[Congressional Record Volume 149, Number 72 (Wednesday, May 14, 2003)]
[House]
[Pages H4035-H4092]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PENSION SECURITY ACT OF 2003
Mr. LINDER. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 230 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 230
Resolved, That upon the adoption of this resolution it
shall be in order to consider in the House the bill (H.R.
1000) to amend title I 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. The bill shall be considered
as read for amendment. The amendment recommended by the
Committee on Education and the Workforce now printed in the
bill shall be considered as adopted. All points of order
against the bill, as amended, are waived. The previous
question shall be considered as ordered on the bill, as
amended, and on any further amendment thereto to final
passage without intervening motion except: (1) one hour and
20 minutes of debate on the bill, as amended, equally divided
among and controlled by the chairmen and ranking minority
members of the Committee on Education and the Workforce and
the Committee on Ways and Means; (2) the further amendment
printed in the report of the Committee on Rules accompanying
this resolution, if offered by Representative George Miller
of California or his designee, which shall be in order
without intervention of any point of order, shall be
considered as read, and shall be separately debatable for one
hour equally divided and controlled by the proponent and an
opponent; and (3) one motion to recommit with or without
instructions.
The SPEAKER pro tempore. The gentleman from Georgia (Mr. Linder) is
recognized for 1 hour.
Mr. LINDER. Mr. Speaker, for the purpose of debate only, I yield the
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter),
pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
Mr. Speaker, H. Res. 230 is a modified, closed rule that provides for
the consideration of H.R. 1000, the Pension Security Act of 2003. This
rule provides for 1 hour and 20 minutes of general debate, with 40
minutes equally divided and controlled by the chairman and ranking
minority member of the Committee on Education and the Workforce, and 40
minutes equally divided and controlled by the chairman and ranking
minority member of the Committee on Ways and Means. H.R. 230 provides
that the amendment recommended by the Committee on Education and the
Workforce now printed in the bill shall be considered as adopted. It
waives all points of order against the bill, as amended.
The rule makes in order the amendment printed in the report of the
Committee on Rules accompanying the resolution, if offered, by the
gentleman from California (Mr. George Miller) or his designee, which
shall be considered as read and shall be separately debatable for 1
hour, equally divided and controlled by the proponent and an opponent.
H.R. 230 waives all points of order against the amendment printed in
the report and provides one motion to recommit, with or without
instructions.
With respect to H.R. 1000, I want to again commend the gentleman from
Ohio (Mr. Boehner), chairman of the full Committee on Education and the
Workforce, for leadership that he is exhibiting to American workers who
want and need enhanced retirement security here in the 21st century. To
his credit, the gentleman from Ohio (Mr. Boehner) brought similar
retirement security legislation to the House Floor in November of 2001.
The House passed that bill, H.R. 2269, with a 230 to 144 vote.
Unfortunately, that vote died in the Senate.
{time} 1200
Again, in April of last year the gentleman from Ohio (Mr. Boehner)
brought legislation to the floor that sought to implement a series of
pension reforms sought by President Bush; and the House passed that
bill, H.R. 3762, with a 255-163 vote. Again, the bill died in the
Senate.
Well, as the saying goes, the third time is a charm, as the gentleman
from Ohio (Mr. Boehner) has brought retirement security legislation to
the House floor today which the House should promptly pass over to the
Senate so that the Chamber's new leadership has a chance to move it
through the body. If so, I fully expect that President Bush would sign
such a bill into law.
Some of the key elements of H.R. 1000 include giving workers the
flexibility and freedom to diversify the holdings within their 401(k)
plans; providing workers with high-quality investment advice as they
exert more and more control over their nest eggs; amending Federal law
to ensure that employers have fiduciary responsibility for employees'
savings during blackout periods when employees are barred from changing
their 401(k) investments; requiring employers to provide quarterly
benefit statements to workers about retirement accounts; and, finally,
a series of reforms designed to simplify pension requirements for small
businesses that want to offer their workers defined benefit plans.
All of these reforms will help enhance the retirement security of
millions of American workers. I look forward to supporting this bill.
In conclusion, Mr. Speaker, H. Res. 230 is a modified closed rule
that will
[[Page H4036]]
give the full House an opportunity to work its will on H.R. 1000 or the
substitute put forward by the gentleman from California (Mr. George
Miller). I urge my colleagues to support the rule so we can move on to
the underlying legislation.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Maryland (Mr. Cardin), if he would like to make some comments on
the bill.
Mr. CARDIN. Mr. Speaker, let me thank my friend for his generosity
considering I am on the other side of the issue on this rule. I very
much appreciate him yielding me time.
Mr. Speaker, I rise in opposition to this rule. The rule does deny
any amendments. There are amendments that need to be considered by this
body if we are going to protect workers.
It is interesting, Mr. Speaker, that this bill comes to us as the
workers' protection legislation, yet it does not afford adequate
protection to our workers. But what concerns me the most, Mr. Speaker,
is over the last 2 years our economy has lost 2.7 million private
sector jobs. This is twice the amount of job loss as compared to the
last recession, and yet we provide only one half of the amount of
extended unemployment benefits to dislocated workers and their
families.
It is for that reason, Mr. Speaker, that at the end of our debate we
will be asking the House to reject the previous question so that we can
offer an amendment that will provide for the extension of Federal
unemployment insurance benefits.
This is urgent. The current Federal unemployment insurance benefit
program is scheduled to terminate at the end of this month. Even though
we know that one million workers, one million workers have already
exhausted their Federal unemployment insurance benefits, the
legislation that we have filed would give them an additional 13 weeks.
Mr. Speaker, we know that in the next 6 months 2 million workers will
exhaust their State unemployment insurance benefits. Now, the
legislation that we have currently extended will only provide
unemployment insurance benefits for those who are on the program. No
new enrollees. Two million Americans will be affected during the next 6
months. We had $21 billion in the Federal unemployment insurance funds
to pay for those benefits, so it is paid for.
The Committee on Rules allowed for provisions within the jurisdiction
of the Committee on Ways and Means in the underlying legislation that
we will be considering if this rule is approved, yet the legislation
was not considered by the Committee on Ways and Means. So, therefore,
Mr. Speaker, I think it is very appropriate that this body permit us to
consider during the debate of this legislation, which is aimed at
protecting workers, the extension of Federal unemployment insurance
benefits. It is going to be one of the last opportunities that we will
have to consider this before the Federal unemployment insurance benefit
program has exhausted and those that are unemployed are going to be
without.
So, Mr. Speaker, I would urge my colleagues to defeat the previous
question and, if necessary, defeat the rule so that we have an
opportunity to take up the extension of the Federal unemployment
insurance benefits that affect millions of our workers.
Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may
consume.
(Ms. SLAUGHTER asked and was given permission to revise and extend
her remarks.)
Ms. SLAUGHTER. Mr. Speaker, let me apologize for my misunderstanding
of the time.
Mr. Speaker, our workforce is what made the United States the great
Nation it is, but here we are debating yet another bill that erodes
protections for our workers. Here we go again sending another message
to our workforce that we just do not care that short-term gain for a
few is more important to us than the economic well-being of the Nation.
Life for the American worker continues to be arduous and uncertain,
Mr. Speaker. Unemployment has risen 6 percent. In my home State of New
York, the unemployment rate is even higher at 6.3. Unemployment
insurance benefits expire at the end of this month even though almost 9
million Americans are without work. Nothing on the legislative horizon
confronts the needs of the millions of the jobless.
Mr. Speaker, this body and this administration have failed the
American worker and continue to do so with this bill. Recently, this
esteemed body had several opportunities to tackle the plight of the
laidoff factory workers, the unemployed bookkeepers, and this Chamber
squandered those chances. Today, the House has another opportunity to
assist American workers by continuing the necessary reforms so
painfully highlighted by the collapse of major corporations like Enron,
WorldCom, Global Crossing. The employees of WorldCom lost $25 million.
Enron employees lost $800 million. And the American workforce nervously
looks to us to protect their pensions and their life savings. And
unfortunately, H.R. 1000 does not go far enough to protect pensions. In
fact, this legislation actually harms American workers with what it
does and what it fails to do. We must show the people, whose faith and
trust sent us here, that we did learn the painful lessons of the Enron,
the WorldCom, and the Global Crossing crises.
H.R. 1000 would permit companies to convert traditional defined
benefit pension plans into cash balance pension plans. This saves the
corporations millions of dollars, but it cuts by half the pension
benefits of retired workers, and employees have no control over the
conversion.
Now, why is the control of your pension plan given to a company with
the self-interest of saving millions of dollars? Even more egregious is
that, as companies have been slashing benefits for their workers, they
have been increasing compensation packages for their CEOs. Further,
this bill handcuffs employees for 3 years after the contribution of
company-matched stocks. Under current law, workers are protected from
financial advisors with conflicts of interest. This bill strikes this
protection from ERISA and allows financial advisors to recommend
products from their own firms and even earn fees for pushing certain
products. In fact, the Attorney General of the State of New York just
settled with 10 of the most respected investment firms for $1.4 billion
because these firms offered self-interested investment advice.
H.R. 1000 further fails the American workers in its omission of
requirements that companies inform employees when someone dumps large
amounts of the company stock. You recall that was a serious issue for
the Enron employees. When former Enron CEO Ken Lay sold his Enron
stock, he unloaded 1.8 million shares for $101.3 million, did not tell
his employees, left them in the dark, and they lost their life savings.
Indeed, throughout that period, the employees were urged to buy more
and more Enron stock.
Last night the Committee on Rules passed a rule that does not allow
this body through debate to delve into the complex issues of ERISA and
securing retirement funds.
H. Res. 230 allows only 80 minutes of debate on the bill. This rule
is just another example of the erosion of this institution as a
deliberative body.
Mr. Speaker, the American workforce deserves our profound respect;
and, Mr. Speaker, they have no one else to turn to but us. Over and
over we have failed them. They deserve the pensions they were promised
during their years of service. How heartbreaking it is for someone who
has spent 30 years of their life with a single company, always being
partially responsible for the profit of that company, to then lose a
major part of that pension. And the almost-9 million unemployed deserve
an extension on unemployment insurance to keep them afloat in a sea of
economic uncertainty. I just had a letter in my office from a man who
has been out of work now for 19 months with absolutely no outlook that
he will find anything soon and asking me what in the world can he do.
We try to answer that question often, Mr. Speaker; and it does this
House no good that the answer we have is that we have refused to extend
unemployment benefits.
I urge my colleagues to oppose the rule and oppose the underlying
bill.
Mr. Speaker, I reserve the balance of my time.
[[Page H4037]]
Mr. LINDER. Mr. Speaker, I yield such time as he may consume to the
gentleman from Indiana (Mr. Buyer).
Mr. BUYER. Mr. Speaker, before I address this issue, I would say to
the gentlewoman that just spoke, I want to give people a job. I do not
want to give people an unemployment check. Get them a job. Vote for the
President's economic plan. So you can have your constituent get into
the details of the plan.
Right now I rise to talk about the rule for H.R. 1000, and, more
importantly, on the opportunity Members of Congress have to make a
change in law. The purpose of the Federal Government is to help those
who cannot help themselves.
Earlier this year, a case was brought to my attention in Clermont,
Indiana, that needs to be addressed. An employee of the town embezzled
$70,000, an amount that may not seem like a lot of money to some of us
here when our daily discussions revolve around billions of dollars and
millions; but this is a significant sum to a very small town.
After the former employee was found guilty, the town obtained a civil
judgment for restitution for $51,000. So far the employee has paid only
$510 in restitution. The former employee has a private pension. No
other form of compensation. That is it. Under ERISA, the restitution
order attained by the town cannot be attached to the pension, so the
town loses out on $50,000 and the guilty avoids complying with the
judgment.
How can we allow the law to be manipulated like this? Clearly, there
is a hole in the justice system that needs to be filled. The pension
law is being used to avoid making victims whole. In this case, the
victim is government. I had hoped to offer an amendment in the
Committee on Rules to fill this hole. However, the amendment was not
made in order. This amendment would permit States and local governments
to obtain restitution from private pensions pursuant to court-ordered
restitution for the embezzlement of State and local funds. Those
communities, including Clermont, are true victims of embezzlement. This
is a narrowly drafted amendment. And the very purpose of the
restitution order is to make victims whole. So when you think about
this, how is justice being served by allowing our present system to
stay in place?
Look at an example of an individual that is sentenced to 10 years to
prison. Maybe they have a $20,000 pension that goes into an account, so
when they get out of prison after a two-for-one good time, after 5
years they have $100,000 sitting in an account. That is money which can
make individuals whole, except under present law you cannot attach a
garnishment to that civil order.
{time} 1215
I think that is wrong.
I know that there was an effort to make this ``a clean bill,'' and
nobody wanted to have amendments to the bill. I think our job is to
choose the harder right over the easier wrong.
So what? If it is hard, do that which is hard, and make justice serve
those of whom have been victimized. I am on the floor today greatly
disappointed that we just wanted to get something done quickly rather
than address a hole in the law.
I am not pleased at all that this amendment was denied, but what I am
most hopeful is that the committee of jurisdiction actually examines
this, because I am not going to let this one go. I think this one, in
fact, we have to address, and I will stand down to the Committee on
Rules at this point.
I wanted to bring this issue to the attention of the Members because
my little town of Clermont, I am sure, is highly representative of
other towns and communities, States and Federal and local governments
of whom have been victimized by some form of embezzlement.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from
Michigan (Mr. Levin).
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, the previous speaker has made it clear, I
hope, to the country why we are asking that the previous question be
voted down so we can bring up the unemployment comp issue. He has said
let us get jobs for workers, not provide unemployment comp checks.
Look, the people who are unemployed are looking for work. They want a
job. There is no job when they seek it, and what the Republicans and
the House are essentially saying to those workers who are looking for
work and cannot find a job, tough luck. We can do much better.
A recent survey indicated that the average unemployed worker has
applied for 29 jobs without finding work, and the average unemployed
worker over 45 has applied for 42 jobs without finding work. Almost 9
million people out of work. Over 1 million have exhausted their
benefits, and by the end of this month, it will be 1.4 million. And now
each month another couple hundred thousand are going to be exhausting
their benefits, out in the cold because of the cold shoulder of this
House majority. That is why we are asking that the previous question be
voted down.
Ten years ago we did much better. We did not hear this talk, get a
job, to people who are looking for work and cannot find it. So we will
proudly ask, give us a chance. My colleagues have been on the
Republican side derelict in their duty, and we are willing to stand up
and say to the people who are unemployed, yes, keep looking for work.
Unemployment comp benefits will help grow the economy because they will
spend the money they receive on benefits, but we are also saying while
they are looking for work, we are not going to turn a cold shoulder to
the unemployed of the United States of America.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
Ohio (Mr. Kucinich).
Mr. KUCINICH. Mr. Speaker, this is a bad rule and this is a bad bill.
Today the bulk of the Nation's pension plans have less than 100
participants, and a gap in ERISA enforcement and in ERISA law leaves
these workers' retirement savings at grave risk. Yet H.R. 1000 does
nothing to correct this problem, and the majority refused to even
consider a common-sense amendment I offered to protect workers'
pensions through the most basic of means, simply by ensuring that plan
fiduciaries actually file their forms.
Eclipsed by the high-profile pension scandals at large corporations
such as Enron, WorldCom and Global Crossing, thousands of other
employees around the country have been no less harmed by gross
fiduciary malfeasance at smaller, less notable companies.
In my own district a group of 19 employees saw their retirement funds
vanish as their employer, Lakewood Manufacturing Company, repeatedly
dismissed employee requests for the release of plan documents, and
ultimately closed, having lost over $2 million in pension funds, the
entire pension plan.
Later investigation revealed that over a period of 3 years, the
plan's fiduciary, also the owner of the company, used funds from the
employee pension plan to make dangerous and poorly diversified
investments in companies for which he had a personal stake, such as the
Psychic Discovery Network, now bankrupt. Even worse, the Department of
Labor failed to investigate the plan even though the company did not
file the most basic plan summary document, Form 5500, required by law,
for 3 consecutive years. Though we may never see the case of Lakewood
Manufacturing featured on the nightly news, its former employees face a
financial future no different than that of Enron's employees.
For small pension plans, Form 5500 is the only avenue for the
Department of Labor to monitor compliance with ERISA. Yet, as the
Lakewood case highlights, and a GAO report has confirmed, ERISA
enforcement is such that fiduciaries of small plans may simply fail to
file a Form 5500 while mismanaging or stealing money from the plan,
knowing they will likely slip through the cracks.
As a result, I proposed an amendment to fix this egregious
enforcement gap in ERISA law. My amendment would have required plans to
submit their forms within 3 months of the end of the plan year, not the
9.5 months as is allowed in the current law. It also insists that the
first priority of the Department of Labor should be to identify those
companies that have not filed their documents by the deadline and give
them the power to freeze assets of the plan fiduciary until the
documents are submitted or the plan is thoroughly investigated.
[[Page H4038]]
This bill does not fix that gap, this H.R. 1000, and, in fact, the
majority even refused to consider this basic change in law. They did
not want the opportunity to take a stand to protect workers whose
retirement security is predicated on their boss' willingness to submit
a form.
I am going to introduce an amendment today to try to amend the bill
at the correct time, and I appreciate the support of the Members for
that. This rule will not correct the problem.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
Vermont (Mr. Sanders).
Mr. SANDERS. Mr. Speaker, I thank my friend, the gentlewoman from New
York (Ms. Slaughter) for yielding me the time.
Mr. Speaker, I rise in strong opposition to this rule. Yesterday I
requested that two amendments be allowed, neither one of which was
accepted.
Mr. Speaker, I first became involved in the issue of pensions in the
State of Vermont when hundreds of employees of IBM contacted my office
because one day they learned that the promises that had been made to
them in terms of their pension benefits was simply being pushed under
the rug and being dismissed; that, in fact, the company had converted
from a defined benefit pension plan to a so-called cash balance benefit
plan; and that for many of the older workers, their benefits would have
been reduced by up to 50 percent. People that had worked at the company
for 20 or 30 years wake up one day and say, sorry, forget everything
that we told you, because we are going to cut your pension benefits by
up to 50 percent if you are an older worker.
It turned out it was not just IBM, but companies all over this
country. In Vermont IBM workers fought back. We had a town meeting with
some 7- or 800 workers coming out, spread all over the country, and IBM
had to rescind that proposal. But the reality is that the Bush
administration has now come up with an idea that would make it easier
for companies to slash the pensions of their workers by moving to cash
balance programs.
My amendment would do a very simple thing that some good companies
have already done. Kodak has done it. Motorola has done it. To some
degree IBM has done it. CSX, John Snow, Treasury Secretary's company
has done it, and that says that if one is an older worker working for
the company for at least 10 years, or they are 40 years of age, they
will have the choice about which proposal they will take, and older
workers, of course, will stay with the defined benefit pension plan.
The second amendment that I introduced was a very interesting one,
and I said if the Republicans think that cash balance payments are such
a good idea, and we all have our pensions, why should we not go to cash
balance benefits? The answer is that cash balance benefits will
substantially lower the pensions that Members of Congress have. Of
course, the Members of Congress will not reduce their own pensions, but
they are prepared to force millions of American workers to lower their
benefits by going to cash balance benefit plans. So my proposal said
that if the President's idea goes forward, on that very day, Members of
Congress will move to cash balance benefit pension plans as well and
see the same reduction in their benefits as do millions of American
workers. Amazingly enough, they did not put that amendment on the
floor.
Ms. SLAUGHTER. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from California (Ms. Woolsey).
(Ms. WOOLSEY asked and was given permission to revise and extend her
remarks.)
Ms. WOOLSEY. Mr. Speaker, I oppose this rule for excluding the
conversation and debate on unemployment insurance, and I support the
Miller substitute because it levels the playing field between a
corporation's top executives and the rest of the employees. This
substitute actually supports what is good for the captain is good for
the crew.
It truly protects employees against the kinds of total pension loss
experienced by Enron employees by requiring companies to give their
employees full and accurate information about their pension benefits
and about any employer's stock in the pension plan.
It ensures employees are armed with good information and allows for
timely discussions about investing the funds in the pension plan, and,
Mr. Speaker, should the employee pension funds be misused, the Miller
substitute gives employees a real opportunity to get their money back.
My constituents just north of the Golden Gate Bridge, across from San
Francisco, tell me they are disgusted by the special protections given
to executives while employees are suffering. Only the Miller substitute
provides the pension protections employees truly need, and only a rule
that allows discussion for unemployment insurance being extended
protects the workers in this country who have lost their employment
because of a terrible, terrible economy, a war economy, caused by huge
tax breaks for the wealthiest in the country.
Mr. Speaker, I urge my colleagues to vote against this rule and vote
for real reform by supporting the Miller substitute.
Mr. LINDER. Mr. Speaker, may I inquire as to how much time is left on
each side?
The SPEAKER pro tempore (Mr. Bass). The gentleman from Georgia (Mr.
Linder) has 20 minutes remaining. The gentlewoman from New York (Ms.
Slaughter) has 15 minutes remaining.
Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield 4 minutes to the gentleman from
California (Mr. George Miller).
Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentlewoman
from New York for yielding me this time.
Mr. Speaker, today we confront an issue that is absolutely
fundamental to the interests of our constituents, to their well-being,
and the question of whether or not they will have the assets to
properly retire in the future, and that is because we address the
issues of the security of the American pension system.
In the wake of the worst pension scandals in recent history, the
response of the Republican congressional leadership is to see no evil,
hear no evil and do no good.
Once again, in the shadow of the failures of Enron and Global
Crossing, and with the new disclosures about Delta and American
Airlines, the Republicans bring forward a pension bill that does
nothing to help employees, but includes lucrative benefits for
corporate interests. How tone-deaf can they be?
Pension scandals that move from page 3 of the business section to
page 1 in every newspaper and magazine of popular nature of this
country, but it is still the business as usual for Republicans in
Congress. The only problem they see is that the investment companies
are making even more money, while pensions and 401(k)s of employees
dwindle with less and less.
The pension bill the Republicans want to steamroll through the House
today fails to address the pension scandals that have outraged
Americans and left so many Americans destitute. It is as though Enron
and Global Crossing and these other pension scandals never happened. It
is business as usual for business, and let the employees fend for
themselves.
The heart of the Republican bill would change the law to allow
investment firms for the first time to give biased and conflicted
financial advice to employees, something that is currently prohibited
under the law. Does this make sense when many of these same investment
firms that would be giving the employees this advice just copped a plea
to Eliot Spitzer, the New York attorney general, if firms like Credit
Suisse, First Boston, Bear Stearns, JP Morgan, Chase, Goldman Sachs and
many others just paid out over a billion and a half dollars in
committing these kinds of abuses?
{time} 1230
Now, I recognize that they do not think they copped a plea, because
they said they did not admit any wrongdoing. But they paid $1.5 billion
just in case they might have. That $1.5 billion is chump change
alongside the hundreds and hundreds of billions of dollars that people
lost in their pension plans during the stock market bubble and because
of conflicted advice and bad advice.
Now, here we are 2 years after Enron, and we are coming back to
simply allow the same thing to happen that
[[Page H4039]]
happened in those corporate scandals. It is no wonder that the American
public, the small investor is reluctant to return to the stock market.
It is no wonder they are reluctant to invest again in mutual funds,
because they recognize the devastation that they received at the hands
of what was essentially criminal activity. Today, the Republican bill
makes that activity legal.
That is why the Attorney General, Eliot Spitzer, of New York said
this about this legislation: ``This legislation opens the loophole that
will sharply erode, rather than enhance, the safeguards for employees
seeking independent and untainted advice about how to invest their
retirement savings. Clearly, this bill puts the interests of Wall
Street firms far ahead of the interests of millions of working
Americans who simply want a fair shake in making sound decisions about
their retirement investments.''
That is what the American public is entitled to. That is what the
people are entitled to as they contemplate how to provide for their
future retirement. That is not what this legislation does. That is not
what the Republican legislation proposes. It now says that those firms
can provide that conflicted advice to our constituents and to the
workers, and that is what we should not allow in this legislation.
Ms. SLAUGHTER. 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 my friend for yielding me this
time.
My colleagues, how does one get on the agenda of the United States
House of Representatives? If you are in the financial industry and you
are interested in changing the rules for giving pension advice, you can
get on the agenda. If you are one of a plethora of special interests
that is interested in changing the Internal Revenue Code, you can get
on the agenda. But if you are one of the millions of people suffering
unemployment in this country and you want this House to take up the
question of whether your unemployment benefits ought to be extended,
you cannot seem to get on the agenda.
Now, I know that there are people who believe that some of the people
who are on unemployment are not trying hard to find a job, and I am
sure there are some for whom that description is accurate; but I know
this is true: for every three Americans looking for a job today, there
is one job. One. And there are hundreds of thousands of people who at
the end of this month are going to lose their ability to pay their
bills because they are one of the two people who cannot get that one
job out of every three people who is unemployed.
It is the business of this country, and it should be the business of
this House, to debate whether or not an extension of unemployment
benefits is justifiable for those people. I feel strongly that it is. I
know there are Members who believe that it is not. I respect their
views. The majority ought to respect our right to bring to this floor,
before this House and before this country, the question as to whether
those benefits ought to be extended.
In many households, Mr. Speaker, this is not some theoretical debate.
It is a question of whether you will be able to pay your rent on the
first of June, whether you will be able to pay your other bills on the
first of June. Let us do the people's business. Let us put on the
agenda of this House the question of whether to extend unemployment
benefits.
Oppose the previous question.
Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may consume
to close.
Mr. Speaker, if the previous question is defeated, I will offer an
amendment to the rule. My amendment will provide that immediately after
the House passes the Pension Security Act it will take up H.R. 1652,
the Unemployment Benefits Extension Act. This bill will extend Federal
unemployment benefits by 26 weeks and would also give a 13-week
extension to those whose benefits have been exhausted.
Mr. Speaker, with unemployment rates increasing daily, this is the
third month in a row, now that we are in May, that this economy has
lost jobs. Of the 8.8 million unemployed, 2 million out of work for 27
weeks or more, the average length of unemployment is nearly 20 weeks,
the highest since 1984. These Americans need relief, and they need it
immediately.
Current Federal unemployment benefits expire at the end of this
month, just 2\1/2\ weeks away. On two separate occasions last week, the
Republicans in this House voted to block an opportunity to extend these
benefits. Let us not let unemployed Americans down a third time. Let us
bring this greatly needed responsible legislation to the floor for a
vote.
Now, let me make very clear that a ``no'' vote on the previous
question will not stop consideration of the pension security act. A
``no'' vote will allow the House to vote on H.R. 1000 and on H.R. 1652,
the Unemployment Benefits Extension Act as well. However, a ``yes''
vote on the previous question will prevent the House from passing the
desperately needed extension of Federal employment benefits to our
unemployed workers one more time.
Make no mistake, this vote is the only opportunity the House will
have to vote on extending Federal unemployment benefits. I urge a
``no'' vote on the previous question and remind my colleagues that
these unemployed workers have no one to turn to but us, and they sent
us here to do our best for our communities.
Mr. Speaker, I ask unanimous consent that the text of the amendment
and a description of the amendment be printed in the Record immediately
before the vote on the previous question.
The SPEAKER pro tempore (Mr. Shimkus). Is there objection to the
request of the gentlewoman from New York?
There was no objection.
The material previously referred to by Ms. Slaughter is as follows:
Previous Question for H. Res. 230--Rule on H.R. 1000: The Pension
Security Act of 2003
At the end of the resolution add the following new section:
Sec. . Immediately after disposition of the bill H.R.
1000, it shall be in order without intervention of any point
of order to consider in the House the bill (H.R. 1652) to
provide extended unemployment benefits to displaced workers,
and to make other improvements in the unemployment insurance
system. The bill shall be considered as read for amendment.
The previous question shall be considered as ordered on the
bill to final passage without intervening motion except: 1)
one hour of debate equally divided and controlled by the
Chairman and ranking Minority Member of the Committee on the
Ways and Means; and 2) one motion to recommit with or without
instructions.
Ms. SLAUGHTER. Mr. Speaker, I yield back the balance of my time.
Mr. LINDER. Mr. Speaker, I urge my colleagues to vote ``yes'' on the
previous question. I yield back the balance of my time, and I move the
previous question on the resolution.
The SPEAKER pro tempore. The question is on ordering the previous
question.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Ms. SLAUGHTER. 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.
Pursuant to clause 8 of rule XX, the Chair will reduce to 5 minutes
the minimum time for electronic voting, if ordered, on the question of
adoption of the resolution.
The vote was taken by electronic device, and there were--yeas 218,
nays 201, not voting 15, as follows:
[Roll No. 186]
YEAS--218
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Bereuter
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
[[Page H4040]]
Everett
Feeney
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Janklow
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Paul
Pearce
Pence
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Sullivan
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
NAYS--201
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Case
Clay
Clyburn
Conyers
Cooper
Costello
Cramer
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Filner
Ford
Frank (MA)
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Hall
Harman
Hastings (FL)
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Lynch
Majette
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOT VOTING--15
Combest
Cox
Doyle
Fattah
Istook
McGovern
Miller, Gary
Oxley
Peterson (PA)
Petri
Radanovich
Rothman
Schrock
Turner (TX)
Young (FL)
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Shimkus) (during the vote). Members are
advised that 2 minutes remain in this vote.
{time} 1257
Mr. BERRY and Mr. DAVIS of Tennessee changed their vote from ``yea''
to ``nay.''
Mrs. WILSON of New Mexico changed her vote from ``nay'' to ``yea.''
So the previous question was ordered.
The result of the vote was announced as above recorded.
Stated for:
Mr. PETRI. Mr. Speaker, on rollcall No. 186, had I been present, I
would have voted ``yea.''
