my plan, why would I want
to open myself up for the possibility of criminal wrongdoing if I made
a mistake in the administration of my plan? Again, I think we have
sufficient remedies today within ERISA to deal with this.
One of the other issues that the gentleman from California (Mr.
George Miller) talked about is the fact that corporate executives have
insured plans and 401(k) plans are not insured. Now, we are dealing a
little bit here with apples and oranges, because when it comes to the
corporate governance issues, it is controlled by another committee, and
we are strictly dealing here with ERISA and with the Tax Code and with
pension issues.
But one of the issues that is in the gentleman's bill is he would
require liability insurance for the full value of all of the 401(k)
accounts within the company. Now, if you want to talk about a
staggering bill that would discourage employers from setting up 401(k)
accounts, here is probably the single one big issue that would stop
them cold in their tracks. They would say, listen, if I have got to buy
an insurance policy for several hundred million dollars, do I really
want to have 401(k) accounts?
The last issue I would like to talk about, though, that is of great
concern to all of us is the issue of investment advice. We have some 50
million Americans today who have self-directed 401(k)-type of accounts.
We all know that they need good, solid investment advice that meets
their particular needs. So both sides have the issue in their bill.
But the difference here is very simply this: There are two issues
that have to be dealt with to get more investment advice into the
marketplace. One, we have to do something about employer liability, and
both the Miller substitute and the underlying bill, the Pension
Security Act, deal with protecting employers from liability, other than
they have to exercise their fiduciary duty in hiring a good investment
advisor.
But the second issue is this: It says if you sell products, you are
prohibited from giving investment advice. Now, the idea here is to get
more investment advice in the marketplace, and under the Miller
proposal they would have to go get independent third-party advice. It
is well-meaning, well-intentioned, but very expensive, and, I would
add, most employers are not going to ever go down that path. My point
is, we will end up with very little investment advice in the
marketplace.
Under the underlying bill, we say you could go out and get
independent advice if you like, or you could have those who sell
product set up investment advice under these conditions: You have to
disclose any potential conflicts; you have to disclose any differences
in fees between the products that you are selling; you have to do this
at the same time commensurate with the giving of the advice; and, above
all, you are required to be held to the highest fiduciary duty in the
giving of that advice, which means that when you give the advice, it
has to be solely in the interest of that employee, and there are
penalties if you violate any or all of those.
We believe what this will do is to bring more investment advice into
the marketplace in a much quicker way and cover far more employees. As
a matter of fact, the House thought this was such a good idea last
November, before we knew what we know today about Enron, that the House
voted 280 to 141 to support the exact investment advice bill, virtually
the same investment advice bill, that is contained here.
So I would say to my colleagues on both sides of the aisle, my
Democrat friends are as concerned about this as we are. I do in fact
believe that if we were to adopt the Miller substitute, that we would
in fact limit the ability of employers to set up plans, we would
discourage employers from setting up plans, and we would see companies
fold up their plans. I do not think that is what we want to do at this
day and hour.
We should be looking at how can we secure the retirement security for
more American workers, how we can expand the number of workers covered
by high-quality retirement plans, and not go in the other direction.
Mr. Speaker, I reserve the balance of my time.
The SPEAKER pro tempore (Mr. Dan Miller of Florida). Without
objection, the gentleman from New Jersey (Mr. Andrews) will be
recognized to control the time in favor of the amendment.
There was no objection.
Mr. ANDREWS. Mr. Speaker, I yield myself 3 minutes in support of the
Miller substitute.
Mr. Speaker, there is some confusion on the issue here of the
competing proposals and how long someone is required to hold shares of
stock contributed by an employer when that is the employer stock. I
want to be very clear: The proposal that we support, the Democratic
substitute, does call for a 3-year period, not a 1-year period as some
groups outside of this body are alleging. It is a 3-year period.
The Republican proposal, the underlying bill though, I want to be
clear about what it means to a person who is in a 401(k) plan that has
her or his employer's stock matched in that 401(k) plan. Under the
underlying bill, it would be 5 years before an employee could
completely divest himself or herself of that stock. So here is what
this means: If you were working for a company and the company put
matching shares of its stock into your 401(k), and the company started
to slide downhill the way Enron slid downhill, and you decided the best
thing for you to do was to get your retirement fund out of that stock,
get it out of there so that you would not be losing your pension, under
the Republican bill that we are amending it would be a 5-year process,
5 years, before you could get all of that stock out. It is phased out
20 percent, then 40 percent, then 60 percent, then 80 percent.
I do not see why people should be required to wait 5 years. Next week
will commemorate the anniversary of the sinking of the Titanic, April
15. The Republican proposal reminds me of the Titanic in this respect:
When the Titanic was sinking, the wealthy people got off the ship in
their lifeboats and the working class people were locked down below in
steerage, unable to get off the boat as it was sinking. That very
unfortunate proposal is carried out in the underlying bill.
Frankly, there are those of us that believe 3 years is far too long,
but in an attempt to compromise, to make sure we could draw as many
people to support the proposal as we could, the Democratic plan talks
about 3.
I do not want any confusion about the fact that the bill that we are
amending, the underlying plan, calls for at the beginning of the plan a
5-year period before someone can get completely off that sinking ship.
That is wrong, and that is another good reason to support the
Democratic substitute and oppose the underlying bill.
Mr. BOEHNER. Mr. Speaker, I ask unanimous consent that 15 minutes of
the time in opposition be given to the Committee on Ways and Means and
controlled by the gentleman from Ohio (Mr. Portman).
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. BOEHNER. Mr. Speaker, I yield 4 minutes to the gentleman from
North

[[Page H1258]]

Carolina (Mr. Ballenger), a long-term member of the Committee on
Education and the Workforce.
Mr. BALLENGER. Mr. Speaker, let me just say I rise in support of the
base bill and in opposition to the Miller-Rangel substitute on the
grounds that it would oppose a host of new government regulations that
will drive businesses out of offering, and I emphasize the word,
voluntary retirement savings plans.
I happened to be in a situation in 1950 in my company back home where
we had an employee that had worked for the company for 30 years and
decided to retire, and I found out at that time, I did not realize much
about the way things went, I realized that this gentleman after 30
years with me had only his Social Security to count on. So what I did
is I put into our company at that time a defined benefit plan that was
going to take care of all the employees, some retirement and so forth.
This whole situation, to my way of thinking, was a fabulous thing. We
should take care of employees.
All of a sudden, somewhere down the road we ran into the fact that
the government's regulations were coming along and it appeared to me I
was not trustworthy of Uncle Sam, so what I did is I liquidated the
whole pension plan and gave the employees all the money and started
over again. And we ended up with a 401(k) and an ESOP right now, which
I realize the ESOP is not involved in this. But I want you to know, I
got out of this pension plan even before I knew about trial lawyers or
fiduciary responsibility.
The Democrat substitute creates a new resource for trial lawyers to
line their pockets by increasing the liability exposure of employers,
administrators, service providers to an ill-defined and uncapped
damage. From the CEOs to the middle managers and those who have no
control over the plan's investment decisions, they could be personally
liable for losses in their retirement plan, and these men and women who
are sued for something out of their control could be forced to pay
damages beyond the lost value of their retirement plan. Current law
allows Labor, Treasury and the Justice Department, as well as affected
individuals, to take actions to recover damages from a plan.
Additionally, the Democrat substitute would extend this unlimited
right to sue to all ERISA plans, including retirement, health,
disability, all of these plans, as well as reducing the availability of
retirement plans. This amendment would destroy the current system of
employer provided health insurance, leaving millions of Americans
uninsured.
The Miller-Rangel substitute would force every fiduciary to a defined
contribution plan to have insurance themselves in case there was a
breach of fiduciary duty. I do not know how many of you have looked at
the cost of that insurance, but today it is unbelievably expensive.
However, mandating each individual fiduciary to have his or her own
insurance would be redundant and costly, and, once again, these costly,
unneeded measures would discourage employers from offering retirement
plans.
Finally, the substitute would mandate that retirement plans include
an employee representative on the joint board of trustees. What
employee can you find that would be willing to serve on a board when he
knew he was going to get sued? That is an interesting situation.
This is already allowed under ERISA, and some employers do it. This
mandate would increase administrative burdens on employers, and since
ERISA currently requires that plan administrators act solely in the
interest of participants and beneficiaries, what is the benefit of
mandating an employee to join the Board of Trustees? There is not one,
but it does add a substantial burden.
While I believe the government has a role in protecting employees'
retirement plans, I cannot support a massive imposition of Federal
regulations that will destroy the incentive for employers to offer
retirement plans. I urge a ``no'' vote on the substitute amendment and
a ``yes'' vote on final passage of H.R. 3762.
Mr. ANDREWS. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman
from New Jersey (Mr. Payne), who is a strong voice for workers both in
New Jersey and around the country.
(Mr. PAYNE asked and was given permission to revise and extend his
remarks.)
Mr. PAYNE. Mr. Speaker, let me thank the gentleman from New Jersey
for yielding me time and commend him for the outstanding work that he
did on the subcommittee handling this very important Pension Security
Act.
There are, in my opinion, defining financial points in every decade.
In the seventies we suffered a gasoline shortage, where long lines
disrupted the daily lives of American people and lost productivity
ensued.

