[Congressional Record (Bound Edition), Volume 148 (2002), Part 4]
[House]
[Pages 4301-4353]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      PENSION SECURITY ACT OF 2002

  Mr. BOEHNER. Mr. Speaker, pursuant to House Resolution 386, I call up

[[Page 4302]]

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

                               H.R. 3762

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

     SECTION 1. SHORT TITLE.

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

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

       (a) Pension Benefit Statements Required on Periodic 
     Basis.--
       (1) In general.--Subsection (a) of section 105 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1025) is amended by inserting ``and, in the case of an 
     applicable individual account plan, shall furnish at least 
     quarterly to each plan participant (and to each beneficiary 
     with a right to direct investments),'' after ``who so 
     requests in writing,''.
       (2) Information required from individual account plans.--
     Section 105 of such Act (29 U.S.C. 1025) is amended by adding 
     at the end the following new subsection:
       ``(e)(1) The quarterly statements required under subsection 
     (a) shall include (together with the information required in 
     subsection (a)) the following:
       ``(A) the value of investments allocated to the individual 
     account, including the value of any assets held in the form 
     of employer securities, without regard to whether such 
     securities were contributed by the plan sponsor or acquired 
     at the direction of the plan or of the participant or 
     beneficiary, and an explanation of any limitations or 
     restrictions on the right of the participant or beneficiary 
     to direct an investment; and
       ``(B) an explanation, written in a manner calculated to be 
     understood by the average plan participant, of the 
     importance, for the long-term retirement security of 
     participants and beneficiaries, of a well-balanced and 
     diversified investment portfolio, including a discussion of 
     the risk of holding substantial portions of a portfolio in 
     the security of any one entity, such as employer 
     securities.''.
       (3) Definition of applicable individual account plan.--
     Section 3 of such Act (29 U.S.C. 1002) is amended by adding 
     at the end the following new subsection:
       ``(42) The term `applicable individual account plan' means 
     any individual account plan, except that such term does not 
     include an employee stock ownership plan (within the meaning 
     of section 4975(e)(7) of the Internal Revenue Code of 1986) 
     unless there are any contributions to such plan (or earnings 
     thereunder) held within such plan that are subject to 
     subsection (k)(3) or (m)(2) of section 401 of the Internal 
     Revenue Code of 1986.''.
       (b) Civil Penalties for Failure To Provide Quarterly 
     Benefit Statements.--Section 502 of such Act (29 U.S.C. 1132) 
     is amended--
       (1) in subsection (a)(6), by striking ``(5), or (6)'' and 
     inserting ``(5), (6), or (7)'';
       (2) by redesignating paragraph (7) of subsection (c) as 
     paragraph (8); and
       (3) by inserting after paragraph (6) of subsection (c) the 
     following new paragraph:
       ``(7) The Secretary may assess a civil penalty against any 
     plan administrator of up to $1,000 a day from the date of 
     such plan administrator's failure or refusal to provide 
     participants or beneficiaries with a benefit statement on at 
     least a quarterly basis in accordance with section 105(a).''.

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

       (a) In General.--Section 101 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021) is amended--
       (1) by redesignating the second subsection (h) as 
     subsection (j); and
       (2) by inserting after the first subsection (h) the 
     following new subsection:
       ``(i) Notice of Suspension, Limitation, or Restriction on 
     Ability of Participant or Beneficiary To Direct Investments 
     in Individual Account Plan.--
       ``(1) In general.--In the case of an applicable individual 
     account plan, the administrator shall notify participants and 
     beneficiaries of any action that would have the affect of 
     suspending, limiting, or restricting the ability of 
     participants or beneficiaries to direct or diversify assets 
     credited to their accounts.
       ``(2) Notice requirements.--
       ``(A) In general.--The notices described in paragraph (1) 
     shall--
       ``(i) be written in a manner calculated to be understood by 
     the average plan participant and shall include the reasons 
     for the suspension, limitation, or restriction, an 
     identification of the investments affected, and the expected 
     period of the suspension, limitation, or restriction, and
       ``(ii) be furnished at least 30 days in advance of the 
     action suspending, limiting, or restricting the ability of 
     the participants or beneficiaries to direct or diversify 
     assets.
       ``(B) Exception to 30-day notice requirement.--In any case 
     in which--
       ``(i) a fiduciary of the plan determines, in writing, that 
     a deferral of the suspension, limitation, or restriction 
     would violate the requirements of subparagraph (A) or (B) of 
     section 404(a)(1), or
       ``(ii) the inability to provide the 30-day advance notice 
     is due to circumstances beyond the reasonable control of the 
     plan administrator,

     subparagraph (A)(ii) shall not apply, and the notice shall be 
     furnished as soon as reasonably possible under the 
     circumstances.
       ``(3) Changes in expected period of suspension, limitation, 
     or restriction.--If, following the furnishing of the notice 
     pursuant to this subsection, there is a change in the 
     expected period of the suspension, limitation, or restriction 
     on the right of a participant or beneficiary to direct or 
     diversify assets, the administrator shall provide affected 
     participants and beneficiaries advance notice of the change. 
     Such notice shall meet the requirements of paragraph 
     (2)(A)(i) in relation to the extended suspension, limitation, 
     or restriction.''.
       (b) Civil Penalties for Failure To Provide Notice.--Section 
     502 of such Act (as amended by section 2(b)) is amended 
     further--
       (1) in subsection (a)(6), by striking ``(6), or (7)'' and 
     inserting ``(6), (7), or (8)'';
       (2) by redesignating paragraph (8) of subsection (c) as 
     paragraph (9); and
       (3) by inserting after paragraph (7) of subsection (c) the 
     following new paragraph:
       ``(8) The Secretary may assess a civil penalty against any 
     person of up to $100 a day from the date of the person's 
     failure or refusal to provide notice to participants and 
     beneficiaries in accordance with section 101(i). For purposes 
     of this paragraph, each violation with respect to any single 
     participant or beneficiary, shall be treated as a separate 
     violation.''.
       (c) Inapplicability of Relief From Fiduciary Liability 
     During Suspension of Ability of Participant or Beneficiary To 
     Direct Investments.--Section 404(c)(1) of such Act (29 U.S.C. 
     1104(c)(1)) is amended--
       (1) in subparagraph (B), by inserting before the period the 
     following: ``, except that this subparagraph shall not apply 
     for any period during which the ability of a participant or 
     beneficiary to direct the investment of assets in his or her 
     individual account is suspended by a plan sponsor or 
     fiduciary''; and
       (2) by adding at the end the following:
     ``Any limitation or restriction that may govern the frequency 
     of transfers between investment vehicles shall not be treated 
     as a suspension referred to in subparagraph (B) to the extent 
     such limitation or restriction is disclosed to participants 
     or beneficiaries through the summary plan description or 
     materials describing specific investment alternatives under 
     the plan.''.

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

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--Section 204 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1107) is amended--
       (1) by redesignating subsection (j) as subsection (k); and
       (2) by inserting after subsection (i) the following new 
     subsection:
       ``(j)(1) An applicable individual account plan may not 
     acquire or hold any employer securities with respect to which 
     there is any restriction on divestment by a participant or 
     beneficiary on or after the date on which the participant has 
     completed 3 years of participation (as defined in subsection 
     (b)(4)) under the plan or (if the plan so provides) 3 years 
     of service (as defined in section 203(b)(2)) with the 
     employer.
       ``(2) For purposes of paragraph (1), the term `restriction 
     on divestment' includes--
       ``(A) any failure to offer at least 3 diversified 
     investment options in which a participant or beneficiary may 
     direct the proceeds from the divestment of employer 
     securities, and
       ``(B) any restriction on the ability of a participant or 
     beneficiary to choose from all otherwise available investment 
     options in which such proceeds may be so directed.''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Subsection (a) of section 401 of the 
     Internal Revenue Code of 1986 (relating to requirements for 
     qualification) is amended by inserting after paragraph (34) 
     the following new paragraph:

[[Page 4303]]

       ``(35) Limitations on restrictions under applicable defined 
     contribution plans on investments in employer securities.--
       ``(A) In general.--A trust forming a part of an applicable 
     defined contribution plan shall not constitute a qualified 
     trust under this subsection if the plan acquires or holds any 
     employer securities with respect to which there is any 
     restriction on divestment by a participant or beneficiary on 
     or after the date on which the participant has completed 3 
     years of participation (as defined in section 411(b)(4)) 
     under the plan or (if the plan so provides) 3 years of 
     service (as defined in section 411(a)(5)) with the employer.
       ``(B) Definitions.--For purposes of subparagraph (A)--
       ``(i) Applicable defined contribution plan.--The term 
     `applicable defined contribution plan' means any defined 
     contribution plan, except that such term does not include an 
     employee stock ownership plan (as defined in section 
     4975(e)(7)) unless there are any contributions to such plan 
     (or earnings thereunder) held within such plan that are 
     subject to subsections (k)(3) or (m)(2).
       ``(ii) Restriction on divestment.--The term `restriction on 
     divestment' includes--

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

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

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

       (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 
     advisor in connection with the provision of investment advice 
     by the fiduciary adviser, and
       ``(v) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice,
       ``(B) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(C) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(D) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(E) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(2) Standards for presentation of information.--The 
     notification required to be provided to participants and 
     beneficiaries under paragraph (1)(A) shall be written in a 
     clear and conspicuous manner and in a manner calculated to be 
     understood by the average plan participant and shall be 
     sufficiently accurate and comprehensive to reasonably apprise 
     such participants and beneficiaries of the information 
     required to be provided in the notification.
       ``(3) Exemption conditioned on continued availability of 
     required information on request for 1 year.--The requirements 
     of paragraph (1)(A) shall be deemed not to have been met in 
     connection with the initial or any subsequent provision of 
     advice described in paragraph (1) to the plan, participant, 
     or beneficiary if, at any time during the provision of 
     advisory services to the plan, participant, or beneficiary, 
     the fiduciary adviser fails to maintain the information 
     described in clauses (i) through (iv) of subparagraph (A) in 
     currently accurate form and in the manner described in 
     paragraph (2) or fails--
       ``(A) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(B) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(C) in the event of a material change to the information 
     described in clauses (i) through (iv) of paragraph (1)(A), to 
     provide, without charge, such currently accurate information 
     to the recipient of the advice at a time reasonably 
     contemporaneous to the material change in information.
       ``(4) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in paragraph (1) who has 
     provided advice referred to in such paragraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     subsection and of subsection (b)(14) have been met. A 
     transaction prohibited under section 406 shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(5) Exemption for plan sponsor and certain other 
     fiduciaries.--
       ``(A) In general.--Subject to subparagraph (B), a plan 
     sponsor or other person who is a fiduciary (other than a 
     fiduciary adviser) shall not be treated as failing to meet 
     the requirements of this part solely by reason of the 
     provision of investment advice referred to in section 
     3(21)(A)(ii) (or solely by reason of contracting for or 
     otherwise arranging for the provision of the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     subsection, and
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice.
       ``(B) Continued duty of prudent selection of adviser and 
     periodic review.--Nothing in subparagraph (A) shall be 
     construed to exempt a plan sponsor or other person who is a 
     fiduciary from any requirement of this part for the prudent 
     selection and periodic review of a fiduciary adviser with 
     whom the plan sponsor or other person enters into an 
     arrangement for the provision of advice referred to in 
     section 3(21)(A)(ii). The plan sponsor or other person who is 
     a fiduciary has no duty under this part to monitor the 
     specific investment advice given by the fiduciary adviser to 
     any particular recipient of the advice.
       ``(C) Availability of plan assets for payment for advice.--
     Nothing in this part shall

[[Page 4304]]

     be construed to preclude the use of plan assets to pay for 
     reasonable expenses in providing investment advice referred 
     to in section 3(21)(A)(ii).
       ``(6) Definitions.--For purposes of this subsection and 
     subsection (b)(14)--
       ``(A) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4),
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Exemption from prohibited transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions) 
     is amended--
       (A) in paragraph (14), by striking ``or'' at the end;
       (B) in paragraph (15), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following new paragraph:
       ``(16) any transaction described in subsection (f)(7)(A) in 
     connection with the provision of investment advice described 
     in subsection (e)(3)(B), in any case in which--
       ``(A) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(B) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(C) the requirements of subsection (f)(7)(B) are met in 
     connection with the provision of the advice.''.
       (2) Allowed transactions and requirements.--Subsection (f) 
     of such section 4975 (relating to other definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(7) Provisions relating to investment advice provided by 
     fiduciary advisers.--
       ``(A) Transactions allowable in connection with investment 
     advice provided by fiduciary advisers.--The transactions 
     referred to in subsection (d)(16), in connection with the 
     provision of investment advice by a fiduciary adviser, are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.
       ``(B) Requirements relating to provision of investment 
     advice by fiduciary advisers.--The requirements of this 
     subparagraph (referred to in subsection (d)(16)(C)) are met 
     in connection with the provision of investment advice 
     referred to in subsection (e)(3)(B), provided to a plan or a 
     participant or beneficiary of a plan by a fiduciary adviser 
     with respect to the plan in connection with any sale, 
     acquisition, or holding of a security or other property for 
     purposes of investment of amounts held by the plan, if--
       ``(i) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

       ``(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 
     advisor in connection with the provision of investment advice 
     by the fiduciary adviser, and
       ``(V) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice,

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

[[Page 4305]]

       ``(G) Definitions.--For purposes of this paragraph and 
     subsection (d)(16)--
       ``(i) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--

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

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

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

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

     SEC. 7. EFFECTIVE DATES AND RELATED RULES.

       (a) In General.--Except as provided in subsection (b), the 
     amendments made by sections 2, 3, 4, and 6 shall apply with 
     respect to plan years beginning on or after January 1, 2003.
       (b) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``January 1, 2003'' the date of 
     the commencement of the first plan year beginning on or after 
     the earlier of--
       (1) the later of--
       (A) January 1, 2004, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 2005.
       (c) Plan Amendments.--If the amendments made by sections 2, 
     3, and 4 of this Act require an amendment to any plan, such 
     plan amendment shall not be required to be made before the 
     first plan year beginning on or after January 1, 2005, if--
       (1) during the period after such amendments made by this 
     Act take effect and before such first plan year, the plan is 
     operated in accordance with the requirements of such 
     amendments made by this Act, and
       (2) such plan amendment applies retroactively to the period 
     after such amendments made by this Act take effect and before 
     such first plan year.
       (d) Amendments Relating to Investment Advice.--The 
     amendments made by section 5 shall apply with respect to 
     advice referred to in section 3(21)(A)(ii) of the Employee 
     Retirement Income Security Act of 1974 or section 
     4975(c)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2003.

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

                               H.R. 3762

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

Sec. 1. Short title and table of contents.

               TITLE I--IMPROVEMENTS IN PENSION SECURITY

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

            TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

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

                        TITLE III--STOCK OPTIONS

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

          TITLE IV--SOCIAL SECURITY AND MEDICARE HELD HARMLESS

Sec. 401. Protection of Social Security and Medicare.

               TITLE I--IMPROVEMENTS IN PENSION SECURITY

     SEC. 101. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Requirements.--
       (A) In general.--Section 105(a) of the Employee Retirement 
     Income Security Act of

[[Page 4306]]

     1974 (29 U.S.C. 1025(a)) is amended to read as follows:
       ``(a)(1)(A) The administrator of an individual account plan 
     shall furnish a pension benefit statement--
       ``(i) to each plan participant at least annually,
       ``(ii) to each plan beneficiary upon written request, and
       ``(iii) in the case of an applicable individual account 
     plan, to each plan participant (and to each beneficiary with 
     a right to direct investments) at least quarterly.
       ``(B) The administrator of a defined benefit plan shall 
     furnish a pension benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a plan participant or plan beneficiary of the 
     plan upon written request.
       ``(2) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written form or in electronic or 
     other appropriate form to the extent that such form is 
     reasonably accessible to the recipient.
       ``(3) In the case of an applicable individual account plan, 
     the requirements of paragraph (1)(A) shall be treated as met 
     if the quarterly statement (together with the information 
     required in subparagraphs (A) and (B) of subsection (d)(1)) 
     is available electronically in reasonably accessible form, 
     and the participant or beneficiary is provided at least once 
     each year a notice that such statement (together with such 
     information) is available in such form. Such notice shall be 
     in written, electronic, or other appropriate form.
       ``(4)(A) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator provides 
     the participant at least once each year with notice of the 
     availability of the pension benefit statement and the ways in 
     which the participant may obtain such statement. Such notice 
     shall be provided in written, electronic, or other 
     appropriate form, and may be included with other 
     communications to the participant if done in a manner 
     reasonably designed to attract the attention of the 
     participant.
       ``(B) The Secretary may provide that years in which no 
     employee or former employee benefits (within the meaning of 
     section 410(b) of the Internal Revenue Code of 1986) under 
     the plan need not be taken into account in determining the 3-
     year period under paragraph (1)(B)(i).''.
       (B) Conforming amendments.--
       (i) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (ii) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     clause (i) or (ii) of subsection (a)(1)(A) or clause (i) or 
     (ii) of subsection (a)(1)(B), whichever is applicable, in any 
     12-month period. If such report is required under subsection 
     (a) to be furnished at least quarterly, the requirements of 
     the preceding sentence shall be applied with respect to each 
     quarter in lieu of the 12-month period.''.
       (2) Information required from applicable individual account 
     plans.--Section 105 of such Act (as amended by paragraph (1)) 
     is amended further by adding at the end the following new 
     subsection:
       ``(d)(1) The statements required to be provided at least 
     quarterly under subsection (a) shall include (together with 
     the information required in subsection (a)) the following:
       ``(A) the value of investments allocated to the individual 
     account, including the value of any assets held in the form 
     of employer securities, without regard to whether such 
     securities were contributed by the plan sponsor or acquired 
     at the direction of the plan or of the participant or 
     beneficiary, and an explanation of any limitations or 
     restrictions on the right of the participant or beneficiary 
     to direct an investment; and
       ``(B) an explanation, written in a manner calculated to be 
     understood by the average plan participant, of the 
     importance, for the long-term retirement security of 
     participants and beneficiaries, of a well-balanced and 
     diversified investment portfolio, including a discussion of 
     the risk of holding more than 25 percent of a portfolio in 
     the security of any one entity, such as employer securities.
       ``(2) The value of any employer securities that are not 
     readily tradable on an established securities market that is 
     required to be reported under paragraph (1)(A) may be 
     determined by using the most recent valuation of the employer 
     securities.
       ``(3) The Secretary shall issue guidance and model notices 
     which meet the requirements of this subsection.''.
       (3) Definition of applicable individual account plan.--
     Section 3 of such Act (29 U.S.C. 1002) is amended by adding 
     at the end the following new paragraph:
       ``(42)(A) The term `applicable individual account plan' 
     means any individual account plan, except that such term does 
     not include an employee stock ownership plan (within the 
     meaning of section 4975(e)(7) of the Internal Revenue Code of 
     1986) unless there are any contributions to such plan (or 
     earnings thereunder) held within such plan that are subject 
     to subsection (k)(3) or (m)(2) of section 401 of the Internal 
     Revenue Code of 1986. Such term shall not include a one-
     participant retirement plan.
       ``(B) The term `one-participant retirement plan' means a 
     retirement plan that--
       ``(i) on the first day of the plan year--
       ``(I) covered only the employer (and the employer's spouse) 
     and the employer owned the entire business (whether or not 
     incorporated), or
       ``(II) covered only one or more partners (and their 
     spouses) in a business partnership (including partners in an 
     S or C corporation),
       ``(ii) meets the minimum coverage requirements of section 
     410(b) of the Internal Revenue Code of 1986 (as in effect on 
     the date of the enactment of this paragraph) without being 
     combined with any other plan of the business that covers the 
     employees of the business,
       ``(iii) does not provide benefits to anyone except the 
     employer (and the employer's spouse) or the partners (and 
     their spouses),
       ``(iv) does not cover a business that is a member of an 
     affiliated service group, a controlled group of corporations, 
     or a group of businesses under common control, and
       ``(v) does not cover a business that leases employees.''.
       (4) Civil penalties for failure to provide quarterly 
     benefit statements.--Section 502 of such Act (29 U.S.C. 1132) 
     is amended--
       (A) in subsection (a)(6), by striking ``(5), or (6)'' and 
     inserting ``(5), (6), or (7)'';
       (B) by redesignating paragraph (7) of subsection (c) as 
     paragraph (8); and
       (C) by inserting after paragraph (6) of subsection (c) the 
     following new paragraph:
       ``(7) The Secretary may assess a civil penalty against any 
     plan administrator of up to $1,000 a day from the date of 
     such plan administrator's failure or refusal to provide 
     participants or beneficiaries with a benefit statement on at 
     least a quarterly basis in accordance with section 
     105(a)(1)(A)(iii).''.
       (5) Model statements.--The Secretary of Labor shall, not 
     later than January 1, 2003, issue initial guidance and a 
     model benefit statement, written in a manner calculated to be 
     understood by the average plan participant, that may be used 
     by plan administrators in complying with the requirements of 
     section 105 of the Employee Retirement Income Security Act of 
     1974. Not later than 75 days after the date of the enactment 
     of this Act, the Secretary shall promulgate interim final 
     rules necessary to carry out the amendments made by this 
     subsection.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Provision of investment education notices to 
     participants in certain plans.--Section 414 of the Internal 
     Revenue Code of 1986 (relating to definitions and special 
     rules) is amended by adding at the end the following:
       ``(w) Provision of Investment Education Notices to 
     Participants in Certain Plans.--
       ``(1) In general.--The plan administrator of an applicable 
     pension plan shall provide to each applicable individual an 
     investment education notice described in paragraph (2) at the 
     time of the enrollment of the applicable individual in the 
     plan and not less often than annually thereafter.
       ``(2) Investment education notice.--An investment education 
     notice is described in this paragraph if such notice 
     contains--
       ``(A) an explanation, for the long-term retirement security 
     of participants and beneficiaries, of generally accepted 
     investment principles, including principles of risk 
     management and diversification, and
       ``(B) a discussion of the risk of holding substantial 
     portions of a portfolio in the security of any one entity, 
     such as employer securities.
       ``(3) Understandability.--Each notice required by paragraph 
     (1) shall be written in a manner calculated to be understood 
     by the average plan participant and shall provide sufficient 
     information (as determined in accordance with guidance 
     provided by the Secretary) to allow recipients to understand 
     such notice.
       ``(4) Form and manner of notices.--The notices required by 
     this subsection shall be in writing, except that such notices 
     may be in electronic or other form (or electronically posted 
     on the plan's website) to the extent that such form is 
     reasonably accessible to the applicable individual.
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) Applicable individual.--The term `applicable 
     individual' means--
       ``(i) any participant in the applicable pension plan,
       ``(ii) any beneficiary who is an alternate payee (within 
     the meaning of section

[[Page 4307]]

     414(p)(8)) under a qualified domestic relations order (within 
     the meaning of section 414(p)(1)(A)), and
       ``(iii) any beneficiary of a deceased participant or 
     alternate payee.
       ``(B) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(i) a plan described in clause (i), (ii), or (iv) of 
     section 219(g)(5)(A), and
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A),

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

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

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

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

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Notice requirements.--
       (A) In general.--Section 101 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021) is amended--
       (i) by redesignating the second subsection (h) as 
     subsection (j); and
       (ii) by inserting after the first subsection (h) the 
     following new subsection:
       ``(i) Notice of Suspension, Limitation, or Restriction on 
     Ability of Participant or Beneficiary To Direct Investments 
     in Individual Account Plan.--
       ``(1) Duties of plan administrator.--
       ``(A) In general.--In the case of any action having the 
     effect of temporarily suspending, limiting, or restricting 
     any ability of participants or beneficiaries under an 
     applicable individual account plan, which is otherwise 
     available under the terms of such plan, to direct or 
     diversify assets credited to their accounts, if such 
     suspension, limitation, or restriction is for any period of 
     more than 3 consecutive business days, the plan administrator 
     shall--
       ``(i) in advance of taking such action, determine, in 
     accordance with the requirements of part 4, that the expected 
     period of suspension, limitation, or restriction is 
     reasonable, and
       ``(ii) after making the determination under subparagraph 
     (A) and in advance of taking such action, notify the plan 
     participants and beneficiaries who are affected by such 
     action in accordance with this subsection.
       ``(B) Exceptions.--Subparagraph (A) does not apply in 
     connection with any suspension, limitation, or restriction--
       ``(i) which occurs by reason of the application of the 
     securities laws (as defined in section 3(a)(47) of the 
     Securities Exchange Act of 1934), or
       ``(ii) to the extent the suspension, limitation, or 
     restriction is a change to the terms of the plan disclosed to 
     participants or beneficiaries through the summary plan 
     description or materials describing specific investment 
     alternatives under the plan.
       ``(C) Business day.--For purposes of subparagraph (A), 
     under regulations prescribed by the Secretary, the term 
     `business day' means--
       ``(i) in the case of a security which is traded on an 
     established security market, any day on which such security 
     may be traded on the principal securities market of such 
     security, and
       ``(ii) in the case of a security which is not traded on an 
     established security market, any calendar day.
       ``(2) Notice requirements.--
       ``(A) In general.--The notices described in paragraph (1) 
     shall be written in a manner calculated to be understood by 
     the average plan participant and shall include--
       ``(i) the reasons for the suspension, limitation, or 
     restriction,
       ``(ii) an identification of the investments affected,
       ``(iii) the expected period of the suspension, limitation, 
     or restriction,
       ``(iv) a statement that the plan administrator has 
     evaluated the reasonableness of the expected period of 
     suspension, limitation, or restriction,
       ``(v) a statement that the participant or beneficiary 
     should evaluate the appropriateness of their current 
     investment decisions in light of their inability to direct or 
     diversify assets credited to their accounts during the 
     expected period of suspension, limitation, or restriction, 
     and
       ``(vi) such other matters as the Secretary may include in 
     the model notices issued under subparagraph (E).
       ``(B) Provision of notice.--Except as otherwise provided in 
     this subsection, notices described in paragraph (1) shall be 
     furnished to all participants and beneficiaries under the 
     plan at least 30 days in advance of the action suspending, 
     limiting, or restricting the ability of the participants or 
     beneficiaries to direct or diversify assets.
       ``(C) Exception to 30-day notice requirement.--In any case 
     in which--
       ``(i) a fiduciary of the plan determines, in writing, that 
     a deferral of the suspension, limitation, or restriction 
     would violate the requirements of subparagraph (A) or (B) of 
     section 404(a)(1), or
       ``(ii) the inability to provide the 30-day advance notice 
     is due to events that were unforeseeable or circumstances 
     beyond the reasonable control of the plan administrator,

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

     the requirement of this subsection that the notice be 
     provided to all participants and beneficiaries shall be 
     treated as met if the notice required under paragraph (1) is 
     provided to all the individuals referred to in subparagraph 
     (A) or (B) to whom the suspension, limitation, or restriction 
     applies as soon as reasonably practicable.
       ``(4) Changes in period of suspension, limitation, or 
     restriction.--If, following the furnishing of the notice 
     pursuant to this subsection, there is a change in the period 
     of the suspension, limitation, or restriction (specified in 
     such notice pursuant to paragraph (2)(A)(iii)) on the right 
     of a participant or beneficiary to direct or diversify 
     assets, the administrator shall provide affected participants 
     and beneficiaries notice of the change as soon as reasonably 
     practicable. In relation to the extended suspension, 
     limitation, or restriction, such notice shall meet the 
     requirements of paragraph (2)(D) and shall specify any 
     material change in the matters referred to in clauses (i) 
     through (vi) of paragraph (2)(A).
       ``(5) Regulatory exceptions.--The Secretary may provide by 
     regulation for additional exceptions to the requirements of 
     this subsection which the Secretary determines are in the 
     interests of participants and beneficiaries.

