[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Extensions of Remarks]
[Page 427]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    THE EMPLOYEE PENSION FREEDOM ACT

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                           HON. GEORGE MILLER

                             of california

                    in the house of representatives

                       Tuesday, January 29, 2002

  Mr. GEORGE MILLER of California. Mr. Speaker, the following is a 
summary of the Employee Pension Freedom Act.

                         I. Improved Disclosure

       Annual Benefit Statements: pension plans would be required 
     to provide annual pension benefit statements to participants 
     and beneficiaries including notification of employee and 
     employer contributions that consist of employer stock and the 
     importance of a well balanced and diversified investment 
     portfolio for long term retirement security.
       Accurate Financial Information: in all pension plans where 
     participants make investment decisions, the employer and plan 
     administrator must provide all material investment 
     information to participants as required under securities law 
     to make investment decisions. Prohibits the employer or plan 
     administrator from making any misleading statements to 
     participants regarding the value of employer stock or other 
     investments available under the plan or from omitting 
     information relevant to the value of the stock or other 
     investment options.

            II. Strengthened Employee Diversification Rights

       Unrestricted Employee Choice Over Employee Contributions: 
     in pension plans where participants make investment 
     decisions, participants will have the right to allocate 
     employee contributions to any plan investment option 
     (eliminate current law rule permitting employers to require 
     10% employer stock holdings).
       Unrestricted Employee Choice Over Employer Contributions 
     When Vested: the plan administrator must notify all 
     participants upon vesting of the right to transfer employer 
     stock matching contributions to other plan investment 
     options; the plan administrator would have up to 30 days to 
     effect any requested transfer; in an ESOP, employees may 
     diversify employer matching contributions after 10 years of 
     service.

                 III. Improved Employee Account Access

       Faster Vesting for Employees: covered employees will be 
     vested in their employer contributions after completion of 
     one year of participation in the plan (many plans currently 
     vest after five or more years and some, like Enron, do not 
     permit employees to transfer employer contributions even 
     following vesting).
       30 Days Advance Notice of Plan ``Lockdowns'': the plan 
     administrator must provide at least 30 days advance written 
     notice of any plan change that would restrict a participant's 
     access to his or her account.
       No More Than 10 Business Days for Lockdowns: an employer or 
     plan administrator may not limit participant access to his or 
     her account for a period of more than 10 business days.

              IV. Adequate Legal Protection for Employees

       Fiduciaries Must Have Insurance or be Bonded: all defined 
     contribution plan fiduciaries shall maintain sufficient 
     fiduciary insurance or bonding to cover financial losses due 
     to breach of fiduciary duty as determined by the Secretary of 
     Labor.
       Employee Pension Plan Representation: in pension plans that 
     permit employees to direct control of their pension 
     investments, the plan must include an equal number of 
     employer and employee trustees to oversee the plan. Many 
     plans today have no employee trustees overseeing employees' 
     funds.
       No Waivers of Legal Rights: Employers may not require 
     participants to sign waivers of statutory pension rights as 
     part of a termination or severance agreement.
       Right to be Made Whole in Court: in cases of fiduciary 
     breach of duty by a fiduciary or knowing participant in a 
     breach, the plan or participants may be made whole by the 
     court.
       Improved Labor Department Assistance: the Department of 
     Labor shall establish an office of the Participant Advocate 
     which shall monitor potential abuses of employee pension plan 
     rights and assist pension plan participants in preventing and 
     resolving abuses.
       Feasibility Study for Guaranty Insurance: the PBGC shall 
     study and report to Congress no later than 3 years after 
     enactment the options for and feasibility of developing an 
     insurance guarantee system for defined contribution plans.

     

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