{time} 1445

In the 1980s, there was the savings and loan debacle where greedy
investors and unscrupulous brokers went away with billions of dollars
of Americans' money. In the 1990s we suffered a recession where the
market dropped. However, we bounced back because President Clinton and
his great program in the early 1990s cut $250 billion of spending and
another $250 billion to the 1 percent of the top earners in the
country, and that $500 billion put us on to a projected $5 trillion
surplus over the years. However, we have seen that wilted away by the
new administration.
In this decade, it is safe to say that the Enron debacle will go down
in the books as an example of deception and mismanagement and which has
ruined the lives of thousands of people. That is the human side that we
do not see.
What have we learned from this tragedy? How can we protect ourselves
from a recurrence of the financial disasters of this magnitude? By not
supporting the Republican bill. Why? Because their bill fails the
American people. Because they create new loopholes and a relaxed
requirement. Their bill lacks real teeth to hold companies accountable.
It fails to hold plans accountable, and it fails to provide real
diversification in plans; and it fails to give employees' notice when
companies are dumping company stock, and it continues to give
preferential treatment to executives.
The Democratic alternative provides real pension reform. How? By,
one, including strong criminal penalties for executives who engage in
mismanagement and abuse, by requiring notification of employees when
executives are dumping company stock, and ensuring that employees
receive honest and timely information about their pensions from
unbiased, independent financial advisors, and it gives employees a
voice on pension boards.
During the markup in the Committee on Education and the Workforce,
the Democrats offered amendments, amendment after amendment, which
would strengthen the current law that would protect the American
workers, holding their hard-earned savings to their own portfolio,
which were denied. Because the bottom line is, this is their money, and
the employees should have more say over it.
It appears to me that the Republican bill serves the interests of
corporate executives rather than the rank-and-file employees who lost
billions of dollars of their retirement savings. There must be an end
to this giving special treatment to executives while employees suffer.
Enough is enough.
Support the Democratic substitute, which seeks to correct loopholes,
shifting less risk on our workers, putting more control of their money
in their hands. Support the substitute which provides unbiased,
independent advice, a parity of benefits for all employees,
representation on pension boards, and tougher criminal enforcement.
We can all agree we cannot let this happen again. The Miller-Rangel
bill seeks to correct the loopholes, shift less risk to our workers by
putting the control of their money in their hands. Stop favoring
executives, and let us protect our workers. Support the Democratic
substitute.
Mr. BOEHNER. Mr. Speaker, I yield 3 minutes to the gentleman from
Georgia (Mr. Norwood), the chairman of the Subcommittee on Workforce
Protections.
Mr. NORWOOD. Mr. Speaker, I thank the gentleman for yielding me this
time. I strongly support the underlying bill, and I ask my colleagues
to vote down the Miller substitute. There are many reasons to do that.
We have heard many of them this afternoon. I would like to focus in on
just one area.
Mr. Speaker, this substitute is a classic case of putting the fox in
charge of

[[Page H1259]]

