[Congressional Record Volume 148, Number 43 (Wednesday, April 17, 2002)]
[Senate]
[Pages S2838-S2839]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CLELAND:
  S. 2185. A bill to amend the Employee Retirement Income Security Act 
of 1974 to provide workers with individual account plans with 
information on how the assets in their accounts are invested and of the 
need to diversify the investment of the assets; to the Committee on 
Health, Education, Labor, and Pensions.
 Mr. CLELAND. Mr. President, today I am introducing a bill 
designed to promote investor education. The collapse of Enron has left 
Congress searching for answers as to how such a disaster could have 
happened and how it can be prevented from happening in the future. I 
serve on both the Commerce and Governmental Affairs Committees which 
are investigating Enron and a central concept I have taken away from 
these investigations is the importance of ensuring that investors have 
adequate and current information regarding their retirement plans. 
Employees need to be armed with knowledge in order to protect 
themselves and their hard earned retirement savings.
  My bill would require that employee investors in company 401(k) plans 
receive quarterly reports detailing the contents of their 401(k) plans. 
Under

[[Page S2839]]

current law, employers are only required to provide annual reports with 
a statement of benefits accrued under the plan. Enron certainly 
illustrates what a difference a year makes. Employees should have 
timely access to information about their 401(k) plan, enabling them to 
make choices in their investments. My bill would require that employees 
receive quarterly reports with a specific listing of: 1. the fair 
market value of the assets of each investment option; 2. the percentage 
of plan investment in each asset; and 3. the percentage of investments 
in employer securities and how much of that investment came from 
employee contributions.
  My bill would also require that quarterly reports contain a ``warning 
label'' informing employees of the potential danger of investing too 
heavily in employer stock. I believe that employees should have the 
ability to choose how to invest and diversify their own 401(k) plan. 
However, I also believe employees should be able to make informed 
choices. Providing employees with the basic information that investing 
too heavily in any one security, including their own company stock, 
violates commonly accepted investing principles is simple common sense. 
Thus, my bill requires that a warning label be provided to employees 
upon enrollment in a plan and included in quarterly reports that reads: 
Under commonly accepted principles of good investment advice, a 
retirement account should be invested in a broadly diversified 
portfolio of stocks and bonds. It is unwise for employees to hold 
significant concentrations of employer stock in an account that is 
meant for retirement savings.
  We may not be able to prevent company executives from lying, cheating 
and stealing like the executives of Enron, though we should ensure a 
climate of strict enforcement to deter such behavior. However, we can 
arm employees with the information and tools to protect themselves and 
their retirement savings. I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2185

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

     SECTION 1. INDIVIDUAL ACCOUNT PLANS REQUIRED TO GIVE 
                   PARTICIPANTS ADEQUATE INFORMATION TO ASSIST 
                   THEM IN DIVERSIFYING PENSION ASSETS.

       (a) In General.--Section 104 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1024) is amended--
       (1) by redesignating subsections (c) and (d) as subsections 
     (d) and (e), respectively, and
       (2) by inserting after subsection (b) the following new 
     subsection:
       ``(c)(1) The plan administrator of an applicable individual 
     account plan shall, within a reasonable period of time 
     following the close of each calendar quarter, provide to each 
     participant or beneficiary a statement with respect to his or 
     her individual account which includes--
       ``(A) the fair market value as of the close of such quarter 
     of the assets in the account in each investment option,
       ``(B) the percentage as of such calendar quarter of assets 
     which each investment option is of the total assets in the 
     account,
       ``(C) the percentage of the investment in employer 
     securities which came from employer contributions other than 
     elective deferrals (and earnings thereon) and which came from 
     employee contributions and elective deferrals (and earnings 
     thereon), and
       ``(D) such other information as the Secretary may 
     prescribe.
       ``(2)(A) Each statement shall also include a separate 
     statement which is prominently displayed and which reads as 
     follows:
       `Under commonly accepted principles of good investment 
     advice, a retirement account should be invested in a broadly 
     diversified portfolio of stocks and bonds. It is unwise for 
     employees to hold significant concentrations of employer 
     stock in an account that is meant for retirement savings'.
       ``(B) The plan administrator of an applicable individual 
     account plan shall provide the separate statement described 
     in subparagraph (A) to an individual at the time the 
     individual first becomes a participant in the plan.
       ``(3) Any statement or notice under this subsection shall 
     be written in a manner calculated to be understood by the 
     average plan participant.
       ``(4) For purposes of this subsection--
       ``(A) The term `applicable individual account plan' means 
     an individual account plan to which section 404(c)(1) 
     applies.
       ``(B) The term `elective deferrals' has the meaning given 
     such term by section 402(g)(3) of such Code.
       ``(C) The term `employer securities' has the meaning given 
     such term by section 407(d)(1).''
       (b) Enforcement.--Section 502(c)(1) of such Act (29 U.S.C. 
     1132(c)(1)) is amended by striking ``or section 101(e)(1)'' 
     and inserting ``, section 101(e)(1), or section 104(c)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar quarters beginning on and after 
     January 1, 2003.
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