[[Page 4308]]

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

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

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of any applicable pension plan to meet the 
     requirements of subsection (e) with respect to any applicable 
     individual.
       ``(b) Amount of Tax.--The amount of the tax imposed by 
     subsection (a) on any failure with respect to any applicable 
     individual shall be $100.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Tax not to apply to failures corrected as soon as 
     reasonably practicable.--No tax shall be imposed by 
     subsection (a) on any failure if--
       ``(A) any person subject to liability for the tax under 
     subsection (d) exercised reasonable diligence to meet the 
     requirements of subsection (e), and
       ``(B) such person provides the notice described in 
     subsection (e) as soon as reasonably practicable after the 
     first date such person knew, or exercising reasonable 
     diligence should have known, that such failure existed and at 
     least 1 business day before the beginning of the transaction 
     restriction period.
       ``(2) Tax not to apply when providing notice not reasonably 
     practicable.--No tax shall be imposed by subsection (a) if, 
     in the case of the occurrence of an unforeseeable event, it 
     is not reasonably practicable to provide such notice before 
     the beginning of the transaction restriction period.
       ``(3) Overall limitation for unintentional failures.--
       ``(A) In general.--If the person subject to liability for 
     tax under subsection (d) exercised reasonable diligence to 
     meet the requirements of subsection (e), the tax imposed by 
     subsection (a) for failures during the taxable year of the 
     employer (or, in the case of a multiemployer plan, the 
     taxable year of the trust forming part of the plan) shall not 
     exceed $500,000. For purposes of the preceding sentence, all 
     multiemployer plans of which the same trust forms a part 
     shall be treated as 1 plan.
       ``(B) Taxable years in the case of certain controlled 
     groups.--For purposes of this paragraph, if all persons who 
     are treated as a single employer for purposes of this section 
     do not have the same taxable year, the taxable years taken 
     into account shall be determined under principles similar to 
     the principles of section 1561.
       ``(4) Waiver by secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive or otherwise inequitable relative to the 
     failure involved.
       ``(d) Liability for Tax.--The following shall be liable for 
     the tax imposed by subsection (a):
       ``(1) In the case of a plan other than a multiemployer 
     plan, the employer.
       ``(2) In the case of a multiemployer plan, the plan.
       ``(e) Notice of Transaction Restriction Period.--
       ``(1) In general.--The plan administrator of an applicable 
     pension plan shall provide written notice of any transaction 
     restriction period to each applicable individual to whom the 
     transaction restriction period applies (and to each employee 
     organization representing such applicable individuals).
       ``(2) Understandability.--The notice required by paragraph 
     (1) shall be written in a manner calculated to be understood 
     by the average plan participant and shall provide sufficient 
     information (as determined in accordance with guidance 
     provided by the Secretary) to allow recipients to understand 
     the timing and effect of such transaction restriction period.
       ``(3) Timing of notice.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the notice required by paragraph (1) shall be provided at 
     least 30 days before the beginning of the transaction 
     restriction period.
       ``(B) Disposition of stock or assets.--
       ``(i) In general.--If, in connection with the major 
     corporate disposition by a corporation maintaining an 
     applicable pension plan, there is the possibility of a 
     transaction restriction period--

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

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

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

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

     which maintains accounts for participants under the plan or 
     under which the accrued benefit of any participant depends in 
     whole or in part on hypothetical investments directed by the 
     participant.

[[Page 4309]]

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

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

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

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

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

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

       Section 404 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1104) is amended by adding at the end the 
     following new subsection:
       ``(e) The Secretary shall establish a program under which 
     information and educational resources shall be made available 
     on an ongoing basis to persons serving as fiduciaries under 
     employee pension benefit plans so as to assist such persons 
     in diligently and effectively carrying out their fiduciary 
     duties in accordance with this part.''.

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

       (a) Amendment to the Employee Retirement Income Security 
     Act of 1974.--Section 204 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1054) is amended--
       (1) by redesignating subsection (j) as subsection (k); and
       (2) by inserting after subsection (i) the following new 
     subsection:
       ``(j) Diversification Requirements for Individual Account 
     Plans that Hold Employer Securities.--
       ``(1) In general.--An applicable individual account plan 
     shall meet the requirements of paragraphs (2) and (3).
       ``(2) Employee contributions and elective deferrals 
     invested in employer securities.--In the case of the portion 
     of the account attributable to employee contributions and 
     elective deferrals which is invested in employer securities, 
     a plan meets the requirements of this paragraph if each 
     applicable individual may elect to direct the plan to divest 
     any such securities in the individual's account and to 
     reinvest an equivalent amount in other investment options 
     which meet the requirements of paragraph (4).
       ``(3) Employer contributions invested in employer 
     securities.--
       ``(A) In general.--In the case of the portion of the 
     account attributable to employer contributions (other than 
     elective deferrals to which paragraph (2) applies) which is 
     invested in employer securities, a plan meets the 
     requirements of this paragraph if, under the plan--
       ``(i) each applicable individual with a benefit based on 3 
     years of service may elect to direct the plan to divest any 
     such securities in the individual's account and to reinvest 
     an equivalent amount in other investment options which meet 
     the requirements of paragraph (4), or
       ``(ii) with respect to any employer security allocated to 
     an applicable individual's account during any plan year, such 
     applicable individual may elect to direct the plan to divest 
     such employer security after a date which is not later than 3 
     years after the end of such plan year and to reinvest an 
     equivalent amount in other investment options which meet the 
     requirements of paragraph (4).
       ``(B) Applicable individual with benefit based on 3 years 
     of service.--For purposes of subparagraph (A), an applicable 
     individual has a benefit based on 3 years of service if such 
     individual would be an applicable individual if only 
     participants in the plan who have completed at least 3 years 
     of service (as determined under section 203(b)) were taken 
     into account under paragraph (6)(B)(i).
       ``(4) Investment options.--The requirements of this 
     paragraph are met if--
       ``(A) the plan offers not less than 3 investment options, 
     other than employer securities, to which an applicable 
     individual may direct the proceeds from the divestment of 
     employer securities pursuant to this subsection, each of 
     which is diversified and has materially different risk and 
     return characteristics, and
       ``(B) the plan permits the applicable individual to choose 
     from any of the investment options made available under the 
     plan to which such proceeds may be so directed, subject to 
     such restrictions as may be provided by the plan limiting 
     such choice to periodic, reasonable opportunities occurring 
     no less frequently than on a quarterly basis.
       ``(5) Definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable individual account plan.--The term 
     `applicable individual account plan' means any individual 
     account plan, except that such term does not include an 
     employee stock ownership plan (within the meaning of section 
     4975(e)(7) of the Internal Revenue Code of 1986) unless there 
     are any contributions to such plan (or earnings thereon) held 
     within such plan that are subject to subsection (k)(3) or 
     (m)(2) of section 401 of the Internal Revenue Code of 1986.
       ``(B) Applicable individual.--The term `applicable 
     individual' means--
       ``(i) any participant in the plan, and
       ``(ii) any beneficiary of a participant referred to in 
     clause (i) who has an account under the plan with respect to 
     which the beneficiary is entitled to exercise the rights of 
     the participant.
       ``(C) Elective deferral.--The term `elective deferral' 
     means an employer contribution described in section 
     402(g)(3)(A) of the Internal Revenue Code of 1986 (as in 
     effect on the date of the enactment of this subsection).
       ``(D) Employer security.--The term `employer security' 
     shall have the meaning given such term by section 407(d)(1) 
     of this Act (as in effect on the date of the enactment of 
     this subsection).
       ``(E) Employee stock ownership plan.--The term `employee 
     stock ownership plan' shall have the same meaning given to 
     such term by section 4975(e)(7) of the Internal Revenue Code 
     of 1986 (as in effect on the date of the enactment of this 
     subsection).
       ``(F) Elections.--Elections under this subsection may be 
     made not less frequently than quarterly.
       ``(6) Exception where there is no readily tradable stock.--
     This subsection shall not apply with respect to a plan if 
     there is no class of stock issued by any employer maintaining 
     the plan (or by a corporation which is an affiliate of any 
     such employer, as defined in section 407(d)(7) as in effect 
     on the date of the enactment of this subsection) that is 
     readily tradable on an established securities market.
       ``(7) Transition rule.--
       ``(A) In general.--In the case of any individual account 
     plan which, on the first day of the first plan year to which 
     this subsection applies, holds employer securities of any 
     class that were acquired before such date and on which there 
     is a restriction on diversification otherwise precluded by 
     this subsection, this subsection shall apply to such 
     securities of such class held in any plan year only with 
     respect to the number of such securities equal to the 
     applicable percentage of the total number of such securities 
     of such class held on such date.
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage shall be as follows:

Applicable percentage: provisions are effective:
1st plan year...............................................20 percent.
2nd plan year...............................................40 percent.
3rd plan year...............................................60 percent.
4th plan year...............................................80 percent.
5th plan year or thereafter................................100 percent.
       ``(C) Elective deferrals treated as separate plan not 
     individual account plan.--For purposes of subparagraph (A), 
     the applicable percentage shall be 100 percent with respect 
     to--
       ``(i) employee contributions to a plan under which any 
     portion attributable to elective deferrals is treated as a 
     separate

[[Page 4310]]

     plan under section 407(b)(2) as of the date of the enactment 
     of this paragraph, and
       ``(ii) such elective deferrals.
       ``(D) Coordination with prior elections.--In any case in 
     which a divestiture of investment in employer securities of 
     any class held by an employee stock ownership plan prior to 
     the effective date of this subsection was undertaken pursuant 
     to other applicable Federal law prior to such date, the 
     applicable percentage (as determined without regard to this 
     subparagraph) in connection with such securities shall be 
     reduced to the extent necessary to account for the amount to 
     which such election applied.
       ``(8) Regulations.--The Secretary of the Treasury shall 
     prescribe regulations under this subsection in consultation 
     with the Secretary of Labor.''
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Section 401(a) of the Internal Revenue 
     Code of 1986 (relating to requirements for qualification) is 
     amended by inserting after paragraph (34) the following new 
     paragraph:
       ``(35) Diversification requirements for defined 
     contribution plans that hold employer securities.--
       ``(A) In general.--An applicable defined contribution plan 
     shall meet the requirements of subparagraphs (B) and (C).
       ``(B) Employee contributions and elective deferrals 
     invested in employer securities.--In the case of the portion 
     of the account attributable to employee contributions and 
     elective deferrals which is invested in employer securities, 
     a plan meets the requirements of this subparagraph if each 
     applicable individual in such plan may elect to direct the 
     plan to divest any such securities in the individual's 
     account and to reinvest an equivalent amount in other 
     investment options which meet the requirements of 
     subparagraph (D).
       ``(C) Employer contributions invested in employer 
     securities.--
       ``(i) In general.--In the case of the portion of the 
     account attributable to employer contributions (other than 
     elective deferrals to which subparagraph (B) applies) which 
     is invested in employer securities, a plan meets the 
     requirements of this subparagraph if, under the plan--

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

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

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

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

Applicable percentage: provisions are effective:
1st plan year...............................................20 percent.
2nd plan year...............................................40 percent.
3rd plan year...............................................60 percent.
4th plan year...............................................80 percent.
5th plan year or thereafter................................100 percent.

       ``(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 109, the amendments made by this section shall apply 
     to plan years beginning after December 31, 2002, and with 
     respect to employer securities allocated to accounts before, 
     on, or after the date of the enactment of this Act.
       (2) Exception.--The amendments made by this section shall 
     not apply to employer securities held by an employee stock 
     ownership plan which are acquired before January 1, 1987.

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

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Exemption from prohibited transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14)(A) Any transaction described in subparagraph (B) in 
     connection with the provision of investment advice described 
     in section 3(21)(A)(ii), in any case in which--
       ``(i) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,

[[Page 4311]]

       ``(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--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution which is subject to periodic examination and 
     review by Federal or State banking authorities,
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in

[[Page 4312]]

     such section) or a person described in section 202(a)(17) of 
     the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(17)) 
     (substituting the entity for the investment adviser referred 
     to in such section).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Exemption from prohibited transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions) 
     is amended--
       (A) in paragraph (14), by striking ``or'' at the end;
       (B) in paragraph (15), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following new paragraph:
       ``(16) any transaction described in subsection (f)(7)(A) in 
     connection with the provision of investment advice described 
     in subsection (e)(3)(B), in any case in which--
       ``(A) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(B) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(C) the requirements of subsection (f)(7)(B) are met in 
     connection with the provision of the advice.''.
       (2) Allowed transactions and requirements.--Subsection (f) 
     of such section 4975 (relating to other definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(7) Provisions relating to investment advice provided by 
     fiduciary advisers.--
       ``(A) Transactions allowable in connection with investment 
     advice provided by fiduciary advisers.--The transactions 
     referred to in subsection (d)(16), in connection with the 
     provision of investment advice by a fiduciary adviser, are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.
       ``(B) Requirements relating to provision of investment 
     advice by fiduciary advisers.--The requirements of this 
     subparagraph (referred to in subsection (d)(16)(C)) are met 
     in connection with the provision of investment advice 
     referred to in subsection (e)(3)(B), provided to a plan or a 
     participant or beneficiary of a plan by a fiduciary adviser 
     with respect to the plan in connection with any sale, 
     acquisition, or holding of a security or other property for 
     purposes of investment of amounts held by the plan, if--
       ``(i) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

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

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

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

       ``(ii) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the

[[Page 4313]]

     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, 
     2002.

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

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

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

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

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

       (a) In General.--Except as otherwise provided in this title 
     or in subsection (b), the amendments made by this title shall 
     apply with respect to plan years beginning on or after 
     January 1, 2003.
       (b) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``January 1, 2003'' the date of 
     the commencement of the first plan year beginning on or after 
     the earlier of--
       (1) the later of--
       (A) January 1, 2004, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 2005.
       (c) Plan Amendments.--If the amendments made by sections 
     101, 102, 103, and 104 of this Act require an amendment to 
     any plan, such plan amendment shall not be required to be 
     made before the first plan year beginning on or after January 
     1, 2005, if--
       (1) during the period after such amendments made by such 
     sections take effect and before such first plan year, the 
     plan is operated in accordance with the requirements of such 
     amendments made by such sections, and
       (2) such plan amendment applies retroactively to the period 
     after such amendments made by such sections take effect and 
     before such first plan year.
       (d) Amendments Relating to Investment Advice.--The 
     amendments made by section 104 shall apply with respect to 
     advice referred to in section 3(21)(A)(ii) of the Employee 
     Retirement Income Security Act of 1974 or section 
     4975(c)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2003.

            TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

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

       (a) Transition Rule Made Permanent.--Paragraph (1) of 
     section 769(c) of the Retirement Protection Act of 1994 is 
     amended--

[[Page 4314]]

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

     SEC. 202. REPORTING SIMPLIFICATION.

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

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

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

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

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

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

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

     SEC. 206. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

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

[[Page 4315]]

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

     SEC. 207. ANNUAL REPORT DISSEMINATION.

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

     SEC. 208. TECHNICAL CORRECTIONS TO SAVER ACT.

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

     SEC. 209. MISSING PARTICIPANTS.

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

     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

[[Page 4316]]

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

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

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

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

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

     SEC. 213. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

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

[[Page 4317]]

       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 2003.

     SEC. 214. BENEFIT SUSPENSION NOTICE.

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

     SEC. 215. STUDIES.

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

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

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

     SEC. 217. PROVISIONS RELATING TO PLAN AMENDMENTS.

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

                        TITLE III--STOCK OPTIONS

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

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

[[Page 4318]]

     paragraph (16), by striking the period at the end of 
     paragraph (17) and inserting ``; or'', and by inserting after 
     paragraph (17) the following new paragraph:
       ``(18) remuneration on account of--
       ``(A) a transfer of a share of stock to any individual 
     pursuant to an exercise of an incentive stock option (as 
     defined in section 422(b)) or under an employee stock 
     purchase plan (as defined in section 423(b)), or
       ``(B) any disposition by the individual of such stock.''.
       (b) Wage Withholding Not Required on Disqualifying 
     Dispositions.--Section 421(b) of such Code (relating to 
     effect of disqualifying dispositions) is amended by adding at 
     the end the following new sentence: ``No amount shall be 
     required to be deducted and withheld under chapter 24 with 
     respect to any increase in income attributable to a 
     disposition described in the preceding sentence.''.
       (c) Wage Withholding Not Required on Compensation Where 
     Option Price Is Between 85 Percent and 100 Percent of Value 
     of Stock.--Section 423(c) of such Code (relating to special 
     rule where option price is between 85 percent and 100 percent 
     of value of stock) is amended by adding at the end the 
     following new sentence: ``No amount shall be required to be 
     deducted and withheld under chapter 24 with respect to any 
     amount treated as compensation under this subsection.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to stock acquired pursuant to options exercised 
     after the date of the enactment of this Act.

          TITLE IV--SOCIAL SECURITY AND MEDICARE HELD HARMLESS

     SEC. 401. PROTECTION OF SOCIAL SECURITY AND MEDICARE.

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

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

                              {time}  1215

  However, in the chairman's opinion, government ought to watch very 
carefully what is occurring in this area because I believe there are a 
number of successful models that can be examined to help us in our 
dilemma of one of the key safety nets, the entitlement of Social 
Security, where over the next several years we are going to have to 
make several decisions about how we modify the Social Security system.
  It is, I think, significant that we are here today to put into place 
modest, but appropriate, changes in that structure in which workers 
have become owners, part or whole.
  Mr. Speaker, I yield to the gentleman from Arizona (Mr. Shadegg) for 
the purpose of a colloquy pointing to the fact that there is a 
difference between certain types of employee-owned companies, commonly 
known because of the law, as ESOPs.
  Mr. SHADEGG. Mr. Speaker, will the gentleman yield?
  Mr. THOMAS. I yield to the gentleman from Arizona.
  Mr. SHADEGG. Mr. Speaker, first I would like to clarify that the 
diversification requirements in the legislation do not apply to 
privately owned corporations, but only to those corporations whose 
securities are tradeable or traded on an established securities market.
  Mr. THOMAS. Mr. Speaker, the gentleman is correct. The 
diversification rules exempt privately held companies. Only public 
companies are subject to the rules.
  Mr. SHADEGG. Mr. Speaker, secondly, a company may continue to make 
contributions to such an employee stock ownership plan, an ESOP, for 
purposes of meeting the safe harbor provisions of the nondiscrimination 
test established by section 401(k), and that such contributions would 
not be subject to the diversification requirement established by this 
legislation.
  Mr. THOMAS. Mr. Speaker, the gentleman is correct. Employer 
contributions used to satisfy the 401(k) safe harbor test will not be 
subject to the diversification rules, as long as the contributions are 
made to a so-called pure ESOP, which is defined as an ESOP which holds 
no employee contributions, no employer-matching contributions, and no 
employer contributions used to meet the nondiscrimination test.
  Mr. Speaker, I reserve the balance of my time.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, first, I thank the distinguished chairman for that 
eloquent essay against communism. It is refreshing to know that this 
bill is trying to minimize the class differences that we have in this 
Nation between the captains of industry and employees, that this gap is 
being closed.
  Most of us thought this was a question about the Enron scandal. Most 
of us thought, like the President, that we ought to repair the damages 
that have been made to see that it does not happen to employees in the 
future. Most of us thought that this was a tax issue since the 401(k)s, 
that so many employees, rank and file employees, got hurt by with 
Enron, that we on the Committee on Ways and Means would be providing 
the leadership for the House

[[Page 4319]]

in order to repair the code so that these things would not happen 
again.
  Instead, the debate is led off by the Committee on Education and the 
Workforce by the gentleman from Ohio (Mr. Boehner). It is good to know 
that things are getting better and the gap is getting closed, but to 
say that we do not know what is in this bill is similar to a statement 
we heard yesterday, nobody knew what was in the taxpayer bill.
  When the day is over, the vote is going to be which side were Members 
on. Were Members with the executives that managed to protect their 
pensions and not pay taxes on it; or were Members with employees that, 
as the President said, as the sailors of this ship, they should have 
the same rights as the captains do?
  Here we find that the captains of the Enron ship jumped ship and took 
the lifeboats with them, took the lifesavers with them, and employees 
sunk and lost their life savings. We want to know what we do about it 
today. Of course the Member says modest adjustments. That is code words 
for we do nothing about it today.
  Some of us on the committee voted for it because we were under the 
impression that we could work out our differences and really put some 
teeth in this, and to try in some way to bring to the floor a 
bipartisan bill so the American people would believe as it relates to 
pension, there was some equity, some parity between how we treat 
executives and how we treat the rank and file.
  We see here that the issue is not communism versus capitalism, it is 
campaign contributions versus doing the right thing.
  I hope as the question was put to us yesterday, whether or not we 
should maintain loopholes for people to make campaign contributions 
that we thought we had closed, or whether or not people want to do the 
right thing, that we do not have people walking in lockstep to party 
leaders, but we have Members doing the right thing because that is what 
is expected of us. The closer we get to election, the more honestly we 
will be seeing our votes.
  Mr. Speaker, I ask Members to listen not to the virtues of capitalism 
that we all really treasure, support, adore and want to maintain, and 
not in attacking communism because I think we have won that argument, 
but which side are Members on: the highly paid executives or protecting 
the rank-and-file employees.
  Mr. Speaker, I reserve the balance of my time.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I find it ironic that the gentleman closed his statement 
right along the same class lines that I said have been blurred 
significantly. I was not talking about communism; I was talking about 
Marxism.
  The gentleman's reference that the captains of industry get to be 
treated differently than their employees is one of the reasons we are 
here today. If the gentleman would turn to page 75 of the bill, the 
gentleman would find section 108, which clearly prohibits the so-called 
captains from participating in activities that the employees are 
denied. Exactly the point that the gentleman makes is contained in the 
legislation.
  In addition to that, the reason we are here today with a shared 
committee responsibility is because in 1974 Congress passed, and the 
President signed, the Employer Retirement Income Security Act, known as 
ERISA. The jurisdiction of the Committee on Ways and Means is to the 
Tax Code. The jurisdiction of the Committee on Education and the 
Workforce is to that portion of the law known as ERISA. As is 
oftentimes the case, there are two different sections of the law.
  Mr. Speaker, if the gentleman would wish that the Committee on Ways 
and Means also controlled the ERISA portion of the code, the Chair 
would reach out to the gentleman, and we could try to figure out a way 
to put that under our jurisdiction as well. But at least temporarily, 
it is under the jurisdiction of the Committee on Education and the 
Workforce. They have to be accommodated since that is their 
jurisdiction.
  It was a pleasure to work with the chairman of that committee, the 
gentleman from Ohio (Mr. Boehner), in putting together this package.
  Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from New York 
(Mr. Houghton), who is someone who understands the relationship between 
owners and workers and the change that has occurred over time in that 
relationship, the chairman of the Subcommittee on Oversight of the 
Committee on Ways and Means.
  Mr. HOUGHTON. Mr. Speaker, I would like to support the pension 
improvements in this legislation, and I want to talk briefly about 
three issues.
  First of all, payroll taxes on stock options: for over 30 years, 
since 1971, the IRS has taken the position that employee purchases of 
company stock and stock options do not give rise to employment tax 
obligations. Now the IRS is totally reversing its position, and 
employees I am sure will consider this a tax increase.
  What this bill does is to preserve that 30-year policy which we have 
been operating under for so many years. In addition to higher taxes, 
several adverse consequences, I feel, are likely to flow from the 
failure to address the problem.
  First of all, employee stock purchases will be depressed, reversing 
the trend in recent years toward greater ownership. Also, because 
employment taxes are higher until an employee reaches the maximum 
Social Security wage base of approximately $85,000, the change will 
also tend to harm those earning below the maximum wage base more than 
those earning above it. For the same reason, it is going to become more 
expensive for companies to award stock options to the average worker 
because employers will bear half the burden of employment taxes. By 
enacting this legislation, we will preserve existing laws on the 
incentive stock options.
  Secondly, some outside the process have criticized other aspects of 
the bill for creating loopholes. I do not believe that. Democrats have 
joined Republicans in calling these loopholes reform. I hope they are 
reforms. What this does is fix mechanical rules that produce irrational 
results.
  The simplification provision that is now criticized merely directs 
the Department of Treasury and Department of Labor to develop 
simplified annual reporting requirements for businesses with fewer than 
25 employees. I have a feeling that the Democratic substitute, although 
well intentioned, is likely to have the unintended consequence of 
sharply restricting the availability of the 401(k) plans. Right now the 
401(k) plans are a critical part of the structure of incentives for 
individual savings that we have built into our tax codes. These 
incentives can only be offered to employees if employers participate.
  The Enron fraud has taught us the need for diversification to protect 
a workers' plan. This substitute would impose tough conditions on plan 
administrators that the best-run companies will have to reevaluate 
their decision to offer these tax-favored saving plans. They are all 
voluntary. I do not believe this is what was intended by this 
particular legislation.
  Mr. Speaker, I support the pension improvement plan. I support the 
security plan, H.R. 3762.
  Mr. RANGEL. Mr. Speaker, I ask unanimous consent to yield the balance 
of my time to the gentleman from California (Mr. Stark) for purposes of 
control.
  The SPEAKER pro tempore (Mr. Latham). Is there objection to the 
request of the gentleman from New York?
  There was no objection.
  Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from Texas 
(Mr. Green).
  Mr. GREEN of Texas. Mr. Speaker, I appreciate the opportunity to 
speak, as I am not on either the Committee on Ways and Means or the 
Committee on Education and the Workforce, but when Enron started to 
collapse, many people in Houston saw their life savings evaporate 
before their eyes.
  My constituents' hands were tied because Enron executives prevented 
them from touching the 401(k)s, even though