the hen house. Believe it or not, their substitute would make union
officials trustees of any savings plan that is given to workers they
represent. This will jeopardize hundreds of billions of dollars in
workers' savings.
Just blocks away from this House, just a couple of blocks, a Federal
grand jury is determining whether a dozen or so union presidents
violated their fiduciary duties by inside trading of stocks tied to
Global Crossings Corporation, in which they have invested workers'
pensions through union life insurance companies. Meanwhile, workers
were losing billions from the bankruptcy of their company. This
substitute will turn private savings of union workers over to these
same leaders.
As chairman of the Subcommittee on Workforce Protections, I can tell
my colleagues that this country is suffering from what The New York
Times reports is a wave of union corruption. Just yesterday, I heard
testimony about the embezzlement of millions by New York City's largest
public employee union. I heard about workers who only make $20,000 a
year forced to pay dues of $700 a year, which was then used for
penthouses, maid services that were really male prostitutes, clothing,
overseas trips, Super Bowl tickets, topless bars, and it goes on and.
Do we really want that same crowd to get their claws into the
individual savings of these workers? I do not believe any of us would
want to do that.
As some of my colleagues know, I raised a few chickens on my place
back in Georgia. I have had dogs on that property, and I love them very
much. However, I would never let my dogs start eating my chickens. It
would naturally be rough on the chickens, and the dogs would never hunt
again.
Now, I know my Democratic friends love the support they get from
labor leaders. I know they want to feed them any chance that they can
get. But please do not feed them the savings of hard-working American
families. It is bad for the dogs, and it is murder for the chickens.
Friends, that dog has already got feathers on his snout that look a
whole lot like pension money.
I urge my colleagues to vote down the Miller substitute.
Mr. ANDREWS. Mr. Speaker, may I inquire as to how much time our side
has left.
The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman
from New Jersey (Mr. Andrews) has 9\1/2\ minutes; the gentleman from
Ohio (Mr. Boehner) has 30 seconds remaining; and the gentleman from
Ohio (Mr. Portman) has 15 minutes remaining.
Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentleman from
Oregon (Mr. Blumenauer).
Mr. BLUMENAUER. Mr. Speaker, I appreciate the gentleman's courtesy of
yielding me this time.
I have been listening in disbelief to the testimony here before us
today. I represent as many Enron survivors as probably almost anybody
in the House, and I have heard people ask, Could we find some workers
that would be willing to serve on the board? I will tell my colleagues,
they are lining up in Portland, Oregon. They would love to serve. I
have heard people who are concerned about the trial lawyers being
involved. Well, the trial lawyers did not create the problem in
Portland; but I will tell my colleagues, there are lots of Republicans
lining up to hire them to try and salvage a little bit of their dream.
Today's Republican pension bill I think falls far short in an
obviously flawed pension system. I support the substitute.
The chairman of the committee referenced the act that we passed last
fall before we knew about some of these abuses dealing with conflicted
investment advice. Well, I will tell my colleagues, it was wrong last
fall; and if the Members on this floor knew of the abuses and the
problems, I do not think it would have passed then.
It is critical that we provide true security for retirement savings,
that we hold corporate executives accountable for their actions, that
we give employees some mode of control over their own retirement
dollars, that we give them a voice. God forbid that there be as many
employee representatives as employer representatives. I am not afraid
of that; and I will tell my colleagues, the people in Portland who have
been brutalized by this system, I think they would find it to be a
great, great proposal to put into effect.
I will tell my colleagues the pain that I have witnessed firsthand
with people who have had to delay their retirement, who have had their
family's dreams shattered; and being disillusioned as a result of this
is impossible to be able to give voice to. But thankfully, some of
these witnesses have come to Washington, D.C.
Mr. Speaker, I would just say that it happened in Portland, Oregon;
and it can happen anywhere. That is why we need to support this
substitute.
Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
I think the gentleman addressed the concerns, and all I can say is
the underlying bill does address them. If you are an Enron employee,
you had to hold that stock until you were 50 years old. What this
underlying bill says is, you cannot do that anymore. A company cannot
require that the employee hold the company-matched, it goes into a
401(k), until the employee is age 50. In fact, you cannot do it for
more than 3 years. There is an initial 5-year period where you can
unload 20 percent per year so you do not disrupt the markets; and after
that point, you cannot hold an employee with the corporate stock for
more than 3 years. The handcuffs are off. That is a big change.
Under current practice, you can hold somebody until they retire. You
can hold them for 40 or 50 or 60 years. It also provides more
education, and this is extremely important. I think there is a
consensus on that among people in this area, on the outside and people
here in Congress, that we have to provide people with better tools so
that they can make better decisions once they have been given more
flexibility and more choice. We have disagreed here on the floor as to
what kinds of tools those should be; but I think we agree, for the most
part, that we ought to be getting people more advice.
There are three ways this bill does that. First, it says that every
time someone gets into a plan, they have to be given a notice saying
you must look at your portfolio and you should diversify; in
retirement, you should not have all of your eggs in one basket. It also
says that on a quarterly basis, you get a report as to what is going on
in your plan. That is not currently required. None of these are. It
also says, under commonly accepted investment practices, you should
diversify, in plain English.
Second, it lets employees, on a pre-tax basis, pay for investment
advice. That is not currently available. It could be like a cafeteria
plan or like an eye glass plan or a health plan or a pension plan. It
lets employees have a tax preference to go out and get investment
advise on their own. They can choose whoever they want. That is
expensive. That is one reason why people do not seek it. That is what
the surveys show. So we are trying to help people.
Finally is the investment advice piece that passed this House last
November with 64 Democrats supporting it, and that piece says the
company should be able to bring in people who are certified, qualified,
who disclose any potential conflict of interest, who have a fiduciary
responsibility to only do what is good for the workers; otherwise, they
face penalties, and those people offer advice. That is a pretty
practical way to do it, because some companies will be willing to pay
for that and offer it. We want to encourage that.
If we really believe education is a problem, and I think most of us
do, we have to do something that is going to address it directly and
that is really going to work in the real world. I think this substitute
and the proposal there would not work nearly as well in the real world
because I do not think employers would take advantage of it.
Finally, we provide a lot more information in this bill. We tell
people when there is a blackout period. Right now there is no
requirement for that. Thirty days before a blackout period, and now you
have to have a notice. That is going to help people who are stuck in a
situation like the Enron scandal.
So this is much more than Enron. It affects 55 million Americans who
are in defined contribution plans, particularly those who are in a plan
where you can get some corporate stock as a match, which is not the
majority of plans, unfortunately, because we want these plans to be
generous; but it will help millions of Americans, and it

[[Page H1260]]

would have helped people who were stuck in the Enron situation. It
would have helped them.
Someone said that there is not adequate protections in here or there
is nothing in here relating to what is good for the goose is good for
the gander or, as someone said earlier, the captains ought to abide by
the same rules as the sailors. Well, there is. First of all, if you are
a captain or if you are a goose, and you have something of a 401(k)
plan, you have some assets in a 401(k) plan, you are treated like
everybody else. You are subject to the same blackout notice, the same
blackout period where you cannot trade.
The question is, what if you have stock outside of the 401(k)? Should
you have an additional requirement for those employees of a company,
senior executives or not, who have stock outside; and we say, yes, you
should. If half or more of the people in a company are affected, as was
the case of Enron, then you cannot trade during a blackout period, even
though your stock has nothing to do with a 401(k) plan. That is a big
change from current law. I think that needs to be clear.
We are doing things that change structurally the way we deal with
pensions in this country. Not every business is happy about this, but
we have tried to achieve a balance. Because at the same time that we
are providing more protections for the workers, information, education,
disclosure, accountability, all equaling more retirement security, we
are also very sensitive to this balance. Remember, there are 42 million
Americans in 401(k)s, 55 million Americans in other kinds of plans.
When we add them all up, there is $2.5 trillion of assets in these
plans. We do not want to do harm to these plans. More important, there
are 70 million Americans, half the workforce, who have no plan at all.
They do not have anything.