Stated against:
Mr. McGOVERN. Mr. Speaker, on rollcall No. 186, had I been present, I
would have voted ``nay.''
The SPEAKER pro tempore. The question is on the resolution.
The resolution was agreed to.
A motion to reconsider was laid on the table.
Mr. BOEHNER. Mr. Speaker, pursuant to House Resolution 230, I call up
the bill (H.R. 1000) to amend title I 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 ask for its immediate
consideration in the House.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 230, the bill
is considered read for amendment.
The text of H.R. 1000 is as follows:
H.R. 1000
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Pension
Security Act of 2003''.
(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. Inapplicability of relief from fiduciary liability during
blackout periods.
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. Effective dates 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.
TITLE III--GENERAL PROVISIONS
Sec. 301. Provisions relating to plan amendments.
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 individual who is a plan participant or
beneficiary and who has a right to direct investments, at
least quarterly.
``(B) The administrator of a defined benefit plan shall
furnish a pension benefit statement--
[[Page H4041]]
``(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)(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, at least
once each year, provides the participant with notice, at the
participant's last known address, 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)(1)(A)(iii) in the case of
applicable individual account plans shall include (together
with the information required in subsection (a)) the
following:
``(A) the value of each investment to which assets in the
individual account have been allocated, determined as of the
most recent valuation date under the plan, 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,
``(B) an explanation, written in a manner calculated to be
understood by the average plan participant, of any
limitations or restrictions on the right of the participant
or beneficiary to direct an investment, and
``(C) 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 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
pension plan with respect to which the following requirements
are met:
``(i) on the first day of the plan year--
``(I) the plan covered only one individual (or the
individual and the individual's spouse) and the individual
owned 100 percent of the plan sponsor (whether or not
incorporated), or
``(II) the plan covered only one or more partners (or
partners and their spouses) in the plan sponsor;
``(ii) the plan meets the minimum coverage requirements of
410(b) of the Internal Revenue Code of 1986 (as in effect on
the date of the enactment of this paragraph) without being
combined with any other plan of the business that covers the
employees of the business;
``(iii) the plan does not provide benefits to anyone except
the individual (and the individual's spouse) or the partners
(and their spouses);
``(iv) the plan 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) the plan 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 ``(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 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 180 days after the date of the enactment of this
Act, 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
with respect to which the following requirements are met:
``(i) on the first day of the plan year--
``(I) the plan covered only one individual (or the
individual and the individual's spouse) and the individual
owned 100 percent of the plan sponsor (whether or not
incorporated), or
[[Page H4042]]
``(II) the plan covered only one or more partners (or
partners and their spouses) in the plan sponsor;
``(ii) the plan meets the minimum coverage requirements of
410(b) without being combined with any other plan of the
business that covers the employees of the business;
``(iii) the plan does not provide benefits to anyone except
the individual (and the individual's spouse) or the partners
(and their spouses);
``(iv) the plan 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) the plan 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. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY
DURING BLACKOUT PERIODS.
(a) In General.--Section 404(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended by
adding at the end the following new paragraph:
``(4)(A) Paragraph (1)(B) shall not apply in connection
with the direction or diversification of assets credited to
the account of any participant or beneficiary during a
blackout period if, by reason of the imposition of such
blackout period, the ability of such participant or
beneficiary to direct or diversify such assets is suspended,
limited, or restricted.
``(B) If a fiduciary authorizing a blackout period meets
the requirements of this title in connection with authorizing
such blackout period, such fiduciary shall not be liable
under this title for any loss occurring during the blackout
period as a result of any exercise by the participant or
beneficiary of control over assets in his or her account
prior to the blackout period. Matters to be considered in
determining whether such fiduciary has met the requirements
of this title include whether such fiduciary--
``(i) has considered the reasonableness of the expected
length of the blackout period,
``(ii) has provided the notice required under section
101(i)(2), and
``(iii) has acted in accordance with the requirements of
subsection (a) in determining whether to enter into the
blackout period.
``(C) If a blackout period arises in connection with a
change in the investment options offered under the plan, a
participant or beneficiary shall be deemed to have exercised
control over the assets in his or her account prior to the
blackout period, if, after reasonable notice of the change in
investment options is given to such participant or
beneficiary before such blackout period, assets in the
account of the participant or beneficiary are transferred--
``(i) to plan investment options in accordance with the
affirmative election of the participant or beneficiary, or
``(ii) in any case in which there is no such election, in
the manner set forth in such notice.
``(D) Any imposition of any limitation or restriction that
may govern the frequency of transfers between investment
vehicles shall not be treated as the imposition of a blackout
period 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.
``(E) For purposes of this paragraph, the term `blackout
period' has the meaning given such term by section
101(i)(7).''.
(b) Guidance.--The Secretary of Labor shall, on or before
December 31, 2004, issue interim final regulations providing
guidance on how plan sponsors or any other affected
fiduciaries can satisfy their fiduciary responsibilities
during any blackout period during which the ability of a
participant or beneficiary to direct the investment of assets
in his or her individual account is suspended.
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. Such program shall
provide information concerning the practices that define
prudent investment procedures for plan fiduciaries.
Information provided under the program shall address the
relevant investment considerations for defined benefit and
defined contribution plans, including investment in employer
securities by such plans. In developing such program, the
Secretary shall solicit information from the public,
including investment education professionals.''.
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 referred
to in paragraph (5)(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 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
[[Page H4043]]
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 if there is no class of stock
issued by the employer (or by a corporation which is an
affiliate of the employer (as defined in section 407(d)(7)))
that is readily tradable on an established securities market
(or in such other circumstances as may be determined jointly
by the Secretary of Labor and the Secretary of the Treasury
in regulations).
``(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:
``Plan years for which provisions are effective: Applicable percentage:
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 referred
to in subparagraph (E)(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 if there is no class of stock
issued by the employer that is readily tradable on an
established securities market (or in such other circumstances
as may be determined jointly by the Secretary of the Treasury
and the Secretary of Labor in regulations).
``(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:
``Plan years for which provisions are effective: Applicable percentage:
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.
``(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 for the amount to which such election applied.
[[Page H4044]]
``(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 108, the amendments made by this section shall apply
to plan years beginning after December 31, 2003, 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 by
the person to the plan or to a participant or beneficiary and
who is--
[[Page H4045]]
``(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) or a savings association (as defined in
section 3(b)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(1))), but only if the advice is provided
through a trust department of the bank or similar financial
institution or savings association 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)(i), 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 H4046]]
``(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) or a savings association (as defined in
section 3(b)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(1))), but only if the advice is provided
through a trust department of the bank or similar financial
institution or savings association 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.
``(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. 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,
2003.
SEC. 108. EFFECTIVE DATES AND RELATED RULES.
(a) In General.--Except as otherwise provided in this title
or in subsection (b), the amendments made by this Act shall
apply with respect to plan years beginning on or after the
general effective date.
(b) General Effective Date.--For purposes of this section,
the term ``general effective date'' means the date which is 1
year after the date of the enactment of this Act.
(c) 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 ``the general effective date''
the date of the commencement of the first plan year beginning
on or after the earlier of--
(1) the later of--
(A) the date which is 1 year after the general effective
date, 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) the date which is 2 years after the general effective
date.
(d) Amendments Relating to Investment Advice.--The
amendments made by section 105 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, 2005.
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, 2002.
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 with respect to which the
following requirements are met:
(A) on the first day of the plan year--
(i) the plan covered only one individual (or the individual
and the individual's spouse) and the individual owned 100
percent of the plan sponsor (whether or not incorporated), or
(ii) the plan covered only one or more partners (or
partners and their spouses) in the plan sponsor;
(B) the plan meets the minimum coverage requirements of
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) the plan does not provide benefits to anyone except the
individual (and the individual's spouse) or the partners (and
their spouses);
(D) the plan 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) the plan 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,
2003.
(b) Simplified Annual Filing Requirement for Plans With
Fewer Than 25 Employees.--In the case of plan years beginning
after December 31, 2004, the Secretary
[[Page H4047]]
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, 2004.
(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, 2004.
(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, 2004, 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, 2003.
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 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, 2003.
(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, 2003.
(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,
2003.
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
``2006 and 2010'';
(2) 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;
[[Page H4048]]
``(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'';
(3) in subsection (e)(3)(B), by striking ``January 31,
1998'' and inserting ``2 months before the convening of each
summit;'';
(4) in subsection (f)(1)(C), by inserting ``, no later than
60 days prior to the date of the commencement of the National
Summit,'' after ``comment'';
(5) 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
(6) 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 amendments 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.
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, 2003.
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, 2003.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to plan years beginning after December 31, 2003.
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--
[[Page H4049]]
``(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, 2003, 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, 2004.
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, 2003.
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.--
(1) General rule.--Subject to paragraph (2), 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.
(2) Election.--The plan sponsor or plan administrator of a
plan may elect whether to have the amendments made by
subsections (a) and (b) apply. Such election shall be made in
such manner and at such time as the Secretary of the Treasury
or his delegate may prescribe and, once made, may not be
revoked. An election to apply such amendments shall not be
treated as a prohibited change in actuarial assumptions for
purposes of reports required to be filed with the Secretary
of Labor, the Secretary of Treasury, or the Pension Benefit
Guaranty Corporation.
[[Page H4050]]
TITLE III--GENERAL PROVISIONS
SEC. 301. 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 section 101, 102,
103, or 104, by title II, or by 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 any such section, title II, or
such title VI, and
(B) on or before the last day of the first plan year
beginning on or after January 1, 2006.
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 ``2008'' for ``2006''.
(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.
The SPEAKER pro tempore. The amendment in the nature of a substitute
printed in the bill is adopted.
The text of H.R. 1000, as amended, is as follows:
H.R. 1000
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Pension
Security Act of 2003''.
(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. Inapplicability of relief from fiduciary liability during
blackout periods.
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. Effective dates 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 and beneficiaries.
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.
TITLE III--GENERAL PROVISIONS
Sec. 301. Provisions relating to plan amendments.
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 individual who is a plan participant or
beneficiary and who has 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.
Information furnished under clause (i) to a participant may
be based on reasonable estimates determined under regulations
prescribed by the Secretary, in consultation with the Pension
Benefit Guaranty Corporation.
``(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)(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, at least
once each year, provides the participant with notice, at the
participant's last known address, 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)(1)(A)(iii) in the case of
applicable individual account plans shall include (together
with the information required in subsection (a)) the
following:
``(A) the value of each investment to which assets in the
individual account have been allocated, determined as of the
most recent valuation date under the plan, 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,
``(B) an explanation, written in a manner calculated to be
understood by the average plan participant, of any
limitations or restrictions on the right of the participant
or beneficiary to direct an investment, and
``(C) 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 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.
[[Page H4051]]
``(B) The term `one-participant retirement plan' means a
pension plan with respect to which the following requirements
are met:
``(i) on the first day of the plan year--
``(I) the plan covered only one individual (or the
individual and the individual's spouse) and the individual
owned 100 percent of the plan sponsor (whether or not
incorporated), or
``(II) the plan covered only one or more partners (or
partners and their spouses) in the plan sponsor;
``(ii) the plan meets the minimum coverage requirements of
section 410(b) of the Internal Revenue Code of 1986 (as in
effect on the date of the enactment of this paragraph)
without being combined with any other plan of the business
that covers the employees of the business;
``(iii) the plan does not provide benefits to anyone except
the individual (and the individual's spouse) or the partners
(and their spouses);
``(iv) the plan 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) the plan 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 ``(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 any
plan administrator of up to $1,000 a day for each day on
which the plan administrator has failed to comply with the
requirements of clause (iii) of section 105(a)(1)(A) and has
not corrected such failure by providing the required
pension benefit statements to the affected participants
and beneficiaries.''.
(5) Model statements.--The Secretary of Labor shall, not
later than 180 days after the date of the enactment of this
Act, 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
with respect to which the following requirements are met:
``(i) on the first day of the plan year--
``(I) the plan covered only one individual (or the
individual and the individual's spouse) and the individual
owned 100 percent of the plan sponsor (whether or not
incorporated), or
``(II) the plan covered only one or more partners (or
partners and their spouses) in the plan sponsor;
``(ii) the plan meets the minimum coverage requirements of
410(b) without being combined with any other plan of the
business that covers the employees of the business;
``(iii) the plan does not provide benefits to anyone except
the individual (and the individual's spouse) or the partners
(and their spouses);
``(iv) the plan 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) the plan 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. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY
DURING BLACKOUT PERIODS.
(a) In General.--Section 404(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended by
adding at the end the following new paragraph:
``(4)(A) Paragraph (1)(B) shall not apply in connection
with the direction or diversification of assets credited to
the account of any participant or beneficiary during a
blackout period if, by reason of the imposition of such
blackout period, the ability of such participant or
beneficiary to direct or diversify such assets is suspended,
limited, or restricted.
``(B) If the fiduciary authorizing a blackout period meets
the requirements of this title in connection with authorizing
such blackout period, no person who is a fiduciary shall be
liable under this title for any loss occurring during the
blackout period as a result of any exercise by the
participant or beneficiary of control over assets in his or
her account prior to the blackout period. Matters to be
considered in determining whether a fiduciary has met the
requirements of this title include whether such fiduciary--
``(i) has considered the reasonableness of the expected
length of the blackout period,
``(ii) has provided the notice required under section
101(i)(2), and
``(iii) has acted in accordance with the requirements of
subsection (a) in determining whether to enter into the
blackout period.
``(C) If a blackout period arises in connection with a
change in the investment options offered under the plan, a
participant or beneficiary shall be deemed to have exercised
control over the assets in his or her account prior to the
blackout period, if, after reasonable notice of the change in
investment options is given to such participant or
beneficiary before such blackout period, assets in the
account of the participant or beneficiary are transferred--
``(i) to plan investment options in accordance with the
affirmative election of the participant or beneficiary, or
``(ii) in any case in which there is no such election, in
the manner set forth in such notice.
``(D) Any imposition of any limitation or restriction that
may govern the frequency of transfers between investment
vehicles shall not be treated as the imposition of a blackout
period 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.
``(E) For purposes of this paragraph, the term `blackout
period' has the meaning given such term by section
101(i)(7).''.
(b) Guidance.--The Secretary of Labor shall, on or before
December 31, 2004, issue interim final regulations providing
guidance on how plan sponsors or any other affected
fiduciaries can satisfy their fiduciary responsibilities
during any blackout period during which the ability of a
participant or beneficiary to direct the investment of assets
in his or her individual account is suspended.
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. Such program shall
provide information concerning the practices that define
prudent investment procedures for plan fiduciaries.
[[Page H4052]]
Information provided under the program shall address the
relevant investment considerations for defined benefit and
defined contribution plans, including investment in employer
securities by such plans. In developing such program, the
Secretary shall solicit information from the public,
including investment education professionals.''.
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 referred
to in paragraph (5)(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 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 if there is no class of stock
issued by the employer (or by a corporation which is an
affiliate of the employer (as defined in section 407(d)(7)))
that is readily tradable on an established securities market
(or in such other circumstances as may be determined jointly
by the Secretary of Labor and the Secretary of the Treasury
in regulations).
``(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:
20 percent.ar..........................................................
40 percent.ar..........................................................
60 percent.ar..........................................................
80 percent.ar..........................................................
100 percent.r or thereafter............................................
``(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 referred
to in subparagraph (E)(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).
[[Page H4053]]
``(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 if there is no class of stock
issued by the employer that is readily tradable on an
established securities market (or in such other circumstances
as may be determined jointly by the Secretary of the Treasury
and the Secretary of Labor in regulations).
``(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:
Applicable percentage: provisions are effective:
20 percent.ar..........................................................
40 percent.ar..........................................................
60 percent.ar..........................................................
80 percent.ar..........................................................
100 percent.r or thereafter............................................
``(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 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 108, the amendments made by this section shall apply
to plan years beginning after December 31, 2003, 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--
[[Page H4054]]
``(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) or a savings association (as defined in
section 3(b)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(1))), but only if the advice is provided
through a trust department of the bank or similar financial
institution or savings association 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)(i), 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
[[Page H4055]]
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) or a savings association (as defined in
section 3(b)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(1))), but only if the advice is provided
through a trust department of the bank or similar financial
institution or savings association 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.
``(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. 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,
2003.
SEC. 108. EFFECTIVE DATES AND RELATED RULES.
(a) In General.--Except as otherwise provided in the
preceding provisions of this title or in subsections (c) and
(d), the amendments made by this Act shall apply with respect
to plan years beginning on or after the general effective
date.
(b) General effective date.--For purposes of this section,
the term ``general effective date'' means the date which is 1
year after the date of the enactment of this Act.
(c) 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 ``the general effective date''
the date of the commencement of the first plan year beginning
on or after the earlier of--
(1) the later of--
(A) the date which is 1 year after the general effective
date, 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) the date which is 2 years after the general effective
date.
(d) Amendments Relating to Investment Advice.--The
amendments made by section 105 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, 2005.
TITLE II--OTHER PROVISIONS RELATING TO PENSIONS
SEC. 201. AMENDMENTS TO RETIREMENT PROTECTION ACT OF 1994.
(a) Transition Rule Made Permanent.--Section 769(c) of the
Retirement Protection Act of 1994 (26 U.S.C. 412 note) is
amended--
(1) in the heading, by striking ``Transition''; and
(2) in paragraph (1), by striking ``transition'' and 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, 2002.
[[Page H4056]]
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 with respect to which the
following requirements are met:
(A) on the first day of the plan year--
(i) the plan covered only one individual (or the individual
and the individual's spouse) and the individual owned 100
percent of the plan sponsor (whether or not incorporated), or
(ii) the plan covered only one or more partners (or
partners and their spouses) in the plan sponsor;
(B) the plan 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) the plan does not provide benefits to anyone except the
individual (and the individual's spouse) or the partners (and
their spouses);
(D) the plan 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) the plan 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,
2003.
(b) Simplified Annual Filing Requirement for Plans With
Fewer Than 25 Employees.--In the case of plan years beginning
after December 31, 2004, 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, 2004.
(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, 2004.
(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, 2004, 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 (26 U.S.C. 401 note) 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, 2003.
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 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, 2003.
(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, 2003.
(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
[[Page H4057]]
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,
2003.
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
``2006 and 2010'';
(2) 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'';
(3) in subsection (e)(3)(B), by striking ``January 31,
1998'' and inserting ``2 months before the convening of each
summit'';
(4) in subsection (f)(1)(C), by inserting ``, no later than
60 days prior to the date of the commencement of the National
Summit,'' after ``comment'';
(5) 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
(6) 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 AND BENEFICIARIES.
(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 the
benefits of a missing participant or beneficiary 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 or beneficiary 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 or beneficiary 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 one or more missing participants or
beneficiaries, and
``(ii) has not provided for the transfer of assets to pay
the benefits of all missing participants and beneficiaries 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 amendments 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.
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, 2003.
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, 2003.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to plan years beginning after December 31, 2003.
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:
[[Page H4058]]
``(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, 2003, 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, 2004.
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, 2003.
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.--
(1) General rule.--Subject to paragraph (2), 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.
(2) Election.--The plan sponsor or plan administrator of a
plan may elect whether to have the amendments made by
subsections (a) and (b) apply. Such election shall be made in
such manner and at such time as the Secretary of the Treasury
or his delegate may prescribe and,
[[Page H4059]]
once made, may not be revoked. An election to apply such
amendments shall not be treated as a prohibited change in
actuarial assumptions for purposes of reports required to be
filed with the Secretary of Labor, the Secretary of Treasury,
or the Pension Benefit Guaranty Corporation.
TITLE III--GENERAL PROVISIONS
SEC. 301. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any pension
plan or contract amendment--
(1) such pension 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 pension 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 pension plan or annuity contract which is made--
(A) pursuant to any amendment made by this Act or by 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 Act or such title VI, and
(B) on or before the last day of the first plan year
beginning on or after January 1, 2006.
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 ``2008'' for ``2006''.
(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.
{time} 1300
The SPEAKER pro tempore (Mr. Shimkus). After 1 hour and 20 minutes of
debate on the bill, as amended, it shall be in order to consider a
further amendment printed in House Report 108-98, if offered by the
gentleman from California (Mr. George Miller), or his 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 California (Mr. Matsui) each will control 20 minutes
of debate on the bill.
The Chair recognizes the gentleman from Ohio (Mr. Boehner).
General Leave
Mr. BOEHNER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks on H.R. 1000.
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 myself such time as I may consume.
Mr. Speaker, last year the Congress responded to the Enron and Global
Crossing financial collapses by passing bipartisan legislation to
strengthen worker retirement security and enhance corporate
responsibility. And thanks largely to the work of the gentleman from
Ohio (Mr. Oxley) and a bipartisan team of legislators, President Bush
signed into law corporate accountability legislation that holds
companies to the highest standards of auditor independence and ethics
for America's investors.
But on the issue of pension security, as the chart shows, we have got
some unfinished business yet to complete. Last year the House responded
quickly to these corporate failures by passing the Pension Security
Act, the comprehensive pension protection bill backed by President Bush
that would give millions of Americans new tools to help them better
manage and expand their retirement security. We passed the bill with
significant bipartisan support, with 46 Democrats joining 209
Republicans in supporting the bill. Unfortunately, the Senate did not
act on any pension reform legislation last year.
Before I talk about the protections included in the bill, I am proud
to say that two key Pension Security Act provisions were signed into
law last summer as part of the Sarbanes-Oxley corporate accountability
law. These provisions bar company insiders from selling their own stock
during blackout periods when workers cannot make changes to their own
accounts and to require companies to give 30 days' advanced notice
before a blackout period would begin.
These provisions give workers parity with corporate executives and
should provide workers with additional security of knowing that
Congress is acting to better protect them. But we have more work to do.
Let us be very clear. Worker retirement savings remain vulnerable to
corporate meltdowns today, and it should not take another Enron or
WorldCom for Congress to act on bipartisan pension protections. That is
why we are here today. The gentleman from Texas (Mr. Sam Johnson) and I
introduced the Pension Protection Act because workers desperately need
access to professional investment advice and the ability to diversify
their 401(k) savings and other safeguards to help them enhance their
retirement security, as this chart shows us.
Enron barred workers from selling company stock until age 50; and as
a result, thousands of Enron employees watched helplessly as their
retirement savings were lost. The Pension Security Act gives workers
new freedoms to sell their company stock within 3 years. This is a
dramatic change that gives workers unprecedented control over their
retirement accounts and personal savings.
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 company executives can.
Not surprisingly, Enron, WorldCom, Global Crossing, and others did not
provide their workers with access to professional investment advice.
This type of investment guidance would have alerted these workers to
the need to diversify their accounts and enabled many of them to have
preserved their retirement savings.
An Enron executive acknowledged before our committee that she
diversified out of Enron stock before it collapsed and saved hundreds
of thousands of dollars. Why are we denying rank-and-file employees the
same opportunity to receive access to high-quality investment advice?
And the answer to that is quite obvious. We should not be.
The Pension Security Act changes outdated Federal rules and
encourages employers to provide their workers with access to this type
of advice. With the 30-day blackout protection now the law of the land,
investment advice becomes even more critical for employees who cannot
make changes to their 401(k) accounts during a company-imposed blackout
period. Importantly, the bill includes new fiduciary and disclosure
protections to ensure that workers receive quality advice that is
solely in their best interests. The average investor will have much
more protection under our bill than under current law.
The bill also requires companies to give workers quarterly benefits
statements that include information about accounts, including the value
of their assets, their right to diversify, and the importance of
maintaining a diverse portfolio. And lastly, the bill empowers workers
to hold company insiders accountable for abuses by clarifying that
companies are responsible for workers' savings during blackout periods.
Congress should take action to protect Americans' retirement
benefits, not endanger them. On a bipartisan basis, Congress has
rejected extreme proposals, such as efforts to place arbitrary caps on
company stock, that could jeopardize Americans' retirement security or
spell the death of 401(k) accounts altogether. The bill before us is a
balanced one that protects workers, but does not jeopardize the
willingness of employers to offer retirement plans to their employees.
American workers deserve the security of knowing that their savings
will be there when they retire. This bill could have made a real
difference for the workers at WorldCom or Global Crossing or Enron.
Current pension laws are simply outdated, and we have a responsibility
to change that.
I want to thank the gentleman from Texas (Mr. Sam Johnson), my
colleague and friend, who has once again
[[Page H4060]]
proven instrumental in moving this issue forward here in the House, and
I would also like to thank the gentleman from California (Chairman
Thomas) on the Committee on Ways and Means for their cooperation in
helping us bring this bill to the floor today.
Mr. Speaker, I include the following letters for the Record:
House of Representatives, Committee on Education and the
Workforce,
Washington, DC, May 7, 2003.
Hon. William M. Thomas,
Chairman, Committee on Ways and Means, Longworth House Office
Building, Washington, DC.
Dear Chairman Thomas: Thank you for your May 6, 2003 letter
regarding H.R. 1000, the ``Pension Security Act of 2003,''
which was referred to the Committee on Education and the
Workforce and in addition the Committee on Ways and Means.
The Education and the Workforce Committee ordered the bill
favorably reported on March 6, 2003 and I filed the report on
March 18, 2003, House Report 108-43. I thank you for working
with me, specifically regarding the provisions amending the
Internal Revenue Code. While these provisions are within the
sole jurisdiction of the Committee on Ways and Means, I
appreciate your willingness to work with me in moving H.R.
1000 forward without the need for additional legislative
consideration by your Committee.
I agree that this procedural route should not be construed
to prejudice the jurisdictional interest and prerogatives of
the Committee on Ways and Means on these provisions or any
other similar legislation and will not be considered as
precedent for consideration of matters of jurisdictional
interest to your Committee in the future.
I thank you for working with me regarding this matter and
look forward to continuing our work and cooperation on this
bill and similar legislation. This letter and your response
will be included in the Congressional Record during the floor
consideration of this bill. If you have questions regarding
this matter, please do not hesitate to call me.
Sincerely,
John Boehner,
Chairman.
____
Committee on Ways and Means,
Washington, DC, May 6, 2003.
Hon. John Boehner,
Chairman, Committee on Education and the Workforce, Rayburn
House Office Building, Washington, DC.
Dear Chairman Boehner: I am writing you concerning H.R.
1000, the ``Pension Security Act of 2003,'' which was
sequentially referred to the Committee on Ways and Means
until Friday, May 9, 2003.
As you know, the Committee on Ways and Means has
jurisdiction over matters concerning the Internal Revenue
Code. However, in order to expedite this legislation for
floor consideration, we will not take action on this
particular proposal. This is being done with the
understanding that it does not in any way prejudice the
Committee with respect to the appointment of conferees or its
jurisdictional prerogatives on this or similar legislation.
I would appreciate your response to this letter, confirming
this understanding with respect to H.R. 1000, and would ask
that a copy of our exchange of letters on this matter be
included in the Congressional Record during floor
consideration.
Best regards,
Bill Thomas,
Chairman.
Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 8
minutes.
Mr. Speaker, today we will have a choice about what to do on behalf
of America's future retirees, the employees of America's corporations
and the protection of their pensions. We can do, as has been suggested
in the Republican bill, a bill that essentially does nothing for
retirees and for employees. What it says is that employees should be
offered advice, and then it also suggests that that advice can be
conflicted, it can be biased, it can be compromised, because under the
current law, if we are given investment advice, we cannot be given
conflicted advice.
And yet in the wake of Enron and Global Crossing, the answer to the
Republicans is to change the current law to allow advice to be given to
employees about their retirement futures but to allow that advice to be
conflicted, to allow that advice to be conflicted by the very same
institutions that just recently settled for $1.4 billion because they
had offered conflicted advice and bad advice to their clients. $1.4
billion, that is what those companies agreed to pay. That does not even
begin to speak to the hundreds of billions of dollars that the
shareholders lost, that employees lost in their mutual funds, their
retirement plans because of those conflicts and that essentially
criminal behavior. Yes, the deal was struck for $1.4 billion.
Now along comes the Republicans 2 years after Enron, and they say we
are going to give them the right to have advice, but that advice gets
to be conflict. How tone deaf can one be? How shocked will the American
public be when they find out they took their retirement plans and put
them exactly in the hands of people who just copped a plea for a
billion and a half dollars for giving people bad advice, maybe illegal
advice, almost criminal activity, if the Members will. The Republicans'
answer is to take America's retirees and turn them over to those firms.
One has to fail to understand what America saw after Enron, what they
saw after the bust in the stock market of their retirement plans being
depleted, the same kind of outrage that Americans felt when they saw
the CEOs and executive officers of American Airlines guarantee their
pensions at the same time they were negotiating several billions in
givebacks from pilots and flight attendants and workers. They were
shocked when they heard this. So shocked and so bad was the reaction,
that the CEO of American Airlines had to resign, and they had to give
back their compensation package.
Delta Airlines, going through givebacks of billions of dollars from
their workers, secures and guarantees their compensation and pension
for the CEOs, where former Delta executives, corporate executives,
write Delta and say it is a shameless act, an embarrassing act that
they would do this. And yet today, after all of those actions, after
that public response to that failure to protect the employees, the
reaction of the Congress is to essentially do nothing.
But the Democrats offer a different alternative because I think we
are listening to the public and to the employees. Yes, pensions is a
dull subject. It has not captured the imagination of all the
politicians. But the fact of the matter is it has moved from the back
pages of the business section to the cover of every major business
magazine and every major business; journal, and Fortune Magazine got it
about right and that is the oink factor. How far will these corporate
executives go? How far will these pigs go at the trough to grab hold of
the assets of a corporation at the same time that they are letting
their employees go down the tubes? Yes, it is the oink factor. It is
CEO pay, it is guaranteed pension plans.
These captains of capitalists, these crusaders of the capitalist
system, what do they want out of the system? They want a guarantee that
no matter if the company goes bankrupt, no matter if they run the
company into the ground, no matter if the company is successful, they
want a guarantee that they will be protected financially forever into
the future. That is what they wanted at American Airlines. That is what
they wanted at Delta Airlines. That is what they wanted at Enron.