[[Page 4320]]

these same executives were able to unload their stock by other means as 
it continued to spiral down. Innocent employees and investors lost all 
their investments while the CEO and executives cut their losses with 
their stock losses and deferred compensation. Congress should be able 
to stand up to these folks who take free enterprise and abuse it, these 
corporate insiders who took advantage of their employees' trust.
  This legislation, as I look at it, and I know that we have two 
different committees working on it, does little to help the average 
rank-and-file worker who could do nothing to prevent what was happening 
at Enron. This reminds me of a saying from Texas that we can put 
earrings and lipstick on a pig and call her Monique, but it is still a 
pig. Even with earrings and lipstick, this bill does not do much to 
prevent future Enrons.
  Mr. Speaker, I do not want to throw out the baby with the bath water, 
and I agree that we need to continue the efforts for stock options and 
ESOPs; but somehow we have to send the message by legislation that we 
will not have what has happened at Enron ever happen again.
  The President said he wanted the CEOs treated the same as the 
workers. The Democratic substitute does that. It makes sure that 
executives play on the same field as their workers and investors. If 
employees are prohibited from selling their stock, executives should 
be, too, without any special dealings or deferred-compensation ways 
that they can get to their stock, and that is what the Republican bill 
that we have today does not do. The majority bill, even with the 
earrings and lipstick, is still no beauty.

                              {time}  1230

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

[[Page 4321]]

Means participated in, and have a bipartisan bill that can enjoy broad 
support in this body and that we can send to the President and get 
enacted into law. That is not the legislation before us. I hope we will 
have that when it returns from the other body.
  Mr. PORTMAN. Mr. Speaker, I yield myself 30 seconds.
  I would like to thank the gentleman from Maryland (Mr. Cardin) for 
the good work he did on this legislation. As he says, the majority of 
this legislation is the product of the Committee on Ways and Means and 
the Portman-Cardin legislation.
  He indicated that there were two areas he had disagreements: The 
workability of the 3-year rolling provision, that of course can be done 
as an option for the company. Second, he talked about his concern about 
the conflict situation of giving investment advice. We are very close 
on that one as well. I just want to underline the fact that we are very 
close in this legislation. I think, in fact, that this legislation is 
bipartisan still. I assume it will be. I look forward to working with 
him into the future to addressing those relatively small concerns in a 
good bill.
  Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Arizona 
(Mr. Hayworth).
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague from Ohio for 
yielding me the time, and I appreciate the comments from my good friend 
from Maryland. If you listened closely, while there were some 
disagreements as to what is transpiring in the bill that my friend from 
Ohio addressed, there seems to be more of a concern about process, and 
we have joint jurisdiction with the Committee on Education and the 
Workforce and some of these questions of process can be worked out in 
the course of the legislation.
  But what we do in this bill is address a definite need. This is an 
example where the House of Representatives responds to a challenge that 
confronts the American people. It is precisely because of the 
diversification rights that I would recommend this legislation. Plans 
would be required to offer at least three investment options other than 
company stock and to allow employees to change investment options at 
least quarterly. Employees must have the option of investing their own 
contributions in any investment option offered by the plan. Employers 
would be allowed to match in the form of company stock. However, 
employees would be allowed to sell this stock and diversify into other 
assets according to a couple of different options, a 3-year service 
option or a 3-year rolling option.
  Another concern addressed by this legislation is that it strikes a 
balance. Mr. Speaker, many folks in Arizona have come to me about ESOPs 
and what goes on there, and it is important to note that the new 
diversification rules would apply only to plans that hold publicly 
traded employer securities and to plans that are not pure ESOPs. A pure 
ESOP does not hold any employee contributions, employer matching 
contributions, or employer contributions used to meet nondiscrimination 
tests.
  As you take a look at this legislation, it actually enlarges and 
improves access to retirement security. It would make it easier for 
small businesses to start and maintain pension plans. It will simplify 
reporting requirements for pension plans with fewer than 25 
participants.
  If the question is access to pension security, it only makes sense to 
enlarge the possibilities for small business, and we should really 
redefine that as essential business since more Americans are employed 
by small businesses than all the corporations of the United States, we 
are able to set up a mechanism so that they can actually come up with 
their own plans, with their own pension programs, and it will provide 
for discounted insurance premiums that small businesses pay to the 
Pension Benefit Guaranty Corporation.
  On balance, this legislation strikes a balance. It is an appropriate 
first step. I urge passage of the legislation.
  Mr. STARK. Mr. Speaker, I yield myself 4 minutes.
  As many speakers who have gone before suggest, this bill points out 
so clearly the difference between the Republicans and the Democrats. 
Not only is this bill terribly unfair to the average working person and 
abundantly generous to rich and high-paid executives and to the 
insurance industry who are contributing to the authors of this plan for 
the munificent tax loopholes it creates, but in structuring the plan in 
the dead of night, there were provisions put back into the bill in the 
Committee on Ways and Means which further discriminate against the 
average worker in the small business.
  This is not about creating plans which, of course, is what the 
Republicans would like to do, to create plans for the rich executives. 
This is about fairness in coverage. This is how many people are covered 
by the plan in a fair way.
  We have had for many years antidiscrimination laws which this bill 
attempts to eliminate. These have been a subject of contention time and 
time again as the Republicans, if you choose to support that 
philosophy, would give tax loopholes to the very rich and ignore the 
average working person. This has been the interest of the people 
selling the plan, selling the investments, selling the insurance or 
selling the service, is to line the pockets of the rich who, of course, 
will continue their contributions to the Republican campaigns at the 
expense of the average working person who will get precious little from 
these plans.
  Why we should continue to think that we can say this helps anybody to 
retire, it helps a very small percentage of very rich people or small 
business owners to retire. And who pays for that? The average taxpayer 
pays for that. We pay for that tax loophole. And the price that we were 
previously extracting was that that small business owner had to give an 
equivalent protection to every employee in his or her business. This 
bill eviscerates that idea.
  There is some claptrappy language in here that will turn it over to 
the Secretary of the Treasury, but if the Secretary of the Treasury 
does nothing, there will be no requirement for antidiscrimination laws. 
And guess who will have won? The Republican Party and their rich 
friends and the people who sell these plans, the investment brokers and 
the insurance agents who do it. What is worse is that it was brought 
into the bill in the dead of night without the knowledge of the 
Democrats on the committee. To me, this is underhanded, it is sneaky, 
and it is indeed the operating procedure of the Republican Party.
  I cannot help but suggest, because our chairman brought up the idea 
of Marxism, and I guess he used to teach history or something like that 
at some junior college, and he might remember that it was in a European 
country in the thirties that the fascist leader of that country 
enlisted the corporate executives to support a war effort in the fight 
against Marxism and, in the process, enslaved the workers. This seems 
to be the pattern that the Republicans in this House are following 
today, by sneaking through in the dead of night, not telling us the 
truth about what is in the bill, and harming the average working 
American to the benefit of the very rich business owners. That is 
wrong, that is obscene, that is immoral.
  Vote ``no'' on the bill.

                              {time}  1245

  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, that was pretty good theater, and I guess I have to 
compliment the gentleman for his partisanship, but there was no basis 
in fact for almost anything he just said.
  This was done without the Democrats knowing about it? It is the 
Portman-Cardin legislation that has been voted five times on the floor 
of this House. You have voted for it, sir. There was a 36-to-2 vote out 
of the Committee on Ways and Means. It was in H.R. 10. It was in all 
the previous legislation that has come before this floor. It was passed 
by this House by over 400 votes. It has been fully vetted.
  The way in which the gentleman described it is, frankly, inaccurate. 
Let

[[Page 4322]]

me quote the gentleman: ``There is no requirement for any 
nondiscrimination testing.''
  Where does that come from? The gentleman from Maryland (Mr. Cardin) 
is on the floor here, as is the gentleman from North Dakota (Mr. 
Pomeroy) on the other side of the aisle. They have worked well on a 
bipartisan basis with us to put forward this legislation over the 
years. Frankly I am, again, very disappointed that we cannot have a 
debate on the merits.
  Let us talk about the facts. I know the gentleman has a disagreement 
with some of the facts. I know the gentleman is not for the investment 
advice part of this bill. The gentleman from Maryland (Mr. Cardin) made 
it clear he is not. I respect that.
  But I would urge on both sides of the aisle that we try to stick to 
the facts as we are talking about pension reform, not that we should 
not on every issue, but this one has been historically bipartisan, and 
it is so important to the workers of this country, including the 55 
million people who now take advantage of defined contribution plans.
  It is the 70 million Americans who have no plan, primarily because 
small businesses do not offer them, that need our help. That is what 
this relatively modest provision that the gentleman referenced as being 
``a Republican idea that was brought up in the dark of the night'' is 
all about. It is one that has been supported by Democrats and 
Republicans alike, it is one that was fully vetted over a 5-year 
period, it is one that has been the subject of hearings and markups; it 
is one that will help small businesses to be able to offer plans by 
giving them just a little relief from the rules, the regulations, the 
costs and burdens under the pension rules, and it does not, does not, I 
repeat, eliminate the need for nondiscrimination testing.
  Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr. 
Weller).
  Mr. WELLER. Mr. Speaker, I rise in support of this legislation, 
legislation which has so much bipartisan work invested in this 
legislation, the Pension Security Act of 2002. I commend the gentleman 
from Ohio (Mr. Portman) and the gentleman from California (Mr. Thomas) 
and the gentleman from Ohio (Mr. Boehner), who have led this effort to 
bring this legislation to the floor.
  We have all learned over the last several months of some terrible 
things that occurred in Enron and Global Crossing and how they have 
impacted the retirement savings of the workers of those companies, and 
certainly we want to find a solution. We are going to hear the rhetoric 
of some who are going to choose to seize this as an opportunity for 
name calling and partisanship and class warfare.
  We are also going to see Members of this House who are going to rise 
up and do the right thing, and that is offer a solution, a solution 
that does what we want to achieve, and that is to protect workers and 
to strengthen retirement savings.
  That is what this is all about, pension security. That is why I stand 
in strong support of this legislation.
  Let us look at what this bill does for America's workers. It empowers 
employees. Employee rights and protections are enhanced without further 
burdensome regulations. The bill also gives employees more control over 
the investment of their accounts once they own or become fully vested 
with that money. It also requires employers to notify workers in 
advance of a blackout so that employees have the same opportunity to 
make changes before the restrictions come into effect.
  I would also note that employees are given the opportunity for 
investment education, something that many employees have told me they 
are looking for, because we give them in this legislation the 
opportunity for investor education and access to professional 
investment advice, and that is all improved with this bill.
  We also help employers, because we want to encourage employers to 
provide pension benefits, because we want to encourage, particularly 
smaller employers, to provide retirement savings opportunities for 
their employees because they are the ones, frankly, that have a harder 
time doing it because of the regulatory and administrative costs. And 
this House has worked so hard with the leadership of the gentleman from 
Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin) to make 
it easier for small employers to offer pensions.
  This bill also reduces costs and regulatory burdens for employers who 
voluntarily sponsor pension plans. I would note that thanks to the 
leadership of the gentleman from New York (Mr. Houghton), this 
legislation prevents the IRS and the Federal Government from imposing 
further taxes on employee stock options. If we do not pass this 
legislation, workers who have employee stock options may suffer payroll 
taxes. We do not want that to happen.
  This legislation deserves bipartisan support. It would make it easier 
for small employers to provide retirement savings opportunities for 
their workers. We empower employees. It is a bipartisan bill and 
deserves bipartisan support. Let us do the right thing. We have a 
solution. I urge support.
  Mr. STARK. Mr. Speaker, I yield 4\1/4\ minutes to the gentleman from 
Texas (Mr. Doggett).
  Mr. DOGGETT. Mr. Speaker, I thank the gentleman for yielding me time.
  In the aftermath of the Enron-Andersen fiasco, certainly we should be 
concerned about activity that was lawless. But I believe we here in 
Congress need to be equally concerned about activity that was lawful, 
but simply awful, in its impact on American families.
  This is a scandal involving the deliberate decisions of policymakers 
in this House of Representatives to allow and overlook loopholes, 
shortcuts, back doors, exemptions, and exceptions that riddle our laws, 
that provide special protection and special opportunities to special 
interests that devote such energy to lobbying us here in Washington. It 
works to the detriment of blameless employees at Andersen and Enron and 
at companies across this country, the blameless participation of 
retirees and investors and of taxpayers who work hard to contribute to 
make this the great country that it is.
  And for those Enron employees who lost all their life savings, for 
those taxpayers that are out there completing their tax return and 
wondering why it was that Enron did not pay a dime in taxes, for all 
those people across America who are saying ``there ought to be a law to 
do something about this,'' those folks do not need to look any further 
than the House Committee on Ways and Means that has responsibility for 
people paying their taxes and for protecting pensions, to ask why did 
they not do something about it. Why do they continue to enable and 
facilitate and encourage companies like Enron to not pay a dime on 
their taxes, while Americans are working hard to pay for the costs of 
the security of this country? Why have they been so indifferent to 
ordinary workers that are concerned about their pension security?
  This bill is not about the protection of pensions for hard-working 
employees; it is about political cover for Members of Congress who have 
not done very much about these kinds of problems in the past. It is 
based on the premise of how very little can this Congress do and still 
go out with a straight face and say they have done something about this 
problem.
  Let me tell you, if your family's future is dependent upon an 
employee pension plan, and you are asking what is this Congress doing 
to protect me, to protect my family, what is this Congress doing to 
prevent another Enron-type debacle from destroying our retirement 
security, the answer is practically nothing.
  That is not just my assessment, that was the assessment of the 
American Association of Retired Persons when this bill came out of 
committee, and I am proud to have voted against it. That was also the 
assessment of the New York Times on the front page yesterday--serious 
concerns that have not been answered by supporters of this bill.
  In fact, a former Treasury official said the bill opens the door to 
discrimination between executive and lower-paid workers.

[[Page 4323]]

  While its proponent did not have time to take care of ordinary folks, 
they could certainly provide new favors for highly-paid workers.
  If management tells you to buy more company stock while they are 
selling theirs, does management have to tell even the pension plan that 
it made these sales? No, not under this bill. If management continues 
to stuff your retirement plan with company stock, is that illegal? Not 
only is it lawful, they give a tax break to the company if they do 
that. And they tell us a company can give some advice to people: ``We 
will let Jeff Skilling go out and hire a consultant to advise people to 
sell their Enron stock.'' If you believe that, I am sure the Brooklyn 
Bridge is available for you.
  A company under this bill can continue to encourage employee 
contributions of company stock and hire an advisor to give advice 
limited to other investment issues. It is more conflicted interests 
atop the very kind of conflicted interests we have had in the past.
  I am so pleased that the gentleman from California (Chairman Thomas) 
brought up Marx, because I am a real fan of their movies. I can tell 
you that what this bill does in the way of pension protection for 
American families is just about as much as if we turned the job over to 
Groucho, Harpo and Chico.
  Mr. PORTMAN. Mr. Speaker, I yield myself 1\1/2\ minutes.
  Mr. Speaker, the gentleman said that there is a New York Times 
article that has not been responded to. We have spent a good part of 
today responding to it and its inaccuracies.
  Just to do it once more, because the gentleman said we had not 
responded, the provision we are talking about is to be able to use a 
facts-and-circumstances test at the Department of Treasury when a plan 
is fair on its face. It is entirely within the discretion of the 
Department of Treasury to determine the procedures for that. It is 
entirely within their discretion to say even though your plan is fair, 
even though it treats everybody the same, even though you have a 
uniform benefit all the way through, still you do not meet the test.
  There are circumstances where a plan is perfectly fair. In fact, you 
could have a uniform benefit for every level of paid worker in the 
plan, but because one of the workers at the middle or higher level came 
on to the plan at an earlier age, it might not meet the specific 
mathematical tests that the Treasury Department uses.
  There needs to be some kind of test, but tests are just that; they 
are mathematical, they are specific. Sometimes they do not work to 
determine whether something is fair or not. Should there not be some 
safety valve? The junior senator from New York thinks there should. It 
is in the Grassley bill that she has cosponsored. It has passed this 
House five times, by votes of over 400 votes it has passed this House. 
It is something that has been totally bipartisan from the start. This 
is nothing new.
  I would just like to be clear, finally, that the legislation before 
us does address problems that have arisen because of what happened at 
Enron, but it affects all folks who are in defined contribution plans 
in this country. It does make significant steps forward.


                announcement by the speaker pro tempore

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

                              {time}  1300

  You tell them what they need is a balanced approach. We are beyond a 
balanced approach. Besides someone going to jail, those people need 
relief; and they are not getting it in this legislation. My colleagues 
may think that is theatrics. You tell that to them, that couple out in 
Washington State.
  This legislation includes no bona fide structural changes that will 
create protection. It does not require equal representation of 
employers and employees on the 401(k) plan management boards. It does 
not create equity between the claims of workers and the executives if 
the company files for bankruptcy. It does not mandate that independent, 
unbiased investment advice be provided to rank-and-file employees. In 
other words, this bill is at worst, a placebo; at best, a Band-Aid on a 
deep wound.
  For these reasons and for what the bill does not do, I urge my 
colleagues to vote against the Republican bill and for the Democratic 
substitute. We know who brought you to the dance; but you do not have 
to keep on saying yes, yes, yes.
  Our substitute levels the playing field. It gives rank-and-file 
employees the same pension protection as the executives. For us to ask 
anything less, we will not do a service to all Americans, just a few.
  The way I see it is certain assets of the company that I have 
invested in, if I am part of the pension plan, are the property of the 
employees.
  In conclusion, Mr. Speaker, I think our substitute does a better job 
in trying to address the problem.
  Mr. STARK. Mr. Speaker, I am happy to yield 3 minutes to the 
gentleman from North Dakota (Mr. Pomeroy).
  Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  The security of retirement programs of America's workers is about as 
important a thing as I think we are going to tackle. It has been my 
pleasure to work with people on both sides of the aisle on this issue 
for many years. I want to commend, in particular, the gentleman from 
Ohio (Mr. Portman) for the substantive and serious-minded work he has 
put into this topic. He is truly one of the experts in the Congress, 
House and Senate, on this issue; and his leadership has been important.
  Let us look at where we are today. Only half the people in the 
workforce today have access to workplace retirement savings. We have 
absolutely a collapse in the number of defined benefit plans providing 
reliable pensions to workers. The plans are not collapsing; they are 
converting to defined contribution plans, a different arrangement, in 
my opinion, over the long run, one not likely to serve the worker quite 
as well. We have 401(k) choices, a bewildering array, facing workers,

[[Page 4324]]

without having provided them sufficient information to best steer their 
interests in light of their new responsibilities. And, obviously, as 
the Enron case has so sadly shown, we have insufficient protections 
that protect workers from the kind of abuse that occurred by an 
employer acting in what, I believe, will be very actionable ways in the 
Enron circumstance.
  So what we have before us are two approaches to try and fix some of 
these issues. Sometimes the choices before us are dumb and dumber. 
Today, I think they are good and better. I am going to vote for the 
underlying bill. I am going to vote for the substitute, in any event. I 
think we are making a step forward with the passage of either one of 
these choices today.
  Let us take a look at, first, the underlying bill. It allows 
diversification protection that we do not have today. The 3-year 
rolling average is not as good as the Committee on Ways and Means' 3-
year provision, which is a distinct advantage in the underlying 
substitute; but it is an advantage, and it will protect workers, allow 
them to be able to put a more healthy investment balance into their 
retirement funds; the 30-day notice on blackout periods and an absolute 
guarantee they will have a right to trade and diversify within that 
period of time. That was in the underlying bill that was obviously 
tragically not in the Enron circumstance, to the abuse of many of those 
employees. A big step forward with that one.
  A big step forward in my opinion on providing investment advise, much 
greater availability of investment advice to workers facing these 
401(k) choices. I am very pleased that the gentleman from Ohio (Mr. 
Boehner), the chairman of the Committee on Education and the Workforce, 
incorporated into this draft changes that I proposed that make sure 
that a fiduciary standard applies in the providing of that advice; and 
it discloses fees in a clear and uniform way, and that it has all of 
the advisors providing this advice, subject to administrative penalties 
in those circumstances where they have a vested interest in the sale.
  I believe that this will go a long way in a very secure format to 
provide them the advice they need.
  This is a choice; two good choices. Yes on the substitute is the 
preferred choice. The other one is good too.
  Mr. STARK. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio 
(Mr. Kucinich).
  Mr. KUCINICH. Mr. Speaker, what is at stake here today is the faith 
of the American people in their economic system and in this Congress. 
The American dream is work hard, get ahead, give your life to a 
company, get a secure, decent retirement pension. Well, that dream is 
being destroyed by corporate executives who are cheating people out of 
their hard-earned retirement benefits.
  As the Nation watched enormous corporate bankruptcies unfold at Enron 
and Global Crossing, and as the people of my district watched Chapter 
11 proceedings at LTV Steel, we see the plot thicken around one major 
theme. There are two sets of rules. Executives get one set of rules and 
the employees have to play under a different set of rules. Corporate 
executives get special treatment, including more investment choices, no 
lockdown restrictions, generous deferred compensation plans that are 
not required to be disclosed, guaranteed rates of return on pension 
investments, and a golden parachute of retention bonuses and other 
benefits when a company goes under.
  Employees, on the other hand, have barriers to information, fewer 
options, more restrictions on investment, and no guaranteed returns. 
The most egregious disparity is that during a bankruptcy, executive 
pension plans are totally protected from creditors, and executives can 
count on cashing in their entire package. On the other hand, employee 
protections are not protected from creditors. Employees stand at the 
end of the line and must wait behind other creditors to claim what 
rightfully belongs to them for compensation that is already earned. 
Finally, if employees do get to make a claim, that claim is capped at a 
mere $4,650.
  At the end of the Enron debacle, Ken Lay still receives $475,000 each 
year for the rest of his life and a prepaid $12 million insurance 
policy; but the employees' 401(k)s are drained, and they will be lucky 
if they get their $4,650 maximum severance pay.
  This bill does nothing to protect employee pensions in a bankruptcy. 
It fails to give equal protection to the employee pension as the law 
currently provides to executive pensions. I urge a ``no'' vote on this 
bill.
  Mr. PORTMAN. Mr. Speaker, I yield 1 minute to the gentleman from 
Florida (Mr. Foley), a valued member of the Committee on Ways and 
Means.
  Mr. FOLEY. Mr. Speaker, I thank the gentleman for yielding me this 
time. Let me commend the gentleman from Ohio (Mr. Portman) for his hard 
work on this legislation. He has been at this for many, many years; and 
I salute him.
  What this bill says loudly and clearly: if it is good for the brass, 
it ought to be the same for the middle class. We are taking care of 
employees; we are defining benefits; we are giving investment advice; 
we are providing advanced notice of blackouts; we are giving 
diversification; we are taking off, if you will, the corporate 
handcuffs that have locked many employees in their employee stock 
option plans. It improves access to retirement planning services so the 
average line worker, or the CEO, can take advantage of up-to-date, 
latest investment advice.
  I am encouraged by the action of this House, and I applaud the 
leadership on this issue. There is no question that Americans need 
security and safety in their pensions. This is a fantastic step in that 
direction. I salute all who have participated. I urge my colleagues, as 
they prepare to leave this Capitol, that when they vote for this bill, 
they are giving an underlying security to the pensions of all American 
workers.
  Mr. PORTMAN. Could we have a division of time, Mr. Speaker.
  The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman 
from Ohio (Mr. Portman) has 5\1/2\ minutes remaining; the gentleman 
from California (Mr. Stark) has 4\3/4\ minutes remaining.
  Mr. PORTMAN. Mr. Speaker, I yield 1 minute to the gentleman from 
Michigan (Mr. Camp).
  Mr. CAMP. Mr. Speaker, I want to thank the gentleman for yielding me 
this time; and I also want to commend him on his efforts on not only 
this bill, but years' long efforts on making sure that retirement 
security is a reality for all Americans.
  This legislation really does address in the right kind of way the 
problems that we have seen so much in the press lately. Employee rights 
and protections are enhanced. We do not have burdensome regulations to 
affect investment and keep people from investing. We will see pension 
benefit statements; we will see investment education notices. The bill 
will give employees more control over the investment of their accounts 
once they own them, or become vested in that money. They will have 
three investment options to choose from, and that will be required 
under this bill. There will be an advanced notification to workers if 
there is a blackout period so that employees have the same opportunity 
to make changes as anyone else does that is involved in that plan 
before the restrictions come into effect.
  Investor education and access to retirement planning and professional 
investment advice are improved under this legislation. This bill will 
reduce the cost of regulatory burdens for employers who voluntarily 
sponsor these plans.
  This clarifies current law treatment by making stock options not 
subject to payroll tax, and it is a good bill, and I urge its passage.
  Mr. STARK. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the distinguished 
gentleman from California for yielding and for his leadership.
  Mr. Speaker, I had hoped that we could have come to this floor in a 
bipartisan manner and supported either the Committee on Ways and Means 
proposal on this issue, the total Committee on Ways and Means proposal, 
or