{time} 1500

They do not have a 401(k). They do not have a SIMPLE plan, a SEP, or
any retirement savings through their employer.
The whole goal of this Congress over the last 5 years has been to
expand pensions to those people. Where do they work? In small business,
that is where the great bulk of them are; in small businesses,
businesses that do not have a lawyer, they do not have an accountant,
they do not have somebody to go through this maze, with the burdens,
the costs and burdens and liabilities of pension plans. That is the
real world.
That is why, on a bipartisan basis, this House has acted, with over
400 votes on this floor, to pass legislation to expand pensions to
these smaller employers by cutting down on the costs and burdens and
liabilities.
The alternative we are looking at here, the substitute we are
debating right now, increases costs, burdens, and liabilities. In fact,
it makes people personally liable for decisions that they have no
control over with regard to pensions.
Now, if one is a small business person and is trying to decide how to
get into this business of offering pensions, and is worried about the
costs, burdens, and liabilities, and now you discover you could have a
criminal liability, a personal liability, more costs, more burdens,
what are you going to do?
Mr. Speaker, it is a voluntary system. We need to provide incentives.
All the surveys show that. They all show the same things: Small
businesses are going to get into providing pensions and the pension
coverage we want them to provide only if it is easier, less expensive,
less burdensome, and has less liability. That is the direction we ought
to be going.
So we do have a balance here. We do provide the employees more rights
and protections, and we think that is appropriate, but we do not go so
as far as to discourage those people who are already offering plans,
and again, more importantly, to discourage those that might be
interested in getting into the pension business now that we are
offering higher contribution levels, more protections, lower costs and
burdens and liabilities.
We cannot go the wrong way here. We cannot go too far. My concern is
that the substitute does go too far.
Remember, in 1983 there were 175,000 defined benefit plans in this
country. Those are the good, guaranteed plans. There were 175,000 of
them; today there are 50,000. This Congress has, over time, added costs
and burdens and liabilities to those plans to the point that most
employers throw up their hands and say, I am not going to offer them
anymore.
We did things last year in this Congress to encourage defined benefit
plans. We increased the limits, made it easier to offer them. But we do
not want defined contribution plans, the 401(k)s, to go the way of the
defined benefit plans, do we? Do we not want more pension coverage? In
a voluntary system, we ought to do everything we can to encourage them.
There are a couple of provisions that I see in the substitute that I
am concerned with. Why should internal dispute resolutions be
prohibited? Employers and employees alike like that, public and private
sector alike. Why increase litigation costs? Why increase litigation? I
do not get that. Why would we want to vote for a substitute that has
increased litigation, increased costs?
Second, there is an amendment in here, well-meaning, trying to close
a loophole, by a colleague of mine in the Committee on Ways and Means,
not vetted. It is a brand new amendment. It did not even come up in
committee. The one that came up in committee was a different amendment.
It has to do with those deferred comp plans that are not qualified
plans. The Treasury Department has not even looked at it. We have not
had a hearing on it.
I would urge my colleagues not to move forward with this amendment
until we have a chance to look at it and see what effect it would have.
We do not want to, by trying to protect workers, create additional
problems that will lead to less retirement coverage.
So the underlying bill has important structural changes: more
information, more education, more choice, more security, more
accountability. The substitute, while well-meaning, goes too far and
strikes the wrong balance. This Congress ought to be working to expand
retirement security, not to decrease it.
Mr. Speaker, I reserve the balance of my time.
Mr. ANDREWS. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from California (Ms. Woolsey), a valued member of the
Committee who has valuable experience as a human rights executive.
(Ms. WOOLSEY asked and was given permission to revise and extend her
remarks.)
Ms. WOOLSEY. Mr. Speaker, I am a member of the Committee on Education
and the Workforce, and I can tell the Members that this Republican
Pension Security Act of 2002 will not make retirement secure for the
majority of employees. Instead, it allows a two-tiered retirement
system that gives top executives, the captains, special benefits and
protections while leaving their employees, the crew, to fend for
themselves if the company has troubled times. That is plain wrong.
Our President has agreed: What is good for the captain is good for
the sailor; or what is good for the captain is good for the crew.
I introduced an amendment during the committee that would ensure that
all of the crew have the pension parity, exactly the same as their
captains. Every Democrat on the committee voted for my amendment for
parity. Every Republican opposed it.
This Republican bill leaves employees that are seeing troubled times
with their firms at the end of the line when it comes to collecting
retirement benefits, while the captains, those like Kenneth Lay from
Enron, do not even have to get in line. Their benefits are paid for up
front in full.
The Miller substitute makes pension benefits for the rank and file,
for the crew, as secure as for the executives, the captains. It is real
pension reform, and we must support it.
Mr. PORTMAN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman
from Illinois (Mr. Weller), my colleague on the Committee on Ways and
Means.
(Mr. WELLER asked and was given permission to revise and extend his
remarks.)
Mr. WELLER. Mr. Speaker, I rise in opposition to the substitute, and,
of course, I support the bill that is being managed and offered by the
gentleman from Ohio (Mr. Boehner) and the gentleman from California
(Mr. Thomas)

[[Page H1261]]

and the gentleman from Ohio (Mr. Portman) today.
We have had a situation in our country that we are all concerned
about. The situation has been illustrated by Global Crossing and by
Enron, and we have heard those names in the debate today. Because of
that, it reinforces a goal we have been working on in this House, and
that is to work to provide safe and secure retirement opportunities for
the men and women who work in America.
We have made a lot of progress in the legislation we have passed out
of here. This legislation before us today, the base bill, the Pension
Security Act of 2002, is a real solution towards concerns that have
been raised by the so-called Enron and Global Crossing problem. In
fact, the base bill provides worker security and pension security.
Let me express some concerns about the substitute that has been
offered by the gentleman from California (Mr. George Miller) and the
gentleman from New York (Mr. Rangel). While I have great respect, I
know they are well-intentioned, I do not believe they are trying to be
partisan and political, but I believe what they are offering is pretty
radical. It is an attempt to offer a so-called solution which is way
overboard, and in the end would actually reduce retirement savings
opportunities for workers, particularly because, while maybe not
intended, this legislation would actually discourage small business
from providing retirement savings. The increased liability and damages
that would result would push employers out of providing retirement
benefits. Again, that is anti-small business.
Also, I just do not understand why, in the substitute that has been
offered, something that both Democrats and Republicans have both agreed
upon, that workers and employers have agreed upon in the past, that the
substitute actually bans and prohibits alternative dispute resolution
when there is an argument over pension benefits or how they are being
operated.
Why would anyone want to do that? The only ones who benefit by
banning alternative dispute resolutions are lawyers. Why do we want to
create more litigation, when I think everyone in our society agrees
there is too much litigation today?
The bottom line is, the Pension Security Act of 2002 is good
legislation. It is bipartisan. It is put together very thoughtfully
over a period of time, recognizing there are challenges and we need to
offer solutions.
Let us do the right thing, Mr. Speaker, and let us reject the
substitute and support the Pension Security Act of 2002 with a
bipartisan vote.
Mr. ANDREWS. Mr. Speaker, it is a pleasure to yield 2 minutes to the
gentleman from Michigan (Mr. Bonior), our former majority whip and one
of the leading voices in America for minority rights.
Mr. BONIOR. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, I rise in strong support of this Democratic substitute
that is being offered by the gentleman from California (Mr. George
Miller) and the gentleman from New York (Mr. Rangel) and others.
What we are talking about here today are the real lives of working
people. This is about valuing and respecting a person's labor. It is
about honoring a commitment. It is about keeping trust.
It is not just about Enron employees. In my home State of Michigan
earlier this year, the auto supplier DCT laid off its last 400
employees with 30-minute notices, and then locked them out of their
401(k)s. The collapse of DCT hurt not only the DCT employees, but also
the city workers in the city of Detroit, whose pension fund lost $32
million in DCT investment.
Our pension laws are too outdated to protect people. They are too
weak to protect the K-Mart workers all across this country who now face
uncertain futures. They are too weak to protect our R&R workers up in
northern Michigan, in the Upper Peninsula, in the Mesabi Range, who are
losing their benefits due to the flood of cheap steel into our country.
Pensions ought to be sacred. They ought to be a symbol of a trust
between a company and a worker. By the way, I would say to my friend,
the gentleman from Georgia (Mr. Norwood), we would not have pensions if
it was not for unions, let us make no mistake about that, for workers.
Pensions are not handouts, they are something people earn. One of the
worst things that could be done to a worker and their family is to take
their pension away. People dream about their pension at their work
site, in the factory, in the office, on construction. They think about
getting to that point in their lives when they can enjoy their pension.
And then to yank it from them, to take it, to pull it out from
underneath them, to deceive them, to break that trust, to break that
commitment, is the worst thing anyone can do.
This Democratic substitute is the right substitute. I urge my
colleagues to support it.
Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from
Arizona (Mr. Hayworth), a member of the Committee on Ways and Means.
Mr. HAYWORTH. Mr. Speaker, I thank my colleague, the gentleman from
Ohio, for yielding time to me.
I appreciate the words of my friend, the gentleman from Michigan, who
preceded me in the well. Would that this substitute from the other
side, would that it in fact concentrated on workers.
I do not dispute a thing that my friend, the gentleman from Michigan,
said about the desirability of pension plans. Indeed, the bill we offer
has an opportunity to expand pension plans on into small businesses,
opportunities for businesses with as few as 25 employees.
The problem with the substitute is that instead of being pension
protection, it is a trial lawyer's bonanza. The language in this
substitute would authorize suits to recover unlimited damages alleging
economic and non-economic losses, and welcome to the litigation
bonanza.
Should pensions be protected? Absolutely. But if we want to help
working people, we want to expand the pension pool. We want to set up
new opportunities for small business to go into these pension plans to
do the very things my friend, the gentleman from Michigan, talked
about.
We do not want an economic bonanza, or, sadly, and I am sure it is
not the intention of my friends, but one can almost see a situation
where we would have an economic bonanza and the equivalent of whiplash,
whiplash.
Look, we are talking about people's lives. It is precisely because of
the dignity of work and the opportunity that retirement brings, and
their hopes and dreams, that we do not want to see funds jeopardized by
unlimited liability and damages that enrich only the trial lawyers'
lobby and does nothing to help working people. That is the choice we
have to make today.
Mr. Speaker, we have a bipartisan piece of legislation with many
commonsense remedies that people on both sides of the aisle have
championed. Do not sacrifice that for a substitute that enriches the
trial lawyers' lobby. Reject the substitute and go with our bipartisan
plan.
Mr. ANDREWS. Mr. Speaker, I am pleased to yield 2 minutes to our
ranking member, the gentleman from California (Mr. George Miller), the
author of the substitute and a tenacious fighter for workers across
America.
Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentleman
for yielding time to me.
Mr. Speaker, the gentleman who just preceded me in the well might be
interested to know that this year, the man of the year of the American
trial lawyers is going to be Ken Lay. He has developed more business
than any single American in the history of the country.
A lot has been talked about about investment advice. We all agree
that investors need to know more about planning for their security. But
it is interesting that when Jane Bryant Quinn, the financial writer for
Newsweek Magazine, looked at the investment advice bill in light of the
Enron scandal, she yelled, ``Help, I am scared for my 401(k).'' Post-
Enron, how could anyone even think of creating such a conflict of
interest that is in the underlying bill? You might as well turn the
system over to the ice skating judges, because that is the situation
you have.
We have the very same people who are making millions, hundreds of
millions of dollars in Commissions and fees as investment bankers
providing retail advice to people who are trying to plan for their
retirement, the average worker.