{time} 1315
Today, the Republican bill is silent on that greed, on that oink
factor.
But the Democratic bill offers something different to the Members of
this House, who have heard from their constituents about the
devastation of their retirement plans. There is none of us in this
House that have not gone to a picnic, have not gone to a family
gathering, have not gone to a graduation where people have not said
that they are postponing their retirement because the retirement plan
is not all they thought it would be, who say their spouse is going to
have to work a little longer than they thought, who thought the place
they were going to retire to in another State or in the country is not
available to them any longer because their retirement plans have been
devastated because of the activities of so many corporations.
Today we have a chance to take the oink, to take the oink, out of
this pension system. We will be given the opportunity to vote on a
substitute to where the problem is when executives loot, as the Delta
people tried to loot the pension plan of the Delta workers, but to
guarantee and insure their own pension plans. The Republican answer is
oink. The answer in the Democratic bill is equity for employees.
As the President said at the beginning of the Enron scandal, what is
good for the captain is good for the sailor. But the Republicans in
Congress do
[[Page H4061]]
not think so, and the Delta executives did not think so 2 years later,
where executives lie to their employees and do not provide full
disclosure about what the executives are doing with the corporate
assets and with the pension assets. Once again, there is nothing in
their bill, just a big oink for those executives. We require full
disclosure for those employees.
With regard to the conflicts of interest on investment advice, the
heart of the Republican bill is to provide that conflicted investment
advice to flow to those employees; not independent investment
counselors, but the very people who will be earning commissions and
fees from the investment of those funds.
The question is, are the American public and employees not entitled
to better? These are the same people who will allow corporate
executives to dedicate hundreds of thousands of dollars to giving
investment advice of all different kinds to the executives of those
corporations, but do not want to give that kind of advice or help those
people out with respect to advice for the employees.
Finally, with regard to older workers, now with hundreds of companies
poised to move from a defined benefit plan to a cash balance plan,
where the shorthand is this, that older workers in their fifties who
have been with companies 10 or 15 years stand to lose 30 to 50 percent
of their retirement assets. This is not speculation, this is what
happened last time they did this. We have a bar on them doing that
again. This administration wants to remove that bar.
There are hundreds of corporations who are poised to make this
conversion, and those employees will lose those pension assets. If you
are 50 or 55 years old, there is no place you can go to make that up.
But the company thinks that they can loot your pension assets to help
out their bottom line.
So there is a stark contrast to be offered to the Members of
Congress. There is a stark contrast to be offered to the workers of
this country about the protection and the security of America's
pensions, about the protection and the security, because that is the
issue here today. It is not whether or not employees should have access
to conflicted information. That is of no real value to those employees.
Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from Tennessee (Mrs. Blackburn), a member of our committee.
Mrs. BLACKBURN. Mr. Speaker, today Congress can take action to give
employees more options in how to manage their 401(k)s and other
investment plans. H.R. 1, the Pension Security Act, includes important
financial safeguards and new disclosure protections for America's
workers. It will help ensure that employees receive the advice they
need to plan and invest for their future, and it provides Americans the
power they need and deserve to manage their retirement funds.
This bill helps American workers in three important ways: First, it
provides companies with guidelines on how to advise workers about
investing. To enhance investment plan protections, this bill requires
that financial advisers let people know that they have the right to
third-party advisers, enabling employees to get the advice that they
need. Today we are giving employees the power to choose alternative
advisers.
In addition, H.R. 1000 works to provide the educational tools for
employees who are investing in the companies they are working for. It
significantly improves an employee's access to information regarding
their accounts by requiring that they be provided with quarterly
statements. By educating America's workers on investing, they will be
better able to plan for their own retirement.
Third, this legislation helps make it clear to employees that
diversifying their investments is absolutely essential. Each quarterly
statement will reiterate the point. Too many people are unaware of the
risks they take by holding large portions of stock in a single company.
Most employers want to do right by their employees, but there are
exceptions, either by accident or gross negligence. The tools of
advice, education and diversification, all of which H.R. 1000 provides
for, will enable employees to make informed decisions about their
investments and their 401(k)s. This bill recognizes that no one will
guard their financial future as well as they will do for themselves.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to
the gentleman from Massachusetts (Mr. Tierney), a member of the
committee.
Mr. TIERNEY. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, I rise today in opposition to this bill, the so-called
Pension Security Act. I cannot help but be struck by a sense of deja
vu, because it was just about a year ago today that the majority
brought a similar bill to the floor with the same inadequate, harmful
political fig leaf for their dismal record, just covering that dismal
record on their retirement security.
Republicans have ignored the problems brought to light by last year's
scandals and by all the scandals in the 13 months since that period of
time. This legislation does address those dangers and challenges and
uncertainties that threaten the retirement security of America's
workers. In some cases it actually rolls back those protections.
For example, the bill opens up a whole new dangerous loophole that
allows for self-interested investment advice to be provided to
employees. For the first time since ERISA was enacted almost three
decades ago, investment firms can be permitted to serve as both the
principal financial adviser and the investment managers to employees.
The bill would permit investment advisers to recommend their firm's
products and earn additional fees on those recommended products if they
just disclose the fact that they are in conflict. It does not require
access to independent advice, nor does it assure any independent
oversight. Conflicts between the adviser's profits and the fiduciary
duty to the worker would be explicitly authorized.
The rollback of these critical protections to workers is an act that
flies in the face of the past year and a half of corporate scandals. On
April 27, the Securities and Exchange Commission and New York Attorney
General's office reached a $1.4 billion settlement with the 10 largest
Wall Street firms. Among other things, it will, for the first time,
require independent investment research to be provided to investors.
This settlement was based on mountains of evidence that the
investment advice that major firms were providing to investors was
corrupted by conflicts of interest. This costs investors billions of
dollars through poor decisions tainted by their adviser's self-dealing.
The very same firms covered by this settlement have demonstrated that
they felt no responsibility to the investing company, only to their
profit margins. They are the same firms who have demonstrated that if a
conflict is possible, they will exploit it, and even if a conflict is
illegal, they will exploit it, and they will be explicitly authorized
to have that conflicted advice presented under this bill.
There are other problems with this bill. It allows for the conversion
of defined benefit plans to less generous cash balance plans, as just
mentioned by my colleague from California. The majority actually voted
down an amendment in committee to add protections for workers on that
aspect.
Further, this legislation leaves in place practices that Enron and
WorldCom and other companies that caused unwitting workers to lose
billions of dollars benefited from.
There are three examples. The bill continues to lock employees into
company-matched stock for 3 years after the contributions have been
made; it fails to require companies to provide notice to employees that
executives are dumping the company's stock, which should be a key
indicator to workers that may wish to divest; and it also continues
special treatment to company executive pensions at the expense of rank-
and-file members.
Mr. Speaker, we should put what is happening today into context. This
debate today is not just about pension security, just like last week's
debate was not just about taxes. This is about an arrogance of power by
this majority. While our economy struggles, and while families across
America watch helplessly as their retirement savings dwindle away as a
result of corporate greed and mismanagement, while health care costs
soar to ever higher rates, while prescription drug prices rise at five
times the rate of inflation, the
[[Page H4062]]
Republican leadership in this House can still be counted on to protect
the interest of corporate moguls and wealthy special interests at the
expense of hard-working American families.
There is something wrong when a party uses Enron and investment
scandals of Wall Street as justification for rolling back pension
protections for American workers. There is something wrong when a party
uses the economic misery of regular Americans to cut the taxes of the
super-rich. And there is something wrong when the majority uses the
crisis of skyrocketing prescription drug prices to privatize Medicare
as a favor to the insurance industry.
This bill exploits the suffering of many to reward the few. It is a
pattern in this House, Mr. Speaker, and I urge my colleagues to oppose
it.
Mr. BOEHNER. Mr. Speaker, I yield 5 minutes to the gentleman from
Texas (Mr. Sam Johnson), chairman of the Subcommittee on Employer-
Employee Relations.
(Mr. SAM JOHNSON of Texas asked and was given permission to revise
and extend his remarks.)
Mr. SAM JOHNSON of Texas. Mr. Speaker, I thank the chairman for
yielding me time.
Mr. Speaker, I am glad you all asked us to look at this, because I
want to help Americans who are working hard and saving for their
retirement. They deserve more information about what is happening to
their retirement plans. They deserve help in making financial decisions
that can often be overwhelming. They deserve the right to diversify
their money in their retirement accounts.
The Pension Security Act that we are debating today lets all
Americans do all this. Unfortunately, we have been here and done this
before. We passed this bill in the last Congress, but it went to the
other side of the Capitol, where nothing happened. Hopefully it will be
enacted this year.
The Pension Security Act gives employees the freedom to diversify
their retirement savings, but does not force them to do so. Free
enterprise works best when individuals have the freedom to put their
money where their mouths are.
It gives employees information on the importance of diversification,
but, ultimately, the individual knows their own situation better than
some arbitrary rule that Congress might have imposed.
I have heard from many constituents about the fact that they do not
want the government imposing caps on how much company stock they can
hold. The Pension Security Act not only gives employees the freedom to
diversify, but it also gives them a new tool to help them, and, more
importantly, to help them understand their investments. Employees will
be able to receive professional advice so they can turn to a fiduciary
adviser who can help them decide what the right investments are for
their individual situation.
During the drafting of this bill about 1 year ago, we worked very
hard to be sure that the employee-owned companies would not be required
to set aside reserves to buy back company stock that might have been
subject to the diversification requirements. The diversification
requirements for privately held ESOP companies would have been a direct
call on capital, requiring these companies to set aside cash or
obligate lines of credit for the possible repurchase of shares, rather
than for building the business. I am glad we dealt with this issue
fairly and quickly.
As chairman of the Subcommittee on Employer-Employee Relations, I
want to add that the bill is simply reiterating current law regarding
fiduciary liability during a blackout. The concept of a blackout was
written into ERISA last year as part of the Corporate Accountability
Act. The provision in this bill is meant as a tag-along with those
changes. Employers are still not liable for market swings during a
blackout period, as long as they provide advance notice of a blackout,
they have a legitimate reason for doing it, and generally acting as a
good fiduciary during these periods.
This bill also contains several ERISA provisions that have been
blocked by arcane Senate rules from moving forward in a tax bill. This
bill will expand the missing participants program at the Pension
Benefits Guaranty Corporation so that 401(k) plan participants can be
reunited with their money if their company ceases to exist.
The bill also simplifies the annual reports that pension plans are
required to file with the Department of Labor. The new form should be
only one page long, and is a step in the right direction to cutting red
tape that has caused so many small businesses to simply terminate their
retirement plans. Small business owners have told me that this change
could go a long way to reducing the cost of maintaining a retirement
plan.
There are several other good changes in this bill, but I just want to
mention two more small business provisions that are long overdue.
{time} 1330
One of them would reduce the PBGC insurance premium for the new
defined benefit plan and for small plans in order to reduce costs
associated with setting up pension plans. Also, current law prohibits
small business owners who pay insurance premiums to PBGC from receiving
retirement benefits if the business fails. We reversed that.
So this bill, in effect, is going to help Americans prepare for their
financial security in retirement. It must pass. It needs to be signed
into law.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to
the gentleman from New Jersey (Mr. Andrews), the senior Democrat on the
subcommittee.
(Mr. ANDREWS asked and was given permission to revise and extend his
remarks.)
Mr. ANDREWS. Mr. Speaker, I thank the gentleman from California for
yielding me this time. I rise in strong opposition to the bill that is
on the floor.
There have been two trends taking place in American life in recent
months and years. The first is an outbreak of conflict of interest in
the financial world of America. A few days ago, the attorney general of
New York State, together with other law enforcement officials,
announced a global settlement against a large number of investment
firms because those firms were rather routinely giving advice that was
conflicted and, therefore, not in the best interests of investors. The
common practice was that the investment banking side of the firm was
out hawking certain securities and trying to sell certain deals. And
then the advice side of the firm was telling the retail clients of the
firm to buy into those very same deals. It became obvious that the
advice being given by these financial houses was not in the best
interests of the investor; it was in the best interests of the
financial house.
It was a scandal that has rocked Wall Street to its foundations. It
has caused some significant problems in the market. It caused this
Congress to take significant steps in the Sarbanes-Oxley legislation of
last year. It was an unwelcome intrusion into the marketplace of
American finance.
The second trend is that more and more Americans have become their
own board of trustees for their own pension fund. Twenty-five years
ago, the way most people's pensions were is that they worked for an
employer, the employer put money into a pension fund, there was a board
of directors or board of trustees for that pension fund that invested
the money, and, when you retired, every month you got a check based
upon how much money you were entitled to under that plan.
In recent years many employers have shifted to self-directed
accounts. Commonly these are known as 401(k)s, where instead of the
employer deciding how the money is invested, the constituent, the
individual, decides how the money is invested, and, in effect, our
constituents become their own board of trustees for their own pension
plans. There is today $1.8 trillion of American pension money invested
in these 401(k)s.
Now, one would think that when we have a trend of tremendous conflict
of interest problems in the financial industry and a huge jump in the
number of pension dollars in self-directed accounts that the House
would be about the business of trying to find ways to assure that we
eliminated any possibility for conflict of interest when people give
advice to pensioners and workers as to how to invest their pension
funds. In fact, since 1974, that has been
[[Page H4063]]
the law. It is illegal under present law for a conflicted adviser to
give advice.
The bill before the House today lifts that prohibition and makes it
legal. In other words, what the attorney general of New York and the
securities agencies of the Federal Government labored so hard to make
unlawful in the rest of the economy, the House is now trying to make
lawful with respect to people's pension funds.
Common sense tells us we want to go in the other direction. We want
to reduce or eliminate conflicts of interest in investment advice. This
bill authorizes and legalizes those conflicts of interest. It makes no
sense. If one liked the Enron scandal, one will love what will happen
if conflicted, unfettered investment advice visits the $1.8 trillion of
America's pensions held in these funds.
Mr. Speaker, this bill should be rejected, and the Democratic
substitute that we will debate later should be adopted.
Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the
gentleman from California (Mr. McKeon), the chairman of the
Subcommittee on 21st Century Competitiveness.
Mr. McKEON. Mr. Speaker, I rise in strong support of this Pension
Security Act of 2003, and I commend the gentleman from Ohio (Chairman
Boehner) and the subcommittee chairman, the gentleman from Texas (Mr.
Johnson), for their leadership in getting this bill to the floor to
help America's workers.
In the wake of the Enron and WorldCom scandals, this Congress must
ensure that innocent, hard-working, dedicated employees have safeguards
to protect their savings. When Enron stock was dropping, its employees
had no other option but to ride its tidal wave until it ran aground and
crashed.
As a former small business owner, I understand the desires of an
employer to provide his or her employees with good, stable pension
plans to ensure a comfortable retirement. By providing sound retirement
benefits, employees' productivity increases through the peace of mind
that they will have a financial future long after they retire.
With the ever-changing economy and the differing retirement plans
that are available to employees, it is the responsibility of an
employer to ensure that his or her workers are given the freedom to
direct the course of their financial future. We must increase workers'
access to financial advice to help them choose the best investment for
their individual needs.
It is for this reason that I am pleased that the Pension Security Act
will allow investment advisers to work in a purely fiduciary capacity
to help employees understand the complexities, advantages, and
opportunities in diversification of their investment pensions. If Enron
workers had had the same sound advice from unbiased, trustworthy
sources, many former employees would not have incurred the great
financial losses that most employees have had to undergo as a result of
the company's failure.
When large corporations go bankrupt for whatever reason, whether it
be through corruption or through innocent financial problems,
management is generally more insulated from the blow than the employees
because of their freedom to invest and their access to information.
This bill will simply give employees the same benefits as management:
the flexibility to make individual decisions with their money. They
should not be penalized for the failure of management or the company.
This bill will greatly alleviate the problems illustrated by Enron
and WorldCom and fill a gaping hole, and I urge my colleagues to
support this bill.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from Arizona (Mr. Grijalva), a member of the committee.
Mr. GRIJALVA. Mr. Speaker, I thank the gentleman from California for
yielding me this time.
I rise today in opposition to H.R. 1000 and in support of the Pension
Fairness Act. As has been stated before, the collapse of WorldCom,
Enron, Global Crossing, and other corporate abuses we have seen in the
news has highlighted the need for critical pension reform to eliminate
abuses and to protect workers. The Pension Fairness Act, the Democratic
substitute, deals with meaningful reform and protections from abuse
against workers. I would like to take the 1 minute to compare the
Democratic substitute and H.R. 1000.
The Democratic substitute gives workers the right to independent,
unbiased investment advice. H.R. 1000 does not. In fact, it creates the
opposite effect.
The Democratic substitute provides workers with a voice in running
defined contribution plans. H.R. 1000 leaves decision-making in the
hands of corporate executives.
The Democratic substitute gives workers notice when executives are
selling company stocks. H.R. 1000 does not.
The Democratic substitute protects older workers when a company
converts from traditional pension plans to a cash balance plan. H.R.
1000 does not.
The Democratic substitute requires that executive pensions be subject
to the same pension rules as rank-and-file workers. H.R. 1000 offers no
such fairness.
Mr. Speaker, H.R. 1000 is unfair and destined for abuse and conflict
and offers no protections or security to workers. The Pension Fairness
Act, the Democratic substitute, is fair, just, and destined for real
reform and protection and security for the workers. I urge a ``yes''
vote on the Democratic substitute and a ``no'' vote on H.R. 1000.
Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentlewoman from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for
yielding me this time.
Mr. Speaker, I rise to support the substitute that has been offered
by the gentleman from California (Mr. Miller) and the gentleman from
New York (Mr. Rangel), because I speak both in metaphor, but as well in
reality. I rise in tribute to the 53 Democrats in Texas that have had
to leave because of processes like this where we have a bill on the
floor of the House that does not, in fact, represent the solution to
the problem. Why do I know the problem? Because I come from a community
where thousands of employees were laid off within 48 hours to 24 hours,
laid off, because Enron went bankrupt, and they lost everything. Why
did they lose everything? Because they had pension programs that would
not be supportive of the freedom to engage in choice.
The Republican bill on the floor of the House does nothing. This bill
opens a dangerous loophole that jeopardizes employee retirement
savings. It fails to protect the sailor, even when the captain is
protected. The bill fails to protect long service workers' pension and
cash balance pension convergence. It fails to address the need for an
employee to have a voice on a pension board. It leaves employees locked
into company stock for long periods of time. That was, if you will, the
undermining of Enron employees and other employees. They could not get
out. We had retirees that lost $1 million, $1 million because they
could not get out of their pension plan. They simply could only stand
by and cry as their savings crumbled.
Mr. Speaker, if we are going to be serious about the corporate
systems who have failed us, if we are going to pay tribute to those
employees and retirees who have catastrophic illnesses and lost loved
ones because of what happened in our community and in Houston, if we
are going to be supportive of a Democratic process, then I believe it
is important to support the Miller-Rangel bill and vote ``no'' on H.R.
1000.
Mr. Speaker, I rise in opposition to H.R. 1000, the ``Pension
Security Act of 2003,'' because this bill fails to sufficiently address
the devastating impact of corporate misconduct on employee retirement
plans.
Congress has the responsibility to provide American citizens with
legislation that protects them and their families. This legislature
should support legislation that ensures the pension plan protects
employees' retirement accounts, by requiring the pension plan be
diversified. We should also draft legislation that compels companies to
provide employees with investment advice about pension plans and the
assets included in the pension plan. Finally, Congress should draft
legislation that both imposes and expands both civil and criminal
liability malfeasance of pension plan fiduciaries and administrators.
H.R. 1000 does not adequately address the many issues facing
employees pertaining to
[[Page H4064]]
their pension plans. H.R. 1000 allows employees to sell company stock
after 3 years, and requires pension plan administrators to give
employees 30 days written notice prior to any lockdown. On the surface
these provisions seem like improvements to existing law and relief for
America's employees. However, H.R. 1000 simply fails to sufficiently
amend current pension plan law to account for and remedy disasters like
the collapse of Enron.
Under H.R. 1000, companies would be free to provide investment advice
that is not necessarily in the best interest of the workers. After
companies provide this poor advice, they would be free from legal
liability as long as the investment advisors disclose any conflict of
interests.
Under H.R. 1000, pension plan participants would continue to be
denied representation on pension boards resulting in employees having
no voice in important pension plan decisions. In addition H.R. 1000
omits any provisions that would provide employees with notice when top
management is contemplating dumping their stock. H.R. 1000 also fails
to hold such administrators liable for knowingly making material
misrepresentations or concealing such information from plan
participants.
The Enron collapse is a paradigm example of what can happen when
there is not full disclosure of corporate decision making in pension
plans. In the Enron case, executives and senior management staff were
encouraging employees to by company stock. At the same time, those same
executives and senior managers were cashing out millions of dollars
shortly before the company declared bankruptcy in December of 2001.
Full disclosure and liability would have protected the 4,500 Enron
employees who lost their jobs in my home district alone.
H.R. 1000 is also potentially dangerous to employees because it fails
to impose limitations on assets that the corporation can hold its stock
reserves. Limiting the amount of stock the corporation holds would
result in diversification of the plan and guarantee there was adequate
revenue and protection in the employees' retirement accounts. Once
again, the Enron case illustrates the importance of limiting corporate
stock ownership. In December of 2000, 62 percent of the assets in Enron
Corporation's 401(k) plan consisted of shares of Enron stock. This lack
of diversification meant financial ruin for thousands of Enron
employees. Exxon Mobil is another example. That corporation, the 2nd
Largest Fortune 500 Company in America, holds an estimated 77 percent
of plan assets in company stock.
Diversification reduces the risk that a pension fund would become
insolvent as a result of the company that sponsors the plan going
bankrupt. Congress has required Defined Benefit Plans to diversify
assets beyond 10 percent and also has generally exempted defined
contribution plans from any type of risk reduction requirements that
would provide plan protection through diversification.
The Democratic substitute to H.R. 1000 addresses the many flaws in
the original bill. The democratic substitute would give employees the
power to protect their retirement investments and provide for a more
comprehensive bill that addresses the many problems raised by the Enron
tragedy. The Democratic substitute will effectively prevent plan
administrators from engaging in unlawful and unethical practices, and
will ensure that plan participants are allowed to diversify their
interests. The Democratic substitute also guarantees that employees are
adequately represented on pension boards and that they receive adequate
independent investment advice.
Mr. Speaker, I oppose H.R. 1000. This legislation does not provide
adequate protection to employees. I support the Democratic substitute
to H.R. 1000 because it protects employees from corporate malfeasance
in the management of their pension plans.
The SPEAKER pro tempore (Mr. Linder). The time of the gentleman from
California (Mr. George Miller) has expired.
Mr. BOEHNER. Mr. Speaker, I yield myself the balance of the time.
There has been a lot said today about the fact that this bill may not
go far enough, and the substitute that we are about to debate in the
coming hours goes much, much further.
The issue here that Members need to understand is that our pension
system is a voluntary system on behalf of employers for their
employees. And while we will have much more debate on this when we get
into the substitute, we walk a very fine line when we bring pension
issues to this floor.
The retirement security for American workers in most cases is one of
their largest assets. It has to be treated with great respect. And all
of us who have served in a legislative body, and especially here in
Congress, know that we always have to deal with the law of unintended
consequences. If we make one mistake, we could cost millions of
Americans the right to their own retirement. So we have to be very
careful.
That is why, if we look at the bill that we have before us, we make
modest reforms to correct problems that we found in the wake of Enron
and WorldCom, and others. We do not do a wholesale overhaul of our
pension security laws, because, in honesty, it is not needed.
Now, the most substantive part of this bill would allow employers to
offer to their employees real investment advice. We have over 60
million Americans who have self-directed accounts today, and most of
whom have no access to real investment advice. The substitute that we
are about to consider, given all of the rules they have around advice,
will mean exactly what we see in the marketplace today: no advice.
Yes, we do allow those who sell products to offer advice. We do
require them to provide notice to the employees of potential conflicts.
We hold them to the highest fiduciary duty. If there is any difference
in fees, they have to let the employee know. But our goal here is to
get real investment advice into the hands of everyday, working people
who want and need this advice, and they need it now. With these new
self-directed accounts, if they are going to really have the kind of
retirement security that they expect and that we want, they need real
investment advice.
Current law, written in 1974, before the birth of the current
financial services firms, barred those who sell product from giving
advice. Now, if you are not in a retirement plan, and you are going to
spend your money, you can get all the advice you want from all of the
people in the world who sell products. But, oh, no, we cannot do that
if you are in a qualified retirement plan. That is wrong. We should not
lock out those firms that are the most successful firms in the country
from offering their advice and their expertise to American workers.
Workers do not have to take it.
Secondly, in the bill we have an above-the-line tax deduction for
employees in order to go out and seek their own investment advice if
they do not want what the employer offers.
{time} 1345
Now, I think between both of these issues employees need to have
options to go get the kind of advice that will benefit their own
retirement security. The underlying bill is a very good bill. It had
passed this House with broad bipartisan support about a year ago, and I
expect that it will have broad bipartisan support today.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Linder). For the remainder of the
debate, the gentleman from Texas (Mr. Sam Johnson) and the gentleman
from California (Mr. Matsui) each will control 20 minutes of debate on
the bill.
The Chair recognizes the gentleman from Texas (Mr. Sam Johnson).
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, PBGC, substantial owner. This important provision was
approved by the Committee on Ways and Means last week, and I am glad
that we are also including it in this bill today.
This provision could help breathe life into defined benefit plans in
small businesses. Right now the owners of small businesses have several
disincentives to offering traditional pension plans. Aside from the
fact that these plans are too expensive to maintain because of too much
red tape, owners of small businesses are prohibited from receiving
guaranteed benefits from PBGC should their businesses fail. It is crazy
to think that small businessmen would offer traditional defined benefit
plans, pay the expensive insurance premiums to the PBGC, and then be
prohibited from receiving the same insurance benefit that all their
employees receive if the company fails. This provision fixes that and
allows owners to get some benefits from PBGC.
This bill also reduces PBGC premiums for new pension plans and for
small pension plans. Those premiums are an expensive barrier to those
few employers who are willing to set up traditional defined benefit
pension plans. Reducing premiums could help
[[Page H4065]]
bring back this type of pension plan. This bill is long overdue. It
should have been approved in our other body during the last session,
but this time it looks like it can be and should be, for the benefit of
all Americans.
Mr. Speaker, I reserve the balance of my time.
Mr. MATSUI. Mr. Speaker, I yield myself 5 minutes.
Mr. Speaker, it is kind of astonishing 2 years after Enron and
WorldCom we are finally, again, taking up a bill that presumably is
supposed to deal with the particular issues that Enron and WorldCom
raise. Unfortunately, I do not think the bill does, which is really
tragic in America today.
Almost every study I have seen and many people have seen over the
last 5 years has indicated that the baby boom population, which is now
retiring, does not have adequate retirement benefits for their future.
And as a result of that, many Americans are going to be working longer,
even though the unemployment rate is going up.
This legislation on the floor presented by my Republican colleagues
unfortunately does not address the issue of pension benefits and
retirement security for Americans that are about to retire. Let me just
give you some examples of that.
The gentleman from Ohio (Mr. Boehner) talked about, well, we are
going to allow independent investment advice for some of these
companies for their employees. The only problem is it is kind of a
ruse, because, in fact, this legislation will allow a conflict of
interest for those investment advisers that they will then be able to
make misleading information and statements to their employees.
Secondly, which is probably even more difficult to understand, is
that this legislation, believe it or not, holds harmless from liability
the employer when these advisers give misleading advice or fraudulent
advice. So the worker is basically left without any remedy or resources
and at the same time probably will be able to get advice that is
misleading and full of conflicts of interest.
It allows cash balance plans. The only problem is if you are 50 or
older, you can end up losing your retirement benefits because, as all
of us know when you are in the workforce, the closer you get to
retirement the greater benefit you get; but if you move to a cash
balance, that is eliminated. And it does not give the employee the
option to say, I want to go into a new plan or stay in my old plan. So
automatically the employee is going to be damaged.
Our substitute, which will come up later, will address that issue,
just like it will address the issue of independent advice.
In addition to that, which is somewhat surprising, is the whole issue
of executive compensation, the whole issue of executive compensation
which was the issue of Enron and WorldCom. It states that in terms of
the 401(k) plan that the Enron employees had, they had to hold that
Enron stock in there for an indefinite period of time.
The gentleman from Ohio's (Mr. Boehner) bill says you can take it out
after 3 years. The problem is it is discretionary with the employer. So
Enron could have made them keep the money in beyond 3 years, and that
would have resulted in the same problem. So this bill does not do
anything to overcome the Enron problem. In fact, the Attorney General
of the State of New York, Eliot Spitzer, said, ``This legislation opens
a loophole that will sharply erode, rather than enhance, safeguard for
employees seeking independent and untainted advice how to invest in
their retirement savings.''
The Attorney General of New York has said this; this legislation will
actually do more harm than good.
Let me just conclude by making a couple other observations in my
time, Mr. Speaker. This bill also would currently allow Ken Lay, the
CEO of Enron Corporation, to keep his retirement benefits even though
the company had filed bankruptcy and even though almost every Enron
employee ended up losing their entire retirement benefits because most
of their stock was held in Enron company stock in their 401(k) plans.
This bill would have allowed that to continue on.
In addition, this bill would do nothing to help the American Airline
employees, and all of us know the American Airline executives attempted
to preserve a golden parachute for themselves and at the same time ask
their employees, which is somewhat ironic, to cut their benefits.
So this bill does not address some of the major issues that I think
the American public are concerned about in terms of its own income
security.