[[Page 4325]]

the complete Committee on Ways and Means proposal and/or the Miller 
substitute. Let me share with my colleagues why, Mr. Speaker.
  I live with this every day. The 18th Congressional District has Enron 
in its district. I am hoping for rehabilitation and reconstruction and 
the opportunity for a new entity to grow and thrive, but I live every 
day with the heartfelt tragedies of employees who now still are in 
foreclosure, who cannot have health care, whose pension benefits, along 
with the retirees, are long gone.
  When they ask me what are we doing, they are asking for a 
comprehensive and inclusive response. They wonder if the hearings of 
these past months, where there was great drama, whether this Congress 
had come together in a bipartisan way.
  I would say to my colleagues, Mr. Speaker, that I am very sad that as 
a member of the Committee on the Judiciary, the Committee on Rules did 
not see fit to establish some parameters to give penalties to the 
destruction of documents. It answers the concerns of Andersen 
employees, and it answers the concerns of ex-Enron employees; but it 
does not answer the concerns that we would never want this to happen 
again.
  Mr. Speaker, I wanted to vote for this legislation today; and I want 
my constituents to know why I am not going to vote for it, because this 
pension bill does not answer the concerns. It does not give independent 
advice that is needed for these employees. It does not give them the 
opportunity to fully diversify their company stock, and fails to give 
workers a voice in administering and protecting their retirement 
savings through employee representation on pension boards; and for the 
first time since this bill was enacted, the Republican pension bill 
provides employees with biased and conflicted investment advice.
  Mainly, let me share with my colleagues a story that is ongoing. The 
Creditors Committee refuses to give a legal severance pay to these 
employees, Mr. Speaker, as I close. Why? Because these are the big 
guys, and the little guys do not get heard. We need to pass legislation 
where the little guys will be heard. I ask my colleagues to reject this 
legislation.
  I thank the distinguished gentleman from California for yielding and 
for his leadership.
  Mr. Speaker, I had hoped that we could have come to this floor in a 
bipartisan manner and supported either the Committee on Ways and Means 
proposal on this issue, the total Committee on Ways and Means proposal, 
or the complete Committee on Ways and Means proposal and/or the Miller 
substitute. Let me share with my colleagues why, Mr. Speaker.
  I live with this every day. The 18th Congressional District has Enron 
in its district. I am hoping for rehabilitation and reconstruction and 
the opportunity for a new entity to grow and thrive, but I live every 
day with the heartfelt tragedies of employees who now have homes in 
foreclosure, who cannot pay for health care, whose pension benefits, 
along with the retirees, are long gone.
  When they ask me what are we doing, they are asking for a 
comprehensive and inclusive response. They wonder if the hearings of 
these past months, where there was great drama, whether this Congress 
had come together in a bipartisan way to do something effective. This 
legislation today is not effective.
  I would say to my colleagues, Mr. Speaker, that I am very sad that as 
a member of the Committee on the Judiciary, the Committee on Rules did 
not see fit to allow an amendment that would establish some parameters 
and add criminal penalties to the destruction of documents. That would 
answer the concerns of the Andersen employees, and it answers the 
concerns of ex-Enron employees; but the legislation today is not the 
tough reform it should be.
  Mr. Speaker, I wanted to vote for this legislation today; and I want 
my constituents to know why I am not going to vote for it, because this 
pension bill does nothing serious. It does not give independent advice 
that is needed for these employees in these investment choices. It does 
not give them the opportunity to fully diversify their company stock, 
and fails to give workers a voice in administering and protecting their 
retirement savings through employee representation on pension boards; 
and the bill does not give notices to employees if executives are 
dumping their stock. This bill provides employees with biased and 
conflicted investment advice.
  Mainly, let me share with my colleagues a story that is ongoing 
regarding ex Enron employers. They hope to fight a Creditors Committee 
that refuses to give a legal severance pay to these employees, Mr. 
Speaker, as I close. Why? Because these are the big guys, and the 
little guys do not get heard. We need to pass legislation where the 
little guys will be heard. I ask my colleagues to reject this 
legislation, and fight for and with the little guys!
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Sam Johnson), who is chairman of the Subcommittee on 
Employer-Employee Relations of the Committee on Education and the 
Workforce, as well as serving on the Committee on Ways and Means.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I hate to tell everybody this, 
but there is independent advice authorized in this bill; and it is for 
everybody, not just the bottom, but the top and the bottom.
  I thank the gentleman for yielding time to me.
  The Pension Security Act contains some important provisions that will 
modernize pension legislation. The gentleman from California (Mr. 
Thomas), the chairman of the Committee on Ways and Means, also included 
in this bill a very important pension-related provision that will 
overturn a new IRS position on employee stock purchase plans.
  I have received a number of calls, letters, and e-mails from 
constituents regarding the new IRS position that is overturning 30 
years of tax policy, that was, the employee stock purchase plans are 
not subject to payroll tax. The IRS overturned that 1971 policy just 
recently. Imposing payroll taxes for Social Security and unemployment 
on employee stock purchase plans is just wrong, just as imposing 
payroll taxes on contributions to 401(k) plans would be wrong. At least 
the IRS did not go that far.
  I hope the IRS sees we are serious about this matter and they do the 
right thing and simply make this issue go away. This IRS ruling 
penalizes hard-working people and is just wrong. Again, I want to thank 
the gentleman from California (Mr. Thomas) for his dedication to this 
issue and for making sure that America's pension plans are safe and 
secure.
  Mr. STARK. Mr. Speaker, I yield myself the balance of our time. I 
will try and summarize. Admittedly, this bill will encourage more 
plans.

                              {time}  1315

  The best way to encourage plans is to have no restriction on them at 
all, and then the very rich will have plans, but they will not cover 
the employees.
  Professor Halperin at the Harvard Law School has written and 
suggested that this really solves a minor problem by creating a 
loophole through which we could march an elephant, or a donkey, too, 
perhaps, to be bipartisan in the closing minutes of this debate.
  But the fact is that this is a bill written to satisfy rich 
contributors to the Republican Party, and it gives assistance to major 
corporations and to owners of small businesses without any regard to 
protecting the employees who are under them.
  And it is couched in some language that will say there is a little 
bit here and there, but the fact is that we give the Treasury the right 
to make the decision of whether the plans meet the antidiscrimination 
rules, and then give the Treasury no direction. So if the Secretary of 
the Treasury does not act, there are no antidiscrimination rules.
  Mr. Speaker, this is a bad bill. It is a bill that is unfair. It is a 
bill that helps only the very rich and the owners of businesses, but 
leaves the workers with less protection than they start with now.
  I guess that is what we have to expect from a Republican-controlled 
House. That is what they have been doing at every step of the way.
  There is the tax bill, which only gives 90 percent of the benefits to 
2 percent of the richest people in this country. That is a Republican 
operation.
  There is a bill that talks about education, but does not fund it. 
That is a Republican plan.
  So one more step in a Republican-controlled House to hammer down the 
working people and the average person

[[Page 4326]]

in this country to the benefit of the few rich people, the few extreme 
right-wing radicals who will support the Republican Party and their 
blatant, blatant, obsequious bowing to the wealthy and the large 
corporations in this country.
  It is something that should shame them. I do not know what they are 
going to tell their children some day: I came to Congress and helped 
the rich, and I destroyed the poor. I destroyed pension plans by 
supporting Enron. I took a lot of money from Enron, and I destroyed the 
pension plans of those workers. I denied seniors medical care coverage. 
I refused to give a pharmaceutical benefit.
  What a wonderful way to take their pension money that they are going 
to get, far better than any workers are going to get, and then sit and 
tell their children and grandchildren what they did for this country. I 
hope they enjoy that retirement, because the average working person in 
this country is not going to enjoy it if he is subject to the rules 
that are written in this law by the Republican majority in this House.
  Vote no on the bill.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  I am so glad my colleague, the gentleman from California, did not get 
too partisan there at the end, as he said he would not. I do not know 
how he could be much more partisan than that.
  Again, I think it is a sad day on the floor of the House when we have 
that kind of rhetoric over legislation that traditionally has been 
bipartisan, and that in fact is commonsense legislation that helps 
working people.
  I do want to apologize to the gentleman because earlier I said I had 
thought he had voted for the provision he was talking about. It passed 
the House 407 to 24. It has passed the House five times, as he knows. 
But he was not one of the people who voted for that, and I apologize 
for saying that.
  Earlier speakers have said there are no bona fide structural changes 
in this bill. The gentleman from California (Mr. Stark) has just talked 
about it in strictly political terms.
  Let me tell Members what the bill does. It provides more education, 
it provides more information, and it provides more choice to workers. 
That is what it does. All of that leads to more security in retirement.
  In terms of education, it says to workers that we are now going to 
allow them to get pre-tax advice. They can take pre-tax dollars, and go 
out and get their own advice. I think that is a good thing. There is a 
bipartisan consensus in the pension world that that is one of the 
things we need to focus on now is giving better information so they can 
make informed choices.
  It also provides for investment advice the employer can provide to 
the employee. It also provides for the first time a requirement that 
employers, as people enter 401(k)s or other retirement plans, send a 
statement which provides generally-accepted investment principles that 
say, you ought to diversify. To put all your eggs in one basket, as in 
the case of Enron, is a bad idea. That notice is good. We want to do 
that for the workers.
  It provides more information. For the first time ever, we are going 
to say that if there is a black-out period, that is when they cannot 
change their stock because that is when we are changing plan managers 
or plan administrators, they ought to know about that. We provide for a 
30-day notice period. It is not in current law. That is an important 
change. It lets people get out of the stock if they want to.
  In terms of choice, right now if you are in a 401(k) plan, your 
employer can tie you with the employer-matched stock until you retire. 
At Enron, it was age 50. In an ESOP it could be up to age 55 plus 10 
years particpation. We say no, it ought to be 3 years. Once you are 
there 3 years, you ought to be able to make that choice with better 
education, with better information; to be able to sell that stock you 
have gotten through an employer match.
  That is what this bill does. It has been mischaracterized today. 
There has been a lot of rhetoric on the floor, but those are the facts. 
Those are substantial changes from current law. Those are structural 
changes to the law that are going to give the workers in this country 
more security in their retirement by giving them better information to 
make choices, by giving them educational tools, and by giving them 
choice, and empowering them to make decisions for their own retirement.
  The SPEAKER pro tempore (Mr. Miller of Florida). All time for debate 
by the Committee on Ways and Means has expired.
  Under the rule, the gentleman from Ohio (Mr. Boehner) and the 
gentleman from California (Mr. George Miller) each will control 30 
minutes of debate.
  The Chair recognizes the gentleman from Ohio (Mr. Boehner).
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, late last year, thousands of Americans employed by Enron 
Corporation watched helplessly as their company collapsed, and their 
retirement savings were lost with it. Today we are here to restore 
worker confidence in our Nation's pension system.
  Enron workers may be the victims of criminal wrongdoing. We do not 
know that yet. But we already know they are victims of an outdated 
Federal pension law. The bill before us today will modernize our 
Nation's pension law and help promote security, education, and freedom 
for employees who have worked and saved all of their lives for a safe 
and secure retirement.
  President Bush followed up his State of the Union speech this year by 
outlining a series of bipartisan reforms that could have made a 
critical difference for Enron workers who lost their retirement 
savings. The bipartisan Pension Security Act of 2002 is based on those 
reform principles.
  But let us be very clear: Congress should take action to protect 
Americans' retirement benefits, not endanger them. One of the great 
strengths of our country is that employees of companies can own stock 
in their place of business and become part of the corporate ownership. 
This has allowed workers who stock shelves at Wal-Mart and run the 
checkout counters at Target, not just the top-level management, allow 
these other workers to build wealth and significantly enhance their own 
retirement security.
  On a bipartisan basis, we have consistently rejected efforts to place 
arbitrary caps on a company's stock because Congress should encourage 
employers to provide matching contributions to their workers, not enact 
extreme proposals that could jeopardize Americans' retirement security, 
or spell the death of 401(k) plans altogether.
  The bipartisan Pension Security Act takes a balanced approach by 
expanding worker access to investment advice and including new 
safeguards to help workers preserve and enhance their own requirement 
security, such as giving employees new freedoms to diversify their own 
portfolios.
  But it also insists on greater accountability from senior company 
insiders. We believe it is unfair for workers to be denied the 
opportunity to sell company stock in their 401(k) accounts during 
blackout periods, while corporate insiders can sell off their 
investments and preserve their own savings. Enron insiders got away 
with this, and we are going to change it.
  The Pension Security Act before us gives rank and file workers parity 
with senior company executives. It also strengthens the notice 
requirements by requiring companies to give 30 days' notice before a 
blackout period can begin.
  The bill also empowers workers to hold company insiders accountable 
for abuses by clarifying the company is responsible for worker savings 
during blackout periods when workers cannot make changes to their 
401(k) plans.
  Under the Pension Security Act, as under current law, workers can sue 
company pension officials if they violate their fiduciary duty to act 
solely in the interest of 401(k) participants.
  Enron barred workers from selling company stock until age 50. The 
bill gives workers new freedoms to sell their company stock within 3 
years of receiving it in their 401(k) plan if they get company stock as 
a match. The benefits of diversification will help

[[Page 4327]]

workers better plan and save for their own future over the long term.
  As we all know it, defined contribution 401(k) type plans have become 
a primary vehicle for retirement savings. Yet today, the vast majority 
of American workers receive no investment advice on how best to 
structure their 401(k) retirement plans, and most cannot afford to pay 
for it on their own like the company insiders can.
  I think it is time to fix outdated Federal rules that discourage 
employers from giving workers access to professional investment advice. 
Like most U.S. companies, Enron did not provide its workers with access 
to this type of advice. This type of investment guidance would have 
alerted Enron workers to the need to diversify their accounts, and 
enable many of them to preserve their retirement nest eggs.
  The pension act today that we have changes these outdated Federal 
rules and encourages employers to provide quality investment advice for 
their workers. We need to give investors more choices and more 
information to choose wisely, so that they are better able to navigate 
their way through the volatile markets and maximize the potential of 
their hard-earned retirement savings.
  Workers must also be fully protected and fully prepared with the 
tools they need to protect and enhance their retirement security. The 
Pension Security Act accomplishes these goals.
  I want to thank my colleague and the chairman of our subcommittee, 
the gentleman from Texas (Mr. Johnson), who is also a member of the 
Committee on Ways and Means, for all of the work that he has done at 
both of our committees to enhance the bills that we have before us, and 
for the important role he played in the process.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 4\1/2\ 
minutes.
  Mr. Speaker, the challenge today is whether or not the House of 
Representatives is prepared to take the lessons of the Enron scandal 
and use those lessons to apply to greater security of the millions of 
workers' 401(k) plans across the country.
  I would suggest that, in the Republican bill, they have failed to do 
that. Later, we will offer a Democratic substitute that I believe 
provides for that greater security, greater control, and greater say by 
the employees of the assets that belong to them that make up much of 
their retirement nest egg, so we do not again see, as we saw on Enron, 
where, because of unethical behavior by corporate executives, where 
because of greedy behavior by corporate executives, where because of 
illegal behavior by corporate executives, where because of conflicts of 
interest by corporate executives, the employees lost everything.
  They were never given advance notice. They were never told what was 
really happening with the corporation. They never had a representative 
on the pension board which was controlling the assets which 100 percent 
belonged to the employees.
  So we will have an opportunity with that substitute to reject the 
Republican bill that fails to learn any lessons and provide those 
greater protections to the workers of this country, and to, in its 
place, provide for an employee representative, a rank and file employee 
representative, on the pension boards so we do not have the situation 
that we had at Enron and other corporations where members of the 
pension board who were executive vice presidents have a conflict of 
interest between their career track and taking care of the 
beneficiaries, the employees, of the corporation; where they sold their 
stock but never told the pension beneficiaries that they were selling, 
or that they thought it was the right thing to do.
  We are going to make sure that a rank and file member is a member, so 
they will have access to the information and they will be able to make 
determinations for their fellow employees.
  We are going to make sure that, after 3 years, they have a complete 
right to divest, so if they want to diversify their portfolio, if they 
want to make other decisions about their retirement, they will be free 
to do it.

                              {time}  1330

  In the Republican bill, which you see, it takes 5 years to be fully 
able to diversify; and every 3 years a new period starts with a new 
contribution. Three years ago we were in the throws of a bull market, 
the greatest bull market in modern history. And today, many of those 
same people have lost much of their retirement because they were locked 
into it. Three years is a very long time, and a rolling 3-year period 
is an unacceptable time to lock up people's assets that belong to them 
so they cannot make a determination about their retirement.
  We will also make sure people are treated equally. What we see in 
Enron and many corporations today is that the retirement plans are 
ensured for the executives. The retirement plans are guaranteed. The 
benefits of the 401(k) plans are guaranteed for the executives but not 
for the employees. So while Enron or other corporations go into 
bankruptcy, the executives are taken care of. They are taken care of. 
They walk away with millions. The employee, they have to walk around 
the corner and stand in line at the bankruptcy courts and hope that 
there is something left over at the end to see if they can put back 
together their retirement.
  This is really about a fundamental test, about the workers of this 
Nation who now have got a rude awakening call; and through the tragedy 
of the workers at Enron that their 401(k) plan that they are being 
required to lean on more and more for their retirement as vulnerable 
beyond their expectations, is far more vulnerable than they were led to 
believe.
  Finally, we say yes, investment advice is important; but that advice 
should not be conflicted.
  We have just witnessed this week once again the incredible conflicts 
in the financial institutions of the country where Merrill Lynch was 
offering retail advice to people to buy their stocks; and in their e-
mail traffic they were making jokes about the stock. They were raising 
ethical concerns about offering these stocks for sale because they knew 
their company was conflicted because it was earning fees as an 
investment bank from the very clients whose stock it was touting. The 
investment advice can be offered and it can be helpful, but it cannot 
be conflicted. The Republican bill allows that investment advice to 
continue to be conflicted.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield 4 minutes to the gentleman from 
Texas (Mr. Sam Johnson), the chairman of the Subcommittee on Employer-
Employee Relations of the Committee on Education and the Workforce.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I thank the gentleman for 
yielding me time.
  Mr. Speaker, conflicted advice, we keep hearing about; but there is 
not any conflicted advice when you have somebody who is recognized as a 
professional stock or option advisor being concerned.
  I have been concerned about many of the pension proposals that have 
been introduced aimed at protecting Americans from themselves. If 
history is any guide, Congress should very well protect Americans by 
simply destroying another successful pension plan. Just look at what 
happened with the government's over-regulation of the defined benefit 
pension system. Congress killed those plans with kindness. Let us not 
repeat those mistakes here.
  The bill we are debating here is moving pension reforms cautiously in 
the right direction, and it is balanced and fair. And I want to commend 
the gentleman from Ohio (Mr. Boehner) and the gentleman from California 
(Mr. Thomas) for their hard work in putting together this bill.
  As a subcommittee chairman for the Committee on Education and the 
Workforce, I will focus on those sections of the bill. First, I believe 
that the rolling 3-year diversification rights for employees who are 
given company stock as a match in their 401(k) is as important an 
improvements as any in this proposed legislation. Rolling 
diversification will preserve employees'

[[Page 4328]]

ownership ethics as stockholders, but will also permit individuals to 
diversify into other investments as they see fit.
  Next, I am glad that we have clarified the issue of employer 
liability for stock market fluctuations in a 401(k) plan during a 
black-out period. We heard a lot of testimony in my subcommittee on 
this subject. Under the bill reported by the full committee, employers 
are not responsible for market swings and 401(k) accounts during a 
black-out period, as long as they provide 30 days' notice in advance 
and make sure they have a legitimate reason for doing the black out.
  The bill today also exempts privately held businesses from being 
subjected to the diversification mandates and permits them to use their 
most recent annual valuation for reporting stock value on 401(k) stock 
benefit statements.
  I probably sat through more hours of hearings on pension benefit 
issues in this session of Congress than any other Member.
  One thing that has been confirmed for me during these hearings is 
that employees want, need and deserve to receive professional 
investment advice for their 401(k) plans. This bill does this.
  Last month, Mr. Dary Ebright was a witness before the Committee on 
Ways and Means; and he told his personal story about the horrors of 
putting all your eggs in one basket. His personal tragedy could have 
been prevented if he had received professional investment advice.
  He had invested 60 percent of his 401(k) into Enron stock, and then 
he cashed out his traditional pension plan and bought Enron stock. His 
defined benefit pension would have paid him roughly $2,000 per month 
for the rest of his life. But instead, at the age of 54, the only 
retirement savings that he has left is the portion of his 401(k) that 
was diversified.
  I asked if he received any professional advice on these decisions. He 
said he did not. Too many workers lack access to quality investment 
advice on how to invest their hard-earned savings. Without a doubt, 
investment advice must become law soon, and I urge Members to vote for 
this sensible bill which does that. It educates. It provides 
investments advice. It provides diversification, and it stops big 
executives from selling their stock during a black-out period.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from New Jersey (Mr. Andrews).
  Mr. ANDREWS. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, we should not replace no advice for workers with bad 
advice for workers. A few days ago, the attorney general for New York 
alleged a scheme involving the Merrill Lynch firm that worked like 
this: one part of the Merrill Lynch house, he alleged, was collecting 
huge fees for raising capital for Internet companies. The other side of 
the Merrill Lynch house was giving investment advice to individual 
clients, telling those individual clients that these Internet companies 
were the way to go with their money, encouraging them to buy the stock.
  This is not what these advisors were telling each other, though, in 
private e-mails and conversations that the attorney general of New York 
later found. What they were telling each other was these stocks were a 
joke; these stocks were a disaster. They were using words that should 
not be used in mixed company or on the House floor.
  This bill wants to take the quality of investment advice the New York 
attorney general alleged those people were receiving and offer it to 
the pensioners of this country. No advice should not be replaced with 
bad advice. The proposal would enshrine into the law, would legalize 
and legitimize the opportunity of unscrupulous advisors to offer advice 
which benefits them but not the pensioners to whom the advice is 
offered.
  Employees do need advice. They should be given a full array of 
choices. They should be made aware, and as the Democratic substitute 
does, made available as to how to pay for the offering and receipt of 
independent advice. One of the many flaws in the majority's bill is 
that it enshrines into law the practice of authorizing and permitting 
the giving of advice by people who have more to look out for themselves 
than for the pensioners to whom the advice is offered.
  For this and many other reasons the underlying bill should be 
defeated and the Democratic Miller substitute should be adopted.
  Mr. BOEHNER. Mr. Speaker, I yield 3 minutes to my colleague and 
friend, the gentleman from California (Mr. McKeon).
  Mr. McKEON. Mr. Speaker, I rise today in strong support of H.R. 3762, 
the Pension Security Act; and I thank the gentleman from Ohio (Mr. 
Boehner) and the gentleman from California (Mr. Thomas) for their hard 
work on this legislation.
  In his State of the Union address, President George W. Bush called on 
Congress to enact important new safeguards to protect the pensions of 
millions of American workers. The President called on Congress to move 
quickly to enact these important reforms so that people who work hard 
and save for their retirement can have full confidence in our 
retirement system.
  In response to the President's call, Congress immediately took action 
by holding several hearings on the Enron collapse and its implications 
for worker retirement security.
  Mr. Speaker, we have listened to both workers who have lost or are at 
risk of losing their retirement savings, and we have listened to 
employers who voluntarily offer their employees retirement savings 
plans. After listening to employees and employers, I am pleased to 
announce that the House is here today to provide new safeguards to help 
workers preserve and enhance their retirement savings. At the same 
time, it will still allow employers to have the incentive to provide 
retirement benefits by refraining from overprecipitous regulation.
  The Pension Security Act provides workers with the tools they need to 
protect their retirement savings. For example, the bill gives workers 
freedom to diversify their investment options, creates parity between 
senior corporate executives and rank-and-file workers, clarifies the 
fiduciary duty of employers, gives workers better information about 
their pensions, and enhances worker access to quality investment 
advice.
  Mr. Speaker, H.R. 3762 promotes security, education and freedom for 
America's workers who have saved all of their lives for a secure 
retirement. I, therefore, encourage all of my colleagues to join me in 
strongly supporting it.
  I would like to use the balance of my time, Mr. Speaker, to engage 
with the chairman in a colloquy.
  Mr. Speaker, I am very concerned that the diversification provision 
of the act not be applied in the case of a nonpublicly traded employer 
with affiliates that may have a limited amount of publicly traded stock 
outstanding. I do not believe it is the intent of the legislation to 
have the diversification provision apply in such a situation; and I 
would ask the distinguished chairman if he would confirm my 
understanding, and if he would be prepared to work with me to clarify 
the application of the provision in this respect as this legislation 
moves.
  Mr. BOEHNER. Mr. Speaker, if the gentleman will yield, I would say to 
my colleague that the act is not intended to apply to diversification 
provision in the indication of a nonpublicly traded employer with 
affiliates that have only a limited amount of publicly traded stock 
outstanding. In this special case, as in others that may arise, I would 
be pleased to work with my colleague to clarify the application of the 
provision to reflect this intent and to provide for flexibility that 
may be necessary to clarify the intent of the legislation.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from Massachusetts (Mr. Tierney).
  Mr. TIERNEY. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, clearly this morning when I spoke on the rule I think I 
made