[[Page H1262]]

{time} 1515

And they are being told on the level, this is a good investment. But,
in fact, what we know is they are making that decision based upon the
millions of dollars in fees, not the best interests of the investor.
This is really about whether or not we are going to treat the corporate
elite and the workers the same.
It is a radical notion in the Republican Party that workers would
have some say in their own retirement; that workers would be warned
when the corporate elite are bailing out of the corporate towers; when
the corporate elite are selling their stock. A radical notion that the
workers at Enron and other corporations would be told of that. But we
should expected that; we saw that in committee.
The Wall Street Journal said it best: ``The Republican-led panel
rejected a dozen Democratic amendments which would have offered workers
greater protections and improved stricter rules on employer-sponsored
401(k)s and other defined contribution plans.'' Yes, they had a chance
to help out workers, to give them notice when the big shots are selling
their stock; to give them a say in the control of retirement funds that
belong to them, it is 100 percent of their assets; to make sure that
they had the same rights as the corporate elite. But the Republicans
have not seen fit to do that. You can support the Democratic
substitute, and you can make sure that the workers after Enron have
more protections than they had before.
Mr. PORTMAN. Mr. Speaker, I yield the balance of our time for
purposes of control to the gentleman from Ohio (Mr. Boehner), the
chairman of the Committee on Education and the Workforce.
The SPEAKER pro tempore (Mr. Dan Miller of Florida). Without
objection, the gentleman from Ohio (Mr. Boehner) will control the
remainder of the time and has 2\1/4\ minutes remaining and will have
the right to close. The gentleman from New Jersey (Mr. Andrews) has 2
minutes remaining.
Mr. ANDREWS. Mr. Speaker, I assume we have the right to close.
The SPEAKER pro tempore. The gentleman from Ohio (Mr. Boehner) has
the right to close.
Mr. ANDREWS. Mr. Speaker, I yield the balance of my time to the
gentlewoman from California (Ms. Pelosi), our dynamic leader, the
highest woman elected in the history of the House of Representatives.
Ms. PELOSI. Mr. Speaker, I thank the gentleman for yielding me time
and for his leadership and kind words.
Mr. Speaker, an extremely important matter is before the House today.
Nothing short of pension security of America's working families is at
risk. We all agree that this is a very, very complicated issue; and we
also agree that we want to maintain confidence in our financial systems
in the decisions we make today.
That is why it is so very regrettable that the Republicans have
brought an irresponsible proposal to the floor. Every day it seems
Republicans are dragging another Trojan horse on to the House floor, a
horse that has some nice features but covers up the dangers within.
I tell my colleagues, beware of Republicans bearing gifts. A vote for
their bill is a vote to weaken existing law by giving employees biased
and conflicted advice without access to an independent alternative.
A vote for the Democratic substitute empowers workers; and it means
giving them control of their investment, accurate investment advice,
representation on pension boards to protect their interests, and
notification when executives are dumping company stock. It also means
holding plans accountable through tougher criminal penalties for
misconduct and the ability of employees to collect damages when they
are misled. The Republican bill fails on all of these counts.
A comparison of these two bills makes it very clear that President
Bush was right when he said, What is good for the captain is good for
the crew.
Let us follow that advice of President Bush and give employees
control of investments of their nest egg and a voice on their pension
boards; give employees the opportunity to be notified when executives
dump company stock; give employees the right to be protected from
conflicts of interest when receiving investment advice. And on that
score, the Republican proposal not only fails, it is regressive. It is
regressive. It makes matters worse for American workers and their
pension funds. It gives employee and executive plans exactly the same
treatment, employees and executives exactly the same treatment. And it
gives tougher penalties for company misconduct.
The Republican bill, on the other hand, gives no control, no voice
for employees over their own nest egg. It allows for conflicts of
interest in investment advice of employees, a very important point
because this is where it makes matters worse. No notification to
employees when executives dump company stock. We know how many were
victimized by that. It gives preferential treatment for executive
pension funds. We want success to be awarded both at the executive and
the employee level. Why cannot Republicans recognize that? There are no
new penalties for pension plan abuse.
The contrast is stark. The decision is important. We have a
responsibility on this day to restore confidence in pension plans and
investments of workers and executives. We have a responsibility today
to maintain confidence in our financial systems.
Vote ``yes'' on the Democratic substitute to do just that. Vote
``no'' on the Republican proposal, a bill that makes matters worse for
workers investing in their retirement pensions.
I urge my colleagues to do just that.
Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, we have talked a lot today about diversification,
blackout periods, fiduciary duty; but at the end of the day what this
bill really is about is real people and their own financial security.
Current pension law is simply outdated, and we have the
responsibility to change that. We have the responsibility to ensure
that America's retirement futures are not jeopardized by laws that are
out of step with our current times. If this bill had been law, it would
have made a real difference for Enron's employees.
Under this bill they would have had access to professional investment
advice, people who could have warned them that they had too many eggs
in one basket. They would have been better informed about upcoming
blackout periods, and they would have had more freedom to diversify
their portfolios.
The retirement future of our Nation's workers is too important for
political gamesmanship. In the wake of the Enron collapse, the American
people are counting on us to make practical and necessary changes to
our pension system that basically is healthy, and that, on the balance,
works very well.
But my colleagues on the other side of the aisle are being encouraged
by the political leaders of their party to support an alternative to
this bill that would do far more harm than good. Instead of supporting
bipartisan protections that would shield millions of American workers,
the partisan opponents of this bill are putting their own political
interests ahead of those of ordinary Americans. The House Democrat
leadership alternative is really no alternative at all. It would enrich
trial lawyers. It would hurt small businesses, impose costly new
mandates, and even endanger 401(k)-type plans. Most importantly of all,
it would continue to deny workers from getting access to the
professional investment advice that is crucial for them to maximize
their own retirement security. In short, the opponents of this bill
would take us in exactly the wrong direction.
The underlying bill, the Pension Security Act, which has been
embraced by Republicans and Democrats alike, would change what is wrong
with current pension law without, and I say without, breaking what does
not need to be fixed. I urge my colleagues to vote against the
substitute and for the underlying bill.
Mr. UDALL of Colorado. Mr. Speaker, this bill is not all that it
should be. It is not even the bill that we should be passing today.
We should be passing the substitute offered by the gentleman from
California, Mr. George Miller, and the gentleman from New York, Mr.
Rangel. That was why I voted for that substitute and why I am very
disappointed that it was not adopted.
But now we are left with the choice of voting for this bill or voting
for no legislation at all. And I think there definitely is an urgent
need