Let me just say this, in terms of coming up with legislation to
protect income security and fraud, we need to reexamine this
legislation. Our Democratic substitute to be offered by the gentleman
from California (Mr. George Miller) will address these issues, but this
bill does not.
Mr. Speaker, I reserve the balance of my time.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 3 minutes to the
gentleman from Pennsylvania (Mr. English).
Mr. ENGLISH. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, I rise today in strong support of the Pension Security
Act, which is very similar to legislation that was passed last year by
the House of Representatives in response to the Enron crisis.
This is mainstream legislation that provides fundamental protections
to American workers and American pension systems.
Now, as I listen to the debate here, I am struck by a certain Alice
in Wonderland quality to the entire proposal because we have heard on
the other side an enumeration of some of the things that they think
this bill does not do. They do not focus on the fact that this does
include fundamental protections.
They complain that this has taken a long time to do, and yet it was
their party in the U.S. Senate that held up the proceedings on this
bill after we passed it in the last Congress.
This is clearly legislation whose time has come, and I am very proud
of the work that two of our committees have done, in the Committee on
Education and the Workforce and in the Committee on Ways and Means, on
which I serve, to make this legislation possible. Ultimately, the bill
before us is one of the most important measures to secure Americans'
retirement futures that we will work on this year.
Our working families clearly deserve to know that their hard-earned
dollars invested in pension and retirement savings are secure. We have
seen the devastating effect of corporate scandal on employees'
pensions. The House again is responding to the challenge to make sure
that the Enrons and WorldComs of the corporate world do not destroy the
savings of their employees. This bill clearly provides rights to
workers to diversify pension plan assets and protections against
corporate abuses and pension mismanagement; and it also helps small
businesses provide retirement security for their workers, which is one
of the most fundamental reforms given, that so many small businesses
currently do not extend to their workers those options.
By giving small businesses just a little relief from burdensome and
costly regulations, millions of small business employees will now have
retirement security. This is a worthy goal. This is worthy legislation.
And I hope in the end when the smoke clears that this body will support
it on a bipartisan basis.
Mr. MATSUI. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from the State of Connecticut (Ms. DeLauro).
Ms. DeLAURO. Mr. Speaker, I rise in strong opposition to this bill.
It has been a year and a half since the collapse of Enron, a year
since the collapse of WorldCom. What has this body done to protect the
pensions of American workers? Nothing.
We have indeed passed legislation, but legislation that fails to
allow employees the right to fully diversify their stock, legislation
that fails to hold executives who are fiduciaries in the pension plan
accountable if they violate the law. Executives like Ken Lay.
Legislation that allows employers to give the same conflicted financial
advice the Republicans tried to push on the American workers before the
Enron scandal broke.
With this bill we head down the same road. Xerox, Georgia Pacific,
Bank of Boston already have switched from traditional defined benefit
plans to cash balance pension plans that leave older
[[Page H4066]]
employees with their pensions slashed up to 50 percent. This bill would
actually make it easier for more companies to adopt such practices. It
would make it easier for companies like Motorola to put another $38
million into the retirement funds of their executives while they
contribute not one cent to their workers' already underfunded pension
funds.
Quite frankly, this bill does absolutely nothing to limit runaway
executive compensation or protect employees from these unfair benefit
cuts. It is obvious to everyone but this Republican majority that our
pension rules do not do enough to protect helpless employees. It does
not protect them from being locked out of their pension plans while
their life savings go down the drain or protect them from venal
executives who would take their money and run.
The majority seems to think that this is somehow acceptable behavior.
You tell the folks in Westbrook, Connecticut, people who lost $2
million from their pension plan. I met with these men and women. We
worked to win back their hard-earned retirement savings. This is about
what this kind of reckless behavior does to a family that is struggling
to pay a mortgage, to pay for their children's college education fund.
No one should have to go through what families have been put through.
There is a Democratic substitute today. We have an opportunity to
protect the working men and women in this country. Vote against this
flawed Republican bill, and vote for the Democratic substitute.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 2 minutes to the
gentleman from Delaware (Mr. Castle).
(Mr. Castle asked and was given permission to revise and extend his
remarks.)
Mr. CASTLE. Mr. Speaker, I thank the gentleman for yielding me time.
I congratulate him and others who worked on this, the gentleman from
Ohio (Mr. Boehner) and others who worked on the legislation before us.
Mr. Speaker, I would like to get out of that a little bit and talk
about where we are going. I do not disagree with the gentlewoman from
Connecticut (Ms. DeLauro). There are a lot of problems out there that
need to be fixed.
{time} 1400
It seems to me, Mr. Speaker, we started with Sarbanes-Oxley, and we
started to address a lot of those problems in terms of employees,
corporate management, those questions.
We then went on to dealing with the issue of management on retirement
funds. That is what we are doing for the most part out there in this
country today. Whether we like it or not, that is happening, and
basically this bill, if we take the time to really read it and be
thoughtful about it, really provides more flexibility and
diversification for the employees so they can make decisions and are
not going to be bound in to something like their own company's stock
and locked in such a way they cannot make the right decision, and it
provides for more investment advice for that.
Some argue it is not independent. In my view of reading it, it is.
Those are the kinds of thing we need to do. I believe if we had taken
those steps, we would have avoided a lot of the problems that we had in
places like Enron and WorldCom.
This measure requires companies to give workers, for example,
quarterly benefits statements that include information about accounts,
including the value of their assets, the right to diversify and the
importance of maintaining a diversified portfolio.
We need to educate people in America about retirement needs, about
what investments are. We need to work very hard on this because that is
what they have to do anyhow, so we ought to have legislation which
enables them to know more about it so they can make sound investments
in light of whatever they want to do in the future.
I believe that this brings unprecedented new retirement security
protections and literally would protect thousands of workers who got
burned very badly in the last 3 years and hopefully are in some sort of
recovery now. I would encourage everyone to support it.
I do not know much about the substitute. We will hear more about that
here in a few minutes, but I will tell my colleagues, the underlying
bill is something that is helpful.
Mr. Speaker, I rise today in strong support of H.R. 1000, the
``Pension Security Act.'' I am proud to be a cosponsor of this measure
that passed the House with bipartisan support in the 107th Congress and
I thank Chairman Boehner and Subcommittee Chairman Sam Johnson for
bringing this matter to the floor again. I am hopeful the measure will
again pass as it provides important protections to working Americans
with employer-based retirement plans.
Sadly, we have watched many Americans see their retirement savings
plummet. Congress took a much needed step in enacting the Sarbanes-
Oxley Act and this legislation further strengthens those reforms. This
legislation gives workers greater ability to manage and expand their
retirement savings.
Congressional hearings in 2002 established that inadequate worker
access to investment advice contributed significantly to retirement
security losses by employees at Enron. This bill provides greater
resources to American workers by allowing employers to provide their
workers with high-quality, professional investment advice as an
employee benefit, while maintaining safeguards to protect the interests
of workers and investors. This measure requires companies to give
workers quarterly benefit statements that include information about
accounts, including the value of their assets, their rights to
diversify, and the importance of maintaining a diversified portfolio.
The ``Pension Security Act'' would give workers unprecedented new
retirement security protections and would have helped to protect
thousands of Enron and WorldCom employees who lost their savings during
the company's collapse. Workers must be fully protected and fully
prepared with the tools they need to protect and enhance their
retirement savings. The ``Pension Security Act'' accomplishes these
goals and I urge my colleagues to join me in supporting this important
legislation.
Mr. MATSUI. Mr. Speaker, I yield myself 30 seconds.
I would just like to say to the gentleman from Delaware, I know he
read the bill, but the problem with the bill that the Republicans have
offered us is it actually makes the situation worse. Instead of giving
independent advice, as the gentleman stated, it actually cloaks it in
independent advice, it really does not.
What it basically does is allow conflicts of interest and hold
harmless to the employer, and at the same time I think the whole issue
of diversification, no, only subject to the whims of the employer will
that be allowed. Enron would have not allowed it. So nothing would
change. That is the problem.
The Democratic substitute, I am sure the gentleman has read that,
will take care of these problems that the gentleman has raised and
talked about, but not the Republican bill.
Mr. Speaker, I yield 2\1/2\ minutes to the distinguished gentleman
from Massachusetts (Mr. Delahunt).
Mr. DELAHUNT. Mr. Speaker, I thank the gentleman for yielding me the
time, and he is absolutely correct. What this bill does is bad enough,
but what it fails to do is even worse.
The sponsors have named it the Pension Security Act, but it does
nothing to protect workers and retirees from the corporate abuses that
have put their hard-earned savings at risk. If this is the Republican's
pension security plan, one shudders to think what they would do with
Social Security.
At company after company, top executives have awarded themselves
millions in bonuses, stock options, severance packages, driving their
companies into bankruptcy and leaving their workers holding the bag.
What does the Pension Security Act do for them? Not a thing.
Airline executives lose billions, lay off thousands of workers, but
then go and set up secret trusts to protect their own retirement assets
and put it out of the reach of creditors. What does this bill do for
them? Not a thing.
Polaroid executives in my home State of Massachusetts cancelled
retirees' health insurance and terminated workers on long-term
disability, all the while awarding themselves millions in bonuses and
severance packages. Once the company was sold, the new CEO terminated
the pension plan as well. What does the Pension Security Act do for
them? Not a thing.
We are in the midst of an unprecedented wave of business failures,
rising unemployment and growing numbers of Americans who cannot afford
health
[[Page H4067]]
insurance premiums, let alone a 401(k) plan. What will the Pension
Security Act do for them? Not a thing, nothing at all.
This bill is a fraud, and it deserves to be defeated.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 2 minutes to the
gentleman from Georgia (Mr. Isakson).
Mr. ISAKSON. Mr. Speaker, I thank the distinguished gentleman from
Texas for yielding me the time.
I want to clear something up, and I would appreciate if the ranking
member, the distinguished gentleman from California, would look this
way.
In rising to take my 2 minutes, I want to clear something up. I am on
the Committee on Education and the Workforce, and I have great regard
for the gentleman's work in the Committee on Ways and Means, but is it
not true that the legislation includes both the Boehner and the Portman
provision that allows an individual employee to choose their
professional adviser and to deduct as a deduction the cost of that
advice on their tax forms? Is that not true?
Mr. MATSUI. Mr. Speaker, will the gentleman yield?
Mr. ISAKSON. I yield to the gentleman from California.
Mr. MATSUI. Mr. Speaker, it allows them to do this, but with a
potential conflict of interest, obviously the disclosure conflict of
interest, but the problem is that the employer is held harmless from
liability. That is what the problem with the bill is.
Mr. ISAKSON. Let me answer that part, too. If the employer provides
the advice, the adviser is liable. They are liable under the Boehner
bill and the one that came out of the Committee on Education and the
Workforce. If the employer provides it, they are liable.
If that had been true under Enron's case, if it had been true under
WorldCom's case, I doubt we would be sitting here today. We would be
reading stories about those advisers who were in jail.
Secondly, if the employee chooses not to want the advice of the
adviser that is liable from the company, then they are free to choose
their professional adviser and use the cost as a legitimate deduction
on their taxes.
The point I want to make is we can argue about executive
compensation. We can argue about health plans, which are not even in
this legislation. We can argue about anything, but the fact of the
matter is with the passage of this bill, an individual is encouraged to
seek independent advice. If it is not independent advice, the dependent
adviser is liable to them if they do anything not in the interest of
the employee, and if they seek advice independent, they are allowed to
use as a legitimate deduction the cost of that individual they choose
for the advice they got.
I would submit to my colleague it would not have taken a whistle-
blower at Enron to blow it sky high. Under this bill we would have had
an employee getting legitimate advice who would have understood long
before that there was a problem, and millions of dollars would have
been saved in the pensions of employees.
Mr. MATSUI. Mr. Speaker, I yield 3 minutes to the gentleman from
Maryland (Mr. Cardin), a distinguished member of the House Committee on
Ways and Means, ranking member of the committee, who will actually
address this issue.
Mr. CARDIN. Mr. Speaker, let me try to explain the problem with the
advice sections of the bill that is on the floor.
What my colleagues have done in this legislation is remove the
prohibited transaction on giving advice by the agent that is selling
the product to the employee. What does that mean? That means an
employer can hire an investment company that will be responsible for
the investment options that the participant must participate in, and
the actual person giving the advice to the participant makes a
commission based upon what product that individual sells.
Under current law, that is a prohibited transaction and is not
allowed. Under the legislation that has been reported to the floor,
that is now permitted without any protection basically in the bill at
all.
I regret that I cannot support this legislation. Let me just take my
colleagues back to the last Congress where I thought we tried to work
in a bipartisan way to deal with the problems of Enron and WorldCom,
and we made some progress, but then somehow when the legislation got
reported to the floor, all that cooperation, all that bipartisan
working together was lost when the Committee on Rules reported out a
bill that contained many provisions that were never agreed upon in
trying to resolve the issues before us.
We are now faced with legislation that opens up a huge loophole that
could magnify the problems we had in Enron and WorldCom by giving
congressional sanction to individuals who are more interested in
getting a commission from the participant in the plan than giving sound
advice as to what will work with that individual's need. Do we need to
pass legislation? Absolutely. But this is not the right bill.
Fortunately, there will be a Democratic substitute, Mr. Speaker, that
will address the legitimate concerns that are out there, and I regret
that we have not been able to work together to develop the type of
legislation that is needed to deal with the Enron-type scandals. We
should have done that. We should have worked together, but for reasons
unknown to me, the majority has decided to go this route, which I think
could very well cause more harm than benefit to the beneficiaries.
I urge my colleagues to support the Democratic substitute and, if
that is not accepted, to reject the underlying bill.
Mr. MATSUI. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
gentleman from California (Mr. Becerra), a member of the House
Committee on Ways and Means.
Mr. BECERRA. Mr. Speaker, I thank the gentleman for yielding the
time.
Mr. Speaker, Enron, Global Crossing, WorldCom, the recent record of
investment advisers serving their own interests above those of
employees or investors is an unambiguous one and is not a pretty one.
The time is not right for this particular idea because opening up a
loophole to allow an employer to offer conflicted investment advice to
its employee shareholders is something that, with previous history
right before us, makes it very clear that we open up a Pandora's box.
Maybe sometime in the future we can figure out how to do this the
right way, and I believe the Democratic alternative does exactly that.
It finds ways to make sure that our investment by employees who work
very hard not only are protected, not only is there flexibility, but
that it can be done in a way that gives the employer the best
opportunity to make sure employees are making the most of their
investments, but to today believe that we can open the door to
permitting conflicted investment advice is to not look at history and
to not look at history of just the recent past.
Has the scandal of Enron left our mind so quickly that we believe we
could do this? Are we still not aware that Global Crossing is still in
the bankruptcy court? Did we forget that WorldCom could not provide to
its employees its 401(k)s? It does not make any sense, and when we take
a closer look at this legislation and see that for older workers we are
not only harming them and encouraging more risk, but we are actually
making it more difficult to protect older workers' investments, that
does not seem like a very smart thing to do.
Then finally when we add to that that we do not provide to rank-and-
file employees the type of flexibility they would need so we could have
avoided the Enron scandal, because remember, in the Enron scandal, a
lot of employees saw their stock, the value of their 401(k), tanking,
just going down to nothing, and a lot of them, before it turned out to
be valued at zero, said, let me pull it out, but they could not. They
were stuck. The way the law was written, they could not pull it out.
Executives could, but the rank-and-file employees could not.
If we are going to reform pension opportunities, why do we not reform
that to provide employees more flexibility? Democrats tried to do that.
This bill does not. This is not the right bill at the right time. Let
us vote this down and vote for the Democratic substitute.
Mr. SAM JOHNSON of Texas. Mr. Speaker, could I inquire as to how many
more speakers the gentleman has?
Mr. MATSUI. I have an additional speaker here.
[[Page H4068]]
Mr. SAM JOHNSON of Texas. Mr. Speaker, I reserve the balance of my
time.
Mr. MATSUI. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Massachusetts (Mr. Frank), the ranking member of the
Committee on Financial Services.
Mr. FRANK of Massachusetts. Mr. Speaker, sadly this bill reminds me
of some comments we heard just a week or so ago from leading corporate
executives who, having signed an agreement in which it was clear that
their companies had abused the trust of investors, tried by public
statements to water that down, and I admire the vigor with which the
new head of the Securities and Exchange Commission Mr. Donaldson, who
appears to be doing a good job, spoke out harshly against them.
What he said was, look, we have got to acknowledge that we made, as a
society, serious errors, and we have to be willing to make a whole-
hearted effort to correct them, and essentially what we saw were chief
executives of culpable corporations who were making it clear that
whatever reforms they had agreed to came grudgingly and reluctantly.
That is what this bill is. It is a grudging, reluctant acknowledgment
that something had to be done, and it is an effort in the face of
serious wrongdoing that took hard-earned money away from large numbers
of people to do as little as people think they can get by with.
{time} 1415
This is a time for us to be forthcoming. This is a time for us to do
an expansive piece of legislation protecting people. We are not dealing
with speculative ills here. We are dealing with real harm that was done
to real people. And a bill such as this, a grudging and partial
acknowledgment that there were some mistakes but a refusal to deal with
them in their entirety, is the same spirit that we saw from these
corporate executives: you caught us, and you are going to make us do
something; but we are going to fight you every step of the way, and we
are not going to give any wholehearted endorsement to measures that
will change things.
The measures that are in the Democratic substitute that will be
coming forward represent, frankly, the spirit in which the head of the
SEC spoke, and I hope we adopt it.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 4\1/2\ minutes to the
gentleman from Ohio (Mr. Portman).
Mr. PORTMAN. Mr. Speaker, I thank Chairman Johnson for yielding me
this time, and I thank him for his work both on the Committee on Ways
and Means and on the Committee on Education and the Workforce on this
very important issue of helping people save more for their retirement.
I have not been here to hear all the debate today, but I understand
there has been a lot of discussion of investment advice; and I did hear
someone say, gee, did we forget about WorldCom and Enron. No, we did
not. The lesson of so much of what has happened in the last couple of
years is the need for more investment advice and, in particular, more
diversification. And I know on the other side of the aisle there are
those who share that view strongly. We may disagree on how to do it,
but to say this legislation is somehow to encourage people to get stuck
in pension plans they do not want to be in with corporate stock they do
not want is exactly the opposite.
In fact, what this legislation says is that we are going to change
the rules so that, number one, for people who end up with matching
stock from a company because they are in a 401(k) plan or some other
kind of defined contribution plan, those people can get out of that
stock. They are not told they have to stay in it.
In Enron, matching stock could not be sold until an employee was 50
years old and had 10 years of service. In other words, people got stuck
with the stock. So when Enron's stock went down, that is all they had
in their retirement plan. And it is horrible because they are left with
nothing. We are saying, instead, after the vesting period, which is
only 3 years, those people should be able to diversify out of that
stock. That is a good idea, and it is a new idea this Congress has
voted on last year; but it is a change in current law and a very
important one.
Secondly, we say people should have more information, so when you get
into a plan, you have to have notice from the employer saying
diversification is a good thing. You ought to diversify. And on a
quarterly basis you are now going to be able to get information you
cannot get now as a participant in the plan, as an employee.
So these are all good things that are in this legislation. Again, it
has passed the Congress before with very strong bipartisan support.
This is something we should have done last year but could not get that
part through the other body. Hopefully we will be able to do that this
year because it all makes sense. And it does relate directly to the
scandals of the last couple of years.
The final piece of this is investment advice. This legislation picks
up something that was in the Portman-Cardin legislation, which allows
people to take pretax money and apply it toward retirement planning.
What does that mean? Well, I think the next frontier in terms of
helping people save more for retirement is in part better educating the
consumer, educating people who are in these plans as to the need to
diversify and to diversify wisely depending on their situation in life.
Some people want to be in riskier investments because they are
younger and want to build up that nest egg; others, closer to
retirement, will want to be in something less risky. Folks need to be
able to adjust. They need the information, the advice, the help. So
this lets people take, on a pretax basis, purchase investment advice.
It is like a cafeteria plan, or some other plan that people might want
to take at their place of business.
This is a good idea. Not everybody will take advantage of it. But
investment advice is expensive. This lets people take that pretax
dollar and apply it towards investment advice. I hope there is not
disagreement on that on a bipartisan basis. I think it is a good use of
our Tax Code. I think it is a good way to get over that hump and to get
people better educated.
The second piece in this advice legislation, which I think has had
more discussion today, is the question of should companies be able to
bring in advisers to advise their employees. Again, the situation is
people are not getting the education information they need. How can
they get that good advice? This says let us give those companies the
ability to do that, but let us establish some rules.
Number one, people have to be certified; they have to be qualified to
do it. That is in the legislation. It is good that that is in the
statute. Second, let us establish a fiduciary relationship that this
adviser would have to the individual employees who would be advised and
consulted with. That means the person giving advice would be personally
liable if that person were to do something that would create a problem
for that participant.
Finally, it says that you have to disclose any potential conflict of
interest. So if there is any potential conflict, in other words if you
are giving advice, such as you should buy this particular kind of
mutual fund or this one, and that person sells that mutual fund, you
have to advise the person of any potential conflict of interest.
Now, we may be able to work over time to make this a better approach
in terms of that specific issue of bringing investment advisers in. We
would love to work with the other body on this. We have not been able
to do so successfully. But we should stop this notion of partisan
rhetoric against the idea, because the education advice is absolutely
needed. We should be able to do it and get it done for the participants
in the plan.
Mr. MATSUI. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
gentleman from Washington (Mr. McDermott), a member of the House
Committee on Ways and Means.
(Mr. McDERMOTT asked and was given permission to revise and extend
his remarks.)
Mr. McDERMOTT. Mr. Speaker, sometimes when I come to the floor, I
think I have come back into the French Theater of the Absurd.
Here we have a bill that we are going to allow employers to provide
financial advice to their employees but does not require sufficient
safeguards to ensure that the advisers do not have a conflict of
interest.
[[Page H4069]]
The country has gotten a better idea about the Republican idea of
fiscal management recently, and I am sure that that would be the kind
of people they would want their employees to get their information
from. Despite running a budget of $400 billion in debt this year, they
continue to spend money for their affluent supporters in trying to keep
them from cutting taxes. They have really turned a modest government
surplus into a prescription drug problem for the next 25 years. We are
drunk on giving tax relief.
If we look at Mr. Bush's economic report on page 58, he says: ``A
conservative rule of thumb is that interest rates rise about three
basis points for every additional $200 billion in government debt.''
Now he tells us that things are going to go up. He tells us, and yet he
continues to drive us into the hole.
Now, I was thinking about the kind of advisers that the company might
recommend. They might recommend Bear Stearns or Credit Suisse or
Deutsch Bank or Goldman Sachs, or any one of a dozen companies here
that the Attorney General of New York has just fined $1.4 billion for
misleading their investors. If you are an employer, and you want them
to buy the stock in your company so you have some dough, and you send
them to your credit bank that floats your bonds, it would not be very
surprising if they recommend that people buy your company, even if it
was like Ken Lay and Enron and it was going in the tank within a week.
But there is nothing in this bill that says you cannot do that. Any way
you can manipulate your workers is fair game.
Now, there is a legitimate role for government, and that is to
protect the American people. And not only to protect them from
terrorists and al Qaeda or whatever is going on in the rest of the
world, but from the financial rapacious people in New York City.
The SPEAKER pro tempore (Mr. Linder). The gentleman from California
(Mr. Matsui) has 1 minute remaining, and the gentleman from Texas (Mr.
Sam Johnson) has 6\1/2\ minutes remaining, and the gentleman from Texas
has the right to close.
Mr. MATSUI. Mr. Speaker, I yield myself the balance of my time, 1
minute, to close.
If I may, Mr. Speaker, because a lot has been said to address the
issue of the independent advice that my colleagues seem to be really
hung up on, it is a question of definition. The way they say
independent advice is that if the independent adviser says I may have a
conflict of interest, one time, then after that it is Katy, bar the
door. They can say whatever they want.
Most employees do not just work 3 days a week, on Tuesday, Wednesday,
and Thursday, like we in the House of Representatives do. They have
kids to take to school. They have a lot of obligations. They do not
remember when people say I may have a conflict of interest. And as a
result of that, it is meaningless what my colleagues on the other side
of the aisle are doing. There will be conflicts of interest; but the
real problem is, obviously, that the employer will be held harmless
from liability when the conflict of interest actually does damage to
the employee.
I am just going to conclude by saying this. This bill will not help
the average American, this will not help individuals who have 401(k)
plans, and it definitely will not help the baby boom population that is
about to retire now and who has inadequate funds for their income
security. We need to address this in a much larger context and actually
not do the kinds of damage that this bill will do under the so-called
ruse of being good government.
This is not a good government bill. It will do more damage than the
status quo.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, I just would like to make the statement that my friend
on the other side voted for H.R. 2269, which was the original
Investment Advice Act, in November of 2001.
The minority is comparing the investment advice that this bill would
allow with the recently concluded Global settlement involving several
Wall Street firms, the SEC, and the New York Attorney General. It is a
bad comparison. It suggests they do not understand the bill or the
Global settlement.
The so-called Global settlement involved claims about individual
company stocks which analysts were allegedly recommending while their
firms were seeking investment banking business from the same companies
without telling them, individual investors, about the relationship.
H.R. 1000, which we are discussing today, is about 401(k)
allocations, which mostly involve mutual funds. Mutual funds and the
advisers who provide guidance about mutual funds are in no way
implicated in the Global settlement. But because they also provide
investment advice, the minority is tarring them with the same brush.
In addition, the Global settlement was about potential conflict of
interests which were not disclosed to investors. This bill requires
clear disclosure of any such relationship so that investors can make
the decision themselves about whether to accept or reject the advice.
Finally, the Global settlement was just a settlement in exchange for
a number of reforms aimed at making sure investment analysis is without
conflict of interest. The investigators who police Wall Street have
dropped their lawsuit and settled their disagreement.
I would like to also include at this time the statement from the
administration on their policy: ``The administration strongly supports
passage of H.R. 1000, which encompasses important principles outlined
in the President's pension retirement security plan. Like the
President's plan, this bill strengthens workers' ability to manage
their retirement funds by giving them more freedom to diversify their
investments and by providing better information to workers through
improved 401(k) and pension plan statements. The bill will also permit
employers to provide their employees with access to professional
investment advice. H.R. 1000 would give American workers access to
information through expert advisers.''
The White House strongly supports this bill. I believe it requires a
``yes'' vote.
The statement of administration policy follows:
Executive Office of the President, Office of Management
and Budget,
Washington, DC, May 14, 2003.
Statement of Administration Policy
H.R. 1000--Pension Security Act of 2003
(Boehner (R) Ohio and 54 cosponsors)
The Administration strongly supports House passage of H.R.
1000, which encompasses important principles outlined in the
President's Pension Retirement Security Plan. These
principles were included in last year's pension reform bill
that passed the House with significant bipartisan support.
The Administration looks forward to working with Congress to
ensure the legislation moves quickly through the process and
is consistent with the President's budget.
Like the President's plan, this bill would strengthen
workers' ability to manage their retirement funds by giving
them more freedom to diversify their investments and by
providing better information to workers through improved 401k
and pension plan statements. This bill will also permit
employers to provide their employees with access to
professional investment advice. H.R. 1000 would give American
workers access to information through expert advisers, who
assume full fiduciary responsibility for their counsel and
disclose relationships and fees associated with investment
alternatives, so that they can make better retirement
decisions. The bill also contains other important provisions
that will help strengthen America's private retirement
system.
The Administration will oppose legislation that discourages
employers from sponsoring and making contributions to
retirement plans for American workers and their families.
Pay-As-You-Go Scoring
The Budget Enforcement Act's pay-as-you-go requirements and
discretionary spending caps expired on September 30, 2002.
The Administration supports the extension of these budget
enforcement mechanisms in a manner that ensures fiscal
discipline and is consistent with the President's budget.
OMB's cost estimate of this bill currently is under
development.
Mr. CONYERS. Mr. Speaker, with the passage of the Fairness Act of
2003, the Republicans are once again placing corporate special
interests ahead of the public interest. This bill is heavily stacked in
favor of corporations and corporate executives with few, if any,
protections for the average working American. It does little, if
anything, to insure that working Americans retain the hard fought
pension plans that they have worked so hard to attain. Alternatively,
the Democratic pension plan would help level the playing field by
subjecting executive pensions to the same pension rules
[[Page H4070]]
that apply to rank and file workers. The Democratic plan closes
loopholes that allow special executive pension plans, such as deferred
compensation plans, trusts and split dollar plans, to escape taxation
and to receive special protection against creditors. Further, the
Democratic plan would also apply the same uniform and fair vesting and
contribution limits to executives that apply to ranks and file
employees.
Instead of protecting pensions, the Republican plan increases the
vulnerability of the hard earned retirement income of workers by
allowing investment advice which is tainted by conflicts of interest.
Under the Republican plan, provisions currently in place under ERISA
would be undermined by allowing employers to give biased, self-
interested advice to workers concerning the investment of plan assets,
as long as the investment advisor discloses a conflict of interest.
The Democratic plan is truly a plan to help average workers, it
protects older workers' pensions when a company converts from a
traditional pension plan to a cash pension plan. Under the GOP plan,
million of workers, especially senior workers, could see their pensions
cut by as much as 50 percent. The Democratic plans also ends secret
pensions schemes, whereas, the Republican plan locks rank and file
workers into company stocks for long periods of time without any legal
options. Additionally, the Democratic Plan seeks to limit pension
abuses by preventing firms from deducting more than 1 million in
executive performance-based compensation if it is obtained through
manipulation of the company's pension funds, by imposing an excise tax
on executive golden parachutes when they leave behind companies with
plummeting shareholder values or which are facing bankruptcy
proceedings.