[[Page 4329]]

a point worth repeating here and that is that the majority did not want 
to have a rule that allowed for individual amendments to be made 
because that would allow us to set up each aspect of this bill side by 
side so that the public would have an education and an informed debate 
on the provisions of the respective bill versus the substitute bill.
  Frankly speaking, we have executive accountability in the Democratic 
substitute. The other bill does not. We have honest, accurate and 
timely information for employees provided in the substitute. The bill 
does not have adequate provisions for that.
  We provide for unbiased, independent investment advice. The main bill 
specifically allows for biased, conflicted advice. And there is no 
reason on the planet why that should ever be the case. There are more 
than ample resources out there to give unbiased, unconflicted advice. 
Employers only want to make sure that they are not held liable when 
they take the precautions to get proper advisors in there, and all 
bills can do that. But, simply, even after Enron's Ken Lay was advising 
people against their interests, when we see news articles as recently 
as yesterday about Merrill Lynch having a conflict of interest that 
works against employees' rights right on down the line, this bill still 
goes up and hails the fact that they are bringing in conflicted advice 
as if that is the only way they can get advice for employees, and that 
is simply not the case.
  The Democratic substitute takes care of lock-out restrictions and 
provisions. It lets employees know that if they are locked out, the 
executives will not be taking advantage of that period of time to their 
benefit. We give parity of benefits for executives and rank-and-file 
workers to make sure that everybody is treated fairly. The substitute 
gives employees control over their retirement savings in much greater 
degree than does the bill itself. And we have additional protections 
for workers' pension benefits and a representative of employees on the 
pension board; and history shows us that when that happens the pension 
itself does better.
  All of these things are lacking and found wanting in the Republican 
bill itself. That is why we do not have a rule that allows us to bring 
up individual motions. That is why we are not allowed to stand here and 
side by side, motion by motion sit here and tell the public why the 
provisions of the substitute are in fact much better than those 
provisions of the bill.

                              {time}  1345

  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentleman from Kentucky (Mr. Fletcher).
  Mr. FLETCHER. Mr. Speaker, certainly I think it is very important in 
light of a lot of the discussion we have heard about Enron about a 
number of people losing investments over a number of years because of 
the ill-advice, because of the way Enron reported its financing, and 
because of the lack of financial advice, I want to say I encourage 
everyone to support 3762, the Pension Security Act of 2002, because it 
includes new safeguards and options to help workers preserve and 
enhance their retirement security.
  It insists on greater accountability from companies and senior 
corporate executives during blackout periods when rank-and-file workers 
are unable to change investments in their retirement accounts. Workers 
must be fully protected and fully prepared with the tools they need to 
protect and enhance their retirement savings.
  This bill gives workers freedom to diversify. We have heard it gives 
employers options to allow sale of company stock after 3 years, the 3-
year rolling diversification, or allows workers to sell company stock 
after 3 years of service, the 3-year diversification cliff. It 
prohibits companies from forcing worker investment in company stock.
  Opponents of the bill, in the bill that will be offered as an option 
here, allow actually the employees to self-direct stock and money that 
actually is not theirs but it may belong in the future to other 
employees for several years, and I think that is a major problem in 
consistency that exists with the other proposals here.
  This bill creates parity between senior corporate executives and 
rank-and-file workers, the captain and sailor equity provisions the 
President has talked about. It prevents senior executives from selling 
stock during blackout periods because workers are unable to sell stocks 
in the plans during these periods, and it requires a 30-day notice to 
workers before the start of a blackout period.
  It clarifies that employers are responsible for workers' savings 
during blackouts. It clarifies that companies have a fiduciary 
responsibility for workers' savings during a blackout period and does 
outline situations where they may not be liable for losses in 
individually directed accounts.
  It enhances worker access to quality investment advice. It includes 
the Retirement Security Advice Act which was passed since the 106th 
Congress. This provision allows workers access to information and 
advice about their 401(k) plans, which is greatly needed to ensure the 
growth we have seen in the last two decades in the defined contribution 
retirement plans, and as my colleagues will recall, the House passed 
this legislation in November with a strongly bipartisan bill, but the 
Senate has failed to act on this bill as of yet.
  There are three reasons, I think, or three important differences with 
the opponent's bill. It does not include investment advice access, 
which is one of the provisions that would actually have helped Enron 
employees. It does not rely on education. Rather, it relies on 
overregulation.
  It increases the regulatory red tape that I believe will discourage 
these types of defined contribution plans.
  Lastly, their answer always seems to be, let us sue for some redress. 
Let us not give the personal freedom, responsibility, and the choice 
along with the education.
  I encourage the passage of 3762.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentlewoman from Connecticut (Ms. DeLauro).
  Ms. DeLAURO. Mr. Speaker, until the collapse of Enron, most Americans 
felt that their pensions would be there for them when they retired. 
They felt their savings earned from a lifetime of hard work were 
protected.
  We know better now. We know that our pension rules do not do enough 
to protect helpless employees from being locked out of their pension 
plans while their life savings go down the drain. They are not 
protected from venal executives who took their money and ran.
  Two years ago, employees from a Westbrook, Connecticut lighting 
company learned a similar lesson. The company lost $2 million from 
their pension plan. I met with these men and women as we worked 
together to win back their hard-earned retirement savings, and no one 
should ever have to go through what those families did.
  This Republican bill does virtually nothing to prevent what happened 
there or at Enron. It fails to allow employees the right to fully 
diversify their stock. It fails to hold executives who are fiduciaries 
of the pension plan accountable if they violate the law; and Ken Lay 
has to be accountable. It continues to allow employers to give the same 
conflicted financial advice the Republicans tried to push on the 
American workers last fall before the Enron scandal broke.
  We have an opportunity today to do something worthwhile for middle-
class Americans, for working men and women in this country. We can tell 
them today that, yes, we want to protect your pensions because your 
life's work has to be there for you and your family when you retire. 
That is what this country is built on. That is what our values are. 
That is the direction we should go in.
  I urge my colleagues to vote against this flawed Republican bill and 
vote for the Democratic substitute.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentleman from Georgia (Mr. Isakson).
  Mr. ISAKSON. Mr. Speaker, I thank the distinguished chairman of the 
Committee on Education and the Workforce for this opportunity.

[[Page 4330]]

  Pension security has two components. First is protecting the workers' 
investment but also is preserving that investment to exist at all. As 
we deal with the ramifications of the immoral and possibly illegal 
actions of Enron executives, and the loss to their employees, we must 
be very careful not to react in such a way that we destroy the benefits 
that most Americans have and the wealth that most have created.
  We have talked a lot about Enron, and some people have painted with a 
pretty broad brush. It has become almost a corporate America statement. 
The gentleman from California (Mr. George Miller), the distinguished 
ranking member in our committee, brought us a chart during the debate 
to raise the question about the disproportionate investment in some 
401(k) plans by employees, and a couple of those companies were in 
Atlanta, Georgia. They were in my district.
  As we talk about Enron, we must also remember the Coca-Cola Company 
and Home Depot. Coca-Cola, with 83 percent of the value of its 401(k) 
in Coca-Cola stock, and Home Depot is 73 percent, and the risk that the 
gentleman from California (Mr. Stark) kept criticizing about a half an 
hour ago happened to be rank-and-file Coca-Cola and rank-and-file Home 
Depot employees who invested in their company and became millionaires 
because of a program that we in this Congress created to create pension 
security.
  Were there bad actors at Enron? Yes. Were there loopholes that need 
to be closed? Yes. This bill closes those loopholes and brings about 
responsibility, but we have to be very careful not to throw the baby 
out with the bath water. We do not need to paint a broad brush that 
destroys pension security by destroying any incentive for businesses to 
have pensions and 401(k)s, and we have to be very careful about who we 
castigate as being rich because, in fact, most of America's wealth has 
been earned by people who have invested in the sweat and the blood of 
their businesses and their companies, and they have been treated right.
  There are bad actors. The Merrill Lynch example sounds bad, but it 
does not mean that every advice any professional ever gave was 
conflicted, nor should we sell the American worker short that they are 
not capable of giving information and making an intelligent decision.
  I commend the President, the chairman of our committee, the chairman 
of the Committee on Ways and Means, and this Congress for dealing 
deliberately in closing the loophole that Enron used, holding corporate 
executives example, allowing people to diversify and allowing people 
the ability to get unconflicted and accurate advice.
  Let us not castigate all of corporate America nor the great benefits 
that most American workers have gained by this important program. Let 
us not throw the baby out with the bath water. Let us not adopt a 
Democratic substitute. Let us adopt the House pension security plan.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to 
the gentleman from Virginia (Mr. Scott) for the purposes of his remarks 
and entering into a colloquy with the chairman of the committee.
  Mr. SCOTT. Mr. Speaker, I rise today to talk about an amendment I 
offered in committee to conduct a study looking into whether and how 
insurance could be provided for defined contribution plans. A defined 
benefit plan is one that defines the benefits one will get at 
retirement. But a defined contribution plan only speaks to the amount 
of money one can put into the plan, says nothing about what will be 
there for someone's retirement.
  ERISA provided many protections, including guarantees for defined 
benefit plans but not for defined contribution plans. The Enron 
accounts we have heard so much about were defined contribution plans 
and, therefore, were not guaranteed.
  In 1974 when ERISA was enacted, the contribution plans represented an 
insignificant portion of the plans, but today they constitute almost 
half of all plans, and because those plans are not insured, those 
employees have no assurances that their money will actually be there 
when they retire.
  That is why I have been pleased to work with the gentleman from Ohio 
(Mr. Boehner), the chairman of the committee, to include a study which 
will explore the feasibility of developing an insurance program for 
defined contribution plans, just as we have for defined benefit plans. 
The study could recommend, for example, a procedure for private 
insurance paid for with the premium on assets. To put that potential 
cost in context, a defined benefit insurance now costs about $19 a year 
per account.
  The study could also show what kinds of assets could be insured; for 
example, broadly based index funds, or AAA bonds could be insured, 
whereas individual stocks or junk bonds may not. The recommendation of 
the study could protect future employees from losing their retirement 
funds because stock prices collapse or because the funds in their 
account have been lost to fraud or theft.
  I would like to engage the gentleman from Ohio (Mr. Boehner), the 
chairman of the committee, the primary sponsor of the legislation, in a 
colloquy for the purposes of clarifying the importance of including the 
study I have offered on insurance for defined contribution plans, and I 
would like his comments on the importance in including that study in 
the bill.
  Mr. BOEHNER. Mr. Speaker, will the gentleman yield?
  Mr. SCOTT. I yield to the gentleman from Ohio.
  Mr. BOEHNER. Mr. Speaker, I want to thank the gentleman for his work 
on this issue, and I want to state that we, too, believe that his study 
could be important in informing future public policy positions on this 
issue. And we regret that there was not enough time to finish out the 
few remaining details of the study to include his provision in this 
bill at this time. It is our intention to continue working with him, 
the other committee of jurisdiction on this issue, and the other body, 
as this issue goes to conference.
  Mr. SCOTT. Mr. Speaker, reclaiming my time, I thank the gentleman for 
his assurance and look forward to working with him.
  Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, can the Chair tell us 
how much time each side has remaining?
  The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman 
from California (Mr. George Miller) has 16\1/2\ minutes remaining, and 
the gentleman from Ohio (Mr. Boehner) has 12 minutes remaining.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from Michigan (Mr. Kildee), a senior member of the 
committee.
  Mr. KILDEE. Mr. Speaker, I thank the gentleman from California for 
yielding me the time.
  Mr. Speaker, I rise in opposition to H.R. 3762 and in strong support 
of the Miller-Rangel substitute. The Enron disaster has illustrated a 
number of glaring loopholes in our pension system that led to some 
15,000 Enron employees losing more than $1.3 billion from their 401(k) 
retirement accounts.
  Testimony in our committee indicated that the actions of some Enron 
executives went beyond simple misfeasance to actual malfeasance. The 
Miller-Rangel substitute ensures that employees will receive honest, 
accurate information by providing, first, regular benefit statements to 
workers that would include information regarding the importance of 
diversification; second, employees will be provided representation on 
pension boards; third, the substitute also provides for independent, 
nonconflicted investment advice when company stock is offered as an 
investment option; and finally, it ensures that executives are not 
given special treatment over rank-and-file employees.
  Mr. Speaker, the collapse of Enron has revealed a number of serious 
flaws in our pension system. This substitute is a major step forward in 
addressing those flaws. I urge my colleagues to support the Miller-
Rangel substitute.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to 
the gentlewoman from California (Ms. Solis).

[[Page 4331]]


  Ms. SOLIS. Mr. Speaker, I thank the gentleman from California for 
this time.
  Mr. Speaker, I rise today in strong opposition to the Republican's 
misnamed pension protection bill. Rather than prevent future Enrons, 
the Republican version of their plan only weakens our current pension 
laws and ignores the very basic reforms that Enron's disaster created 
for us.

                              {time}  1400

  Mr. Speaker, unlike the Republican version of pension reform, our 
bill would give employees a voice about their pension plans. It 
requires a employee representative to serve on pension boards. What a 
great idea.
  I am sure that the Enron employees who recently lost their life 
savings would have loved to have had an opportunity to be at the table 
to discuss how their pension plan funds would be spent.
  Eliminating the disparity between employer and employee pension 
protection goes way beyond just making up the composition of a board. 
We must also close the loopholes that provide greater legal protections 
for executive retirement plans. Because of this loophole, Enron 
executives not only rescued their money from a sinking ship, but they 
were also able to shield their luxurious homes and other assets from 
attacks by general creditors during the bankruptcy. Once again, the 
hard-working rank-and-file men and women of Enron do not enjoy such 
protections. Instead, they are vulnerable and left to defend for 
themselves.
  Mr. Speaker, the Democratic substitute eliminates this special 
treatment for executives and levels the playing field for employees. I 
urge my colleagues to support the Democratic substitute.
  Mr. BOEHNER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Nebraska (Mr. Osborne).
  Mr. OSBORNE. Mr. Speaker, I join my colleagues in support of the 
Pension Security Act. The district that I represent is very rural, 
small towns and small businesses; and I think it is important to point 
out that most of the business done in this country is done by small 
businesses, not by Fortune 500 companies. My father was a small 
businessman, and my brother currently runs one.
  The number one complaint that I hear is that government regulation is 
so burdensome that many small businesses are damaged or driven out of 
business entirely. Examples of this would be parts of the Tax Code, 
ergonomic regulation, health care paperwork, and retirement plan 
paperwork.
  The President's plan addresses the major issues that resulted in the 
loss of retirement benefits of Enron employees without adding 
significant regulatory burdens. I think it strikes a good balance. The 
Pension Security Act allows employees to sell stock within 3 years. One 
of the major problems at Enron was an employee had to be 55 years of 
age or more and had to be employed for 10 years or more.
  It prohibits senior executives from selling stock during blackout 
periods, and requires 30 days' notice before declaring blackouts. 
Neither of these were true in the Enron case.
  In addition, the plan requires companies to give regular financial 
reports on the value of the stock. Also the President's plan includes 
the Retirement Security Advice Act, which has already passed the House, 
which provides for increased availability of investment advisers to 
assist plan participants in making good decisions about their 
investments. Currently, only 16 percent of businesses provide this 
advice; and in most cases small businesses do not provide it at all, 
whereas roughly 75 percent of employees would like such advice. I think 
this would be very helpful.
  So the greatest concern I have is that this well-intentioned 
substitute, and I am sure it is motivated from good intentions, will 
provide safeguards that will really eliminate pension plans, and that 
is absolutely something that helps no one.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentlewoman from California (Ms. Sanchez).
  Ms. SANCHEZ. Mr. Speaker, as a former investment banker and a small 
business owner, I am well aware of the complexities that are involved 
with pensions and with private investments. I believe that most bankers 
and business owners try to do a good job for their clients and 
employees; but many Americans invest too much of their money in their 
company's stock, unaware of the type of problems that arise, like the 
ones that we have seen with Enron.
  The Pension Security Act opens a dangerous loophole that allows self-
interested people at investment firms to serve as principal financial 
advisers to employees and to offer conflicted advice. We saw this as an 
example in the Merrill Lynch case detailed in the Washington Post and 
other major newspapers.
  The Miller-Rangel substitute would offer employees independent 
financial advice when company stock is offered as an investment option 
under their pension plan. This is just one example of how the Miller-
Rangel substitute offers real reform to our pension system and how the 
base bill fails to give employees control over their money.
  Mr. Speaker, employees have already lost too much. We must pass 
legislation that gives them more security for their retirement, and I 
urge my colleagues to reject the base bill and to vote for the Miller-
Rangel substitute.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to 
the gentleman from Ohio (Mr. Kucinich).
  Mr. KUCINICH. Mr. Speaker, I went to a grade school in suburban 
Cleveland about a month ago to talk about current affairs, and I asked 
for a show of hands of about 300 grade schoolers, How many have heard 
of Enron? Every hand went up. These are first through sixth graders. 
And then I asked, What do you know about Enron? Some of the sixth 
graders actually knew there were workers who were cheated out of their 
pensions. These were sixth graders.
  I think it is fair to say just about everybody in America knows about 
Enron, and most adults certainly know about the fact that people were 
cheated out of their pensions. Everyone in America knows this except 
some Members in the House of Representatives. It is as if Enron never 
happened.
  Mr. Speaker, the bill that we consider today continues special 
treatment for company executive pension plans at the expense of the 
employees. It is like Enron never happened.
  It is just like Enron was some passing fancy, instead of it being 
symptomatic of something that is wrong at the core of this system, and 
that is that workers do not get fair treatment.
  The Miller substitute is the only bill that addresses the inequity 
between executives and employees. A vote for the Miller substitute is a 
vote for fair treatment for workers. The Miller substitute would 
prohibit plans for executives from receiving greater protections under 
the law than the 401(k)-type plans that employees have.
  As Enron began to implode in a wave of accounting scandals, company 
executives not only cashed out millions in company stock, but also 
protected themselves through a number of executive-type plans. Enron 
employees stand as general creditors to recover 401(k) losses from the 
misconduct of the corporation. Enron executives prefunded deferred 
compensation plans that were immune from claims of general creditors 
once the company went into bankruptcy.
  Meanwhile, executive savings plans operate under different rules from 
the employees' 401(k) plans. Executive savings plans afford executives 
more choice, more protection of assets, and guarantee more money. Most 
companies offer these plans. As shown in the 2000 study of Fortune 1000 
companies, 86 percent of companies surveyed already had those plans, 
with the remainder considering adding one. Enron set up an executive 
savings plan that lets participating executives contribute 25 percent 
of their salaries and 100 percent of cash bonuses each year. Executives 
were guaranteed a 9 percent rate of return on the first 2 years of the 
plan, and allowed to put money in a variety of investments. Executives 
were not limited to just Enron stock.

[[Page 4332]]

  In addition, Ken Lay holds a pension that will pay $475,000 each year 
for the rest of his life and a prepaid, $12 million life insurance 
policy. Think about the workers at Enron. Think about how they have to 
worry about making ends meet, how they may not be able to make mortgage 
payments, and about how they may not be able to send their kids to 
college or have bread on the table. Meanwhile, the executives walk away 
wealthier than ever.
  Enron executives had similar pension or insurance agreements, but 
employees' 401(k)s are drained. They will be lucky if they get their 
$4,650 maximum severance pay. The lack of a consistent set of rules 
between employees and executives is unjust and unfair, and it should be 
illegal. Only the Miller substitute makes it so because executive plans 
have legal protections that put a barrier between the money and the 
general creditors. Enron executives were protected from losing their 
retirement. Employees were totally exposed. It is time we stood up for 
the American workers here.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from New Jersey (Mr. Holt).
  Mr. HOLT. Mr. Speaker, it is really quite simple. We have learned 
some very simple lessons; perhaps we should have learned them a long 
time ago, but we certainly should learn them now in light of Enron. The 
employees have been left holding the bag, while the corporate 
executives, sometimes in a very duplicitous way, walk away with their 
options, walk away with their bundles.
  We have such a good opportunity here to get things right. But the 
bill before us, the underlying bill, fails to give employees notice 
when executives are dumping company stock. It fails to hold the plan 
fiduciaries accountable and limits the ability of the employees to 
collect damages resulting from misconduct under the pension plan. It 
denies employees a spot on the pension board. How simple could that be? 
Yet the bill fails to do that.
  Mr. Speaker, it also continues special treatment of executives. In 
other words, executives could continue to have their savings set aside 
and protected through their stock options and so forth when a company 
fails, while rank and file would be at the end of the line in 
bankruptcy holding this empty bag.
  Perhaps most important, it fails to give employees early control of 
their assets. Anybody's standard financial advice would be to 
diversify, and yet the employees are denied the opportunity to 
diversify for at least 5 years under the underlying bill. Ordinary 
employees would be prevented from diversifying while corporate 
executives would be allowed to sell the stock they receive in stock 
options. We are missing a real opportunity here to help the employees.
  Mr. GEORGE MILLER of California. Mr. Speaker, I have no further 
requests for time, and I yield back the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, let me close with our section on the general debate and 
thank my colleagues on both sides of the aisle for their contributions 
to this process.
  Members on both sides of the aisle believe it is important to protect 
retirement security of American workers, and Members need to understand 
that there are outdated Federal laws that need to be dealt with.
  A bipartisan group of Members believes that the bill, the Pension 
Security Act, the base bill today, is the reasonable approach to deal 
with this issue in a balanced way that protects the rights of employees 
further than it does under current law without driving employers out of 
the pension business or discouraging employers from setting up new 
pensions; nor does it restrict the ability of employees to make 
decisions with regard to their own accounts.
  I believe my colleagues on the other side of the aisle want to go too 
far, too far that will have unintended consequences. As we get into the 
substitute in a few minutes, we will have an opportunity to talk about 
those differences and shortcomings.
  Mr. MOORE. Mr. Speaker, I rise today to express my reasons for voting 
against H.R. 3762, the Pension Security Act, and the Miller-Rangel 
substitute to this legislation.
  During my time in Congress, I have strongly supported legislation 
that would help employees prepare for their retirement. Pension reform 
legislation affects all working Americans, and as such both parties in 
Congress have a responsibility to work together in a thoughtful and 
conscientious manner on this issue. To that end, I am a cosponsor of 
the bipartisan Employee Savings Bill of Rights Act, which empowers 
employees to take control of their retirement plan investments and 
gives workers substantial new rights to avoid over-concentration in the 
stock of their own company. By modifying the rules that apply to the 
401(k) plans and Employee Stock Ownership Plans (ESOPs) of publicly-
traded companies, the Employee Savings Bill of Rights provides workers 
with needed control over their retirement plan investments while 
preserving the opportunity for employee ownership. Through new 
diversification rights, new disclosure requirements and new tax 
incentives for retirement education, this legislation would help 
employees achieve retirement security through their 401(k) plans and 
ESOPs.
  I have serious concerns with both H.R. 3762 and the Miller-Rangel 
substitute to this legislation. I am disappointed that the House has 
not been able to come together on this issue to advance reasonable, 
much needed pension reform that will benefit working Americans. 
Unfortunately, the substitute overreacts to the unfortunate 
circumstances surrounding Enron's historic bankruptcy. Congress has a 
duty to the American people to enact responsible legislation that will 
benefit employees rather than impose new administrative burdens on 
millions of retirement plans.
  The substitute would thwart bipartisan efforts to reduce 
administrative burdens on employers who voluntarily sponsor retirement 
plans by imposing new, expensive rules on such plans. The substitute's 
provision that would require retirement plans to insure against vaguely 
defined plan asset losses would increase the cost of these retirement 
plans, creating a disincentive for employers to offer their employees a 
pension plan.
  Additionally, under the substitute, a plan participant is allowed to 
divest of company stock held in an account after just one year. The 
bipartisan Employee Savings Bill of Rights Act, of which I am 
cosponsor, requires only current holdings to be diversified out over 
five years. The substitute's one-year diversification provision runs 
the significant risk of causing disruptions in both plan administration 
and the markets.
  Further, the substitute would require employers to create joint 
employer-employee retirement plan trusteeships. Employers in Kansas's 
Third District have assured me that this provision has the potential to 
complicate plan administration to the point that some employers may 
drop their plans altogether. The working people of this country deserve 
a more thoughtful, careful process from their federal representatives.
  While the substitute goes too far in seeking to ensure reasonable 
safeguards on employer-sponsored retirement plans, the so-called 
Pension Security Act does not go far enough in protecting working 
Americans. Additionally, I am extremely disappointed that the House 
leadership decided to schedule this legislation for floor consideration 
instead of the bipartisan Employee Savings Bill of Rights. Last month, 
the Ways & Means Committee approved this legislation by a near-
unanimous vote of 36-2. I am frustrated, though not surprised, at the 
House leadership's unwillingness to address the important issue of 
pension reform in a bipartisan fashion.
  I will continue to support bipartisan efforts to reform our nation's 
retirement system in a manner that benefits both employers and 
employees. I urge my colleagues to do the same.
  Mr. ETHERIDGE. Mr. Speaker, I rise in opposition to H.R. 3762, the 
Pension Security Act and in support of the Miller Substitute. Today, we 
have an important opportunity to protect our working families and their 
retirement security from greedy, unscrupulous corporate wrongdoers. 
But, Mr. Speaker the Republican Leadership has wasted that opportunity.
  Earlier this year, the Ways and Means Committee passed a truly 
bipartisan pension reform bill. But, the Republican Majority chose to 
merge that bipartisan measure with a controversial bill passed by the 
Education and Workforce Committee. The product of that merger, H.R. 
3762, does not protect employee pensions, fails to prevent future 
scandals like Enron, and opens a new loophole that jeopardizes employee 
savings. H.R. 3762 also establishes complicated diversification rules 
that