[[Page H1263]]

for legislation to address the serious problems made so evidently by
recent events, including the collapse of the Enron Corporation.
For that reason--and solely for that reason--I will vote for the
bill. I do not think that it would be responsible to say that it would
be better to do nothing.
In voting for the bill, I am under no illusions about its flaws. In
particular, I very much disapprove of the changes the bill would make
in current law related to investment advice provided to employees.
Those provisions are similar to those in H.R. 2269, which the House
passed last year. I voted against that bill, and if this bill did not
include anything more, I would vote against it as well.
However, while the rest of the bill falls short of what I would
prefer, it does make some improvements in current law. Further, passage
of the bill will set the stage for the Senate to make further
improvements--including correction or deletion of the investment-advice
provision. I am voting for the bill today so that can take place, as I
expect it will.
Mr. POMEROY. Mr. Speaker, I rise in opposition to the Miller
substitute and in support of the underlying bill. Earlier in this
debate, I indicated my support for the Miller amendment. In many
respects, it does improve on the underlying bill. After further
reviewing the substitute, however, I have found legal liability
provisions that I believe will seriously discourage employers from
offering retirement plans, to detriment of workers.
Setting aside the Enron fiasco, employer-sponsored retirement plans
are a great success story of the American workplace. Such plans help
employees accrue the assets they will need to live comfortably in
retirement. Unfortunately, only half of American workers have access to
employer-sponsored plans.
Therefore, as we seek to address the problems revealed by the
collapse of Enron, we must both increase worker protection and
encourage employers to expand pension coverage. We should protect
workers by allowing them to diversify their retirement portfolio rather
than keeping them locked into company stock. We should provide workers
with adequate notification of impending black-out periods so that they
may make changes in their portfolios before the temporary freeze
occurs. Both the substitute and the underlying bill include these
worker protections.
We should encourage the expansion of pension coverage by providing
the type of rational, regulatory relief that is found in the underlying
bill. What we should not do is increase employers' exposure to
litigation arising from their retirement plan. Regrettably, the
substitute does so in significant fashion. Rather than limiting
liability to the fiduciary, who exercises control over the assets in
the plan, the substitute expands liability to other parties who have no
such control or responsibility. In addition, it greatly expands damage
awards beyond simple losses to the plan. This increase in legal
exposure would at least retard the growth of employer-sponsored plans
and could even result in the contraction of retirement plans.
For these reasons, I must oppose the Miller substitute.
Mr. PASTOR. Mr. Speaker, I rise today in opposition to the Pension
Protection Act as it is being presented to the House of Representatives
and in favor of the alternative plan being offered by Congressman
Rangel and Congressman Miller.
As we all know, the collapse and bankruptcy of the Enron Corporation
left thousands of people without their retirement funds and wondering
how they might make ends meet when they are no longer working. While
the high ranking officials of the company were able to dump their stock
in the last few days of the company's existence, the middle level and
lower level workers, the people who had no idea of the financial
disaster that lurked on the horizon, were locked out of selling their
company stock and ended up losing most of if not all of their hard
earned retirement funds.
Accordingly, it is incumbent on us in Congress to address this issue
and to take the necessary steps, no matter how difficult they may be,
to ensure that this never happens again. I strongly support efforts to
do so.
However, Mr. Speaker, the bill we are voting on today does nothing to
keep another ``Enron'' debacle from occurring today, or next month, or
in years to come. The basic reforms that are needed are simply not
there. True, this bill takes marginal actions, but these merely address
the symptoms and not the core of the problems.
This bill would allow a dangerous situation to develop by allowing
the investment firm that manages a company's pension plan to advise the
employees on investment decisions that they should make. This is a
fundamental conflict of interest and the classic example of the fox
guarding the hen house.
The so-called Pension Protection Act also denies employees a voice on
their own Pension Board. It is clear in the Enron scandal that the
Enron Pension Trustees failed to take any actions at all to protect the
savings of Enron employees. I believe it is critical that the Pension
Board include some rank and file employees who have the interests of
other employees at heart.
Also, Mr. Speaker, the bill we are considering today leaves employees
locked into company stock for long periods of time, whether it is in
their best interest to be there or not. And, just like the case in the
Enron situation, this bill does nothing to let employees know when
executives are ``dumping'' company stock.
But, I say to the employees of America, there is an alternative to
this misguided legislation. Mr. Rangel and Mr. Miller are offering a
substitute that addresses all these concerns and will take significant
steps to ensure that your pension plans are safe and viable for your
days of retirement.
The substitute require that retirement plan participants be notified
within three days when any significant sales of company stock by
company executives occurs. Hopefully, the employees will then be able
to make their own judgments as to the necessity to sell their own
stock.
The substitute also will no longer allow company executives to dump
their stock while the employees are in a blackout period. In my mind,
this was one of the most horrific examples of executive greed in the
entire Enron scandal, and we must do whatever is necessary to ensure
that this never occurs again.
The substitute also provides for independent financial advice for
employees when company stock is offered as an investment option. And,
it gives employees a voice on their Pension Board.
Mr. Speaker, I hear over and over again in this House the desire to
allow individuals to have more control of their money, whether it be
through massive tax cuts, or the creation of individual Social Security
accounts, or other innumerable examples. Yet, this bill does not give
employees any control over their money. It keeps control of their
pensions in the hands of their employers.
This is the perfect vehicle to finally give the people more control
of their hard earned money. Let's take the responsible step and pass
the Rangel-Miller Substitute and make sure that employees' retirement
accounts are protected.
Ms. KILPATRICK. Mr. Speaker, so the pattern continues. In October
2001, we provided $15 million to the airline industry following the
September 11th attack but the Republican leadership did nothing to
assist the rank-and-file workers who were laid off. In November 2001,
the Republican leadership bailed out the insurance industry at $30 plus
million, but did nothing for the rank-and-file workers. In February
2002, the Republican leadership secured big business with several tax
breaks, but again, no real assistance for the rank-and-file worker.
Mr. Speaker, this pattern begs the question, ``who are we here to
represent?'' According to the actions of the leadership, it would seem
that we are to represent big business only. What about the rank-and-
file workers who make up more than half of our country? Do they not
deserve protection and security by the United States of America?
Today, we are attempting to pass a bill that purports to protect
workers from future Enron debacles. Thousands of workers at Enron were
left distraught and with little to no retirement savings. Executives,
who knew of the situation, secured their assets. These employees lost
well over $1 billion of their retirement savings because corporate
management kept their employees in the dark about the actual net worth
of Enron and the safety of the 401(k) plans.
The leadership claims to fix that situation with H.R. 3762. This bill
proposes a 30-day notice prior to ``blackout'' periods for rank-and-
file employees. This, supposedly, will allow employees to alter their
401(k) plans before the blackout. Executives, however, will have the
option to adjust their 401(k) plans at anytime, even during the
blackout. The bill also permits executives to move thousands of dollars
from their stock plans without rank-and-file employees being notified
of the drastic change. Additionally, executives would be the only
individuals on the Pension Board deliberating the pension plans for the
entire company. Amendments to include workers on the Board have been
struck down.
This bill supports what occurred at Enron. We need a bill that works
for the rank-and-file, not just for the corporate executive. We need
extensive disclosure of pension information for the rank-and-file. We
need independent, unbiased and accurate financial advice. We need rank-
and-file representation on the Pension Boards so their voices will be
heard. We need a level playing field during blackouts. If rank-and-file
employees cannot touch their 401(k) plans, executives should be
prohibited too. All of these suggestions are addressed in the
Democratic substitute but not in the bill.
Mr. Speaker, it is due time that the leadership acknowledge the
pension rights of workers and seek to secure them. For that reason, I
will vote ``no'' on H.R. 3762. This is another