Mr. FRELINGHUYSEN. Mr. Speaker, today I rise in strong support of
H.R. 1000, the Pension Security Act of 2003. I believe the time to
update Federal pension law is now! I also believe this legislation
could have prevented the tragic financial consequences of the Enron
collapse, which is why I strongly support H.R. 1000.
This legislation will help ensure the safety of the American workers'
pension fund savings through the following ways:
First, this legislation holds businesses to a higher standard of
accountability. Specifically, it clarifies that company pension
officials who do not act in the best interests of pension
beneficiaries, can be held liable for breaching their fiduciary duty.
Thus, this legislation ensures that America's CEOs, do not get rich at
the expense of the American workers' pension fund savings.
Second, this legislation empowers the American worker by protecting
employees against future abuses by giving them more control over their
investments. Specifically, the American worker is empowered with the
right to diversify employer stock contributions and the option to sell
company stock three years after receiving it.
Third, this legislation also empowers the American worker by
increasing their access to quality investment advice and by providing
them with more information about their pensions. Specifically, it
encourages employers to make investment advice available to their
employees; it allows workers to use a tax-free payroll deduction to
purchase investment advice on their own; and it requires companies to
give quarterly reports that include account information, as well as
their rights to diversify.
Notably, the Democrat's alternative for pension reform does not
address the current shortcomings in the pension system. Instead, the
Democratic alternative increases mandates and regulations that will
result in increased costs, which will ultimately discourage employers
from offering retirement plans altogether.
Finally, this legislation will help restore confidence in America's
pension fund system. A generation of American workers have enjoyed a
safe and secure retirement. By passing H.R. 1000 today, we will ensure
future generations enjoy the same safe and secure retirement.
Mr. ETHERIDGE. Mr. Speaker, I rise in opposition to H.R. 1000, the
so-called Pension Security Act, and in support of the Andrews
Substitute.
Once again, this body finds itself considering a recycled bill that
is harmful to America's working families. More than one year ago, this
House passed seriously flawed legislation similar to H.R. 1000.
Fortunately, that bill was wisely stopped in the Senate. But instead of
taking time to write a bipartisan bill to protect worker pensions, here
we are again debating another terrible bill.
As I did during the 107th Congress, I will vote against this
misguided bill because it does not protect employee pensions, fails to
prevent future corporate scandals, and creates a new loophole in the
law jeopardizing employee savings.
Among the most egregious portions of this bill are the provisions
relating to retirement investment advice. Under current law, employees
are allowed to receive independent, comprehensive investment
information as part of their employee benefits package. H.R. 1000 would
overturn current law to allow employers to offer conflicted investment
advice to their workers. While the sponsors of this legislation argue
these provisions would help prevent future corporate scandals like
Enron and Global Crossing, nothing could be farther from the truth.
Financial institutions should not be able to give out investment advice
if they stand to make a profit as a result of that advice.
Instead I am voting for the Andrews Substitute Amendment, otherwise
known as the Pension Fairness Act. This important amendment requires
executive pensions to be subject to the same pension rules that apply
to rank-and-file workers, protects older workers' pensions when their
companies convert to cash balance plans, and stops secret pensions
schemes that allow corporate fat cats to get rich while workers suffer
after their companies goes broke.
In this era, when people are saving less, we must ensure that the
pensions of our working families are protected. H.R. 1000 will not
achieve that goal, Mr. Speaker. In fact, it will make matters worse.
I urge all my colleagues to oppose H.R. 1000, and to support the
Andrews Subsitute.
Mr. BACA. Mr. Speaker, I rise in strong opposition of H.R. 1000, the
so-called Pension Fairness Act.
Congress adjourned last year after failing to address the faults in
our pension system. A pension system that has been laid bare by
catastrophic losses for thousands of workers, the tumbling stock
market, and corporate abuse of retirement plans. We are now setting
ourselves up to make the system even worse with this bill.
Proponents of this bill claim that the bill will prevent future
Enron's and increase retirement security for workers. That is
completely false. Despite the recycled and tired rhetoric, the bill
would do nothing to prevent the kind of devastating retirement losses
suffered by millions of employees and retirees at Enron, WorldCom, and
other companies. In fact, it would weaken and even eliminate existing
safeguards.
To make matters worse, this bill combined with the Treasury
Department's decision to all conversions from traditional pension plans
to cash balance plans, is a deadly two-hit combination against our
Nation's workers. I thought the purpose of this bill was to benefit
workers, not to leave them poor and with a black eye.
Evidence shows that older workers who are employed at companies that
have made this switch have seen their retirement nest eggs shrink by 20
percent to 50 percent. In other words, these regulations would
undermine a relatively safe retirement benefit and add to households'
retirement security woes.
This proposal does not address the three primary problems with
today's pension system: lack of coverage for half the workforce,
inadequate pension income for low- and middle-income workers, and an
unacceptable risk of pension losses for all workers. Clear strategies
exist to address each of these issues, but the Pension Security Act of
2003 and the proposed regulatory changes miss the mark entirely.
Only half of America's workers have pension coverage at any given
time. Just 50 percent of private sector workers had pension coverage in
2000, a level that has increased only slightly since 1970.
In 2000, 73 percent of our Nation's highest earners had pension
coverage, compared with just 18 percent of our Nation's lowest earners.
Hispanic workers are covered at a startlingly low rate of 29 percent,
compared with 43 percent and 55 percent for their African American and
white counterparts, respectively.
Like pension coverage, levels of retirement wealth depend on several
factors; however, our retirement income level is still primarily
determined by race, income, and gender. Hispanic retirees are far more
likely to experience poverty in retirement. As of 1998, a startling 43
percent of Hispanic workers age 47-64 could expect retirement incomes
below the poverty line, compared with 13 percent of whites.
The Federal Government spent over $89 billion in 2000 alone, to
subsidize employee pensions. Under current law, employers that receive
these Federal subsidies must pass a ``non-discrimination test,'' under
which firms can exclude some lower-income employees from coverage, but
not all.
But H.R. 1000 will effectively destroy this already thin layer of
protection for low-income workers.
Under the guise of the now-familiar refrain of ``increased
flexibility,'' a goal that has meant more money for employers and less
money and fewer rights for workers, the House bill would allow
companies to exclude more of their employees from pension coverage and
avoid the test for fairness.
This bill is not flawed; it is deliberate. Deliberate in its
intention to destroy what few pension protections exist for workers.
[[Page H4071]]
H.R. 1000 deliberately intends, like the tax cut, to deceive the
working class by claiming to work in their favor, but instead shift
those benefits to the wealthy.
I urge my colleagues to defeat this thinly veiled effort to legalize
Enron pension scams.
I urge my colleagues to stand up for workers and vote ``no'' on this
bill.
Mr. STARK. Mr. Speaker, I rise today to oppose H.R. 1000, the Pension
Security Act of 2003. This bill does protect pensions--for CEOs and
business owners. This bill doesn't do a thing to secure pensions for
the rank and file worker. The bill actually hurts the average worker by
weakening the non-discrimination rules that require employers to give
the rank and file adequate pensions if they give lucrative pensions to
those at the top. H.R. 1000 further hurts the average worker by eroding
the conflicted advice rules which currently prohibits consultants from
profiting from the investments they recommend to employees. It seems
that my Republican colleagues have selective memory when it comes to
the scandals of Enron and other corporations who led their employees
into retirement pension devastation just last year. The bill before us
today does nothing more than promote the behaviors of the greedy
corporate executives at the peril of the average workers' retirement
savings.
Current rules, enacted in 1986 to protect the average worker from
getting left out of the tax-preferred retirement vehicles used by the
top brass, require the pension plans to meet very specific tests for
the balance between benefits for lower paid and higher paid workers.
Today's bill seeks to delegate a significant amount of discretion to
the Treasury Department concerning these so-called ``non-
discrimination'' rules governing pension plans. Treasury would have the
flexibility to permit pension plans to apply a ``facts and
circumstances'' test to the benefits provided under the plan. This
could result in disproportionately larger benefits going to the highly-
paid employees compared to the benefits for the rank and file workers.
At a time when 50 percent of the workforce doesn't even have a pension
and the other 50 percent are trying to hold on to what they might have
after last year's corporate debacles, Congress ought not to put
retirement pensions into further jeopardy.
This bill goes a step further to hurt the rank and file workers'
pension plans by allowing ``conflicted advice.'' Wall Street recently
agreed to pay about $2 billion in penalties for the money it made off
of investors by giving conflicted advice--advising investors to invest
in the same companies from which they were receiving consulting
and initial public offering fees. The SEC is currently trying to devise
ways to keep investment advice separate from consulting dealings in
order to protect investors. Now, the Republican party wants to take
anything we learned from Enron about what not to do with pensions and
turn it on its head. This is class warfare because the Republican party
has made it class warfare. They aren't interested in helping the
average worker who saves a lifetime in order to achieve an adequate
secure retirement. The Republicans in Congress and in the White House
would rather pass legislation to help their wealthy Wall Street
campaign contributors.
The Democratic alternative is a sound bill that would truly protect
all workers' pensions, not just those of the CEOs. The Democratic bill
would require employers to provide conflict-free investment advice to
employees. Our bill would also provide for worker representation on
401(k) boards of trustees. Who better to protect workers' pensions than
a worker representative? Finally, the Democratic substitute bill would
close the loopholes that permit companies to protect millions of
dollars in pension benefits for a few top executives while the
retirement savings of rank and file workers are lost.
The Democratic bill brings parity to the pensions of the rank and
file worker by requiring executive pensions to be subject to the same
pension rules that apply to rank-and-file workers. It would close
loopholes that allow special executive pension plans (such as deferred
compensation plans, trusts and split dollar plans) to escape taxation,
to receive special protection against creditors, and to end-run pension
laws that require wide employee participation (of both high and low
wage workers) at the company. It would also apply to executives the
same uniform and fair vesting and contribution limits that apply to
rank and file employees. This bill fulfills President Bush's promise to
provide equitable treatment to the captain and the sailor.
I urge my colleagues to put a stop to raids on retirement pensions by
voting ``no'' on H.R. 1000 and ``yes'' on the Democratic substitute
bill.
Mr. CASTLE. Mr. Speaker, I rise today in strong support of H.R. 1000,
the ``Pension Security Act.'' I am proud to be a cosponsor of this
measure that passed the House with bipartisan support in the 107th
Congress and I thank Chairman Boehner and Subcommittee Chairman Sam
Johnson for bringing this matter to the floor again. I am hopeful the
measure will again pass as it provides important protections to working
Americans with employer-based retirement plans.
Sadly, we have watched many Americans see their retirement savings
plummet. Congress took a much needed step in enacting the Sarbanes-
Oxley Act and this legislation further strengthens those reforms. This
legislation gives workers greater ability to manage and expand their
retirement savings.
Congressional hearings in 2002 established that inadequate worker
access to investment advice contributed significantly to retirement
security losses by employees at Enron. This bill provides greater
resources to American workers by allowing employers to provide their
workers with high-quality, professional investment advice as an
employee benefit, while maintaining safeguards to protect the interests
of workers and investors. This measure requires companies to give
workers quarterly benefit statements that include information about
accounts, including the value of their assets, their rights to
diversify, and the importance of maintaining a diversified portfolio.
The ``Pension Security Act'' would give workers unprecedented new
retirement security protections and would have helped to protect
thousands of Enron and WorldCom employees who lost their savings during
the company's collapse. Workers must be fully protected and fully
prepared with the tools they need to protect and enhance their
retirement savings. The ``Pension Security Act'' accomplishes these
goals and I urge my colleagues to join me in supporting this important
legislation.
Ms. WATERS. Mr. Speaker, we find ourselves with yet another
Republican bill that does not deliver what its title promises. H.R.
1000 is not a true pension security bill. We can and must do better
than this bill.
Since 2001, our country has experienced what has seemed to be almost
weekly bankruptcies of some of the Nation's largest companies. Many of
these bankruptcies were accompanied by corporate mismanagement and, in
some cases, looting of employee pensions.
Enron, Tyco, Global Crossing--and many other companies are household
names because of their executives' disgraceful actions. Some of the
largest airlines have provided golden parachutes for their senior
executives, even as their pilots, stewards and maintenance workers
accept pay and benefit cuts to help these companies survive.
The President and his party have been talking tough about the need to
protect workers' pensions and to combat corporate misdeeds. The
President has been trying to make it sound as if he wanted to pursue
tough reforms to strengthen employee protections and protect pensions.
Yet, he is supporting this inadequate bill. A bill where, once again,
the Republicans have sided with the worst CEOs and the special
interests, rather than with our country's workers.
Witness, for example, how this bill locks employees into company
stock for excessively long periods of time, putting at risk their
retirement savings while company executives are allowed to sell off
their stocks at any time. Enron's employees were forced to watch their
retirement savings disappear as the company's stock went from a high of
$80 to just a few pennies. They were not allowed to sell their stock.
Enron executives, on the other hand, sold their holdings as they
pleased. Enron's CEO, Kenneth Lay, made almost $50 million; and the
Chief Financial Officer made $21 million last year. The company managed
to pay out $744 million in salaries, bonuses and stock grants to the
company's 140 senior officers just before it collapsed.
The same thing happened with Global Crossing. As the company mislead
the public and its employees about its finances, many of the Crossing
officials sold their stocks and made millions of dollars. Gary Winnick,
the company's Chairman of the Board, sold about 9 percent of his stake
in the company for $123.5 million. Each one of his deputies made out
just as well. Meanwhile, the company laid off thousands of people.
Those Global Crossing employees who managed to survive these job cuts,
saw their retirement savings vanish.
Mr. Speaker, with all its many shortcomings, the greatest problem
with this bill is that it repeals the law that prohibits employers from
offering ``conflicted advice.'' It will now be legal for companies to
offer financial advice even though it might be tainted with conflicts
of interest. If Congress were to take any steps in this area, we should
be strengthening provisions to protect employees and their pensions
from such conflicted advice, not eliminating laws that prohibit them.
This legislation is an insult to the millions of people who lost
billions in retirement savings while they watched their company leaders
continue to enrich themselves. We should not pass this bill.
Ms. MAJETTE. Mr. Speaker, in our rush to pass this legislation, we
have failed to consider the needs of the American worker today.
[[Page H4072]]
I would like to note my thoughts about this legislation, including what
it does and also, importantly, what it does not do. This bill includes
a number of provisions that are necessary, including some that are long
overdue, but fails to consider some other needs that should be
addressed.
For too long, investors have been putting their hard-earned money
into investments, including the stock market, without understanding all
of the benefits of diversification into different investment options.
This bill will allow employers to provide workers with investment
advice concerning the divestiture of their plan assets. I am very
pleased that this bill also requires investment advisors to disclose
any conflicts of interest. I know that plan fiduciaries take their
obligations to provide good advice seriously and workers should expect
from these advisors no less than the best, most honest financial advice
possible. It is my hope that workers, armed with competent,
professional investment advice, will translate this knowledge into
secure retirement plans that meet their individual needs. I am pleased
that workers will no longer be making investment decisions without
receiving this financial education.
For too long, workers have been forced by some companies to hold the
majority of their assets in their own company's stock. This requirement
resulted in many workers holding all of their eggs in one basket and,
for many, this requirement resulted in their losing all of their
retirement savings (along with their jobs) when companies went
bankrupt. This law was outdated and overly-restrictive. I am excited
that this bill prohibits employers from forcing workers to keep savings
in their own company's stock for more than three years. Employees must
be given the opportunity to diversify their investments and, where
necessary, rescue their savings when the company's fortunes turn bad.
Unfortunately, these changes to pension law fall short of the broad
reform needed to adequately protect workers' retirement savings.
Workers specifically need legislation today that will protect their
pensions when a company converts to a cash balance plan. Many companies
are considering adopting these plans without maintaining the benefits
upon which many senior workers have planned their retirements. For a
company to strip away promised benefits by changing the rules just
before workers retire, is unconscionable; moreover, it should be
criminal. This bill's failure to address the serious concerns many
workers have about their pensions is simply unacceptable.
Furthermore, this body's continued unwillingness to allow sufficient
debate on significant issues is a practice that must end--and end soon.
By disallowing debate on important amendments, we are failing to live
up to our constituents' expectations. Our constituents sent us to
Washington to discuss the nation's difficult issues and to debate these
issues on their merits. Today, the important issue of whether we would
extend unemployment benefits, currently set to expire at the end of the
month, was not discussed. When we fail to allow discussion of important
issues we are failing the American people.
I vote in opposition of the ``pension security act'' for its failure
to address the pressing needs of the American people today. I earnestly
hope that consideration of future bills will include substantial debate
on all of the issues that warrant attention, not just those that are
easy to talk about.
Mr. KIND. Mr. Speaker, the Education and Workforce Committee, of
which I am a member, recently passed H.R. 1000, legislation to protect
workers hard earned pensions as well as expanding their retirement
savings. While the bill will not necessarily end all corruption and
abuse in our Nation's pension system, I feel that it is a step in the
right direction.
As we all know over the past year, thousands of Enron, Global
Crossing and WorldCom 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. These recent scandals 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 then $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 America'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 seeks
parity of benefits for executives and rank-in-file workers by closing a
current loophole that gives special treatment for executive pension
plans. In addition, the substitute requires that executive compensation
packages, including pensions, are approved by the board of directors
and that shareholders and employees are notified of any new benefits
awarded to executives 100 days before their adoption.
While I would prefer that the legislation on the floor today contain
some of the provisions included in the Miller substitute, H.R. 1000
ultimately provides employees more control and decisionmaking 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 H.R. 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, makes certain that
employers assume full fiduciary responsibility during ``lockdown''
periods; and 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
recent corporate scandals exposed weaknesses in our pension laws that
could jeopardize many workers retirement savings.
Mr. Speaker, hardworking Americans should not lose all of their
retirement savings due to the wrong-doing of corporate executives and
loopholes in our pension laws. This 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. EVERETT. Mr. Speaker, I rise in support of this legislation to
improve pension security for American workers. However, I come to the
floor today to express my serious concerns about the actions of some
corporate decision makers, which has resulted in the sometimes criminal
raiding and robbing of pension funds. I fear that we have not seen the
last of the corporate malfeasance exhibited by the Enrons, Worldcoms,
Global Crossings and HealthSouths. It is clear to me that consumer
confidence in the American economy will not improve until corporate
governance in America changes.
I am concerned about what appears to be a growing number of
executives in America who do not feel they should be accountable to
their shareholders or employees. Moreover, some of these same corporate
executives have been walking the halls of Congress looking for a
taxpayer bailout for their failing industries. The sad fact is some
continue to demand and receive outrageous salaries and perks while
their companies flounder and, in some cases, face civil and criminal
investigations for fraud and corruption.
One of the most disturbing facts of these misguided or criminal
actions by corporate leaders is that their employees see their hard-
earned profit sharing plans disappear. The corporate ``rock star''
rides off with his guaranteed benefits package intact, while the
workers and shareholders take it on the chin. Their investments and
savings, tied to corporate growth and built up over the years, have
vanished. Plans of retirement are halted, either permanently or
indefinitely; and many workers find themselves forced to work in their
golden years.
Mr. Speaker, this legislation will do much to improve the security of
private pension funds, but until the actions of corporate boardrooms
reflect a new sense of responsibility and accountability to their
employees and investors, consumer confidence in our economy will be a
long time in coming.
Mr. DAVIS of Illinois. Mr. Speaker, I rise today in opposition to
H.R. 1000, the ``Pension Security Act.'' Last year, our country was in
disbelief to witness the scandals that occurred in corporate America.
We all heard the countless stories of workers who lost everything--from
their jobs, their homes to their retirement savings. And then we heard
the stories of the executives and the CEOs of the corporations who were
still living in their million dollar homes with no change to their
luxurious lifestyle.
Not only did America lose confidence in corporations or begin to
question their employer, America began to lose confidence in the
market, and our economy has paid the price. As Representatives of the
American workers, we must ensure that this does not occur again. We
must ensure that all of our workers are protected, especially our older
workers. Older workers should not be penalized for their dedication and
years of hard work. We also need to ensure that workers be active
participants on their pension boards, receive independent investment
advice, and should not have a significant wait period to diversify
their own money.
[[Page H4073]]
We all know the Enron story, the Tyco story, the WorldCom story. And
America knows of these stories, too. Let's show America that we are
putting an end to these sagas! Let's stand strong in support of
workers, in obtaining jobs for workers and putting in safeguards that
would prevent our workers pensions from disappearing.
Mr. SAM JACKSON of Texas. Mr. Speaker, I yield back the balance of my
time.
The SPEAKER pro tempore. All time for debate on the bill has expired.
{time} 1430
Amendment in the Nature of a Substitute Offered by Mr. Andrews
Mr. ANDREWS. Mr. Speaker, as the designee of the ranking member, I
offer an amendment in the nature of a substitute.
The SPEAKER pro tempore (Mr. Linder). 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.
Andrews:
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 ``Pension
Fairness Act of 2003''.
(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. Report to participants and beneficiaries of trades in
employer securities.
Sec. 104. Enforcement of information and disclosure requirements.
TITLE II--FREEDOM TO MAKE INVESTMENT DECISIONS WITH PLAN ASSETS.
Sec. 201. Amendments to the Internal Revenue Code of 1986.
Sec. 202. Amendments to the Employee Retirement Income Security Act of
1974.
Sec. 203. Recommendations relating to non-publicly traded stock.
Sec. 204. Effective date of title.
TITLE III--EMPLOYEE REPRESENTATION
Sec. 301. Participation of participants in trusteeship of individual
account plans.
TITLE IV--INCREASED ACCOUNTABILITY
Sec. 401. Bonding or insurance adequate to protect interest of
participants and beneficiaries.
Sec. 402. Liability for breach of fiduciary duty.
Sec. 403. Preservation of rights or claims.
Sec. 404. Office of pension participant advocacy.
Sec. 405. Study regarding insurance system for individual account
plans.
Sec. 406. Excise tax on failure of pension plans to provide notice of
transaction restriction periods.
TITLE V--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES
Sec. 501. Independent investment advice.
Sec. 502. Tax treatment of qualified retirement planning services.
TITLE VI--PARITY IN EMPLOYEE BENEFITS
Sec. 601. Inclusion in gross income of funded deferred compensation of
corporate insiders if corporation funds defined
contribution plan with employer stock.
Sec. 602. Performance-based compensation exception to $1,000,000
limitation on deductible compensation not to apply in
certain cases.
TITLE VII--PROTECTION OF RETIREMENT EXPECTATIONS
Sec. 701. Protection of participants from conversions to hybrid defined
benefit plans.
TITLE VIII--TREATMENT OF CORPORATE INSIDERS
Sec. 801. Special rules for executive perks and retirement benefits.
Sec. 802. Golden parachute excise tax to apply to deferred compensation
paid by corporation after major decline in stock value or
corporation declares bankruptcy.
Sec. 803. Adequate disclosure regarding executive compensation
packages.
TITLE IX--MISCELLANEOUS PROVISIONS
Sec. 901. Corporate deduction for reinvested ESOP dividends subject to
deductible limits.
Sec. 902. Credit for elective deferrals and IRA contributions by
certain individuals made permanent (saver's tax credit).
Sec. 903. Authority to rescind transfers to plans made for the benefit
of highly compensated employees.
TITLE X--GENERAL PROVISIONS
Sec. 1001. General effective date.
Sec. 1002. 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) in the case of an individual account plan, 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 assets 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) In general.--Chapter 43 of the Internal Revenue Code of
1986 (relating to qualified
[[Page H4074]]
pension, etc., plans) is amended by adding at the end the
following new section:
``SEC. 4980G. FAILURE OF APPLICABLE PLANS TO PROVIDE NOTICE
OF GENERALLY ACCEPTED INVESTMENT PRINCIPLES.
``(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 for each day in the noncompliance
period with respect to such failure.
``(c) Limitations on Amount of Tax.--
``(1) Tax not to apply to failures corrected within 30
days.--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) during the 30-day period beginning on 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) and paragraph (1) is
not otherwise applicable, 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) Notice of Generally Accepted Investment Principles.--
``(1) In general.--The plan administrator of an applicable
pension plan shall provide notice of generally accepted
investment principles, including principles of risk
management and diversification, to each applicable
individual.
``(2) Notice.--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 rules or other
guidance adopted by the Secretary) to allow applicable
individuals to understand generally accepted investment
principles, including principles of risk management and
diversification.
``(3) Timing of notice.--The notice required by paragraph
(1) shall be provided upon enrollment of the applicable
individual in such plan and at least once per plan year
thereafter.
``(4) Form and manner of notice.--The notice required by
paragraph (1) 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 with respect to an applicable pension
plan--
``(A) any participant in the applicable pension plan,
``(B) any beneficiary who is an alternate payee (within the
meaning of section 414(p)(8)) under an applicable qualified
domestic relations order (within the meaning of section
414(p)(1)(A)), and
``(C) any beneficiary of a deceased participant or
alternate payee described in subparagraph (A) or (B), as the
case may be,
who has an accrued benefit under the plan and who is entitled
to direct the investment (or hypothetical investment) of some
or all of such accrued benefit.
``(2) Applicable pension plan.--The term `applicable
pension plan' means--
``(A) a plan described in section 219(g)(5)(A) (other than
in clause (iii) thereof), and
``(B) 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.''.
(1) 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 applicable plans to provide notice of
generally accepted investment principles.''.
(3) Effective date.--
(A) In general.--The amendments made by this subsection
shall take effect 60 days after the adoption of rules or
other guidance to carry out the amendments made by this
subsection, which shall include a model notice of generally
accepted investment principles, including principles of risk
management and diversification.
(B) Model investment principles.--For purposes of
subparagraph (A), not later than 120 days after the date of
the enactment of this Act, the Secretary of the Treasury, in
consultation with the Secretary of Labor, shall issue rules
or other guidance and a model notice which meets the
requirements of section 4980G of the Internal Revenue Code of
1986 (as added by this section).
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 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. 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
[[Page H4075]]
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.
``(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 after 90
days after the date of the enactment of this Act.
SEC. 104. 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(e)(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--FREEDOM TO MAKE INVESTMENT DECISIONS WITH PLAN ASSETS
SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.
(a) In General.--Subsection (a) of section 401 of the
Internal Revenue Code of 1986 (relating to requirements for
qualification) is amended by adding at the end the following
new paragraph:
``(35) Diversification requirements for defined
contribution plans that hold employer securities.--
``(A) In general.--In the case of a defined contribution
plan described in this subsection that includes a trust which
is exempt from tax under section 501(a) and which holds
employer securities that are readily tradable on an
established securities market, such trust shall not
constitute a qualified trust under this section unless such
plan meets the requirements of subparagraphs (B) and (C).
``(B) Elective deferrals invested in employer securities.--
``(i) In general.--In the case of the portion of the
account attributable to 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 portion of such
securities in the individual's account and to reinvest an
equivalent amount in other investment options which meet the
requirements of subparagraph (D). The preceding sentence
shall apply to the extent that the amount attributable to
reinvested portion exceeds the amount to which a prior
election under this subparagraph or paragraph (28) applies.
``(ii) Applicable individual.--For purposes of this
subparagraph, the term `applicable individual' means--
``(I) any participant in the plan,
``(II) any beneficiary who is an alternate payee (within
the meaning of section 414(p)(8)) under an applicable
qualified domestic relations order (within the meaning of
section 414(p)(1)(A)), and
``(III) any beneficiary of a deceased participant or
alternate payee.
``(C) Other employer contributions.--
``(i) In general.--In the case of the portion of the
account attributable to employer contributions (other than
elective deferrals) which is invested in employer securities,
a plan meets the requirements of this subparagraph if each
qualified participant in the plan may elect to direct the
plan to divest any portion of such securities in the
participant's account and to reinvest an equivalent amount in
other investment options which meet the requirements of
subparagraph (E). The preceding sentence shall apply to the
extent that the amount attributable to such reinvested
portion exceeds the amount to which a prior election under
this subparagraph or paragraph (28) applies.
``(ii) Qualified participant.--For purposes of this
subparagraph, the term `qualified participant' means--
``(I) any participant in the plan who has completed at
least 3 years of service (as determined under section 411(a))
under the plan,
``(II) any beneficiary who, with respect to a participant
who met the service requirement in subclause (I), is an
alternate payee (within the meaning of section 414(p)(8))
under an applicable qualified domestic relations order
(within the meaning of section 414(p)(1)(A)), and
``(III) any beneficiary of a deceased participant who met
the service requirement in subclause (I) or alternate payee
described in subclause (II).
``(D) Investment options.--The requirements of this
subparagraph are met if the plan offers not less than 3
investment options (not inconsistent with regulations
prescribed by the Secretary) other than employer securities.
``(E) Preservation of authority of plan to limit
investment.--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.
``(E) Other definitions and rules.--For purposes of this
paragraph--
``(i) Employer securities.--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.
``(ii) Elective deferrals.--For purposes of this
subparagraph, the term `elective deferrals' means an employer
contribution described in section 402(g)(3)(A) and any
employee contribution.
``(iii) Election.--Elections under this paragraph shall be
not less frequently than quarterly.
``(iv) Employee stock ownership plan.--The term `employee
stock ownership plan' shall have the same meaning given to
such term by section 4975(e)(7).''.
(b) Conforming Amendments.--
(1) 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 with
respect to employer securities which are readily tradable on
an established securities market.''.
(2) Section 409(h)(7) of such Code is amended by inserting
at the end ``or subparagraph (B) or (C) of section
401(a)(35)''.
(3) Section 4975(e)(7) of such Code is amended by adding at
the end the following new sentence: ``A plan shall not fail
to be treated as an employee stock ownership plan merely
because the plan meets the requirements of section 401(a)(35)
(or provides greater diversification rights) or because
participants in such plan exercise diversification rights
under such section (or greater diversification rights
available under the plan).''.
(4) 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) and (C) are met.''.