[[Page 4333]]

do not allow workers substantial control over their retirement 
investments. Under the Miller Substitute employees would be able to 
diversify company-matched stock after three years of participation in a 
401K plan.
  Under current law, employees are allowed to receive independent, 
comprehensive investment information as a part of their employee 
benefits package. H.R. 3762 would overturn current law, and allow 
employers to offer conflicted investment advice to their employees. 
Financial institutions should not be able to give an employee 
investment advice if the financial institution stands to profit from 
that advice. About 15,000 Enron employees lost their retirement savings 
because Ken Lay and other Enron executives assured their employees that 
Enron stock was a sound investment. Ken Lay and his cronies lined their 
pockets while they misled their employees with bad advice. The 
conflicted investment advice provisions in this bill would set workers 
up for another Enron. Mr. Speaker, we know all too well the corrupting 
power of greed.
  In contrast the Miller Substitute would offer employees honest, 
accurate, and timely investment information. It would prohibit pension 
plans from giving misleading information, require that workers receive 
regular benefit statements and are notified of plan lockdowns at least 
30-days in advance.
  As more Americans turn to 401K and other retirement plans to help 
them prepare for their golden years, we must act to prevent future 
Enrons. The Republican Leadership had an opportunity to act in 
bipartisan manner to protect the retirement security of working 
families, but they chose not do so. H.R. 3762 fails to solve our 
pension law problems. In fact, the bill would actually create new ones. 
The Miller Substitute protects workers and their investments from 
greedy corporate entities, provides unbaised, independent investment 
advice, and gives employees control over their retirement savings.
  I urge my colleagues to oppose H.R. 3762 and to vote for the Miller 
Substitute.
  Mr. BLUMENAUER. Mr. Speaker, I rise today in strong opposition to 
H.R. 3762, the Republican leadership's missed opportunity to address 
concerns for the security of working Americans' pension plans. I fully 
support the Democratic substitute amendment, which makes an honest 
attempt to correct the problems apparent in the wake of the Enron 
debacle.
  I represent as many Enron survivors as anyone outside of Houston. 
Portland, Oregon is the home of Portland General Electric (PGE), a 
stable utility company founded in 1889 that has provided steady 
employment to 2,700 employees. Enron purchased PGE in 1997. PGE line 
employees did not volunteer for this takeover. They were working for a 
profitable and respected company, earning a fair salary and saving for 
retirement in a stable pension plan. After Enron's purchase of PGE, it 
was only a few years before the stability of Enron. PGE and their 
employee's retirement savings began to unravel. Enron executives 
continued to encourage employee investment in Enron stock and spoke of 
the integrity of the comapny's financial position, while they sold 
their personal holdings of Enron stock and drove the company into 
bankruptcy proceedings.
  I have seen the pain and disbelief of PGE employees firsthand. Dozens 
of people I know personally have had dreams shattered, been forced to 
postpone life decisions and delay retirement. Those involved in the 
Enron debacle have failed and abused honest hardworking employees in my 
district and across the country.
  Sadly, it may yet be determined that past Congressional and 
governmental actions contributed to the betrayal of these honest 
employees. Today, we have the opportunity to pass legislation that can 
help to prevent the destruction of working families' lives and 
retirement savings in the future. It would be tragic if Congress fails 
American workers again, which will surely happen under the Republican 
leadership's proposal. The Republican pension bill not only falls short 
of improving an obviously flawed pension system, but actually weakens 
current law by providing employees with biased and conflicted 
investment advice without access to an independent alternative.
  To provide true security for retirement savings, pension reform must:
   hold corporate executives accountable for their actions,
   give employees control over their own retirement dollars.
   ensure workers a voice on management pension boards, and
   provide independent advice for workers.
  I strongly support the Democratic substitute amendment, which will 
provide these needed reforms and help protect workers' retirement 
savings from the misdeeds of executives and corporations. The pain I 
have witnessed firsthand among the PGE employees in my district demands 
that Congress provide true pension security.
  Mr. MEEHAN. Mr. Speaker, today, the House voted on H.R. 3762, the 
Pension Security Act. Had I been present, I would have voted in favor 
of the Democratic substitute authored by Representatives Miller and 
Rangel and against final passage of H.R. 3762, the so-called Pension 
Security Act.
  I would have opposed H.R. 3762, the Republican proposal, because it 
would have done little to prevent future ``Enron'' scenarios, where 
executives and pension administrators withheld financial information 
from the employees of that company. Without the necessary information 
about the financial status of the company, Enron's non-executive 
employees then lost the bulk of their retirement sayings when the value 
of the company's stock fell through the floor.
  H.R. 3762 fails to require anyone to alert employees when company 
officials begin dumping company stock, as Enron executives did just 
before the value of Enron stock dropped dramatically on the market. 
H.R. 3762 also fails to hold fiduciaries of pension plans accountable 
if they violate the law. Furthermore, under H.R. 3762, employees would 
not have the option to fully diversify their stock in a timely manner, 
nor would they have a voice in the administration and protection of 
their retirement savings. Combined, these failings would leave future 
workers vulnerable to the same type of financial disaster facing 
Enron's employees today.
  I would have supported the Democratic substitute to H.R. 3762 because 
I believe it would go a long way towards preventing a future ``Enron'' 
situation from occurring. The Democratic substitute to H.R. 3762 would 
arm employees with the same access to information as corporate 
executives, giving employees the tolls they need to make informed 
investment decisions regarding their pension plans. Moreover, H.R. 3762 
would give employees representation on the boards that manage pension 
plans and a say in the administration and protection of those plans. I 
would have also supported the Democratic substitute because it would 
require executives to notify the pension plan when they are selling 
large amounts of company stock, and it would give the employees the 
right to diversify their investments as soon as they are vested in the 
funds.
  I was unable to vote for the Democratic plan and against H.R. 3762 
because of a compelling obligation in my Congressional district 
occurring at the time of the votes. Former Mayor of New York City 
Rudolph Guiliani is giving remarks in Lowell, Massachusetts today--
which is located in my Congressional District. Mayor Giuliani 
demonstrated superb and heralded leadership immediately following the 
September 11th terrorist attacks on the World Trade Center in New York 
City. Tragically, 30 of my constituents lost their lives in those 
attacks, as they were on the American Airlines jet which was one of two 
airplanes that crashed into the Twin Towers. Their families continue to 
mourn the loss of parents, children and siblings and every day feel the 
pain that terrorism has visited upon them. Mayor Giuliani has provided 
unique comfort to families who lost loved ones on September 11th 
because of his boundless compassion, tremendous leadership in the face 
of unspeakable tragedy, and unstinting efforts to help these families 
overcome the financial and emotional difficulties caused by this 
terrible event. I have accordingly arranged for the Mayor to meet 
privately with these families at my residence and will miss these votes 
to attend that gathering.
  As I was unable to vote for the Democratic substitute today, I am 
looking forward to having the opportunity to vote for a balanced and 
effective pension reform bill that I hope will be the result of a 
House-Senate compromise on this critical issue.
  Ms. HARMAN. Mr. Speaker, the collapse of Enron and its impact on 
employees' retirement plans underscores the need to enact additional 
federal protections.
  The bill before us is a step in that direction. It is far from 
perfect--but perfection is not an option. Forward progress is.
  Similarly, the substitute amendment offered by my colleagues, George 
Miller and Charles Rangel, is not perfect either. While making some 
improvements over the committee bill, it too has some features that may 
have the effect of discouraging employers from providing retirement 
benefits to employees.
  Striking the right balance is often a difficult task. But it is 
especially difficult in an area like defined contribution pension plans 
where a poor investment or management decision may cause untold 
financial hardship on individuals in or near their retirement years.
  We clearly need to move the process of reform forward--hopefully 
combining the best

[[Page 4334]]

features of both the bill and substitute and more thoroughly vetting 
the more problematic features of each.
  Mr. Speaker, we don't have the luxury of doing nothing. We have long 
recognized the outdated nature of many of our pension laws. Enron's 
collapse has provided the impetus for action.
  Protecting workers' retirement benefits and encouraging the expansion 
of pension plans to more companies and workers are positive goals in 
the abstract. But writing the rules is always more difficult.
  We should proceed carefully.
  Mr. KIND. Mr. Speaker, this past winter, thousands of ENRON 
employees, stockholders, and their families saw their life savings 
disappear. While their nest eggs were being crushed, top executives 
were selling stock at top dollar and the auditors were shredding 
documents. The ENRON debacle shook the foundation of our country's 
private pension system and caused many people to wonder if the same 
thing could happen to them. Today, 46 million Americans participate in 
401(k) and other pension programs with more than $4 trillion invested 
in the private pension system.
  Congress has a responsibility to improve retirement security and 
restore confidence in the pension system for millions of Americans. In 
1974, Congress enacted the Employee Retirement Income Security Act 
(ERISA) to provide protection of pension benefits for American's 
private sector employees. While ERISA made great strides, the growth of 
401(k) plans and increased participation in the securities markets call 
for improved safeguards to protect these individually controlled 
pension accounts.
  Our Democratic substitute includes important provisions that should 
be included in the underlying bill. For example, the Miller bill would 
provide employees a voice on their pension board where critical 
decisions about workers' retirement security are made. In addition, the 
substitute seeks parity of benefits for executives and rank-and-file 
workers by closing a current loophole that gives special treatment for 
executive pension plans.
  While I would prefer that the legislation on the floor today contain 
some of the provisions included in the Miller substitute, the Pension 
Security Act, is a step in the right direction to provide employees 
more control and decision making over their 401(k) plans. Pension 
reform must be carefully done so as not to impose such onerous new 
restrictions that employers would be unwilling to offer pension plans, 
or might be encouraged to discontinue the plans they already offer.
  Specifically HR 3762 would:
  Allow employees to sell their company-contributed stock after three 
years.
  Ensures that corporate executives are held to the same restrictions 
as average American workers during ``lockdown'' periods.
  Provide workers quarterly statements about their investments and 
their rights to diversify them.
  Ensure that employers assume full fiduciary responsibility during 
``lockdown'' periods.
  Expand workers' access to investment advice.
  These are common sense reforms that will help employees make better, 
more informed investment choices to prepare for their golden years. The 
ENRON scandal exposed weaknesses in our pension laws that could 
jeopardize these retirement savings. Hardworking Americans should not 
lose all of their retirement savings due to the wrong doing of 
corporate executives and loopholes in our pension laws. The 
legislation, while not perfect, will bring much needed improvements to 
our private pension system and help millions of American workers save 
for a happy and healthy retirement.
  Mr. BOEHNER. Mr. Speaker, I yield back the balance of my time.


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

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

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

Sec. 1. Short title and table of contents.

                  TITLE I--IMPROVEMENTS IN DISCLOSURE

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

                 TITLE II--DIVERSIFICATION REQUIREMENTS

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

                   TITLE III--EMPLOYEE REPRESENTATION

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

                       TITLE IV--EXECUTIVE PARITY

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

                   TITLE V--INCREASED ACCOUNTABILITY

Sec. 501. Bonding or insurance adequate to protect interest of 
              participants and beneficiaries.
Sec. 502. Liability for breach of fiduciary duty.
Sec. 503. Preservation of rights or claims.
Sec. 504. Office of Pension Participant Advocacy.
Sec. 505. Additional criminal penalties.
Sec. 506. Study regarding insurance system for individual account 
              plans.

     TITLE VI--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

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

                     TITLE VII--GENERAL PROVISIONS

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

                  TITLE I--IMPROVEMENTS IN DISCLOSURE

     SEC. 101. PENSION BENEFIT INFORMATION.

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

     ``Information furnished under the preceding sentence to a 
     participant in a defined benefit plan (other than at the 
     request of the participant) may be based on reasonable 
     estimates determined under regulations prescribed by the 
     Secretary.''.
       (2) Model statement.--Section 105 of such Act (29 U.S.C. 
     1025) is amended by adding at the end the following new 
     subsection:
       ``(e)(1) The Secretary of Labor shall develop a model 
     benefit statement which shall be used by plan administrators 
     in complying with the requirements of subsection (a). Such 
     statement shall include--
       ``(A) the amount of nonforfeitable accrued benefits as of 
     the statement date which is payable at normal retirement age 
     under the plan,
       ``(B) the amount of accrued benefits which are forfeitable 
     but which may become nonforfeitable under the terms of the 
     plan,
       ``(C) the amount or percentage of any reduction due to 
     integration of the benefit with the participant's Social 
     Security benefits or similar governmental benefits,
       ``(D) information on early retirement benefit and joint and 
     survivor annuity reductions, and
       ``(E) the percentage of the net return on investment of 
     plan assets for the preceding plan year (or, with respect to 
     investments directed by the participant, the net return on 
     investment of plan assets for such year so directed), 
     itemized with respect to each type of investment, and, stated 
     separately, the administrative and transaction fees incurred 
     in connection with each such type of investment, and
       ``(F) in the case of an individual account plan, the amount 
     and percentage of assets in the individual account that 
     consists of employer securities and employer real property 
     (as defined in paragraphs (1) and (2), respectively, of 
     section 407(d)), as determined as of the most recent 
     valuation date of the plan.
       ``(2) The Secretary shall also develop a separate notice, 
     which shall be included by the plan administrator with the 
     information furnished pursuant to subsection (a), which 
     advises participants and beneficiaries of generally accepted 
     investment principles, including principles of risk 
     management and diversification for long-term retirement 
     security and the risks of holding substantial

[[Page 4335]]

     asssets in a single asset such as employer securities.''.
       (3) Rule for multiemployer plans.--Subsection (d) of 
     section 105 of such Act (29 U.S.C. 1025) is amended to read 
     as follows:
       ``(d) Each administrator of a plan to which more than 1 
     unaffiliated employer is required to contribute shall furnish 
     to any plan participant or beneficiary who so requests in 
     writing, a statement described in subsection (a).''.
       (b) Disclosure of Benefit Calculations.--
       (1) In general.--Section 105 of such Act (as amended by 
     subsection (a)) is amended further--
       (A) by redesignating subsections (b), (c), (d), and (e) as 
     subsections (c), (d), (e), and (f), respectively; and
       (B) by inserting after subsection (a) the following new 
     subsection:
       ``(b)(1) In the case of a participant or beneficiary who is 
     entitled to a distribution of a benefit under an employee 
     pension benefit plan, the administrator of such plan shall 
     provide to the participant or beneficiary the information 
     described in paragraph (2) upon the written request of the 
     participant or beneficiary.
       ``(2) The information described in this paragraph 
     includes--
       ``(A) a worksheet explaining how the amount of the 
     distribution was calculated and stating the assumptions used 
     for such calculation,
       ``(B) upon written request of the participant or 
     beneficiary, any documents relating to the calculation (if 
     available), and
       ``(C) such other information as the Secretary may 
     prescribe.

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

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

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

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

     SEC. 102. IMMEDIATE WARNING OF EXCESSIVE STOCK HOLDINGS.

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

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

     SEC. 103. ADDITIONAL FIDUCIARY PROTECTIONS RELATING TO 
                   LOCKDOWNS.

       (a) Amendment to Employee Retirement Income Security Act of 
     1974.--Section 404 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1104) is amended by adding at the end 
     the following new subsection:
       ``(e)(1) In the case of any eligible individual account 
     plan (as defined in section 407(d)(3)) no lockdown may take 
     effect until at least 30 days after written notice of such 
     lockdown is provided by the plan administrator to such 
     participant or beneficiary (and to each employee organization 
     representing any such participant).
       ``(2) Subject to such regulations as the Secretary may 
     prescribe, the requirements of paragraph (1) shall not apply 
     in cases of emergency.
       ``(3) A plan described in paragraph (1) shall provide that 
     each participant and beneficiary required to receive a notice 
     under paragraph (1)(A) is entitled to direct the plan to 
     divest within 3 business days (but in no event later than the 
     beginning of the lockdown) any security or other property in 
     which any assets allocated to the account of such individual 
     are invested and to reinvest such assets in any other 
     investment option offered under the plan.
       ``(4) For purposes of this subsection, the term `lockdown' 
     means any temporary lockdown, blackout, or freeze with 
     respect to, suspension of, or similar limitation on the 
     ability of a participant or beneficiary to exercise control 
     over the assets in his or her account as otherwise generally 
     provided under the plan (as determined under regulations of 
     the Secretary), including the ability to direct investments, 
     obtain loans, or obtain distributions.''.
       (b) Amendments to Internal Revenue Code of 1986.--
       (1) Excise tax on failures with respect to lockdowns.--
     Chapter 43 of the Internal Revenue Code of 1986 (relating to 
     qualified pension, etc., plans) is amended by adding at the 
     end the following new section:

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

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of any defined contribution plan to meet the 
     requirements

[[Page 4336]]

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

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

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

       (a) In General.--Section 104 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1024) is amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) In any case in which assets in the individual 
     account of a participant or beneficiary under an individual 
     account plan include employer securities, if any person 
     engages in a transaction constituting a direct or indirect 
     purchase or sale of employer securities and--
       ``(A) such transaction is required under section 16 of the 
     Securities Exchange Act of 1934 to be reported by such person 
     to the Securities and Exchange Commission, or
       ``(B) such person is a named fiduciary of the plan,
     such person shall comply with the requirements of paragraph 
     (2).
       ``(2) A person described in paragraph (1) complies with the 
     requirements of this paragraph in connection with a 
     transaction described in paragraph (1) if such person 
     provides to the plan administrator of the plan a written 
     notification of the transaction not later than 1 business day 
     after the date of the transaction.
       ``(3)(A) If the plan administrator is made aware, on the 
     basis of notifications received pursuant to paragraph (2) or 
     otherwise, that the proceeds from any transaction described 
     in paragraph (1), constituting direct or indirect sales of 
     employer securities by any person described in paragraph (1), 
     exceed $100,000, the plan administrator of the plan shall 
     provide to each participant and beneficiary a notification of 
     such transaction. Such notification shall be in writing, 
     except that such notification may be in electronic or other 
     form to the extent that such form is reasonably accessible to 
     the participant or beneficiary.
       ``(B) In any case in which the proceeds from any 
     transaction described in paragraph (1) (with respect to which 
     a notification has not been provided pursuant to this 
     paragraph), together with the proceeds from any other such 
     transaction or transactions described in paragraph (1) 
     occurring during the preceding one-year period, constituting 
     direct or indirect sales of employer securities by any person 
     described in paragraph (1), exceed (in the aggregate) 
     $100,000, such series of transactions by such person shall be 
     treated as a transaction described in subparagraph (A) by 
     such person.
       ``(C) Each notification required under this paragraph shall 
     be provided as soon as practicable, but not later than 3 
     business days after receipt of the written notification or 
     notifications indicating that the transaction (or series of 
     transactions) requiring such notice has occurred.
       ``(4) Each notification required under paragraph (2) or (3) 
     shall be made in such form and manner as may be prescribed in 
     regulations of the Secretary and shall include the number of 
     shares involved in each transaction and the price per share, 
     and the notification required under paragraph (3) shall be 
     written in language designed to be understood by the average 
     plan participant. The Secretary may provide by regulation, in 
     consultation with the Securities and Exchange Commission, for 
     exemptions from the requirements of this subsection with 
     respect to specified types of transactions to the extent that 
     such exemptions are consistent with the best interests of 
     plan participants and beneficiaries. Such exemptions may 
     relate to transactions involving reinvestment plans, stock 
     splits, stock dividends, qualified domestic relations orders, 
     and similar matters.
       ``(5) For purposes of this subsection, the term `employer 
     security' has the meaning provided in section 407(d)(1).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to transactions occurring on or 
     after July 1, 2002.

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

       Section 404(c) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1104(c)) is amended by adding at the 
     end the following new paragraph:
       ``(4) The plan sponsor and plan administrator of a pension 
     plan described in paragraph (1) shall have a fiduciary duty 
     to ensure that each participant and beneficiary under the 
     plan, in connection with the investment by the participant or 
     beneficiary of plan assets in the exercise of his or her 
     control over assets in his account, is provided with all 
     material investment information regarding investment of such 
     assets to the extent that the provision of such information 
     is generally required to be disclosed by the plan sponsor to 
     investors in connection with such an investment under 
     applicable securities laws. The provision by the plan sponsor 
     or plan administrator of any misleading investment 
     information shall be treated as a violation of this 
     paragraph.''.

     SEC. 106. ENFORCEMENT OF INFORMATION AND DISCLOSURE 
                   REQUIREMENTS.

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

                 TITLE II--DIVERSIFICATION REQUIREMENTS

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

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--Section

[[Page 4337]]

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

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

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

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

     The application of any penalty or any restriction based on 
     age or years of service in connection with any exercise of 
     such right as provided under this clause shall be construed 
     as a violation of this clause.
       ``(B) Limitation to readily tradable employer securities.--
     Subparagraph (A) shall apply only to so much of a 
     nonforfeitable accrued benefit as consists of employer 
     securities which are readily tradable on an established 
     securities market.
       ``(3) Prompt compliance with directions to allocate 
     investments.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a plan meets the requirements of this paragraph if the plan 
     provides that, within 5 days after the date of any election 
     by a participant or beneficiary allocating his or her 
     nonforfeitable accrued benefit to any investment option 
     provided under the plan, the plan administrator shall take 
     such actions as are necessary to effectuate such allocation.
       ``(B) Special rule for periodic elections.--In any case in 
     which the plan provides for elections periodically during 
     prescribed periods, the 5-day period described in 
     subparagraph (A) shall commence at the end of each such 
     prescribed period.
       ``(4) Notice of rights and of importance of 
     diversification.--A plan meets the requirements of this 
     paragraph if the plan provides that, not later than 30 days 
     prior to the date on which the right of a participant under 
     the plan to his or her accrued benefit becomes 
     nonforfeitable, the plan administrator shall provide to such 
     participant and his or her beneficiaries a written notice--
       ``(A) setting forth their rights under this section with 
     respect to the accrued benefit, and
       ``(B) describing the importance of diversifying the 
     investment of account assets.
       ``(5) Preservation of authority of plan to limit 
     investment.--Nothing in this subsection shall be construed to 
     limit the authority of a plan to impose limitations on the 
     portion of plan assets in any account which may be invested 
     in employer securities.''.
       (2) Clerical amendment.--The table of sections for chapter 
     43 of such Code is amended by adding at the end the following 
     new item:

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

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

     SEC. 202. EFFECTIVE DATE OF TITLE.