[[Page H1264]]

attempt to protect the wealthy, with little concern for the worker. We
can do much better, Mr. Speaker, and I await that day.
The SPEAKER pro tempore. Pursuant to House Resolution 386, the
previous question is ordered on the bill, as amended, and on the
amendment by the gentleman from California (Mr. George Miller).
The question is on the amendment in the nature of a substitute
offered by the gentleman from California (Mr. George Miller).
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. ANDREWS. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 187,
nays 232, not voting 15, as follows:

[Roll No. 90]

YEAS--187

Abercrombie
Ackerman
Andrews
Baca
Baird
Baldacci
Baldwin
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Carson (IN)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meek (FL)
Meeks (NY)
Menendez
Miller, George
Mink
Mollohan
Moran (VA)
Morella
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Phelps
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

NAYS--232

Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barcia
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Calvert
Camp
Cannon
Cantor
Capito
Cardin
Carson (OK)
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis (FL)
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
Matheson
McCrery
McHugh
McInnis
McKeon
Mica
Millender-McDonald
Miller, Dan
Miller, Gary
Miller, Jeff
Moore
Moran (KS)
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Platts
Pombo
Pomeroy
Portman
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Ross
Royce
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tanner
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Turner
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)

NOT VOTING--15

Allen
Burton
Buyer
Callahan
Cooksey
Diaz-Balart
Ford
Jones (NC)
Meehan
Pitts
Pryce (OH)
Roukema
Ryan (WI)
Sessions
Traficant

{time} 1548

Messrs. SKEEN, SMITH of Texas, EHLERS, HYDE, and TIBERI changed their
vote from ``yea'' to ``nay.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
Stated for:
Ms. MILLENDER-McDONALD. Mr. Speaker, I mistakenly voted ``no'' on
rollcall 90, the Miller substitute. My intention was to vote ``yes.''
The SPEAKER pro tempore (Mr. Dan Miller of Florida). The question is
on engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.

Motion to Recommit Offered by Mr. George Miller of California

Mr. GEORGE MILLER of California. Mr. Speaker, I offer a motion to
recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. GEORGE MILLER of California. Mr. Speaker, yes, I am.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:

Mr. George Miller of California moves to recommit the bill
H.R. 3762 to the Committee on Education and the Workforce
with instructions to report the same back to the House
promptly with the following amendment:

Add at the end thereof the following new section:

SEC. 501. TREATMENT OF CERTAIN FUNDED DEFERRED COMPENSATION
PLANS FOR CORPORATE INSIDERS AS PENSION PLANS
COVERED UNDER ERISA.

(a) Inclusion in Definition of Pension Plan.--Section 3(2)
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(2)) is amended by adding at the end the following
new subparagraph:
``(C)(i) The terms `employee pension benefit plan' and
`pension plan' shall also include any arrangement providing
for the deferral of compensation of a corporate insider of a
corporation that is not otherwise a pension plan within the
meaning of subparagraph (A), unless--
``(I) all amounts of compensation deferred under the
arrangement,
``(II) all property and rights purchased with such amounts,
and
``(III) all income attributable to such amounts, property,
or rights,
remain (until made available to the corporate insider or
other beneficiary under the arrangement) solely the property
and rights of the employer (without being restricted to the
provision of benefits under the arrangement), subject only to
the claims of the employer's general creditors.
``(ii) For purposes of clause (i), the term `corporate
insider' means, in connection with a corporation, any
individual who is subject to the requirements of section
16(a) of the Securities Exchange Act of 1934 with respect to
such corporation.
``(iii) In the case of any arrangement that is a pension
plan under clause (i)--
``(I) the corporation shall be treated as an employer
(within the meaning of paragraph (5)) of the corporate
insider,
``(II) the corporate insider shall be treated as an
employee (within the meaning of paragraph (6)) of the
corporation, and
``(III) the arrangement shall not be treated as an unfunded
arrangement.''.
(b) Compliance With Certain Participation Standards.--
Section 202 of such Act (29 U.S.C. 1052) is amended by adding
at the end the following new subsection:

[[Page H1265]]

``(c) An arrangement that is a pension plan under section
3(2)(C)(i) shall comply with the requirements of section 410
of the Internal Revenue Code of 1986 necessary for a trust
forming a part of such plan to constitute a qualified trust
under section 401(a) of such Code.''.