(5) Section 407 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1107) is amended by adding at the end
the following new subsection:
``(g) Notwithstanding section 408(e) or any other provision
of this title, an individual account plan may not include
provisions that do not meet the requirements of section
401(a)(35)(B) of the Internal Revenue Code of 1986.''.
SEC. 202. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974.
(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) is amended by adding at
the end the following new subsection:
``(e) Diversification of Investment of Account Assets Held
Under Individual Account Plans.--
``(1) In general.--In the case of an individual account
plan under which a participant or beneficiary is permitted to
exercise control over assets in his or her account, with
respect to the assets in the account to which the participant
or beneficiary has a nonforfeitable right and which consist
of employer securities which are readily tradable on an
established securities market, the plan shall meet the
requirements of paragraphs (2), (3), (4), (5), (6), and (7).
``(2) Assets attributable to employee contributions.--In
the case of any portion of the account assets described in
paragraph (1) which is attributable to employee
contributions, there shall be no restrictions on the right of
a participant or beneficiary to allocate the assets in such
portion to any investment option provided under the plan.
``(3) Elective deferrals invested in employer securities.--
``(A) In general.--In the case of the portion of the
account assets described in paragraph (1) which is
attributable to elective deferrals and is invested in
employer securities, a plan meets the requirements of this
paragraph if each applicable individual in such plan may
elect to direct the plan to divest any portion of such
securities in the individual's account and to reinvest an
equivalent amount in other investment options which meet the
requirements of paragraph (5). The preceding sentence shall
apply to the extent that the amount attributable to such
[[Page H4076]]
reinvested portion exceeds the amount to which a prior
election under this paragraph or section 401(a)(28) of the
Internal Revenue Code of 1986 applies.
``(B) Applicable individual.--For purposes of this
paragraph, the term `applicable individual' means--
``(i) any participant in the plan,
``(ii) any beneficiary who is an alternate payee (within
the meaning of section 206(d)(3)(K)) under an applicable
qualified domestic relations order (within the meaning of
section 206(d)(3)(B)(i)), and
``(iii) any beneficiary of a deceased participant or
alternate payee.
``(4) Other employer contributions.--
``(A) In general.--In the case of the portion of the
account assets described in paragraph (1) which is
attributable employer contributions (other than elective
deferrals) and is invested in employer securities, a plan
meets the requirements of this paragraph if each qualified
participant in the plan may elect to direct the plan to
divest any portion of such securities in the participant's
account and to reinvest an equivalent amount in other
investment options which meet the requirements of paragraph
(6). The preceding sentence shall apply to the extent that
the amount attributable to such reinvested portion exceeds
the amount to which a prior election under this paragraph or
section 401(a)(28) of such Code applies.
``(B) Qualified participant.--For purposes of this
paragraph, the term `qualified participant' means--
``(i) any participant in the plan who has completed at
least 3 years of service (as determined under section 203(a))
under the plan,
``(ii) any beneficiary who, with respect to a participant
who met the service requirement in clause (i), is an
alternate payee (within the meaning of section 206(d)(3)(K))
under an applicable qualified domestic relations order
(within the meaning of section 206(d)(3)(B)(i)), and
``(iii) any beneficiary of a deceased participant who met
the service requirement in clause (i) or alternate payee
described in clause (ii).
``(5) Investment options.--The requirements of this
paragraph are met if, with respect to the account assets
described in paragraph (1), the plan offers not less than 3
investment options (not inconsistent with regulations
prescribed by the Secretary) other than employer securities.
``(6) Prompt compliance with directions to allocate
investments.--
``(A) In general.--Except as provided in subparagraph (B),
a plan meets the requirements of this paragraph with respect
to plan assets described in paragraph (1) if the plan
provides that, within 5 days after the date of any election
by a participant or beneficiary allocating any such assets 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.
``(7) 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 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.
``(8) 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.
``(9) Other definitions and rules.--For purposes of this
subsection--
``(A) Employer securities.--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.
``(B) Elective deferrals.--The term `elective deferrals'
means an employer contribution described in section
402(g)(3)(A) of such Code and any employee contribution.
``(C) Election.--Elections under this subsection shall be
not less frequently than quarterly.
``(D) 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 such Code.
SEC. 203. 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
title), 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. 204. EFFECTIVE DATE OF TITLE.
(a) In General.--Except as provided in subsection (b), the
amendments made by this title shall apply with respect to
plan years beginning after December 31, 2003.
(b) Exception.--The amendments made by this section shall
not apply to employer securities held by an employee stock
ownership plan which are not subject to section 401(a)(28) of
the Internal Revenue Code of 1986 by reason of section
1175(a)(2) of the Tax Reform Act of 1986 (100 Stat. 2519).
(c) Delayed Effective Date of 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, 2005.
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--INCREASED ACCOUNTABILITY
SEC. 401. 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. 402. LIABILITY FOR BREACH OF FIDUCIARY DUTY.
(a) Additional Equitable or Remedial Relief.--Section 409
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1109) is amended--
(1) by redesignating subsection (b) as subsection (c);
(2) in subsection (a), by striking ``, including removal of
such fiduciary''; and
(3) by inserting after subsection (a) the following new
subsection:
``(b) The equitable or remedial relief referred to in
subsection (a) may include (but is not limited to) a court
order removing the
[[Page H4077]]
fiduciary from the plan referred to in subsection (a) and a
court order prohibiting, conditionally or unconditionally,
and permanently or for such period of time as the court shall
determine, the fiduciary from serving--
``(1) as an administrator, fiduciary, officer, trustee,
custodian, counsel, agent, employee, or representative in any
capacity of any employee benefit plan,
``(2) as a consultant or adviser to an employee benefit
plan, including but not limited to any entity whose
activities are in whole or substantial part devoted to
providing goods or services to any employee benefit plan, or
``(3) in any capacity that involves decisionmaking
authority or custody or control of the moneys, funds, assets,
or property of any employee benefit plan.''.
(b) Liability for Participating In or Concealing Fiduciary
Breach in Connection with Individual Account Plans.--
(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 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) if provided to an individual account plan, shall
inure to the individual accounts of the affected participants
or beneficiaries, and
``(B) if provided 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)''.
(c) 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)''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to breaches occurring on or after
the date of the enactment of this Act.
SEC. 403. 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. 404. OFFICE OF PENSION PARTICIPANT ADVOCACY.
(a) In General.--Subtitle A of title III of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 3001 et
seq.) is amended by inserting after section 3004 the
following new section:
``office of pension participant advocacy
``Sec. 3005. (a) Establishment.--
``(1) In general.--There is established in the Department
of Labor an office to be known as the `Office of Pension
Participant Advocacy'.
``(2) Pension participant advocate.--The Office of Pension
Participant Advocacy shall be under the supervision and
direction of an official to be known as the `Pension
Participant Advocate' who shall--
``(A) have demonstrated experience in the area of pension
participant assistance, and
``(B) be selected by the Secretary after consultation with
pension participant advocacy organizations.
The Pension Participant Advocate shall report directly to the
Secretary and shall be entitled to compensation at the same
rate as the highest rate of basic pay established for the
Senior Executive Service under section 5382 of title 5,
United States Code.
``(b) Functions of Office.--It shall be the function of the
Office of Pension Participant Advocacy to--
``(1) evaluate the efforts of the Federal Government,
business, and financial, professional, retiree, labor,
women's, and other appropriate organizations in assisting and
protecting pension plan participants, including--
``(A) serving as a focal point for, and actively seeking
out, the receipt of information with respect to the policies
and activities of the Federal Government, business, and such
organizations which affect such participants,
``(B) identifying significant problems for pension plan
participants and the capabilities of the Federal Government,
business, and such organizations to address such problems,
and
``(C) developing proposals for changes in such policies and
activities to correct such problems, and communicating such
changes to the appropriate officials,
``(2) promote the expansion of pension plan coverage and
the receipt of promised benefits by increasing the awareness
of the general public of the value of pension plans and by
protecting the rights of pension plan participants,
including--
``(A) enlisting the cooperation of the public and private
sectors in disseminating information, and
``(B) forming private-public partnerships and other efforts
to assist pension plan participants in receiving their
benefits,
``(3) 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 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 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.
[[Page H4078]]
``(3) Reports to be submitted directly.--The report
required under paragraph (1) shall be provided directly to
the committees of Congress without any prior review or
comment by the Secretary or any other Federal officer or
employee.
``(d) Specific Powers.--
``(1) Receipt of information.--Subject to such
confidentiality requirements as may be appropriate, the
Secretary and other Federal officials shall, upon request,
provide such information (including plan documents) as may be
necessary to enable the Pension Participant Advocate to carry
out the Advocate's responsibilities under this section.
``(2) Appearances.--The Pension Participant Advocate may
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 in section
1 of such Act is amended by inserting after the item relating
to section 3004 the following new item:
``Sec. 3051. Office of Pension Participant Advocacy.''.
(c) Effective Date.--The amendment made by this section
shall take effect on January 1, 2004.
SEC. 405. 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.
SEC. 406. 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 for each day in the noncompliance
period with respect to such failure.
``(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) and paragraph (1) is
not otherwise applicable, 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) Notice of Transaction Restriction Periods.--
``(1) Duties of plan administrator.--In advance of the
commencement of any transaction restriction period with
respect to an applicable pension plan, the plan administrator
shall notify the plan participants and beneficiaries who are
affected by such action in accordance with this subsection.
``(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 transaction restriction period,
``(ii) an identification of the investments and other
rights affected,
``(iii) the expected beginning date and length of the
transaction restriction period,
``(iv) in the case of investments affected, a statement
that the applicable individual 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 transaction restriction
period, and
``(v) such other matters as the Secretary may require by
regulation.
``(B) Notice to participants and beneficiaries.--Except as
otherwise provided in this subsection, notices described in
paragraph (1) shall be furnished to all participants and
beneficiaries under the plan to whom the transaction
restriction period applies at least 30 days in advance of the
transaction restriction period.
``(C) Exception to 30-day notice requirement.--In any case
in which--
``(i) a deferral of the transaction restriction period
would violate the requirements of subparagraph (A) or (B) of
section 404(a)(1) of the Employee Retirement Income Security
Act of 1974, and a fiduciary (within the meaning of section
3(21) of such Act) of the plan reasonably so determines in
writing, 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, and
a fiduciary of the plan reasonably so determines in writing,
subparagraph (B) shall not apply, and the notice shall be
furnished to all participants and beneficiaries under the
plan to whom the transaction restriction period applies as
soon as reasonably possible under the circumstances unless
such a notice in advance of the termination of the
transaction restriction period 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) Notice to issuers of employer securities subject to
transaction restriction period.--In the case of any
transaction restriction period in connection with an
applicable pension plan, the plan administrator shall provide
timely notice of such transaction restriction period to the
issuer of any employer securities subject to such transaction
restriction period.
``(3) Exception for transaction restriction periods with
limited applicability.--In any case in which the transaction
restriction period applies 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 an applicable individual 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 such participants or
beneficiaries to whom the transaction restriction period
applies as soon as reasonably practicable.
``(4) Changes in length of transaction restriction
period.--If, following the furnishing of the notice pursuant
to this subsection, there is a change in the beginning date
or length of the transaction restriction period (specified in
such notice pursuant to paragraph (2)(A)(iii)), the
administrator shall provide affected participants and
beneficiaries notice of the change as soon as reasonably
practicable. In relation to the extended transaction
restriction period, 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 (v) 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.
``(7) Transaction restriction period.--For purposes of this
subsection--
``(A) In general.--The term `transaction restriction
period' means, in connection with an applicable pension plan,
any period for which any ability of participants or
beneficiaries under the plan, which is otherwise available
under the terms of such plan, to direct or diversify assets
credited to their accounts, to obtain loans from the plan, or
to
[[Page H4079]]
obtain distributions from the plan is temporarily suspended,
limited, or restricted, if such suspension, limitation, or
restriction is for any period of more than 3 consecutive
business days.
``(B) Exclusions.--The term `transaction restriction
period' does not include a 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),
``(ii) which is a change to the plan which provides for a
regularly scheduled suspension, limitation, or restriction
which is disclosed to participants or beneficiaries through
any summary of material modifications, any materials
describing specific investment alternatives under the plan,
or any changes thereto, or
``(iii) which applies to 1 or more individuals, each of
whom is the participant, an alternate payee (as defined in
section 414(p)(8)), or any other beneficiary pursuant to a
qualified domestic relations order (as defined in section
414(p)(1)).
``(8) Applicable individual.--For purposes of this section,
the term `applicable individual' means--
``(A) any participant in the applicable pension plan,
``(B) any beneficiary who is an alternate payee (within the
meaning of section 414(p)(8)) under an applicable qualified
domestic relations order (within the meaning of section
414(p)(1)(A)), and
``(C) any beneficiary of a deceased participant or
alternate payee,
who has an accrued benefit under the plan and who is entitled
to direct the investment (or hypothetical investment) of some
or all of such accrued benefit.
``(9) Applicable pension plan.--For purposes of this
subsection, the term `applicable pension plan' means--
``(A) a plan described in section 219(g)(5)(A) (other than
in clause (iii) thereof), and
``(B) 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.''.
(b) 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.''.
(c) Effective Date and Related Rules.--
(1) Effective date.--The amendments made by this section
shall take effect 180 days after the date of the enactment of
this Act. Good faith compliance with the requirements of such
amendments in advance of the issuance of applicable
regulations thereunder shall be treated as compliance with
such provisions.
(2) Issuance of initial guidance and model notice.--The
Secretary of the Treasury shall, in consultation with the
Secretary of Labor, issue initial guidance and a model notice
pursuant to section 4980H(e)(6) of the Internal Revenue Code
of 1986 (as added by this section) not later than January 1,
2005. 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
section.
(3) Plan amendments.--If any amendment made by this section
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 of this section,
if--
(A) during the period after such amendment made by this
section takes effect and before such first plan year, the
plan is operated in good faith compliance with the
requirements of such amendment made by this section, and
(B) such plan amendment applies retroactively to the period
after such amendment made by this section takes effect and
before such first plan year.
TITLE V--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES
SEC. 501. 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,
``(II) such adviser is a named fiduciary under the plan in
connection with the provision of such advice, and
``(III) in the provision of the advice, such adviser is not
conflicted in connection with the provision of the advice, in
accordance with subparagraph (C).
``(C) A qualified fiduciary adviser is not conflicted in
the provision of investment advice if, with respect to any
product taken into account in determining the asset
allocation with respect to which such advice is provided--
``(i) the adviser has no material interest in such product,
or
``(ii) the adviser discloses any material interest the
adviser has in such product to the recipient of the advice
and refers the recipient to an alternative qualified
fiduciary adviser made available by the plan under
subparagraph (B)(i) who has no material interest in any
product taken into account in the recommended asset
allocation.
``(D) 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 employer (other than such
person's relationship with the employer in the capacity of a
qualified fiduciary adviser),
``(III) meets the independence requirements of clause (ii)
in connection with investment advice provided by such person
pursuant to services rendered pursuant to clause (i),
``(IV) meets the qualifications of clause (iii), and
``(V) meets the additional requirements of clause (iv).
``(ii) A person meets the independence requirements of this
clause if--
``(I) the amount of compensation payable to any entity in
connection with the provision of the advice is not dependent
on any particular product with respect to which the advice is
rendered or the value of any such product,
``(II) no recordkeeping is maintained by such person, the
plan, the plan sponsor, or any other fiduciary with respect
to the plan with respect to which products are recommended by
such person,
``(III) such person has no material interest in, and no
material affiliation or contractual relationship with any
third party having a material interest in, any other person
whose analysis, with respect to any security or other
property with respect to which the advice is being provided,
is employed in developing recommendations included in such
advice, and
``(IV) the plan provides for prompt disclosure of material
interests and for the services of alternative qualified
fiduciary advisers, sufficient to meet the requirements of
subparagraph (C).
``(iii) 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.
``(iv) 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 subparagraph shall not be construed to exempt any
fiduciary from liability for any violation of this section''.
SEC. 502. TAX 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
[[Page H4080]]
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,
2003.
TITLE VI--PARITY IN EMPLOYEE BENEFITS
SEC. 601. 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.''
(c) Effective Date.--The amendments made by this section
shall apply to amounts deferred after the date of the
enactment of this Act.
SEC. 602. PERFORMANCE-BASED COMPENSATION EXCEPTION TO
$1,000,000 LIMITATION ON DEDUCTIBLE
COMPENSATION NOT TO APPLY IN CERTAIN CASES.
(a) In General.--Paragraph (4) of section 162(m) of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subparagraph:
``(G) Certain factors not permitted to be taken into
account in determining whether performance goals are met.--
Subparagraph (C) shall not apply if, in determining whether
the performance goals are met, any of the following are taken
into account:
``(i) Cost savings as a result of changes to any qualified
employer plan (as defined in section 4972(d)).
``(ii) Excess assets of such a plan or earnings thereon.
``(iii) Any excess of the amount assumed to be the return
on the assets of such a plan over the actual return on such
assets.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
TITLE VII--PROTECTION OF RETIREMENT EXPECTATIONS
SEC. 701. PROTECTION OF PARTICIPANTS FROM CONVERSIONS TO
HYBRID DEFINED BENEFIT PLANS.
(a) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) Election to maintain rate of accrual in effect before
plan amendment.--Section 204(b)(1) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1054(b)(1)) is amended
by adding at the end the following new subparagraph:
``(I)(i) Notwithstanding the preceding subparagraphs, in
the case of a plan amendment to a defined benefit plan--
``(I) which has the effect of converting the plan to a plan
under which the accrued benefit is expressed to participants
and beneficiaries as an amount other than an annual benefit
commencing at normal retirement age (or which has a similar
effect as determined under regulations issued under clause
(iii)), and
``(II) which has the effect of reducing the rate of future
benefit accrual of 1 or more participants,
such plan shall be treated as not satisfying the requirements
of this paragraph unless such plan meets the requirements of
clause (ii).
``(ii) A plan meets the requirements of this clause if the
plan provides each participant who has attained 10 years of
service (as determined under section 203) under the plan at
the time such amendment takes effect with--
``(I) notice of the plan amendment indicating that it has
such effect, including a comparison of the present and
projected values of the accrued benefit determined both with
and without regard to the plan amendment, and
``(II) an election, on the date of the conversion, to
either receive benefits under the terms of the plan as in
effect on or after the effective date of such plan amendment
or to receive benefits under the terms of the plan as in
effect immediately before the effective date of such plan
amendment (taking into account all benefit accruals under
such terms since such date).
``(iii) The Secretary shall issue regulations under which
any plan amendment which has an effect similar to the effect
described in clause (i)(I) shall be treated as a plan
amendment described in clause (i)(I). Such regulations may
provide that if a plan sponsor represents in communications
to participants and beneficiaries that a plan amendment has
an effect described in the preceding sentence, such plan
amendment shall be treated as a plan amendment described in
clause (i)(I).''.
(2) Early retirement subsidy taken into account for
purposes of opening balance of hybrid defined benefit plan.--
Section 204(g) of such Act (29 U.S.C. 1054(g)) is amended by
adding at the end the following new paragraph:
``(6) In the case of a plan amendment to a defined benefit
plan which has the effect of converting the plan to a plan
under which the accrued benefit is expressed to participants
and beneficiaries as an amount other than an annual benefit
commencing at normal retirement age (or a plan amendment to
such plan having a similar effect as determined under
regulations issued under subsection (b)(1)(I)(iii)), such
amendment shall not be treated as reducing accrued benefits
merely because under such amendment any early retirement
benefit or retirement-type subsidy (within the meaning of
paragraph (2)(A)) is taken into account for purposes of the
opening balance of the amended plan.''.
[[Page H4081]]
(3) Interest rate for determinations relating to plan
conversions.--Section 204(g) of such Act (as amended by
paragraph (2)) is amended further by adding at the end the
following new paragraph:
``(7) Interest rate.--For purposes of this paragraph--
``(A) in the case of an amendment described in paragraph
(1) which takes effect on or after the enactment of this
paragraph, the interest rate and mortality tables to be used
in determining the present value of the accrued benefit under
such amendment shall be the applicable rate and tables under
section 417(e)(3) of the Internal Revenue Code of 1986 as of
the date on which such amendment takes effect, and
``(B) in the case of amendments described in paragraph (1)
which took effect before the enactment of this paragraph, the
interest rate and mortality tables to be used in determining
the present value of the accrued benefit under such
amendments shall be the applicable rate and tables which were
in effect under section 412(l) of the Internal Revenue Code
of 1986 as of the effective date of the respective
amendment.''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Election to maintain rate of accrual in effect before
plan amendment.--Section 411(b)(1) of the Internal Revenue
Code of 1986 (relating to accrued benefit requirements for
defined benefit plans) is amended by adding at the end the
following new subparagraph:
``(I) Election to maintain rate of accrual in effect before
certain plan amendments.--
``(i) In general.--Notwithstanding the preceding
subparagraphs, in the case of a plan amendment to a defined
benefit plan--
``(I) which has the effect of converting the plan to a plan
under which the accrued benefit is expressed to participants
and beneficiaries as an amount other than an annual benefit
commencing at normal retirement age (or which has a similar
effect as determined under regulations issued under clause
(iii)), and
``(II) which has the effect of reducing the rate of future
benefit accrual of 1 or more participants,
such plan shall be treated as not satisfying the requirements
of this paragraph unless such plan meets the requirements of
clause (ii).
``(ii) Requirements.--A plan meets the requirements of this
clause if the plan provides each participant who has attained
10 years of service (as determined under section 203) under
the plan at the time such amendment takes effect with--
``(I) notice of the plan amendment indicating that it has
such effect, including a comparison of the present and
projected values of the accrued benefit determined both with
and without regard to the plan amendment, and
``(II) an election, on the date of the conversion, to
either receive benefits under the terms of the plan as in
effect on or after the effective date of such plan amendment
or to receive benefits under the terms of the plan as in
effect immediately before the effective date of such plan
amendment (taking into account all benefit accruals under
such terms since such date).
``(iii) Regulations.--The Secretary shall issue regulations
under which any plan amendment which has an effect similar to
the effect described in clause (i)(I) shall be treated as a
plan amendment described in clause (i)(I). Such regulations
may provide that if a plan sponsor represents in
communications to participants and beneficiaries that a plan
amendment has an effect described in the preceding sentence,
such plan amendment shall be treated as a plan amendment
described in clause (i)(I).''.
(2) Early retirement subsidy taken into account for
purposes of opening balance of hybrid defined benefit plan.--
Paragraph (6) of section 411(d) (relating to accrued benefit
not to be decreased by amendment) is amended by adding at the
end the following new subparagraph:
``(F) Early retirement subsidy taken into account for
purposes of opening balance of hybrid defined benefit plan.--
In the case of a plan amendment to a defined benefit plan
which has the effect of converting the plan to a plan under
which the accrued benefit is expressed to participants and
beneficiaries as an amount other than an annual benefit
commencing at normal retirement age (or a plan amendment to
such plan having a similar effect as determined under
regulations issued under subsection (b)(1)(I)(iii)), such
amendment shall not be treated as reducing accrued benefits
merely because under such amendment any early retirement
benefit or retirement-type subsidy (within the meaning of
section subparagraph (B)(i)) is taken into account for
purposes of the opening balance of the amended plan.''.
(3) Interest rate for determinations relating to plan
conversions.--
Paragraph (6) of section 411(d) of such Code (as amended by
paragraph (2)) is amended further by adding at the end the
following new subparagraph:
``(G) Interest rate.--For purposes of this paragraph--
``(i) in the case of an amendment described in subparagraph
(A) which takes effect on or after the enactment of this
subparagraph, the interest rate and mortality tables to be
used in determining the present value of the accrued benefit
under such amendment shall be the applicable rate and tables
under section 417(e)(3) as of the date on which such
amendment takes effect, and
``(ii) in the case of amendments described in subparagraph
(A) which took effect before the enactment of this
subparagraph, the interest rate and mortality tables to be
used in determining the present value of the accrued benefit
under such amendments shall be the applicable rate and tables
which were in effect under section 412(l) as of the effective
date of the respective amendment.''.
(b) Effective Date and Related Rules.--
(1) In general.--The amendments made by this section shall
apply to plan amendments taking effect after the date of the
enactment of this Act.
(2) Plan amendments subject to litigation.--The amendments
made by this section also shall apply to any plan amendment
taking effect on or before such date if--
(A) no determination letter is issued on or before such
date by the Internal Revenue Service which has the effect of
approving the plan amendment, and
(B) such plan amendment is, on April 8, 2003, subject to a
court action based on age discrimination.
(3) Special rule.--In the case of a plan amendment taking
effect before 90 days after the date of the enactment of this
Act, the requirements of section 204(b)(1)(I) of the Employee
Retirement Income Security Act of 1974 (as added by this
section) and section 411(b)(1)(I) of the Internal Revenue
Code of 1986 (as added by this section) shall be treated as
satisfied in connection with such plan amendment, in the case
of any participant described in such sections 204(b)(1)(I)
and 411(b)(1)(I) in connection with such plan amendment, if,
as of the end of such 90-day period--
(A) the notice described in clause (i)(I) of such section
204(b)(1)(I) and clause (i)(I) of such section 411(b)(1)(I)
in connection with such plan amendment has been provided to
such participant, and
(B) the plan provides for the election described in clause
(i)(II) of such section 204(b)(1)(I) and clause (i)(II) of
such section 411(b)(1)(I) in connection with such
participant's retirement under the plan.
TITLE VIII--TREATMENT OF CORPORATE INSIDERS
SEC. 801. SPECIAL RULES FOR EXECUTIVE PERKS AND RETIREMENT
BENEFITS.
(a) In General.--Part I of subchapter D of chapter 1 of the
Internal Revenue Code of 1986 (relating to pension, profit-
sharing, stock bonus plans, etc.) is amended by adding at the
end the following new subpart:
``Subpart F--Special Rules for Executive Perks and Retirement Benefits
``Sec. 420A. Holding period requirement for stock acquired through
exercise of option.
``Sec. 420B. Additional tax on nondisclosed retirement perks.
``Sec. 420C. Definitions and special rule.
``SEC. 420A. HOLDING PERIOD REQUIREMENT FOR STOCK ACQUIRED
THROUGH EXERCISE OF OPTION.
``(a) In General.--In the case of a corporate insider with
respect to a corporation, the tax imposed by this chapter on
a corporate insider for any taxable year shall be increased
by 50 percent of the amount realized by such insider from the
disqualified disposition during such year of stock acquired
by the corporate insider upon the exercise of a stock option
granted by the corporation with respect to which such
individual is a corporate insider.
``(b) Disqualified Disposition of Stock.--
``(1) In general.--For purposes of subsection (a), the term
`disqualified disposition of stock' means any sale, exchange,
or other disposition of stock which, if such stock were
employer securities held in a qualified cash or deferred
arrangement (as defined in section 401(k)(2)), would violate
any restriction imposed on the sale or other disposition of
such securities by the plan of which such arrangement is a
part.
``(2) Special rule for 2 or more cash or deferred
arrangements.--If a corporation has more than 1 qualified
cash or deferred arrangement (as so defined), the
restrictions which apply for purposes of paragraph (1) shall
be the most restrictive provisions relating to the
disposition of employer securities held pursuant to any such
arrangements.
``SEC. 420B. ADDITIONAL TAX ON NONDISCLOSED RETIREMENT PERKS.
``(a) In General.--In the case of a publicly traded
corporation, the tax imposed by this chapter for the taxable
year shall be increased by 50 percent of the net cost to the
corporation for the taxable year of personal perks provided
to a retired executive of the corporation.
``(b) Waiver If Perks Provided Pursuant to Shareholder
Approval.--Subsection (a) shall not apply with respect to any
personal perks provided pursuant to a contract if--
``(1) all of the material terms of such contract (including
a description of the benefits to be provided to the executive
and the extent of such benefits) are disclosed to
shareholders, and
``(2) such contract is approved by a majority of the vote
in a separate shareholder vote before any benefits are
provided under the contract.
``(c) Net Cost of Personal Perks.--
``(1) In general.--For purposes of subsection (a), the net
cost of personal perks provided to a retired executive is the
excess of--
``(A) the cost to the corporation of such perks, over
``(B) the amount paid in cash during the taxable year by
the executive to reimburse the corporation for the cost of
such perks.
[[Page H4082]]
``(2) Personal perks.--For purposes of paragraph (1), the
term `personal perks' means--
``(A) the use of corporate-owned property,
``(B) travel expenses, including meals and lodging, unless
such expenses are directly related to the performance of
services by the executive for the corporation and the
business relationship of such expenses is substantiated under
the requirements of section 274,
``(C) tickets to sporting or other entertainment events,
``(D) amounts paid or incurred for membership in any club
organized for business, pleasure, recreation, or other social
purpose, and
``(E) other personal services, including services related
to maintenance or protection of any personal residence of the
executive.
``(3) Cost relating to use of corporate-owned property.--
For purposes of this subsection--
``(A) In general.--The cost taken into account with respect
to the use of corporate-owned property shall be the allocable
portion of the total cost of operating such property.
``(B) Allocable portion.--For purposes of subparagraph (A),
the allocable portion of total cost is--
``(i) the portion of the total cost (including
depreciation) incurred by the corporation for operating and
maintaining such property during the corporation's taxable
year in which such use occurred,
``(ii) which is allocable to the use (determined on the
basis of the relationship of such use to the total use of the
property during the taxable year).
``SEC. 420C. DEFINITIONS AND SPECIAL RULE.
``(a) Definitions.--For purposes of this subpart--
``(1) Corporate insider.--The term `corporate insider'
means, with respect to a corporation, any individual--
``(A) who is subject to the requirements of section 16(a)
of the Securities Exchange Act of 1934 with respect to such
corporation, or
``(B) who would be subject to such requirements if such
corporation were an issuer of equity securities referred to
in such section.