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

[[Page 4338]]

     Security Act of 1974) immediately before the first date of 
     the first plan year to which the amendments made by this 
     title apply, such portion shall be taken into account only 
     with respect to plan years beginning on or after January 1, 
     2004.

                   TITLE III--EMPLOYEE REPRESENTATION

     SEC. 301. PARTICIPATION OF PARTICIPANTS IN TRUSTEESHIP OF 
                   INDIVIDUAL ACCOUNT PLANS.

       (a) In General.--Section 403(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1103(a)) is amended--
       (1) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively;
       (2) by inserting ``(1)'' after ``(a)''; and
       (3) by adding at the end the following new paragraph:
       ``(2)(A) The assets of a single-employer plan which is an 
     individual account plan and under which some or all of the 
     assets are derived from employee contributions shall be held 
     in trust by a joint board of trustees, which shall consist of 
     two or more trustees representing on an equal basis the 
     interests of the employer or employers maintaining the plan 
     and the interests of the participants and their beneficiaries 
     and having equal voting rights.
       ``(B)(i) Except as provided in clause (ii), in any case in 
     which the plan is maintained pursuant to one or more 
     collective bargaining agreements between one or more employee 
     organizations and one or more employers, the trustees 
     representing the interests of the participants and their 
     beneficiaries shall be designated by such employee 
     organizations.
       ``(ii) Clause (i) shall not apply with respect to a plan 
     described in such clause if the employee organization (or all 
     employee organizations, if more than one) referred to in such 
     clause file with the Secretary, in such form and manner as 
     shall be prescribed in regulations of the Secretary, a 
     written waiver of their rights under clause (i).
       ``(iii) In any case in which clause (i) does not apply with 
     respect to a single-employer plan because the plan is not 
     described in clause (i) or because of a waiver filed pursuant 
     to clause (ii), the trustee or trustees representing the 
     interests of the participants and their beneficiaries shall 
     be selected by the plan participants in accordance with 
     regulations of the Secretary.
       ``(C) An individual shall not be treated as ineligible for 
     selection as trustee solely because such individual is an 
     employee of the plan sponsor, except that the employee so 
     selected may not be a highly compensated employee (as defined 
     in section 414(q) of the Internal Revenue Code of 1986).
       ``(D) The Secretary shall provide by regulation for the 
     appointment of a neutral individual, in accordance with the 
     procedures under section 203(f) of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 173(f)), to cast votes as 
     necessary to resolve tie votes by the trustees.''.
       (b) Regulations.--The Secretary of Labor shall prescribe 
     the initial regulations necessary to carry out the provisions 
     of the amendments made by this section not later than 90 days 
     after the date of the enactment of this Act.

                       TITLE IV--EXECUTIVE PARITY

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

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

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

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

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

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

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

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

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

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

[[Page 4339]]

     term in rules or regulations issued by the Commission under 
     section 16 of the Securities Exchange Act of 1934 (15 U.S.C. 
     78p).
       (2) Blackout period.--The term ``blackout period'' with 
     respect to the equity securities of any issuer--
       (A) means any period during which the ability of at least 
     fifty percent of the participants or beneficiaries under all 
     applicable individual account plans maintained by the issuer 
     to purchase (or otherwise acquire) or sell (or otherwise 
     transfer) an interest in any equity of such issuer is 
     suspended by the issuer or a fiduciary of the plan; but
       (B) does not include--
       (i) a period in which the employees of an issuer may not 
     allocate their interests in the individual account plan due 
     to an express investment restriction--

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

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

                   TITLE V--INCREASED ACCOUNTABILITY

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

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

     SEC. 502. LIABILITY FOR BREACH OF FIDUCIARY DUTY.

       (a) Liability for Participating In or Concealing Fiduciary 
     Breach.--
       (1) Application to participants and beneficiaries of 401(k) 
     plans.--
       (A) In general.--Part 4 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1101 et seq.) is amended by adding after section 409 the 
     following new section:

     ``SEC. 409A. LIABILITY FOR BREACH OF FIDUCIARY DUTY IN 401(K) 
                   PLANS.

       ``(a) Any person who is a fiduciary with respect to an 
     individual account plan that includes a qualified cash or 
     deferred arrangement under section 401(k) of the Internal 
     Revenue Code of 1986 who breaches any of the 
     responsibilities, obligations, or duties imposed upon 
     fiduciaries by this title shall be personally liable to make 
     good to each participant and beneficiary of the plan any 
     losses to such participant or beneficiary resulting from each 
     such breach, and to restore to such participant or 
     beneficiary any profits of such fiduciary which have been 
     made through use of assets of the plan by the fiduciary, and 
     shall be subject to such other equitable or remedial relief 
     as the court may deem appropriate, including removal of such 
     fiduciary. A fiduciary may also be removed for a violation of 
     section 411 of this Act.
       ``(b) The right of participants and beneficiaries under 
     subsection (a) to sue for breach of fiduciary duty with 
     respect to an individual account plan that includes a 
     qualified cash or deferred arrangement under section 401(k) 
     of such Code shall be in addition to all existing rights that 
     participants and beneficiaries have under section 409, 
     section 502, and any other provision of this title, and shall 
     not be construed to give rise to any inference that such 
     rights do not already exist under section 409, section 502, 
     or any other provision of this title.
       ``(c) No fiduciary shall be liable with respect to a breach 
     of fiduciary duty under this title if such breach was 
     committed before he or she became a fiduciary or after he or 
     she ceased to be a fiduciary.''
       (B) Conforming amendment.--The table of contents for part 4 
     of subtitle B of title I of such Act is amended by inserting 
     the following new item after the item relating to section 
     409:

     ``SEC. 409A. LIABILITY FOR BREACH OF FIDUCIARY DUTY IN 401(K) 
                   PLANS.''

       (2) Insider liability.--
       (A) In general.--Section 409 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1109) is amended by 
     redesignating subsection (b) as subsection (c) and by 
     inserting after subsection (a) the following new subsection:
       ``(b)(1)(A) If an insider with respect to the plan sponsor 
     of an employer individual account plan that holds employer 
     securities that are readily tradable on an established 
     securities market--
       ``(i) knowingly participates in a breach of fiduciary 
     responsibility to which subsection (a) applies, or
       ``(ii) knowingly undertakes to conceal such a breach,

     such insider shall be personally liable under this subsection 
     for such breach in the same manner as the fiduciary who 
     commits such breach.
       ``(B) For purposes of subparagraph (A), the term `insider' 
     means, with respect to any plan sponsor of a plan to which 
     subparagraph (A) applies--
       ``(i) any officer or director with respect to the plan 
     sponsor, or
       ``(ii) any independent qualified public accountant of the 
     plan or of the plan sponsor.
       ``(3) Any relief provided under this subsection or section 
     409A--
       ``(A) to an individual account plan shall inure to the 
     individual accounts of the affected participants or 
     beneficiaries, and
       ``(B) to a participant or beneficiary shall be payable to 
     the individual account plan on behalf of such participant or 
     beneficiary unless such plan has been terminated.''
       (B) Conforming amendment.--Section 409(c) of such Act (29 
     U.S.C. 1109(c)), as redesignated by subparagraph (A), is 
     amended by inserting before the period the following: ``, 
     unless such liability arises under subsection (b)''.
       (b) Maintenance of Fiduciary Liability.--Section 
     404(c)(1)(B) of such Act (29 U.S.C. 1104(c)(1)(B)) is amended 
     by inserting before the period the following: ``, except that 
     this subparagraph shall not be construed to exempt any 
     fiduciary from liability for any violation of subsection (e) 
     or (f)''.

     SEC. 503. PRESERVATION OF RIGHTS OR CLAIMS.

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

     SEC. 504. OFFICE OF PENSION PARTICIPANT ADVOCACY.

       (a) In General.--Title III of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 3001 et seq.) is 
     amended by adding at the end the following:
       ``(1) In general.--There is established in the Department 
     of Labor an office to be known as the `Office of Pension 
     Participant Advocacy'.
       ``(2) Pension participant advocate.--The Office of Pension 
     Participant Advocacy shall be under the supervision and 
     direction of an official to be known as the `Pension 
     Participant Advocate' who shall--
       ``(A) have demonstrated experience in the area of pension 
     participant assistance, and
       ``(B) be selected by the Secretary after consultation with 
     pension participant advocacy organizations.

     The Pension Participant Advocate shall report directly to the 
     Secretary and shall be entitled to compensation at the same 
     rate as the highest rate of basic pay established for the 
     Senior Executive Service under section 5382 of title 5, 
     United States Code.
       ``(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,

[[Page 4340]]

       ``(4) giving priority to the special needs of low and 
     moderate income participants,
       ``(5) developing needed information with respect to pension 
     plans, including information on the types of existing pension 
     plans, levels of employer and employee contributions, vesting 
     status, accumulated benefits, benefits received, and forms of 
     benefits, and
       ``(6) pursuing claims on behalf of participants and 
     beneficiaries and providing appropriate assistance in the 
     resolution of disputes between participants and beneficiaries 
     and pension plans, including assistance in obtaining 
     settlement agreements.
       ``(c) Reports.--
       ``(1) Annual report.--Not later than December 31 of each 
     calendar year, the Pension Participant Advocate shall report 
     to the Committee on Education and the Workforce of the House 
     of Representatives and the Committee on Health, Education, 
     Labor, and Pensions of the Senate on its activities during 
     the fiscal year ending in the calendar year. Such report 
     shall--
       ``(A) identify significant problems the Advocate has 
     identified,
       ``(B) include specific legislative and regulatory changes 
     to address the problems, and
       ``(C) identify any actions taken to correct problems 
     identified in any previous report.

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

          ``Subtitle C--Office of Pension Participant Advocacy

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

       (c) Effective Date.--The amendment made by this section 
     shall take effect on January 1, 2003.

     SEC. 505. ADDITIONAL CRIMINAL PENALTIES.

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

     SEC. 506. STUDY REGARDING INSURANCE SYSTEM FOR INDIVIDUAL 
                   ACCOUNT PLANS.

       (a) Study.--As soon as practicable after the date of the 
     enactment of this Act, the Pension Benefit Guaranty 
     Corporation shall contract to carry out a study relating to 
     the establishment of an insurance system for individual 
     account plans. In conducting such study, the Corporation 
     shall consider--
       (1) the feasibility and impact of such a system, and
       (2) options for developing such a system.
       (b) Report.--Not later than 3 years after the date of the 
     enactment of this Act, the Corporation shall report the 
     results of its study, together with any recommendations for 
     legislative changes, to the Committee on Education and the 
     Workforce and the Committee on Ways and Means of the House of 
     Representatives and the Committee on Health, Education, 
     Labor, and Pensions and the Committee on Finance of the 
     Senate.

     TITLE VI--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

     SEC. 601. INDEPENDENT INVESTMENT ADVICE.

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

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

       (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),''.

[[Page 4341]]

       (2) Section 414(s)(2) of such Code is amended by inserting 
     ``132(m)(4),'' after ``132(f)(4),''.
       (3) Section 415(c)(3)(D)(ii) of such Code is amended by 
     inserting ``132(m)(4),'' after ``132(f)(4),''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

                     TITLE VII--GENERAL PROVISIONS

     SEC. 701. GENERAL EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this Act, 
     the amendments made by this Act shall apply with respect to 
     plan years beginning on or after January 1, 2003.
       (b) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``January 1, 2003'' the date of 
     the commencement of the first plan year beginning on or after 
     the earlier of--
       (1) the later of--
       (A) January 1, 2004, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 2005.

     SEC. 702. PLAN AMENDMENTS.

       If any amendment made by this Act requires an amendment to 
     any plan, such plan amendment shall not be required to be 
     made before the first plan year beginning on or after the 
     effective date specified in section 601, if--
       (1) during the period after such amendment made by this Act 
     takes effect and before such first plan year, the plan is 
     operated in accordance with the requirements of such 
     amendment made by this Act, and
       (2) such plan amendment applies retroactively to the period 
     after such amendment made by this Act takes effect and before 
     such first plan year.

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

                              {time}  1415

  But this legislation is more than about Enron, because Enron is in 
bankruptcy. Enron may very well cease to exist as an ongoing financial 
entity. Its parts are being sold off. Its parts are being salvaged and 
people are trying to get hold of their lives again after the financial 
collapse. But Enron was also a beacon of warning to millions of 
American workers about what their particular situation might or might 
not be with respect to the security of their 401(k) plan; a 401(k) plan 
of which the workers are being told over and over again they are going 
to have to rely on more and more for their retirement because companies 
refuse to provide a defined benefit plan which would provide them much 
more security and much more future security with their retirement, 
something that they could count on.
  So what have we learned from Enron? We learned from Enron that many 
employees did not have control over that part of the stock that was 
contributed by the corporation. We also found out that many employees 
were prevented from having any control over that stock until age 50 or 
55. But we also found out that that was not unique to Enron. That was 
true of many corporations, of the Fortune 500 and unnamed corporations 
that we do not know a lot about, but that was true of them and a 
holding period for the employees not to divest themselves of the stock. 
That was done for the convenience of the corporation. That was done 
because the corporation believed it made their employees more loyal. 
But when the plans went wrong with their financial future, the company 
went wrong, we found out that the employees were locked into a 
situation from which they could not extract themselves.
  So this legislation takes the Enron lesson and says we ought not let 
that happen to other employees in other corporations. So we say that 
after 3 years of employment, you ought to be able to diversify your 
401(k), your 401(k), in a manner which you think is best for your 
retirement. The 3 years is a maximum period of time which you ought to 
be able to force the employee to hold onto the stock, because markets 
move fast, financial markets move fast, and the future of corporations 
changes all the time. The Republicans do not do that. They have a 
rolling 3 years. They have a 5-year phaseout. We do not think that that 
is fair to the worker. We think the worker ought to have that control.
  It is interesting now that as corporations review their plans, they 
are moving toward the Democratic bill. Chevron, in its merger with 
Texaco, decided that people could diversify immediately. Time Warner 
decided that people in AOL could diversify immediately. Walt Disney, 
Gillette, Quest Communications, Procter & Gamble, McDonald's, Coca-
Cola, Pfizer, Abbot Laboratories. So this is not a radical approach. 
People realize this is what workers are entitled to now because the 
401(k) is made up, 100 percent, of the assets that belong to the 
worker.
  We also said that if this is the employees' assets, if this is their 
money, this is their stock portfolio, this is their retirement, maybe 
they ought to have a say on the board. At Enron we saw that they had no 
say on the board, that the board was made up of executive vice 
presidents who did not want to deliver any bad news to the corporation, 
who when they found out bad news did not tell the employees, did not 
tell the pension board, went off and privately sold their own stock.
  But we have also seen that that has been true in other corporations 
beyond Enron. We have seen that family members have been selling stock 
when the corporations are in trouble. Obviously somebody whispered to 
their son or daughter, ``The company is not doing so well, sell the 
stock.''
  Why should the employees not have that information? We believe there 
should be a rank-and-file member on the pension board since the pension 
represents 100 percent of the employees' money. Research has shown us 
that where we have rank-and-file members on the pension board, people 
tend to invest more in their retirement plans and they do a little 
better on the rate of return. We think that that is important. That is 
a lesson of Enron that is important for other corporations and for the 
employees.
  We also saw the situation where employers were dumping stock, where 
Ken Lay was telling people in e-mails that he was buying stock. But he 
was not really buying stock, he was trading stock and, in fact, he was 
selling the stock to liquidate the large loans, personal loans, that he 
had taken from the Enron Corporation.
  Again, as we have seen the fortunes of companies change over the last 
several months in a down economy, in a changed dot-com society, we have 
seen that many employers have been dumping stock. We think that maybe 
the employee ought to know that when the corporate heads of the company 
decide to dump the stock, that they ought to be told about that. Today 
you can hide that sale of stock for 6 months or a year. Six months or a 
year can be an economic disaster for the employees if you are caught 
behind that wave. So we say when you sell $100,000 of shares, inform 
the pension board, inform the employees. What is it that we cannot 
trust these employees to understand? They will make the decision if 
they want to also sell their stock, like the CEOs and the FAO of the 
corporations.
  We also decided and we learned from Enron that there was much 
corporate misconduct, where the employees who were devastated by that 
conduct had no right to proceed against those people who defrauded 
them, who had looted the companies. Again, tragically, not unique to 
Enron, but we have seen the same instances in a number of other 
corporations, so we said

[[Page 4342]]

those people ought to be able to proceed to recover their retirement 
nest egg, to recover their financial future, to recover the plans that 
they have made for themselves and their families because somebody acted 
in an illegal fashion.
  Today those people can do that. And under ERISA there is no right of 
recovery, so this is beyond the Enron employees. This is about the 
millions of other employees who are out there in this same situation.
  What else did we learn from Enron? We learned that the employees had 
one plan, a 401(k) plan, and that the executives had another 401(k) 
plan. The executives' plan was insured. It was guaranteed. So as Enron 
goes on the rocks, as it becomes bankrupt, the executives leave with 
life preservers in the lifeboat. The employees leave with nothing.
  We think that if you are going to insure the executives' plan, insure 
the employees' plan. Both of them are contributing to making the wealth 
of the company. Both of them are creating the earnings of the company. 
It is not like the Enron employees were not working hard in this 
company. They just did not get a chance to be protected like the 
executives.
  So this is really about whether or not we are going to continue to 
accept a system where we have an elite group of executives that get 
insured pension plans, get incredible compensation, are able to buy 
multimillion-dollar homes in Florida or in Texas that are exempt from 
bankruptcy, that can have insurance plans that guarantee a payout, and 
then there are the employees who go to work every day, who build the 
financial future of the company, who do the job for which they were 
hired and can be left with nothing.
  This really is about equity. This is about fairness. This is about 
what we owe the workers in these companies. Mind you, these very same 
companies made a decision that this was really good for the executives, 
for the top corporate elite, that these were all good things to do. But 
now when you suggest that maybe you should do them for the employees, 
for the rank-and-file people who are on the line working every day, 
that somehow it is radical or it is un-American or it is against the 
free enterprise system.
  I think President Bush got it about right. In his first public 
statement after the Enron case down in North Carolina, I believe it was 
at a naval base, he said, ``What is good for the captain should be good 
for the sailor.'' That is what the Democratic substitute says. It says 
that we ought to recognize the dignity and the hard work of the 
employees and they should not be put in a position of disadvantage. 
They should not be put in a position where they could lose everything 
when the executives are in a position of losing nothing. That is a very 
important principle. It is a very important principle for this Nation. 
The President recognized it, but the Republican bill does not.
  The Republican bill concentrates on getting the employees better 
investment advice, and that is a good idea. Clearly, even the Enron 
employees did not understand the real value of diversification. So good 
investment advice makes sense as people are trying to plan for their 
retirement. We believe that that advice should not be conflicted. The 
Republican bill does not provide for that kind of protection.
  We recognize, as we have seen, where Arthur Andersen was deeply 
conflicted between the commissions it was making on consulting from 
Enron and auditing the books they were presenting to the public, to the 
shareholders, and to the employees about the health of the company.
  We have now seen all of the labyrinth of commissions and fees and 
financial arrangements that had distorted the financial marketplace, 
the most recent of which is Merrill Lynch, where Merrill Lynch was 
seeking to make millions, tens of millions of dollars as an investment 
bank, but it was doing business with the same people whose stock it was 
touting, so it did not want to say ``don't buy ABC stock'' when it was 
trying to negotiate a commission worth tens of millions of dollars, so 
it had its people keep saying ``buy ABC stock'' and even those people 
said, ``That is lousy stock. It's no good.'' They were conflicted.
  Yes, investment advice is good, but it ought to be independent. It 
ought to be independent of those commissions, of those holdings, of 
those conflicts. And they run throughout the financial markets.
  If America got any lesson from Enron, through Arthur Andersen, 
through Global Crossing, through so many others, they learned that 
there really are two systems; a system for the privileged, for the 
elite, for the executives, and another system for the employees who are 
investing in these companies.
  That is why we have introduced the substitute, because half of the 
Republican bill is missing. Yes, it deals with investment advice, but 
it does not deal with the lessons of Enron. It does not deal with the 
peril of millions of Americans who are leaning very hard on their 
401(k) to help provide for their retirement. It does not deal with the 
unethical behavior of corporate executives who are not in Enron. It 
does not deal with the ability of corporate executives to hide their 
transactions from their employees and from the investors. And it does 
not deal with the fairness of the treatment of those two parts of the 
corporation.
  The Democratic substitute does it. It does it in a way that does not 
place a burden on the system. It is really about disclosure. It is 
really about fairness. And it is making sure that as we walk away from 
the Enron disaster, that we really in fact have changed the manner in 
which we are doing business to make sure that there is fairness in 
treatment and there is protection for the American worker. The bill as 
presented to us today is incomplete in that fashion. The Democratic 
substitute will complete that part of the story, to provide that kind 
of protection for the American worker.
  I will hope that our colleagues in this House on both sides of the 
aisle will embrace this substitute and discharge their obligation that 
we have to provide for the retirement future and protection of the 
American worker.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  As I said earlier, with all due respect to my colleagues, some on the 
other side who believe that the base bill before us does not go far 
enough, I would argue that the proposal offered by my good friend, the 
gentleman from California (Mr. George Miller), does in fact go way too 
far.
  Let me point out several of those differences. As the gentleman said, 
when it comes to company-matched stock in a 401(k) plan, companies 
today can require you to hold that until such time as you retire, not 
allowing you to take the company match and to convert it into some 
other type of stock or bond, or cash for that matter, within the 
account. And so the gentleman from California has a 3-year limit that 
would go into effect at the signing of the bill, but after that there 
is no holding period at all.

                              {time}  1430

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

[[Page 4343]]

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

[[Page 4344]]

  There was no objection.
  Mr. BOEHNER. Mr. Speaker, I yield 4 minutes to the gentleman from 
North Carolina (Mr. Ballenger), a long-term member of the Committee on 
Education and the Workforce.
  Mr. BALLENGER. Mr. Speaker, let me just say I rise in support of the 
base bill and in opposition to the Miller-Rangel substitute on the 
grounds that it would oppose a host of new government regulations that 
will drive businesses out of offering, and I emphasize the word, 
voluntary retirement savings plans.
  I happened to be in a situation in 1950 in my company back home where 
we had an employee that had worked for the company for 30 years and 
decided to retire, and I found out at that time, I did not realize much 
about the way things went, I realized that this gentleman after 30 
years with me had only his Social Security to count on. So what I did 
is I put into our company at that time a defined benefit plan that was 
going to take care of all the employees, some retirement and so forth. 
This whole situation, to my way of thinking, was a fabulous thing. We 
should take care of employees.
  All of a sudden, somewhere down the road we ran into the fact that 
the government's regulations were coming along and it appeared to me I 
was not trustworthy of Uncle Sam, so what I did is I liquidated the 
whole pension plan and gave the employees all the money and started 
over again. And we ended up with a 401(k) and an ESOP right now, which 
I realize the ESOP is not involved in this. But I want you to know, I 
got out of this pension plan even before I knew about trial lawyers or 
fiduciary responsibility.
  The Democrat substitute creates a new resource for trial lawyers to 
line their pockets by increasing the liability exposure of employers, 
administrators, service providers to an ill-defined and uncapped 
damage. From the CEOs to the middle managers and those who have no 
control over the plan's investment decisions, they could be personally 
liable for losses in their retirement plan, and these men and women who 
are sued for something out of their control could be forced to pay 
damages beyond the lost value of their retirement plan. Current law 
allows Labor, Treasury and the Justice Department, as well as affected 
individuals, to take actions to recover damages from a plan.
  Additionally, the Democrat substitute would extend this unlimited 
right to sue to all ERISA plans, including retirement, health, 
disability, all of these plans, as well as reducing the availability of 
retirement plans. This amendment would destroy the current system of 
employer provided health insurance, leaving millions of Americans 
uninsured.
  The Miller-Rangel substitute would force every fiduciary to a defined 
contribution plan to have insurance themselves in case there was a 
breach of fiduciary duty. I do not know how many of you have looked at 
the cost of that insurance, but today it is unbelievably expensive. 
However, mandating each individual fiduciary to have his or her own 
insurance would be redundant and costly, and, once again, these costly, 
unneeded measures would discourage employers from offering retirement 
plans.
  Finally, the substitute would mandate that retirement plans include 
an employee representative on the joint board of trustees. What 
employee can you find that would be willing to serve on a board when he 
knew he was going to get sued? That is an interesting situation.
  This is already allowed under ERISA, and some employers do it. This 
mandate would increase administrative burdens on employers, and since 
ERISA currently requires that plan administrators act solely in the 
interest of participants and beneficiaries, what is the benefit of 
mandating an employee to join the Board of Trustees? There is not one, 
but it does add a substantial burden.
  While I believe the government has a role in protecting employees' 
retirement plans, I cannot support a massive imposition of Federal 
regulations that will destroy the incentive for employers to offer 
retirement plans. I urge a ``no'' vote on the substitute amendment and 
a ``yes'' vote on final passage of H.R. 3762.
  Mr. ANDREWS. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman 
from New Jersey (Mr. Payne), who is a strong voice for workers both in 
New Jersey and around the country.
  Mr. PAYNE. Mr. Speaker, let me thank the gentleman from New Jersey 
for yielding me time and commend him for the outstanding work that he 
did on the subcommittee handling this very important Pension Security 
Act.
  There are, in my opinion, defining financial points in every decade. 
In the seventies we suffered a gasoline shortage, where long lines 
disrupted the daily lives of American people and lost productivity 
ensued.