Mr. GEORGE MILLER of California (during the reading). Mr. Speaker, I
ask unanimous consent that the motion to recommit be considered as read
and printed in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
California (Mr. George Miller) is recognized for 5 minutes in support
of his motion to recommit.
Mr. GEORGE MILLER of California. Mr. Speaker, one of the things we
learn from the Enron tragedy and one of the things that we have learned
from Global Crossing and so many other companies that have started to
fail or turned on bad times is that the corporate elite, the CEO and
others, have 401(k) plans that are absolutely protected. Their ability
to collect on their pension plans has nothing to do with the financial
health of the company, how well the company does or how poorly the
company does. Yet we see the employees with their 401(k) plans; they
are absolutely tied to how the company does. And in many instances,
they are locked into the stock of the company.
What we are seeing here is what the President said when he went to
North Carolina, if it is good for the captain, it is good for the crew.
We cannot have the executives ensuring their pension plans so that they
walk off with millions and tens of millions of dollars, lifetime
pensions, and the employees have got to go to bankruptcy court and hope
that there is something left over for them. If we insure one, we insure
others. If preference is given to one, preference is given to the
other.
Mr. Speaker, it is a very important principle. The theory of
executive compensation is that we are rewarding an executive, one, for
how well their company does. Yet we see time and again executive
compensation has nothing to do with the performance of the company.
Their pension plans are guaranteed; and yet the employee must be more
productive, must do all that they can to make that company perform so
that their stock is worth what it should be in their retirement plans.
We think that they ought to be treated alike, and this is an
opportunity to vote to make sure that there is parity among the elite
executives of a corporation with respect to pension plans, and among
the employees, that they not get left out.
It is terribly important that as the executives walk off stage with
tens of millions of dollars, that the employees not be left holding the
bag; and that is the purpose of this amendment.
Mr. Speaker, I yield to the gentleman from California (Mr. Matsui),
who offered this in the Committee on Ways and Means.
Mr. MATSUI. Mr. Speaker, I have to say what happened with the Enron
situation was not unique because this is going to happen more and more.
Essentially what has happened is CEOs and top management people in many
corporations have set up a plan that basically violates the principles
of our pension laws.
Ken Lay, for example, was able to get deferred compensation, that is,
he did not have to pay any taxes on his retirement program. Yet when
Enron filed bankruptcy, he was able to collect about $2 million from
that plan, whereas every other Enron employee lost valuable assets in
their 401(k) plan. This would merely tighten that up and make it
consistent where Members of both the House and the Senate, and
certainly Democrats and Republicans would not want anyone to be able to
defer taxes, and at the same time be able to get a fully funded program
that is protected from bankruptcy.
Mr. Speaker, this has to be tightened up. This is closing a loophole.
This is something that we cannot allow to happen as we see more and
more of these Enron scandals occur.
Mr. GEORGE MILLER of California. Mr. Speaker, all of us in the
Committee on Financial Services, the Committee on Energy and Commerce,
and the Committee on Education and the Workforce have listened to these
workers who have had their retirement plans destroyed, workers who are
55, 59, 62 years old; their plans are destroyed, and they are now
dependent on their children. The life they thought they were going to
lead, they are not going to be able to.
Yet Ken Lay, who looted this company and destroyed these people's
retirement nest egg walks off stage with $475,000 a year in guaranteed
income and a multimillion dollar house in Texas that is protected under
bankruptcy law.
Somehow there has to be parity and fairness. This is our chance to
repair what is lacking in the Republican bill and provide fairness and
protection for the employee, the same as the CEO and the chief
operating officers of this corporation get, to make sure that employees
are not left holding the bag.
Mr. Speaker, I would urge an ``aye'' vote on the motion to recommit.
Mr. BOEHNER. Mr. Speaker, I rise in opposition to the motion to
recommit.
The SPEAKER pro tempore. The gentleman from Ohio (Mr. Boehner) is
recognized for 5 minutes in opposition to the motion to recommit.
Mr. BOEHNER. Mr. Speaker, this is a rather unusual motion to
recommit. It does not change the bill and allow it to move on; it
actually would send the bill back to the committee. After all of the
work that we have done in two committees, and all of the work we have
done here, the last think we want to do is send this bill off to a
black hole.
But more importantly, what the gentleman from California (Mr. George
Miller) is suggesting is that we try to change IRS code and bankruptcy
code through ERISA, trying to get at the top end of employees who have
deferred compensation plans.
All of us know that deferred compensation plans are not tax-qualified
pension plans. They are payment plans for high-level executives. I
could not agree more with the gentleman from California (Mr. Matsui)
that what Ken Lay and other executives at Enron did was absolutely
wrong. But to try to change bankruptcy protections through ERISA is not
going to change the employees who we are attempting to help in the
underlying bill.
Mr. Speaker, I would ask my colleagues, considering the time, that we
do not want to send this bill off to oblivion. We want to move this
process on. This is not a very good idea and will not help the
employees that we are attempting to help. I urge my colleagues to vote
``no.''
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.

Recorded Vote

Mr. GEORGE MILLER of California. Mr. Speaker, I demand a recorded
vote.
A recorded vote was ordered.
The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair
will reduce to 5 minutes the period of time within which a vote by
electronic device will be taken on the question of the passage of the
bill.
The vote was taken by electronic device, and there were--ayes 204,
noes 212, not voting 19, as follows:

[Roll No. 91]

AYES--204

Abercrombie
Ackerman
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce

[[Page H1266]]

Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

NOES--212

Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Brady (TX)
Brown (SC)
Bryant
Burr
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Putnam
Quinn
Ramstad
Regula
Rehberg
Reynolds
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)

NOT VOTING--19

Allen
Burton
Buyer
Callahan
Cooksey
Diaz-Balart
Ford
Hoyer
Meehan
Meek (FL)
Pryce (OH)
Radanovich
Riley
Roukema
Ryan (WI)
Sessions
Tiahrt
Traficant
Young (FL)

{time} 1616

Mr. LUCAS of Kentucky changed his vote from ``aye'' to ``no.''
Ms. JACKSON-LEE of Texas changed her vote from ``no'' to ``aye.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
Stated against:
Mr. TIAHRT. Mr. Speaker on rollcall No. 91, I was unavoidably
detained. Had I been present, I would have voted ``no.''
The SPEAKER pro tempore (Mr. Dan Miller of Florida). The question is
on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.

Recorded Vote

Mr. GEORGE MILLER of California. Mr. Speaker, I demand a recorded
vote.
A recorded vote was ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 255,
noes 163, not voting 17, as follows:

[Roll No. 92]

AYES--255

Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barcia
Barr
Bartlett
Barton
Bass
Bentsen
Bereuter
Berry
Biggert
Bilirakis
Bishop
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boucher
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Calvert
Camp
Cannon
Cantor
Capito
Carson (OK)
Castle
Chabot
Chambliss
Clement
Coble
Collins
Combest
Condit
Cox
Cramer
Crane
Crenshaw
Crowley
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Hall (OH)
Hall (TX)
Hansen
Harman
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hinojosa
Hobson
Hoekstra
Holden
Hooley
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Keller
Kelly
Kennedy (MN)
Kerns
Kind (WI)
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Larsen (WA)
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
Lipinski
LoBiondo
Lucas (KY)
Lucas (OK)
Luther
Maloney (CT)
Manzullo
Matheson
McCarthy (NY)
McCrery
McHugh
McInnis
McIntyre
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Pence
Peterson (MN)
Peterson (PA)
Petri
Phelps
Pickering
Pitts
Platts
Pombo
Pomeroy
Portman
Price (NC)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Ross
Royce
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shows
Shuster
Simmons
Simpson
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Souder
Stearns
Stenholm
Stump
Sullivan
Sununu
Sweeney
Tancredo
Tanner
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Turner
Udall (CO)
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Wu
Young (AK)
Young (FL)

NOES--163

Abercrombie
Ackerman
Andrews
Baca
Baird
Baldacci
Baldwin
Barrett
Becerra
Berkley
Berman
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Clay
Clayton
Clyburn
Conyers
Costello
Coyne
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Frank
Frost
Gephardt
Gonzalez
Green (TX)
Gutierrez
Gutknecht
Hastings (FL)
Hilliard
Hinchey
Hoeffel
Holt
Honda
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larson (CT)
Lee
Levin
Lewis (GA)
Lofgren
Lowey
Lynch
Maloney (NY)
Markey
Mascara
Matsui
McCarthy (MO)
McCollum
McDermott
McGovern
McKinney
McNulty
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Slaughter
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Thompson (CA)
Thompson (MS)
Thurman
Tierney

[[Page H1267]]

Towns
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wynn

NOT VOTING--17

Allen
Burton
Buyer
Callahan
Cooksey
Diaz-Balart
Ford
Horn
Meehan
Meek (FL)
Paul
Pryce (OH)
Riley
Roukema
Ryan (WI)
Sessions
Traficant

{time} 1625

Mr. STRICKLAND changed his vote from ``aye'' to ``no.''
Mr. LUTHER changed his vote from ``no'' to ``aye.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.

____________________