``(2) Retired executive.--The term `retired executive'
means any corporate insider who is no longer performing
services on a substantially full time basis in the capacity
that resulted in being subject to the requirements of section
16(a) of the Securities Exchange Act of 1934.
``(3) Publicly traded corporation.--The term `publicly
traded corporation' means any corporation issuing any class
of securities required to be registered under section 12 of
the Securities Exchange Act of 1934.
``(4) Corporate-owned property.--
``(A) In general.--Except as provided in subparagraph (B),
the term `corporate-owned property' means any of the
following property owned by a corporation--
``(i) planes,
``(ii) apartments or other residences,
``(iii) vacation, sports, and entertainment facilities, and
``(iv) cars.
Such term includes any such property which is leased or
chartered by the corporation.
``(B) Exceptions.--Such term does not include any property
used directly by the corporation in providing transportation,
lodging, or entertainment services to the general public.
``(b) Additions to Tax Not Treated As Tax for Certain
Purposes.--The tax imposed by sections 420A and 420B shall
not be treated as a tax imposed by this chapter for purposes
of determining--
``(1) the amount of any credit allowable under this
chapter, or
``(2) the amount of the minimum tax imposed by section
55.''.
(b) Clerical Amendment.--The table of subparts for part I
of subchapter D of chapter 1 of such Code is amended by
adding at the end the following new item:
``Subpart F. Special Rules for Executive Perks and Retirement
Benefits.''.
(c) Effective Date.--The amendments made by this section
shall take effect as follows:
(1) Section 420A of the Internal Revenue Code of 1986 (as
added by this section) shall apply to stock acquired pursuant
to the exercise of an option after the date of the enactment
of this Act.
(2)(A) Except as provided by subparagraph (B), section 420B
of such Code (as so added) shall apply to perks provided
after the date of the enactment of this Act.
(B) In the case of perks provided pursuant to a contract in
existence on the date of the enactment of this Act, such
section 420B shall apply to such perks after the date of the
first annual shareholders meeting after the date of the
enactment of this Act.
SEC. 802. GOLDEN PARACHUTE EXCISE TAX TO APPLY TO DEFERRED
COMPENSATION PAID BY CORPORATION AFTER MAJOR
DECLINE IN STOCK VALUE OR CORPORATION DECLARES
BANKRUPTCY.
(a) In General.--Section 4999 of the Internal Revenue Code
of 1986 (relating to golden parachute payments) is amended by
redesignating subsection (c) as subsection (d) and by
inserting after subsection (b) the following new subsection:
``(c) Tax To Apply to Deferred Compensation Paid After
Major Stock Value Decline or Bankruptcy.--
``(1) In general.--For purposes of this section, the term
`excess parachute payment' includes severance pay, and any
other payment of deferred compensation, which is received by
a corporate insider after the date that the insider ceases to
be employed by the corporation if--
``(A) there is at least a 75-percent decline in the value
of the stock in such corporation during the 1-year period
ending on such date, or
``(B) such corporation becomes a debtor in a title 11 or
similar case (as defined in section 368(a)(3)(A)) during the
180-day period beginning 90 days before such date.
Such term shall not include any payment from a qualified
employer plan.
``(2) Corporate insider.--For purposes of paragraph (1),
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.''
(b) Effective Date.--The amendment made by this section
shall apply with respect to cessations of employment after
the date of the enactment of this Act.
SEC. 803. ADEQUATE DISCLOSURE REGARDING EXECUTIVE
COMPENSATION PACKAGES.
(a) In General.--Section 402 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1102) is amended by
inserting after subsection (c) the following new subsection:
``(d) Disclosure Regarding Executive Compensation
Packages.--
``(1) In general.--In any case in which an employer takes
any action to establish or substantially improve an executive
compensation package with respect to any employee, such
action may not take effect unless the employer has met the
requirements of paragraph (2).
``(2) Requirements.--An employer meets the requirements of
this paragraph if--
``(A) not less than 100 days prior to the effective date of
the action described in paragraph (1), the employer provides
written notification of the action to--
``(i) each employee of the employer,
``(ii) each employee organization representing employees of
the employer (if any), and
``(iii) in the case of an employer that is a corporation,
the board of directors, and
``(B) in the case of an employer that is a corporation, the
board of directors has approved such action.
Any such written notification shall be written in language
calculated to be understood by the average plan participant.
``(3) Definitions.--For purposes of this subsection--
``(A) Executive compensation package.--The term `executive
compensation package' means a combination of pay, benefits
under employee benefit plans, and other forms of compensation
provided by an employer primarily for employees who are
members of a select group of management or highly compensated
employees.
``(B) Substantial improvement.--An executive compensation
package is `substantially improved' if the present value of
such package is increased by not less than 10 percent.''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to actions taken after the date of
the enactment of this Act.
TITLE IX--MISCELLANEOUS PROVISIONS
SEC. 901. CORPORATE DEDUCTION FOR REINVESTED ESOP DIVIDENDS
SUBJECT TO DEDUCTIBLE LIMITS.
(a) In General.--Subsection (a) of section 404 of the
Internal Revenue Code of 1986 (relating to general rule) is
amended by adding at the end the following new paragraph:
``(13) Certain dividends reinvested in employee stock
ownership plans subject to deductible limits.--For purposes
of this subsection, an applicable dividend described in
subsection (k)(2)(A)(iii)(I) shall be treated as
compensation.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2003.
SEC. 902. CREDIT FOR ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS
BY CERTAIN INDIVIDUALS MADE PERMANENT (SAVER'S
TAX CREDIT).
Section 25B of the Internal Revenue Code of 1986 is amended
by striking subsection (h) (relating to termination).
SEC. 903. AUTHORITY TO RESCIND TRANSFERS TO PLANS MADE FOR
THE BENEFIT OF HIGHLY COMPENSATED EMPLOYEES.
Section 403 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1103) is amended by adding at the end the
following new subsection:
``(e) The plan administrator or any person acting as the
plan administrator may avoid a transfer of an interest in
property to any trust or similar arrangement for the benefit
of any insider or other management employee to fund
supplemental retirement benefits or other deferred
compensation.''.
TITLE X--GENERAL PROVISIONS
SEC. 1001. 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, 2004.
(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
[[Page H4083]]
this Act, subsection (a) shall be applied to benefits
pursuant to, and individuals covered by, any such agreement
by substituting for ``January 1, 2004'' the date of the
commencement of the first plan year beginning on or after the
earlier of--
(1) the later of--
(A) January 1, 2005, 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, 2006.
SEC. 1002. 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 230, the
gentleman from New Jersey (Mr. Andrews) and the gentleman from Ohio
(Mr. Boehner) each will control 30 minutes.
The Chair recognizes the gentleman from New Jersey (Mr. Andrews).
Mr. ANDREWS. Mr. Speaker, I yield myself 2 minutes.
I would urge our colleagues to support this well-reasoned and well-
thought-out Democratic substitute. It differs in many ways, and it is
an improvement in many ways from the underlying bill. I would like to
highlight a few of those improvements, first in the area of investment
advice.
This substitute does provide for investment advice for workers and
pensioners, but it clearly favors independent investment advice. It
provides that workers and pensioners will receive advice from qualified
individuals who do not have an interest in the outcome of the advice
that they are giving.
Second, this substitute, unlike the underlying bill, deals with the
problem of cash balance plans. Cash balance plans, which I believe have
been improperly used in many cases, have become a nightmare for
pensioners, where people who thought that they had a guaranteed income
at a set level for the rest of their lives have confronted the
nightmare scenario where they, in fact, have much less, sometimes as
much as 50 percent less than they thought they had in their pensions.
This substitute contains a very simple provision that empowers each
employee to choose between conversion of his or her pension to a cash
balance plan or retention of his or her pension in its more traditional
form. This bill puts a stop to the secret transactions involving
executive pension compensation and pension provisions. This substitute
also requires that in collective bargaining negotiations, that
companies be candid and comprehensive in their disclosures to
bargaining units with whom they are negotiating.
Very recently in the problems regarding American Airlines, we saw the
situation where unions received significant misrepresentations as to
the financial provisions of their employers and agreed to massive
cutbacks in their compensation packages based upon those
misrepresentations. This substitute would outlaw such a provision.
In summary, the substitute addresses the underlying problems and
causes of the Enron scandal. I would urge its adoption.
Mr. Speaker, I reserve the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield 10 minutes to the gentleman from
Texas (Mr. Sam Johnson) and ask unanimous consent that he be permitted
to control that time.
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 myself such time as I may consume.
Mr. Speaker, today we have before us a pension security bill that
passed the House last year with broad bipartisan support. That is the
underlying bill, with two exceptions, two issues that were contained in
last year's Sarbanes-Oxley bill, the 30-day notice of a blackout period
and the prohibition on company insiders selling stock during a blackout
period. Those issues have been signed into law. But the balance of that
bill is what we have before us today. It is a reasonable and
responsible approach to address the problems that were identified
during our investigation of Enron, WorldCom and others. More
specifically and more importantly, it does not overreach and begin to
delve into areas where there are likely to be very serious unintended
consequences.
The substitute that is being offered by my friends on the other side
is well-meaning, well-intentioned, and we have worked closely on these
issues for many years, but the fact is that if Members look at the
substitute that we have before us, it will cause serious concern in the
employer community, and I would suggest many employees across the
country will no longer have pensions because of the onerous regulations
and excessive litigation that would result if the substitute that is
offered were, in fact, adopted and signed into law.
Specifically, it does, in fact, increase liability for employers
under ERISA, new rights to sue, additional penalties that I think are
unnecessary. The current protections within ERISA provide a solid
framework for addressing grievances from employees.
Secondly, it would require every plan fiduciary to have insurance to
meet whatever the size of the pension plan is. It would be expensive,
costly, and would create a situation where no one will want to serve as
the fiduciary; and if, in fact, they can find someone, the cost of
providing the insurance will drive up the cost of providing pensions.
We have worked for years in this body to try to make it easier for
businesses to set up pensions. We have tried to encourage businesses to
cover more employees with pensions. The last thing we want to do is to
dump cold water on this movement by again increasing cost and
increasing regulation. We could talk about the regulatory bombardment
in here when it comes to company insiders selling stock, regardless of
what the reason is. Under this bill they would have to report it within
1 day. Employees would be getting these notices on an ongoing basis,
and to what purpose? I do not know.
But, more importantly, the substitute tries to regulate corporate
salaries and corporate governance issues, but through the pension
system. The Congress passed the Sarbanes-Oxley bill last year that
dealt with large corporate governance issues. Most all Members of this
body on both sides of the aisle supported it. It was a very good bill.
One could argue it might be overreaching in some areas, but by and
large addressing the serious issues that were uncovered during Enron
and WorldCom. I do not think that we need to readdress corporate
governance issues and executive pay issues in a pension bill.
But most importantly, the substitute that we have before us guts the
serious investment advice language that we have in the underlying bill.
We have heard a lot today about the need for investment advice for the
61, 62 million Americans who have self-directed accounts who have been
so protected by this law passed in 1974 that their ability to get
investment advice is almost nil. As I have said before, the only place
they can really get investment advice is from Bob at the coffee shop.
What we seek to do in the underlying bill is to provide a framework and
safeguards for them to get investment advice from the real experts in
the industry. If they do not want to take employer-provided investment
advice, the Committee on Ways and Means as part of this bill provides a
tax deduction, an above-the-line tax deduction for them to go out and
get their own investment advice. But I think all of us agree that
having real investment advice in the marketplace for those with self-
directed accounts has to happen, and the sooner it happens, the better.
But under the bill that we have before us, it says you can only get
third-party independent investment advice. There is no reason to even
have it in the bill because that is what you can get today. And you do
not get real investment advice because, one, employees do not want to
have to pay for it; and, secondly, the so-called independent advice
that is out there today is generic, very generic, whatever your
[[Page H4084]]
age is, whatever your income is, whatever the assets in your plan are.
I would suggest to my colleagues that if we are serious about having
real investment advice in the marketplace today for America's
employees, that this will not get there. I would ask my colleagues and
urge them to look at the substitute and vote against it.
Mr. Speaker, I reserve the balance of my time.
Mr. ANDREWS. Mr. Speaker, I yield such time as he may consume to the
distinguished gentleman from California (Mr. George Miller), the author
of the substitute.
(Mr. GEORGE MILLER of California asked and was given permission to
revise and extend his remarks.)
Mr. GEORGE MILLER of California. Mr. Speaker, the Democratic
substitute that we offer today is based on a very simple principle. It
is a principle that we all grew up with. It was a principle that was
articulated by the President of the United States just days after the
Enron catastrophe when America saw that so many people who worked for
Enron were trapped in a system during the meltdown of that company,
during the corruption in that company, during the unlawfulness in that
company, that they were trapped in that system and unable to protect
their retirement while corporate executives in the penthouse suites
were unloading stock, getting golden parachutes, getting secured
pension plans, getting insured pension plans, having pension plans put
into trusts. They took good care of themselves even though they took
the company over the edge. But down below, just like in the Titanic,
just like in the Lusitania, the poor people were trapped as the ship
was going down. They were trapped because of a class system.
That very simple principle that has been articulated by the President
was that if it is okay for the sailor, it ought to be okay for the
captain. What the President was saying there was those protections that
are in place for the executives should have been in place for the
employees, that employees' pensions ought to be treated as executive
pensions are treated.
We grew up with this. Our parents told us when you got into a fight
with our brothers and sisters and maybe it did not go our way, they
said, ``What's good for the goose is good for the gander.'' What is
good for the captain is good for the sailor. We have said it to our
spouse, we have said it to our children, we have said it to our
partners in business, we have said it to our staff. It is about
fairness.
What the Democratic alternative recognizes is the basic dignity of
the American worker and the right of that worker to control the pension
plan, which is their money. This is money that was given to them for
the work that they gave to the corporation. It was figured out by the
corporation, how much they would pay them an hour, how much they would
give them in health care, how much they would give them in pension
benefits, and they went to work for them. When they gave it to them
each month, it is theirs. But now they do not want to have them have
any control over it. They do not want them to have the same protections
as the corporate elite. They do not want them to have the same rights
as those individuals. Why?
Enron was not just built on the back of Ken Lay. Big parts of that
company were built on the utility workers in the Pacific Northwest, the
pipeline workers in the Southwest, the power plant workers in
California and everybody in between. Why were they not entitled to
these protections? Why were they not entitled to these rights?
But the Republican bill today, as the Republican bill last year,
keeps in place that class system, that the corporate elites will get
taken care of, these great captains of capitalists, these crusaders of
the free enterprise system, the people who come to Congress and talk
about risk, that they take risk. What we now see is the CEO of Delta
Airlines, we see the CEO of American Airlines, we see the CEOs of so
many companies and the board of directors, they do not want any risk,
they want their compensation guaranteed, they want their golden
parachute guaranteed, and they want their pension plan guaranteed. Even
if they drive the company into the ground, even if they take it into
bankruptcy, they will be protected.
That is what has so incensed the American public, and the pilots, and
the flight attendants, and the machinists, and the workers at American
Airlines that they were willing to risk their whole future to say, that
is unfair. And America recognized it like that, Wall Street recognized
it like that, and the chairman of American Airlines resigned, admitting
that he had made a tragic mistake in being so selfish on behalf of the
board of directors and himself at a time he was asking workers to give
back billions of dollars.
So what do we say? We say that workers are entitled to advice about
the selling and the coming and going in the corporate suites when they
are selling their stock because they do not think the corporation is
doing so well; we are entitled to know that on those inside sales. We
say that workers are entitled, if they have their pensions guaranteed,
that the crew, the workers, will have their pensions guaranteed just
like the people in the corporate suites. We are saying for those
workers, that they should be represented on the boards of the
retirement plan so that they will have the information, because as we
saw in Enron, the executive representative on the retirement plan, the
captain, so to speak, never told the crew that she was selling her
stock because she had investment advice to get out of the company.
Those people lost their fortune. She walked away with hundreds and
hundreds of thousands of dollars because she did not tell them.
We are simply saying, you must tell them, that you must be on the
board so you have a chance. That is what this bill does. It is about
the equity for the worker, it is about the dignity of the worker, and
it is about the rights of the worker to be protected.
They say this will cause trouble in corporations, this will cause
concern. A little democracy? A little democracy in the corporation? A
little recognition that the corporate body is more than just the CEOs
and the executives, that it is also the workers? That causes concern?
Ladies and gentlemen, that is what we are talking about spreading to
the rest of the world, the free enterprise system. We are talking about
spreading the democratic system. But somehow when it comes to carving
up billions of dollars, we cannot have too much democracy in the
workplace.
{time} 1445
It is simply unfair to the workers. This bill also closes a loophole
of having conflicted advice that the Republican bill opens for the
first time, and this bill responds to the concerns of the Attorney
General of New York, who just settled a case for $1.4 billion, when he
said that this bill would open up a huge loophole, a huge loophole for
conflicted advice, and put at risk the pensions of these individuals,
that this bill goes too far. That conflicted advice, Jane Bryant Quinn,
the financial columnist in Newsweek magazine, says they might as well
give their money to an Olympic ice-skating judge as give it to this
conflicted advice. These are the very same people who just agreed to
pay a $1.4 billion fine for their activity. They did not admit that
they did anything wrong, but they put up $1.4 billion. We have got to
understand that we cannot turn the pension assets, the retirement
assets of those workers over to those individuals. The workers in this
country and their families and their future and their children and
their retirement plans deserve better. They deserve the Democratic
substitute.
Mr. BOEHNER. Mr. Speaker, I yield 3 minutes to the gentleman from
Sacramento, California (Mr. Ose).
(Mr. OSE asked and was given permission to revise and extend his
remarks.)
Mr. OSE. Mr. Speaker, I rise today to support the legislation that
the gentleman from Ohio (Mr. Boehner) has brought forward, and I thank
him for yielding me this time to come to the floor and speak to it.
I am opposed to the substitute. I did want to come down and talk
about one issue here in particular, and that is this issue of highly
compensated individuals within corporate America and the treatment that
their retirement plans and retirement planning get versus the run-of-
the-mill pension plans that the everyday worker gets.
[[Page H4085]]
We have asked, and unfortunately the Committee on Rules ruled out of
order, to place an amendment in that would have directed the Department
of Labor to do a study as to the broad variety of plans that are
available to highly compensated individuals and the manner in which
they are funded and then compare that with the manner in which the
pension plans for ordinary Americans who might work in corporate
America might be receiving. And the reason we asked for that is that
there is significant anecdotal evidence that while retirement plans in
corporate America for the run-of-the-mill worker are in many cases
underfunded, this cafeteria of plans for highly compensated individuals
may well be getting fully funded using corporate assets.
As I said, I did propose an amendment that was unfortunately ruled
out of order by the Committee on Rules to this, and I will be
introducing a bill entitled The Employees' Pension Equity Act of 2003
to address this situation. I think we are all concerned here on the
floor of the House that Americans be treated equitably. This particular
proposal that I will be putting forward will do that.
We do need to look at the manner in which highly compensated
individuals as defined under ERISA, how they take care of their pension
planning as compared with the regular American retirement programs that
the corporation provides under the pension plans that occur. We need to
make sure that both groups are treated equitably. We need to make sure
that if the regular American, the regular Joe and the regular Jane, if
their pension plans are funded to a 60 percent level, then the highly
compensated individuals cannot take corporate assets and fund their
retirement programs at a 100 percent level and the like. We are looking
for equity here. We are looking for some means of leveling the playing
field so that the corporate assets cannot be used disproportionately to
benefit employees of corporate America.
In my travels around my district, I hear about this regularly. It
sticks in people's craw that the occasion arises where highly
compensated individuals get to take corporate assets and use them to
secure their retirements using any one of the vehicles identified under
the ERISA plan act for their purpose and regular Joes cannot do the
same thing.
Mr. Speaker, I rise today to support this legislation, which will
provide greater security for the pensions of American workers, and to
oppose the substitute. In this time of economic instability in the
world, it is essential that our hard-working constituents know that
their financial future is safe.
Today's bill is focused on securing employee pensions. This is a
truly noble cause.
However, many Americans are skeptical about the security of their
pension funds. They are also concerned with reports that the managers,
whose actions may have damaged the stability of their retirement, walk
away with a ``golden parachute'' package of guaranteed money. In short,
American workers want to make sure that they are treated fairly and
that their funds are equally capable of meeting liabilities as the
pension plans of the highly compensated individuals who run their
companies.
I recently began investigating just how often employees are left
holding the bag while senior executives are fully compensated. I was
surprised to learn how little data there is on this topic.
There have been numerous reports on the instability of employee
pensions and other retirement plans in recent years. Such reports
helped spur the legislation currently before us. There has also been
research into the variety of compensation vehicles for corporate
executives. However, little of the research compares the two systems or
examines why one side may face a shortfall while other employees in the
same company are assured of their compensation.
Last night, I proposed an amendment to this bill which the rules,
unfortunately, does not allow us to consider. It was quite simple: it
called for the Secretary of Labor to conduct a study on the funding and
under-funding of pension plans and similar arrangements for both
employee plans and the plans of highly compensated individuals.
Most American workers simply want to be treated fairly. When they
succeed, they are pleased that their coworkers also benefit. When they
fall short, they recognize that everyone gave their best. But, what
really sticks in their ``craw'' is when they lose out and the people in
charge don't care because they are paid either way. We need to look
carefully at situations where employees and executives face different
results in the same situation. This report would help us better
understand such occurrences.
It is for this reason that I recently introduced ``The Employees'
Pension Equity Act of 2003,'' a bill that will prevent executives from
walking away with ``golden parachutes'' while employees are left
holding the bag.
How does it happen that the ``highly compensated individuals,'' an
actual legal term, do not suffer when their decisions leave a business
floundering while the foot-soldiers of the business are left unemployed
and facing financial hardships?
My legislation seeks to right that wrong.
The Employees' Pension Equity Act requires that the employee funds be
just as sound as executive funds. Employees need to know that their
pensions will not be left to ``wither on the vine'' while executives
walk away with big, guaranteed checks in their pockets.
This legislation is another straightforward bill that requires an
annual comparison of employees' and executives' plans, and an annual
additional contribution to the employees' fund when they are not in the
same fiscal shape as their executives' counterparts.
Mr. Speaker, H.R. 1000 is a good bill that will help protect our
constituents. I am pleased to support this legislation and hope the
House will take the next step in passing my Employees' Pension Equity
Act in the near future.
Mr. ANDREWS. Mr. Speaker, I yield 3 minutes to the gentleman from
Vermont (Mr. Sanders), who is the author of a key provision of the
substitute regarding the prevention of the abuse of cash balance plans.
(Mr. SANDERS asked and was given permission to revise and extend his
remarks.)
Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me this
time.
I rise in strong support of the George Miller-Rangel substitute, and
this substitute includes legislation that I introduced last month that
now has 133 co-sponsors and has been endorsed by the 35 million members
of the AARP and the 13 million workers in the AFL-CIO. And this
legislation is a very simple piece of legislation included in this
amendment, and it says that when a company converts to a cash balance
plan after promising its workers a certain pension benefit that one
cannot simply, like that, cut somebody's pension by up to 50 percent.
They cannot renege on the promise that they made to that worker and
one of the reasons why that worker worked at that company for 10, 20 or
30 years. I ran into this experience in Vermont when hundreds of IBM
workers called me up and they said that the promise that the company
had made to them was rescinded and the pensions that they had been
promised were now out the window. In Vermont, the IBM workers fought
back, and they fought back all over the country; and as a result, IBM
partially withdrew what they did, and they ended up protecting the
older workers and Kodak protected older workers and Motorola protected
older workers. But the reality is that millions of American workers
today are at risk in seeing huge reductions in the pensions that they
were expecting.
Pension anxiety is running rampant all over this country, and if we
do not pass this amendment, workers will have good reason to worry that
the pensions promised to them will not be there. What this amendment
says is very simple. It says that if one is 40 years of age or if one
has been with a company for 10 years and is on a defined benefit plan
and the company goes to cash balance, they have got to give them a
choice. What is wrong with giving workers a choice and not taking away
the benefits that they had worked their whole lives for? I would like
my Republican friends to tell me that. Some of the good companies have
given workers a choice. We should give workers a choice right here.
That is the amendment that I have included in this bill.
But there is another issue that was not included. The Members of the
United States Congress have a defined benefit pension plan. And the
amendment that I offered said if they think cash balance is such a good
idea, why do we not adopt it in the Congress? If they want to tell
millions of American workers to see a substantial reduction in their
pensions, why do we not do the same thing? If it is good for the
workers of America, surely it must be good for the Members of the
Congress. I offered that amendment. Everyone will be shocked to know
the Republican leadership denied it.
Mr. ANDREWS. Mr. Speaker, may I inquire how much time we have left on
our side.
[[Page H4086]]
The SPEAKER pro tempore (Mr. Linder). The gentleman from New Jersey
(Mr. Andrews) has 17 minutes remaining. The gentleman from Ohio (Mr.
Boehner) has 11\1/2\ minutes remaining, and the gentleman from Texas
(Mr. Sam Johnson) has 10 minutes remaining.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, we just heard about IBM and some of the other large
companies. But guess what? They fixed the problem; so there is no
longer a problem. Why are we talking about it? Because all of this
stuff is voluntary anyway.
The Democrat substitute proposes to limit the types of defined
benefit plans that companies can offer. Specifically, the substitute
limits companies in converting to cash balance plans even though there
is substantial evidence that 80 percent of workers fare better under a
cash balance plan. The Democrats are attempting to force companies to
stay with an outdated, arcane pension system that does not really work
in today's market.
We need to allow companies the freedom to provide the best possible
benefits to their employees with advice.
Mr. Speaker, I reserve the balance of my time.
Mr. ANDREWS. Mr. Speaker, I yield 30 seconds to the gentleman from
Vermont (Mr. Sanders).
Mr. SANDERS. Mr. Speaker, my friend said that we do not have to do
anything. My friend said that it should be voluntary. What happened at
IBM is that thousands of workers stood up and fought back.
Unfortunately, hundreds of thousands, if not millions, of other workers
did not even know what was happening to them. They could not fight
back. If the gentleman thinks that giving people a choice is a bad
idea, why do the 35 million members of AARP think it is a good idea and
the 13 million members of the AFL-CIO? Choice is right.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I reserve the balance of my
time.
Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentlewoman from
California (Ms. Solis), who speaks with passion and conviction for
people struggling to get ahead around our country.
(Ms. SOLIS asked and was given permission to revise and extend her
remarks.)
Ms. SOLIS. Mr. Speaker, I also rise today in opposition. Almost a
year ago I recall as a member of the Committee on Education and the
Workforce voting against this similar proposal that is now before us.
H.R. 1000 is really an act; and when I say that, it is an act by the
Members on the other side of the aisle to give the impression that this
piece of legislation will protect working men and women's pensions, and
it will not do that, in my opinion. It puts their pensions at risk by
allowing self-interested accounting firms to advise employees. That
sounds to me like the fox guarding the hen house. This does not work;
and if we did not learn from Enron, then we do have some serious
problems in this House.
This bill allows high-living executives to continue to skirt pension
rules, have their pensions, and ride off into the sunset, while their
companies fall into bankruptcy and lay off workers every single day.
And I see it happening in my district in Los Angeles County. For the
millions of people who have worked hard to put aside money so that one
day that little token of security would be there for them is long gone,
and it is really unfortunate because I would like to tell the Members
that in my own district where many union members thought that they had
their pensions protected have now found themselves bankrupt as well,
and they are having to borrow from their own family members. This is
the wrong thing to do.
In my district people have lost their jobs. Unemployment is above 9
percent; and we are not even talking about that. We are not even
talking about those people that are really hurting. President Bush
seems to have closed his ears to the concerns and the voice of America,
working America. I urge my colleagues to support the George Miller-
Rangel substitute, and I thank the gentleman from California (Mr.
George Miller) for offering this true Pension Security and Fairness Act
because it provides fairness and equity for all workers. I oppose H.R.
1000 and support the Miller substitute.
Mr. BOEHNER. Mr. Speaker, I yield 2 minutes to the gentleman from
Nebraska (Mr. Osborne).
Mr. OSBORNE. Mr. Speaker, I come from a family that has been in a
small business operation for the last 100 years, and the biggest
concern that I hear in small businesses is government regulation; and I
agree with many of the gentleman's proposals here. Some are good, but
it does add complexity. It adds cost. And right now what we are seeing
is a huge exodus from the retirement plan operations of so many
companies. I am afraid that this would exacerbate the problem.
For example, expanding the remedies of ERISA will quite likely lead
to more litigation and more expense. Requiring 401(k) insurance is
already provided by many plans but adds cost. Making it mandatory will
cause people to exit the system. Reporting of insider sales is already
governed by the Securities and Exchange Commission; so we think this is
somewhat redundant.
{time}
1500 I am as embarrassed as the author of this substitute with some
of the compensation plans that we have seen by various executives, and
I agree this needs to be addressed. However, when we are dealing with
something that has to do with pension reform, I do not believe that
this is the appropriate vehicle to use at this time.
So overall what I am saying is I believe the base bill provides sound
pension reform without promoting so much complexity and expense that we
would eliminate retirement plans. If we do so, we simply throw out the
baby with the bath water; and I think as a result, we cause more
problems than we solve.
So, Mr. Speaker, I urge passage of this base bill and rejection of
the substitute.
Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentleman from
Oregon (Mr. Blumenauer).
Mr. BLUMENAUER. Mr. Speaker, I listened to the comments about some
increased complexity and efforts that may be required. I find it ironic
that as we look at some of the complexity we have now for the
protection of those who need it the least, we do not get too upset
about it; but when we are talking about ordinary working men and women,
a little bit of complexity, a little bit of regulation I think is not
only in order, but I represent thousands of people in my community who
would welcome it today.
Enron purchased a locally owned electric utility in my community
called Portland General Electric, a straightforward organization that
had been working providing service in our community for generations.
In a few short years, because of the manipulation, the lack of
complexity, the lack of oversight, these people had their lives turned
upside down. Men and women who had been investing for years took the
representations of what you can only regard as corporate bandits at
face value and ended up losing hundreds of thousands of dollars,
pushing back their retirement for years.
We found the manipulation of Texas-based Enron wash through the West.
It has raised utility rates dramatically in our community, putting
people out of work and some companies out of business.
I welcome the Miller substitute that would make sure that everybody
plays by the same rules; that everybody has perhaps a little bit of
complexity, but a whole lot of security. It will protect older
employees with a choice on pension conversion, and it will provide more
freedom and better information about how their money is managed.
Mr. Speaker, if this had been in place 5 years ago, there would be
thousands of Oregonians that could retire today in dignity, not having
their lives turned upside down.
I urge support of the Miller substitute.
The SPEAKER pro tempore. The Chair would inform the managers that the
gentleman from New Jersey (Mr. Andrews) has 12\1/2\ minutes remaining,
the gentleman from Ohio (Mr. Boehner) has 9\1/2\ minutes remaining, and
the gentleman from Texas (Mr. Sam Johnson) has 9 minutes remaining.
Mr. ANDREWS. Mr. Speaker, I yield such time as he may consume to the
[[Page H4087]]
gentleman from California (Mr. George Miller), the author of the
substitute.
Mr. GEORGE MILLER of California. Mr. Speaker, the suggestion again
has been made on the other side of the aisle that somehow this would be
a burden or somehow this would be complex if we required that workers
be treated the same as executives.
They do very complex things in the corporate suites. They create
various accounts to pay for the pension benefit of executives. They go
out and buy various insurance schemes to pay for the benefit of
executives. They create special tax treatment. They come to Congress
and get special tax treatment for the pension plans of executives. All
very complex. But at the end of the day, it means that that executive
will know, no matter what happens to that company, that they and their
family and their children will be protected forever into the future
because it will be outside of the bankruptcy, it will be outside of the
corporate failure.
So complexity is not a problem when the executives want to protect
their income. They have been doing it for years. But somehow now to say
that we ought to send notice, send an e-mail to your employees and tell
them that the president is selling 100,000 shares, that the President
is doing an inside deal on a stock option, send an e-mail, you send
them all day long, there is nothing complex about it, you type it out
and push send; it is not complex. But they do not want the employees to
know this. That is why so many people have been trapped in the
financial collapse of these companies.
In the middle of the negotiations with the flight attendants, the
pilots, the machinists, the ramp workers, when American Airlines was
asking those people for $2.3 billion in givebacks from their vacation
time, from their pay, from their health benefits, give it back to help
the company fly, they were secretly, quietly and in a very complex
fashion protecting and guaranteeing hundreds of millions of dollars in
compensation for the executives; and they got caught. Once the light
was shined on them, they scrambled like rats for the door, because they
knew they could not sustain it; and the CEO resigned and they had to
give back the compensation package, and then the flight attendants and
others agreed to try to help the company stay out of bankruptcy.
That is all this bill does. It says that you ought to know about that
when they are negotiating your union contract, what they are doing for
the executives. That is why the pension story today is no longer a
back-page story. That is why it is on the cover of Fortune Magazine,
not exactly a left-wing journal. But Fortune Magazine captured the
context when it said oink, the pigs in the suits are jeopardizing your
corporation, your compensation and your pension plans. Oink.
Earlier, Fortune Magazine asked America, is your retirement at risk,
and why? Because of what is going on in terms of corporate financial
gimmickry. It is why millions and millions of Americans have left the
stock market and why the stock market laments that they have not
returned. They do not have confidence in this system. They do not have
confidence in this system any longer. They understand it is rigged on
Wall Street against them and it is rigged in the Congress of the United
States against them.
Where do these families go to get justice? Where do these families go
to get equity? Where do these families go to get fairness, if they
cannot come to the Congress of the United States?
So now what we say in the Republican bill is we are going to give
them additional advice about what to do with their savings, and we are
going to give that advice from the very same people that just had an
out-of-court settlement of $1.4 billion because they lied to their
clients. They had financial arrangements that prevented them from being
independent. They had financial arrangements, so they misrepresented
how a stock was doing, how a company was doing, because they were
getting fees, they were getting commissions, they were getting
percentages of deals. Those are the very same people the Republicans
say now that Mr. and Mrs. Jones and Mr. and Mrs. Smith ought to go to
and trust that they are going to give them independent advice.
The Democratic bill says you can go to those people, you can make
them available, but you also must make an independent adviser available
to these people as they plan for their retirements.
When things go wrong for people in their retirement plans, as they
did over the last couple of years, and you are 50 or 55 years old, you
do not have much chance to make it up.
Again, we have all heard from our constituents about people who
thought they were going to retire a year ago, a year and a half ago.
From Pacific Gas and Electric, the Portland company, not the California
one, a person came before our committee, the Committee on Education and
the Workforce, who had $650,000 in Enron stock. He and his wife bought
a small farm that they were going to use to run a care center for
retarded children. By the time they got to our committee, he had $6,000
in stock. He is 60 years old. Where does he go to get back his money?
Where does he go to get made whole?
Well, unless we want that to happen to another generation of workers
planning for their retirement, planning for their families, unless we
want that to happen again, we have got to support the Democratic
substitute, because it is about justice, it is about fairness and it is
about getting away from the conflicted advice, from the manipulation,
from the dishonesty, from the criminal activity of the financial
markets.
Mr. Speaker, $7 trillion was lost in the markets, $7 trillion. These
are the people who want to take you out of Social Security and put you
into that market. Social Security did not lose a dime. Wall Street lost
$7 trillion, and hundreds and thousands and millions of Americans had
their entire retirement future changed overnight.
We thought, well, that is the free enterprise system. That is the
market system. But what we find out now every day is, no, like the
California energy crisis, that was a manipulated system, that was a
dishonest system, that was a criminal system.
All the Democratic bill says is give people some notice, give people
some rights, give people control over their money so they can escape
the ship. The CEOs, the board presidents, the presidents of companies,
they are heading for the lifeboats. They do not even have the decency
to hit the alarm bell to tell you the ship is going down.
We say at least you have to sound the alarm and tell the workers that
they may want to jump too. That is the decent thing to do if you care
about your workers, if you respect them, if you appreciate what they
have done for the corporations. But that is not what is going on in
America today, and that is not what will go on in America under the
Republican bill.
Mr. Speaker, you must vote for the Democratic substitute if you
believe that workers and their families are entitled to the decent
protections for their retirement funds. I urge Members to vote for the
Democratic substitute.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, I am glad that was brought out. All of the reasons to
not vote for this substitute, we just heard them. The Democrat
substitute unwisely expands remedies available under ERISA. Under the
Democrat substitute, employers, administrators and service providers
can expect a wave of new litigation from participants alleging economic
and noneconomic losses stemming from ERISA violations. It can only lead
to higher costs. Employers will become more reluctant to offer
retirement savings plans to their workers. ERISA already provides for
comprehensive penalties and enforcement mechanisms in the case of
wrongdoing.
The Democrat substitute also tries to reform salaries and corporate
governance through the guise of pension reform. These provisions
regarding corporate compensation are not really about pensions; they
are about punishment for corporations.
The Democrat punitive corporate provision will not enhance pension
coverage or protection for one rank-and-file member. Instead, it will
only make it likely that corporations will be discouraged from offering
pensions because of the complex and heavy-handed pension rules.
Mr. Speaker, I urge a vote against the Democrat substitute.
Mr. Speaker, I yield back the balance of my time.
[[Page H4088]]
Mr. ANDREWS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would urge our colleagues to vote in favor of the
Miller substitute. If there is one asset that should be sacrosanct, if
there is one asset that should be solid as a rock, it is our pensions.
Prior to 1974, there were numerous problems with pensions as corrupt or
incompetent boards of trustees mismanaged workers' funds.
Twenty-nine years ago this Congress did something about that by
passing the ERISA law. Since then, scandals and misappropriation of
pension funds have been few and far between. They have been rare, and
pensions have been largely safe.
But there is a new kind of pension. It is a self-directed pension
account, commonly called a 401(k). The problem with the 401(k) has
admittedly been that workers who do not have sound advice have
sometimes made unsound decisions and lost their money.
There is no dispute that there is a need to provide solid and sound
investment advice, but there is a strong dispute about how to do so.
The substitute provides for advice; but frankly, it favors independent
advice so the advice given is not given from the point of view of self-
interest. The substitute provides a remedy.
{time} 1515
When someone entrusted with fiduciary responsibility under the ERISA
law does wrong by the pensioner or by the worker, there are
consequences. My friend from Texas a few minutes ago said that there
would be an expansion of remedies under ERISA. He is absolutely
correct, because as the workers at Enron can tell us, the remedies that
the present law contains do not do them very much good at all when they
see their future security evaporate in the new pension scandals of our
time.
The Miller substitute provides for sound investment advice, it ceases
the practice of fraudulent misrepresentation during collective
bargaining, it stops secret pension deals on behalf of highly
compensated employees and executives, and it provides for meaningful
remedies for those who have been wronged. It stops the abuse of cash
balance plans and makes sure that every American pensioner is made
whole. It is a realistic and meaningful response to the scandals of the
last 24 to 36 months.
Mr. Speaker, I would urge all of my colleagues to vote ``yes'' in
favor of the Miller substitute.
Mr. Speaker, I yield back the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, there is a lot that has been said here today about the
need for pension reform. Certainly, in the wake of the Enron and
WorldCom scandals and the collapse of the stock market, Congress had a
duty and a responsibility to look at our pension system, and we did.
That was over a year ago. Out of that we learned that there were some
deficiencies in our current pension system, such as the fact that
company insiders could sell the company stock during a blackout period,
while employees could not sell stock in their 401(k) plan. That has
been fixed and signed into law. We found that there was no notice of a
potential blackout period, not enough notice to employees of these
blackout periods. Again, that has been fixed, both issues signed into
law in the Sarbanes-Oxley bill.
But there are other issues out there that need to be addressed, and I
think the underlying bill addresses them in a fair and expansive way.
With all due respect to my friends on the other side, the substitute
that we have before us is nothing more than overkill.
Now, if we are worried about people's pensions in America, then
people who have pensions in America ought to be really worried about
the substitute that we have before us, because if the substitute were
to become law, virtually no employer in America could offer their
employees pensions. And that is not an exaggeration at all.
Pension plans are voluntary plans offered by employers to their
employees, and the fact that they are voluntary means that we have to
walk a delicate line. All one has to do is look at the regulatory
impact, the legislative impact, well-meaning, well-intentioned during
the 1980s that Congress and the agencies imposed on defined benefit
plans. We nearly are making them extinct because of the cost, the
litigation, and the regulatory nightmare that is involved with offering
a traditional defined benefit plan. That is why we see this huge
conversion from defined benefit plans, the traditional plan, to defined
contribution plans like 401(k) plans. And nothing that we do here
today, in my view, is going to slow that conversion down.
And for many of us who are concerned about defined benefit plans, the
traditional benefit plans, we ought not take up the issue that is
contained in the substitute that would defy the conversion to a cash
balance plan. A cash balance pension plan is a defined benefit plan.
Those employers and those employees are covered under the Pension
Benefit Guaranty Corporation. They pay premiums to the employer, and
the employee's pension is protected, and the cash balance plan is
protected there. And there has been no convergence of these over the
last 2 years, as there is a moratorium in effect as the Treasury
Department and others try to determine what the appropriate rules
should be for conversions.
Well, let us be honest. There have been over 500 conversions over the
last 15 years. In virtually every single one of them, the employer made
every employee whole. And it is almost impossible to find a case where
an employer did not keep an employee whole. And, as we have heard
before from the gentleman from Texas (Mr. Johnson), 80 percent of
workers do better under cash balance plans than under traditional
plans. Let us not forget, under a traditional plan, if you are a
younger worker and you leave, you take nothing with you, zero. Under a
cash balance plan, if you are a younger worker and you change jobs, you
can take the net benefits that you have got vested and move them just
like you can with a 401(k) account.
So we can sit here and castigate one or two examples of companies who
tried to do it the wrong way, who fixed it, but let us not castigate
the other 500 plus employers across the country who made these
conversions and did them successfully, working with their employees.
When it is all said and done, Mr. Speaker, we want to encourage more
employers to cover more of their employees with pension plans. We will
not accomplish that goal, and that is a bipartisan goal, if we
overregulate and drive up the cost of operating these plans. The
substitute offered by my friends across the aisle will do just that. It
is overkill. It should be defeated, and we should pass the underlying
bill.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Quinn). Pursuant to House Resolution
230, the previous question is ordered on the bill, as amended, and on
the further amendment by the gentleman from New Jersey (Mr. Andrews).
The question is on the amendment in the nature of a substitute
offered by the gentleman from New Jersey (Mr. Andrews).
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 193,
nays 236, not voting 5, as follows:
[Roll No. 187]
YEAS--193
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Bell
Bereuter
Berkley
Berman
Berry
Bilirakis
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Brady (PA)
Brown (OH)
Brown, Corrine
Brown-Waite, Ginny
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Case
Clay
Clyburn
Conyers
Cooper
Costello
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
[[Page H4089]]
Frost
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Harman
Hastings (FL)
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lynch
Majette
Maloney
Markey
Marshall
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Petri
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Taylor (MS)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NAYS--236
Akin
Alexander
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Biggert
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Boyd
Bradley (NH)
Brady (TX)
Brown (SC)
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carson (OK)
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Combest
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Dooley (CA)
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht
Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hill
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Janklow
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
Matheson
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Moore
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Sullivan
Sweeney
Tancredo
Tanner
Tauzin
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Turner (TX)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
NOT VOTING--5
Aderholt
Gephardt
Miller, Gary
Schrock
Young (FL)
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Quinn) (during the vote). The Chair
would remind Members there are 2 minutes remaining in this vote.
{time} 1542
Messrs. SOUDER, FRANKS of Arizona, GINGREY, SHAW, CARSON of Oklahoma,
TAUZIN and LEWIS of California changed their vote from ``yea'' to
``nay.''
Messrs. BILIRAKIS, PETRI, THOMPSON of Mississippi, SNYDER and CROWLEY
changed their vote from ``nay'' to ``yea.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
Stated against:
Mr. ADERHOLT. Mr. Speaker, on rollcall No. 187 I was inadvertently
detained. Had I been present, I would have voted ``nay.''
The SPEAKER pro tempore. The question is on the 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. I am, Mr. Speaker.
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. 1000 to the Committee on Education and the Workforce
with instructions to report the same back to the House
forthwith with the following amendment:
Page 92, insert after line 21 the following new section:
SEC. 217. PROTECTION OF PARTICIPANTS FROM CONVERSIONS TO
HYBRID DEFINED BENEFIT PLANS.
(a) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) Election to maintain rate of accrual in effect before
plan amendment.--Section 204(b)(1) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1054(b)(1)) is amended
by adding at the end the following new subparagraph:
``(I)(i) Notwithstanding the preceding subparagraphs, in
the case of a plan amendment to a defined benefit plan--
``(I) which has the effect of converting the plan to a plan
under which the accrued benefit is expressed to participants
and beneficiaries as an amount other than an annual benefit
commencing at normal retirement age (or which has a similar
effect as determined under regulations issued under clause
(iii)), and
``(II) which has the effect of reducing the rate of future
benefit accrual of 1 or more participants,
such plan shall be treated as not satisfying the requirements
of this paragraph unless such plan meets the requirements of
clause (ii).
``(ii) A plan meets the requirements of this clause if the
plan provides each participant who has attained 10 years of
service (as determined under section 203) under the plan at
the time such amendment takes effect with--
``(I) notice of the plan amendment indicating that it has
such effect, including a comparison of the present and
projected values of the accrued benefit determined both with
and without regard to the plan amendment, and
``(II) an election, on the date of the conversion, to
either receive benefits under the terms of the plan as in
effect on or after the effective date of such plan amendment
or to receive benefits under the terms of the plan as in
effect immediately before the effective date of such plan
amendment (taking into account all benefit accruals under
such terms since such date).
``(iii) The Secretary shall issue regulations under which
any plan amendment which has an effect similar to the effect
described in clause (i)(I) shall be treated as a plan
amendment described in clause (i)(I). Such regulations may
provide that if a plan sponsor represents in communications
to participants and beneficiaries that a plan amendment has
an effect described in the preceding sentence, such plan
amendment shall be treated as a plan amendment described in
clause (i)(I).''.
(2) Early retirement subsidy taken into account for
purposes of opening balance of hybrid defined benefit plan.--
Section 204(g) of such Act (29 U.S.C. 1054(g)) is amended by
adding at the end the following new paragraph:
``(6) In the case of a plan amendment to a defined benefit
plan which has the effect of converting the plan to a plan
under which the accrued benefit is expressed to participants
and beneficiaries as an amount other than an annual benefit
commencing at normal retirement age (or a plan amendment to
such plan having a similar effect as determined under
regulations issued under subsection (b)(1)(I)(iii)), such
amendment shall not be treated as reducing accrued benefits
merely because under such amendment any early retirement
benefit or retirement-type subsidy (within the meaning of
paragraph (2)(A)) is taken into account for purposes of the
opening balance of the amended plan.''.
(3) Interest rate for determinations relating to plan
conversions.--Section 204(g) of such Act (as amended by
paragraph (2)) is amended further by adding at the end the
following new paragraph:
``(7) For purposes of this subsection--
``(A) in the case of an amendment described in paragraph
(1) which takes effect on or after the enactment of this
paragraph,
[[Page H4090]]
the interest rate and mortality tables to be used in
determining the present value of the accrued benefit under
such amendment shall be the applicable rate and tables under
section 417(e)(3) of the Internal Revenue Code of 1986 as of
the date on which such amendment takes effect, and
``(B) in the case of amendments described in paragraph (1)
which took effect before the enactment of this paragraph, the
interest rate and mortality tables to be used in determining
the present value of the accrued benefit under such
amendments shall be the applicable rate and tables which were
in effect under section 412(l) of the Internal Revenue Code
of 1986 as of the effective date of the respective
amendment.''.
(b) Effective Date and Related Rules.--
(1) In general.--The amendments made by this section shall
apply to plan amendments taking effect after the date of the
enactment of this Act.
(2) Plan amendments subject to litigation.--The amendments
made by this section also shall apply to any plan amendment
taking effect on or before the date of the enactment of this
Act if--
(A) no determination letter is issued on or before such
date by the Internal Revenue Service which has the effect of
approving the plan amendment, and
(B) such plan amendment is, on April 8, 2003, subject to a
court action based on age discrimination.
(3) Special rule.--In the case of a plan amendment taking
effect before 90 days after the date of the enactment of this
Act, the requirements of section 204(b)(1)(I) of the Employee
Retirement Income Security Act of 1974 (as added by this
section) shall be treated as satisfied in connection with
such plan amendment, in the case of any participant described
in such section 204(b)(1)(I) in connection with such plan
amendment, if, as of the end of such 90-day period--
(A) the notice described in clause (i)(I) of such section
204(b)(1)(I) in connection with such plan amendment has been
provided to such participant, and
(B) the plan provides for the election described in clause
(i)(II) of such section 204(b)(1)(I) in connection with such
participant's retirement under the plan.
{time} 1545
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 (Mr. Quinn). Is there objection to the
request of the gentleman from California?
There was no objection.
The SPEAKER pro tempore. 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, this motion to recommit
provides that workers with 10 years of service with a company would
have the choice of whether or not to accept a cash balance retirement
plan or a defined benefit plan when a corporation decides that they
want to switch from a defined benefit plan to a cash balance plan.
We do nothing about the corporation's right to do so. That is simply
up to the corporations. Many corporations are doing this in an attempt
to save money. The question that my colleagues must answer is should
they be able to save that money by dramatically jeopardizing the
retirement nest egg and the retirement benefits of older workers in
that corporation.
The last time corporations did this before the moratorium, workers
lost somewhere up to 50 percent. Last time, according to the GAO, older
workers lost up to 50 percent of their retirement benefits. Individuals
that were 50, 55, 60 years old, they had no ability to recapture those
benefits. They could not work long enough. They could not make enough
money. They could not save enough in those jobs.
The question is whether we will allow them the election. Secretary
Treasurer Snow said that when he was chairman of the board at CSX
Corporation, he recommended and the corporation did this because it was
fair. He reminded us that when Congress switched its retirement plan,
we allowed every Member in Congress at that time to have an election.
He said that was the fair thing to do.
He said when he was on the board of Verizon, that he insisted that
they allow workers to have a choice in that plan to see which one they
would do better under. The company could save the money for all new
workers, and older workers would be made whole.
The gentleman from Ohio will tell my colleagues that some 500
corporations have converted, and they have made workers whole. That is
because that is the law. They are changing the law. They will no longer
be required to do that under the law.
When Jesse James and Billy the Kid and Bonnie and Clyde stole the
life savings of people in this country, we hunted them down like dogs.
Right now there are 300 corporations that have filed notice all over
the country, all different sizes, affecting thousands of workers, that
they are going to convert immediately upon the new Treasury ruling to a
cash balance system. The question is whether or not we will protect
these people against having their retirement benefits looted.
After a person gives this kind of service to a company, and they are
too old to recoup it, they ought to make sure that they do not lose
that benefit. That is what this amendment does, and I am going to tell
my colleagues, for those who do not think this will affect them,
several years ago we had this operation before the moratorium, IBM,
Kodak and others, and it blew up. On a bipartisan vote of over 300
Members of Congress, we sought to end that practice.
The Clinton administration put on a moratorium. Those companies ended
up giving their workers an election. It is the just and fair thing to
do. There is no other remedy other than this amendment for those
workers if the Treasury Department decides, as their original proposal
did, that it did not matter whether we gave workers a choice or not.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield to the
gentleman from Illinois (Mr. Emanuel).
(Mr. EMANUEL asked and was given permission to revise and extend his
remarks.)
Mr. EMANUEL. Mr. Speaker, I rise in strong support of the Democratic
substitute to H.R. 1000, the Pension Security Act.
The Republican bill just does not do enough to take care of
retirement security for American families. In particular, I support the
substitute's fight against cash balance conversion, which pulls the rug
out from under employees midcareer.
I worked on the moratorium that my colleague talked about when I was
in the White House. Today 500 companies have converted to cash balance.
There have been more than 1,000 age discrimination claims filed with
the EEOC over these plans. Three hundred fifty companies are on the
sidelines waiting to convert, which affects thousands upon thousands of
employees.
Cash balance conversion can be done right. They are a good financial
instrument if done effectively, but if we create winners and losers,
that is the wrong approach.
The right approach is to include a grandfather clause to ensure
workers who are 55 or older have a choice, that can work both for the
employees and the employers. There is a right way and a wrong way to go
about this.
I want to also speak about another situation in the bill. Even worse
than the cash balance, the bill fails to require companies to notify
employees when executives dump company stock or provide adequate notice
to employees of excessive stock holdings. This bill treats the CEO
retirement one way and treats employees' retirement another way: Two
sets of books, two sets of standards and two sets of values.
Mr. Speaker, in contrast, the Democratic substitute does two
important things. It protects workers when their pensions are converted
to cash balance plans, and it ensures that workers' and executives'
pension plans are treated equally.
Mr. BOEHNER. Mr. Speaker, I am opposed to the motion.
The SPEAKER pro tempore. The gentleman from Ohio is recognized for 5
minutes.
Mr. BOEHNER. Mr. Speaker, I appreciate the indulgence of the Members.
We all know that pension plans are voluntarily offered by employers
to their employees. For those of us that have worked in the pension
area for some time, we know that we have to walk a very delicate line
in terms of the regulations that we put around these plans so that we
do not drive employers and their employees out of the system.
We spend a lot of time on a bipartisan basis here trying to find ways
to encourage more companies to offer plans to their employees. Most of
those plans today would be defined contribution plans, like 401(k)
plans.
The traditional defined benefit plan that we would have and all
Federal employees would have is in serious trouble in America today. In
1986, we had
[[Page H4091]]
176,000 defined benefit plans in America. Today, we have less than
50,000, and the conversion from traditional pension plans to 401(k)-
type plans is going to continue. Why? We have so overregulated and
driven up the cost of offering defined benefit plans that these
conversions continue.
The whole issue of cash balance plans boils down to this: Cash
balance plans are a way to save defined benefit plans. Cash balance
plans are those where employers pay premiums into the Pension Benefit
Guaranty Corporation. Employees who have cash balance plans are
protected by the Pension Benefit Guaranty Corporation. So for those of
us who have tried to find ways to help save the traditional defined
benefit plan, the cash balance conversions are a way to save them.
There have been over 500 conversions over the last 15 years.
Virtually every single one of them have been successful, where
employers have found ways to make sure that all employees are made
whole. But do not be misunderstood. Eighty percent of employees benefit
greater under a cash balance plan than they would under a defined
benefit plan, and for younger workers who change jobs under a defined
benefit plan, a traditional plan, they do not get to move anything with
them, zero, but if they are vested in their cash balance plan, they can
move that, and it is much more portable than a traditional plan.
What the gentleman from California (Mr. George Miller) seeks to do is
to require employers to offer two plans, the traditional plan and the
cash balance plan. What this means is that the employer has to continue
offering both plans, which will mean we will not have conversions, and
if we do not have conversions, here is what will happen: The defined
benefit plans will continue to be scrapped. Let us watch when the
market begins to recover and the plans are healthier, companies will
eliminate their defined benefit plan and move to a defined contribution
plan, like a 401(k) plan. I do not think that is what most employees in
America want.
I would ask all of my colleagues, because on a bipartisan basis we
have worked to make sure that these cash balance plans worked, and they
worked fairly, my colleagues should also know there have been no
conversions the last 2 years, and that is because there is a moratorium
in effect. The Treasury Department had regulations out for comment.
They got lots of comments. They withdrew them. They are continuing to
work to find the right set of regulations to regulate these conversions
to cash balance plans. Let us let them do the technical work.
For Members on both sides of the aisle who have worked on these
pension issues in a bipartisan way, we understand that these
conversions will help save these plans. The underlying bill passed this
House with 209 Republican votes and 46 Democrat votes a year ago. The
underlying bill is a good bill that would help protect the pensions of
American workers. Let us stand up for American workers today.
Defeat the motion to recommit and vote for the underlying bill.
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.
Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the
yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair
will reduce to 5 minutes the minimum time for any electronic vote on
the question of passage.
The vote was taken by electronic device, and there were--yeas 202,
nays 226, not voting 6, as follows:
[Roll No. 188]
YEAS--202
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Case
Clay
Clyburn
Conyers
Cooper
Costello
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gonzalez
Goode
Gordon
Green (TX)
Grijalva
Gutierrez
Harman
Hastings (FL)
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lynch
Majette
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Ose
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Petri
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Whitfield
Woolsey
Wu
Wynn
NAYS--226
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Bereuter
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Combest
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht
Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Janklow
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Sullivan
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
NOT VOTING--6
Gephardt
Jefferson
Miller, Gary
Schrock
Towns
Young (FL)
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Quinn) (during the vote). There are 2
minutes remaining in this vote.
{time} 1612
Messrs. SMITH of Michigan, GALLEGLY, and CRAMER changed their vote
from ``yea'' to ``nay.''
[[Page H4092]]
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore. 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.
Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the
yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This is a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 271,
nays 157, not voting 6, as follows:
[Roll No. 189]
YEAS--271
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Bell
Bereuter
Berry
Biggert
Bilirakis
Bishop (UT)
Blackburn
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Boswell
Boyd
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Cardoza
Carson (IN)
Carson (OK)
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Combest
Costello
Cox
Cramer
Crane
Crenshaw
Crowley
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Dooley (CA)
Doolittle
Dreier
Duncan
Dunn
Edwards
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Frost
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Gonzalez
Goode
Goodlatte
Goss
Granger
Green (TX)
Green (WI)
Greenwood
Hall
Harman
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hill
Hobson
Hoekstra
Holden
Holt
Hooley (OR)
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Israel
Issa
Istook
Janklow
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kind
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
Lipinski
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney
Manzullo
Marshall
Matheson
McCarthy (NY)
McCotter
McCrery
McHugh
McInnis
McIntyre
McKeon
Mica
Miller (FL)
Miller (MI)
Moore
Moran (KS)
Murphy
Musgrave
Myrick
Neal (MA)
Nethercutt
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Ross
Royce
Ruppersberger
Ryan (WI)
Ryun (KS)
Sabo
Sandlin
Saxton
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Stearns
Stenholm
Sullivan
Sweeney
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Turner (TX)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Wu
Young (AK)
NAYS--157
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Berkley
Berman
Bishop (GA)
Bishop (NY)
Blumenauer
Boucher
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Case
Clay
Clyburn
Conyers
Cooper
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Gordon
Grijalva
Gutierrez
Gutknecht
Hastings (FL)
Hinchey
Hinojosa
Hoeffel
Honda
Hoyer
Inslee
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lofgren
Lowey
Lynch
Majette
Markey
Matsui
McCarthy (MO)
McCollum
McDermott
McGovern
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moran (VA)
Murtha
Nadler
Napolitano
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Rahall
Rangel
Reyes
Rodriguez
Rothman
Roybal-Allard
Rush
Ryan (OH)
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Scott (VA)
Serrano
Sherman
Slaughter
Smith (WA)
Solis
Spratt
Stark
Strickland
Stupak
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wynn
NOT VOTING--6
Blunt
Gephardt
Graves
Miller, Gary
Schrock
Young (FL)
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Quinn) (during the vote). Members are
advised that less than 2 minutes remain in this vote.
{time} 1619
Mr. WYNN changed his vote from ``yea'' to ``nay.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________