                              {time}  1445

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

[[Page 4345]]


  Mr. NORWOOD. Mr. Speaker, I thank the gentleman for yielding me this 
time. I strongly support the underlying bill, and I ask my colleagues 
to vote down the Miller substitute. There are many reasons to do that. 
We have heard many of them this afternoon. I would like to focus in on 
just one area.
  Mr. Speaker, this substitute is a classic case of putting the fox in 
charge of the hen house. Believe it or not, their substitute would make 
union officials trustees of any savings plan that is given to workers 
they represent. This will jeopardize hundreds of billions of dollars in 
workers' savings.
  Just blocks away from this House, just a couple of blocks, a Federal 
grand jury is determining whether a dozen or so union presidents 
violated their fiduciary duties by inside trading of stocks tied to 
Global Crossings Corporation, in which they have invested workers' 
pensions through union life insurance companies. Meanwhile, workers 
were losing billions from the bankruptcy of their company. This 
substitute will turn private savings of union workers over to these 
same leaders.
  As chairman of the Subcommittee on Workforce Protections, I can tell 
my colleagues that this country is suffering from what The New York 
Times reports is a wave of union corruption. Just yesterday, I heard 
testimony about the embezzlement of millions by New York City's largest 
public employee union. I heard about workers who only make $20,000 a 
year forced to pay dues of $700 a year, which was then used for 
penthouses, maid services that were really male prostitutes, clothing, 
overseas trips, Super Bowl tickets, topless bars, and it goes on and. 
Do we really want that same crowd to get their claws into the 
individual savings of these workers? I do not believe any of us would 
want to do that.
  As some of my colleagues know, I raised a few chickens on my place 
back in Georgia. I have had dogs on that property, and I love them very 
much. However, I would never let my dogs start eating my chickens. It 
would naturally be rough on the chickens, and the dogs would never hunt 
again.
  Now, I know my Democratic friends love the support they get from 
labor leaders. I know they want to feed them any chance that they can 
get. But please do not feed them the savings of hard-working American 
families. It is bad for the dogs, and it is murder for the chickens. 
Friends, that dog has already got feathers on his snout that look a 
whole lot like pension money.
  I urge my colleagues to vote down the Miller substitute.
  Mr. ANDREWS. Mr. Speaker, may I inquire as to how much time our side 
has left.
  The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman 
from New Jersey (Mr. Andrews) has 9\1/2\ minutes; the gentleman from 
Ohio (Mr. Boehner) has 30 seconds remaining; and the gentleman from 
Ohio (Mr. Portman) has 15 minutes remaining.
  Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentleman from 
Oregon (Mr. Blumenauer).
  Mr. BLUMENAUER. Mr. Speaker, I appreciate the gentleman's courtesy of 
yielding me this time.
  I have been listening in disbelief to the testimony here before us 
today. I represent as many Enron survivors as probably almost anybody 
in the House, and I have heard people ask, Could we find some workers 
that would be willing to serve on the board? I will tell my colleagues, 
they are lining up in Portland, Oregon. They would love to serve. I 
have heard people who are concerned about the trial lawyers being 
involved. Well, the trial lawyers did not create the problem in 
Portland; but I will tell my colleagues, there are lots of Republicans 
lining up to hire them to try and salvage a little bit of their dream.
  Today's Republican pension bill I think falls far short in an 
obviously flawed pension system. I support the substitute.
  The chairman of the committee referenced the act that we passed last 
fall before we knew about some of these abuses dealing with conflicted 
investment advice. Well, I will tell my colleagues, it was wrong last 
fall; and if the Members on this floor knew of the abuses and the 
problems, I do not think it would have passed then.
  It is critical that we provide true security for retirement savings, 
that we hold corporate executives accountable for their actions, that 
we give employees some mode of control over their own retirement 
dollars, that we give them a voice. God forbid that there be as many 
employee representatives as employer representatives. I am not afraid 
of that; and I will tell my colleagues, the people in Portland who have 
been brutalized by this system, I think they would find it to be a 
great, great proposal to put into effect.
  I will tell my colleagues the pain that I have witnessed firsthand 
with people who have had to delay their retirement, who have had their 
family's dreams shattered; and being disillusioned as a result of this 
is impossible to be able to give voice to. But thankfully, some of 
these witnesses have come to Washington, D.C.
  Mr. Speaker, I would just say that it happened in Portland, Oregon; 
and it can happen anywhere. That is why we need to support this 
substitute.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  I think the gentleman addressed the concerns, and all I can say is 
the underlying bill does address them. If you are an Enron employee, 
you had to hold that stock until you were 50 years old. What this 
underlying bill says is, you cannot do that anymore. A company cannot 
require that the employee hold the company-matched, it goes into a 
401(k), until the employee is age 50. In fact, you cannot do it for 
more than 3 years. There is an initial 5-year period where you can 
unload 20 percent per year so you do not disrupt the markets; and after 
that point, you cannot hold an employee with the corporate stock for 
more than 3 years. The handcuffs are off. That is a big change.
  Under current practice, you can hold somebody until they retire. You 
can hold them for 40 or 50 or 60 years. It also provides more 
education, and this is extremely important. I think there is a 
consensus on that among people in this area, on the outside and people 
here in Congress, that we have to provide people with better tools so 
that they can make better decisions once they have been given more 
flexibility and more choice. We have disagreed here on the floor as to 
what kinds of tools those should be; but I think we agree, for the most 
part, that we ought to be getting people more advice.
  There are three ways this bill does that. First, it says that every 
time someone gets into a plan, they have to be given a notice saying 
you must look at your portfolio and you should diversify; in 
retirement, you should not have all of your eggs in one basket. It also 
says that on a quarterly basis, you get a report as to what is going on 
in your plan. That is not currently required. None of these are. It 
also says, under commonly accepted investment practices, you should 
diversify, in plain English.
  Second, it lets employees, on a pre-tax basis, pay for investment 
advice. That is not currently available. It could be like a cafeteria 
plan or like an eye glass plan or a health plan or a pension plan. It 
lets employees have a tax preference to go out and get investment 
advise on their own. They can choose whoever they want. That is 
expensive. That is one reason why people do not seek it. That is what 
the surveys show. So we are trying to help people.
  Finally is the investment advice piece that passed this House last 
November with 64 Democrats supporting it, and that piece says the 
company should be able to bring in people who are certified, qualified, 
who disclose any potential conflict of interest, who have a fiduciary 
responsibility to only do what is good for the workers; otherwise, they 
face penalties, and those people offer advice. That is a pretty 
practical way to do it, because some companies will be willing to pay 
for that and offer it. We want to encourage that.
  If we really believe education is a problem, and I think most of us 
do, we have to do something that is going to address it directly and 
that is really going to work in the real world. I think this substitute 
and the proposal there would not work nearly as well in the

[[Page 4346]]

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

                              {time}  1500

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

[[Page 4347]]

their firms at the end of the line when it comes to collecting 
retirement benefits, while the captains, those like Kenneth Lay from 
Enron, do not even have to get in line. Their benefits are paid for up 
front in full.
  The Miller substitute makes pension benefits for the rank and file, 
for the crew, as secure as for the executives, the captains. It is real 
pension reform, and we must support it.
  Mr. PORTMAN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from Illinois (Mr. Weller), my colleague on the Committee on Ways and 
Means.
  Mr. WELLER. Mr. Speaker, I rise in opposition to the substitute, and, 
of course, I support the bill that is being managed and offered by the 
gentleman from Ohio (Mr. Boehner) and the gentleman from California 
(Mr. Thomas) and the gentleman from Ohio (Mr. Portman) today.
  We have had a situation in our country that we are all concerned 
about. The situation has been illustrated by Global Crossing and by 
Enron, and we have heard those names in the debate today. Because of 
that, it reinforces a goal we have been working on in this House, and 
that is to work to provide safe and secure retirement opportunities for 
the men and women who work in America.
  We have made a lot of progress in the legislation we have passed out 
of here. This legislation before us today, the base bill, the Pension 
Security Act of 2002, is a real solution towards concerns that have 
been raised by the so-called Enron and Global Crossing problem. In 
fact, the base bill provides worker security and pension security.
  Let me express some concerns about the substitute that has been 
offered by the gentleman from California (Mr. George Miller) and the 
gentleman from New York (Mr. Rangel). While I have great respect, I 
know they are well-intentioned, I do not believe they are trying to be 
partisan and political, but I believe what they are offering is pretty 
radical. It is an attempt to offer a so-called solution which is way 
overboard, and in the end would actually reduce retirement savings 
opportunities for workers, particularly because, while maybe not 
intended, this legislation would actually discourage small business 
from providing retirement savings. The increased liability and damages 
that would result would push employers out of providing retirement 
benefits. Again, that is anti-small business.
  Also, I just do not understand why, in the substitute that has been 
offered, something that both Democrats and Republicans have both agreed 
upon, that workers and employers have agreed upon in the past, that the 
substitute actually bans and prohibits alternative dispute resolution 
when there is an argument over pension benefits or how they are being 
operated.
  Why would anyone want to do that? The only ones who benefit by 
banning alternative dispute resolutions are lawyers. Why do we want to 
create more litigation, when I think everyone in our society agrees 
there is too much litigation today?
  The bottom line is, the Pension Security Act of 2002 is good 
legislation. It is bipartisan. It is put together very thoughtfully 
over a period of time, recognizing there are challenges and we need to 
offer solutions.
  Let us do the right thing, Mr. Speaker, and let us reject the 
substitute and support the Pension Security Act of 2002 with a 
bipartisan vote.
  Mr. ANDREWS. Mr. Speaker, it is a pleasure to yield 2 minutes to the 
gentleman from Michigan (Mr. Bonior), our former majority whip and one 
of the leading voices in America for minority rights.
  Mr. BONIOR. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I rise in strong support of this Democratic substitute 
that is being offered by the gentleman from California (Mr. George 
Miller) and the gentleman from New York (Mr. Rangel) and others.
  What we are talking about here today are the real lives of working 
people. This is about valuing and respecting a person's labor. It is 
about honoring a commitment. It is about keeping trust.
  It is not just about Enron employees. In my home State of Michigan 
earlier this year, the auto supplier DCT laid off its last 400 
employees with 30-minute notices, and then locked them out of their 
401(k)s. The collapse of DCT hurt not only the DCT employees, but also 
the city workers in the city of Detroit, whose pension fund lost $32 
million in DCT investment.
  Our pension laws are too outdated to protect people. They are too 
weak to protect the K-Mart workers all across this country who now face 
uncertain futures. They are too weak to protect our R&R workers up in 
northern Michigan, in the Upper Peninsula, in the Mesabi Range, who are 
losing their benefits due to the flood of cheap steel into our country.
  Pensions ought to be sacred. They ought to be a symbol of a trust 
between a company and a worker. By the way, I would say to my friend, 
the gentleman from Georgia (Mr. Norwood), we would not have pensions if 
it was not for unions, let us make no mistake about that, for workers.
  Pensions are not handouts, they are something people earn. One of the 
worst things that could be done to a worker and their family is to take 
their pension away. People dream about their pension at their work 
site, in the factory, in the office, on construction. They think about 
getting to that point in their lives when they can enjoy their pension. 
And then to yank it from them, to take it, to pull it out from 
underneath them, to deceive them, to break that trust, to break that 
commitment, is the worst thing anyone can do.
  This Democratic substitute is the right substitute. I urge my 
colleagues to support it.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Arizona (Mr. Hayworth), a member of the Committee on Ways and Means.
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague, the gentleman from 
Ohio, for yielding time to me.
  I appreciate the words of my friend, the gentleman from Michigan, who 
preceded me in the well. Would that this substitute from the other 
side, would that it in fact concentrated on workers.
  I do not dispute a thing that my friend, the gentleman from Michigan, 
said about the desirability of pension plans. Indeed, the bill we offer 
has an opportunity to expand pension plans on into small businesses, 
opportunities for businesses with as few as 25 employees.
  The problem with the substitute is that instead of being pension 
protection, it is a trial lawyer's bonanza. The language in this 
substitute would authorize suits to recover unlimited damages alleging 
economic and non-economic losses, and welcome to the litigation 
bonanza.
  Should pensions be protected? Absolutely. But if we want to help 
working people, we want to expand the pension pool. We want to set up 
new opportunities for small business to go into these pension plans to 
do the very things my friend, the gentleman from Michigan, talked 
about.
  We do not want an economic bonanza, or, sadly, and I am sure it is 
not the intention of my friends, but one can almost see a situation 
where we would have an economic bonanza and the equivalent of whiplash, 
whiplash.
  Look, we are talking about people's lives. It is precisely because of 
the dignity of work and the opportunity that retirement brings, and 
their hopes and dreams, that we do not want to see funds jeopardized by 
unlimited liability and damages that enrich only the trial lawyers' 
lobby and does nothing to help working people. That is the choice we 
have to make today.
  Mr. Speaker, we have a bipartisan piece of legislation with many 
commonsense remedies that people on both sides of the aisle have 
championed. Do not sacrifice that for a substitute that enriches the 
trial lawyers' lobby. Reject the substitute and go with our bipartisan 
plan.
  Mr. ANDREWS. Mr. Speaker, I am pleased to yield 2 minutes to our 
ranking member, the gentleman from California (Mr. George Miller), the 
author of the substitute and a tenacious fighter for workers across 
America.
  Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentleman 
for yielding time to me.

[[Page 4348]]

  Mr. Speaker, the gentleman who just preceded me in the well might be 
interested to know that this year, the man of the year of the American 
trial lawyers is going to be Ken Lay. He has developed more business 
than any single American in the history of the country.
  A lot has been talked about about investment advice. We all agree 
that investors need to know more about planning for their security. But 
it is interesting that when Jane Bryant Quinn, the financial writer for 
Newsweek Magazine, looked at the investment advice bill in light of the 
Enron scandal, she yelled, ``Help, I am scared for my 401(k).'' Post-
Enron, how could anyone even think of creating such a conflict of 
interest that is in the underlying bill? You might as well turn the 
system over to the ice skating judges, because that is the situation 
you have.
  We have the very same people who are making millions, hundreds of 
millions of dollars in Commissions and fees as investment bankers 
providing retail advice to people who are trying to plan for their 
retirement, the average worker.

                              {time}  1515

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

[[Page 4349]]

would do far more harm than good. Instead of supporting bipartisan 
protections that would shield millions of American workers, the 
partisan opponents of this bill are putting their own political 
interests ahead of those of ordinary Americans. The House Democrat 
leadership alternative is really no alternative at all. It would enrich 
trial lawyers. It would hurt small businesses, impose costly new 
mandates, and even endanger 401(k)-type plans. Most importantly of all, 
it would continue to deny workers from getting access to the 
professional investment advice that is crucial for them to maximize 
their own retirement security. In short, the opponents of this bill 
would take us in exactly the wrong direction.
  The underlying bill, the Pension Security Act, which has been 
embraced by Republicans and Democrats alike, would change what is wrong 
with current pension law without, and I say without, breaking what does 
not need to be fixed. I urge my colleagues to vote against the 
substitute and for the underlying bill.
  Mr. UDALL of Colorado. Mr. Speaker, this bill is not all that it 
should be. It is not even the bill that we should be passing today.
  We should be passing the substitute offered by the gentleman from 
California, Mr. George Miller, and the gentleman from New York, Mr. 
Rangel. That was why I voted for that substitute and why I am very 
disappointed that it was not adopted.
  But now we are left with the choice of voting for this bill or voting 
for no legislation at all. And I think there definitely is an urgent 
need for legislation to address the serious problems made so evidently 
by recent events, including the collapse of the Enron Corporation.
  For that reason--and solely for that reason--I will vote for the 
bill. I do not think that it would be responsible to say that it would 
be better to do nothing.
  In voting for the bill, I am under no illusions about its flaws. In 
particular, I very much disapprove of the changes the bill would make 
in current law related to investment advice provided to employees. 
Those provisions are similar to those in H.R. 2269, which the House 
passed last year. I voted against that bill, and if this bill did not 
include anything more, I would vote against it as well.
  However, while the rest of the bill falls short of what I would 
prefer, it does make some improvements in current law. Further, passage 
of the bill will set the stage for the Senate to make further 
improvements--including correction or deletion of the investment-advice 
provision. I am voting for the bill today so that can take place, as I 
expect it will.
  Mr. POMEROY. Mr. Speaker, I rise in opposition to the Miller 
substitute and in support of the underlying bill. Earlier in this 
debate, I indicated my support for the Miller amendment. In many 
respects, it does improve on the underlying bill. After further 
reviewing the substitute, however, I have found legal liability 
provisions that I believe will seriously discourage employers from 
offering retirement plans, to detriment of workers.
  Setting aside the Enron fiasco, employer-sponsored retirement plans 
are a great success story of the American workplace. Such plans help 
employees accrue the assets they will need to live comfortably in 
retirement. Unfortunately, only half of American workers have access to 
employer-sponsored plans.
  Therefore, as we seek to address the problems revealed by the 
collapse of Enron, we must both increase worker protection and 
encourage employers to expand pension coverage. We should protect 
workers by allowing them to diversify their retirement portfolio rather 
than keeping them locked into company stock. We should provide workers 
with adequate notification of impending black-out periods so that they 
may make changes in their portfolios before the temporary freeze 
occurs. Both the substitute and the underlying bill include these 
worker protections.
  We should encourage the expansion of pension coverage by providing 
the type of rational, regulatory relief that is found in the underlying 
bill. What we should not do is increase employers' exposure to 
litigation arising from their retirement plan. Regrettably, the 
substitute does so in significant fashion. Rather than limiting 
liability to the fiduciary, who exercises control over the assets in 
the plan, the substitute expands liability to other parties who have no 
such control or responsibility. In addition, it greatly expands damage 
awards beyond simple losses to the plan. This increase in legal 
exposure would at least retard the growth of employer-sponsored plans 
and could even result in the contraction of retirement plans.
  For these reasons, I must oppose the Miller substitute.
  Mr. PASTOR. Mr. Speaker, I rise today in opposition to the Pension 
Protection Act as it is being presented to the House of Representatives 
and in favor of the alternative plan being offered by Congressman 
Rangel and Congressman Miller.
  As we all know, the collapse and bankruptcy of the Enron Corporation 
left thousands of people without their retirement funds and wondering 
how they might make ends meet when they are no longer working. While 
the high ranking officials of the company were able to dump their stock 
in the last few days of the company's existence, the middle level and 
lower level workers, the people who had no idea of the financial 
disaster that lurked on the horizon, were locked out of selling their 
company stock and ended up losing most of if not all of their hard 
earned retirement funds.
  Accordingly, it is incumbent on us in Congress to address this issue 
and to take the necessary steps, no matter how difficult they may be, 
to ensure that this never happens again. I strongly support efforts to 
do so.
  However, Mr. Speaker, the bill we are voting on today does nothing to 
keep another ``Enron'' debacle from occurring today, or next month, or 
in years to come. The basic reforms that are needed are simply not 
there. True, this bill takes marginal actions, but these merely address 
the symptoms and not the core of the problems.
  This bill would allow a dangerous situation to develop by allowing 
the investment firm that manages a company's pension plan to advise the 
employees on investment decisions that they should make. This is a 
fundamental conflict of interest and the classic example of the fox 
guarding the hen house.
  The so-called Pension Protection Act also denies employees a voice on 
their own Pension Board. It is clear in the Enron scandal that the 
Enron Pension Trustees failed to take any actions at all to protect the 
savings of Enron employees. I believe it is critical that the Pension 
Board include some rank and file employees who have the interests of 
other employees at heart.
  Also, Mr. Speaker, the bill we are considering today leaves employees 
locked into company stock for long periods of time, whether it is in 
their best interest to be there or not. And, just like the case in the 
Enron situation, this bill does nothing to let employees know when 
executives are ``dumping'' company stock.
  But, I say to the employees of America, there is an alternative to 
this misguided legislation. Mr. Rangel and Mr. Miller are offering a 
substitute that addresses all these concerns and will take significant 
steps to ensure that your pension plans are safe and viable for your 
days of retirement.
  The substitute requires that retirement plan participants be notified 
within three days when any significant sales of company stock by 
company executives occurs. Hopefully, the employees will then be able 
to make their own judgments as to the necessity to sell their own 
stock.
  The substitute also will no longer allow company executives to dump 
their stock while the employees are in a blackout period. In my mind, 
this was one of the most horrific examples of executive greed in the 
entire Enron scandal, and we must do whatever is necessary to ensure 
that this never occurs again.
  The substitute also provides for independent financial advice for 
employees when company stock is offered as an investment option. And, 
it gives employees a voice on their Pension Board.
  Mr. Speaker, I hear over and over again in this House the desire to 
allow individuals to have more control of their money, whether it be 
through massive tax cuts, or the creation of individual Social Security 
accounts, or other innumerable examples. Yet, this bill does not give 
employees any control over their money. It keeps control of their 
pensions in the hands of their employers.
  This is the perfect vehicle to finally give the people more control 
of their hard earned money. Let's take the responsible step and pass 
the Rangel-Miller Substitute and make sure that employees' retirement 
accounts are protected.
  Ms. KILPATRICK. Mr. Speaker, so the pattern continues. In October 
2001, we provided $15 million to the airline industry following the 
September 11th attack but the Republican leadership did nothing to 
assist the rank-and-file workers who were laid off. In November 2001, 
the Republican leadership bailed out the insurance industry at $30 plus 
million, but did nothing for the rank-and-file workers. In February 
2002, the Republican leadership secured big business with several tax 
breaks, but again, no real assistance for the rank-and-file worker.
  Mr. Speaker, this pattern begs the question, ``who are we here to 
represent?'' According to the actions of the leadership, it would seem 
that we are to represent big business only.

[[Page 4350]]

What about the rank-and-file workers who make up more than half of our 
country? Do they not deserve protection and security by the United 
States of America?
  Today, we are attempting to pass a bill that purports to protect 
workers from future Enron debacles. Thousands of workers at Enron were 
left distraught and with little to no retirement savings. Executives, 
who knew of the situation, secured their assets. These employees lost 
well over $1 billion of their retirement savings because corporate 
management kept their employees in the dark about the actual net worth 
of Enron and the safety of the 401(k) plans.
  The leadership claims to fix that situation with H.R. 3762. This bill 
proposes a 30-day notice prior to ``blackout'' periods for rank-and-
file employees. This, supposedly, will allow employees to alter their 
401(k) plans before the blackout. Executives, however, will have the 
option to adjust their 401(k) plans at anytime, even during the 
blackout. The bill also permits executives to move thousands of dollars 
from their stock plans without rank-and-file employees being notified 
of the drastic change. Additionally, executives would be the only 
individuals on the Pension Board deliberating the pension plans for the 
entire company. Amendments to include workers on the Board have been 
struck down.
  This bill supports what occurred at Enron. We need a bill that works 
for the rank-and-file, not just for the corporate executive. We need 
extensive disclosure of pension information for the rank-and-file. We 
need independent, unbiased and accurate financial advice. We need rank-
and-file representation on the Pension Boards so their voices will be 
heard. We need a level playing field during blackouts. If rank-and-file 
employees cannot touch their 401(k) plans, executives should be 
prohibited too. All of these suggestions are addressed in the 
Democratic substitute but not in the bill.
  Mr. Speaker, it is due time that the leadership acknowledge the 
pension rights of workers and seek to secure them. For that reason, I 
will vote ``no'' on H.R. 3762. This is another attempt to protect the 
wealthy, with little concern for the worker. We can do much better, Mr. 
Speaker, and I await that day.
  The SPEAKER pro tempore. Pursuant to House Resolution 386, the 
previous question is ordered on the bill, as amended, and on the 
amendment by the gentleman from California (Mr. George Miller).
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from California (Mr. George Miller).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. ANDREWS. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 187, 
nays 232, not voting 15, as follows:

                             [Roll No. 90]

                               YEAS--187

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

                               NAYS--232

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

                             NOT VOTING--15

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

                              {time}  1548

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


     Motion to Recommit Offered by Mr. George Miller of California

  Mr. GEORGE MILLER of California. Mr. Speaker, I offer a motion to 
recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. GEORGE MILLER of California. Mr. Speaker, yes, I am.

[[Page 4351]]

  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

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

       Add at the end thereof the following new section:

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

       (a) Inclusion in Definition of Pension Plan.--Section 3(2) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1002(2)) is amended by adding at the end the following 
     new subparagraph:
       ``(C)(i) The terms `employee pension benefit plan' and 
     `pension plan' shall also include any arrangement providing 
     for the deferral of compensation of a corporate insider of a 
     corporation that is not otherwise a pension plan within the 
     meaning of subparagraph (A), unless--
       ``(I) all amounts of compensation deferred under the 
     arrangement,
       ``(II) all property and rights purchased with such amounts, 
     and
       ``(III) all income attributable to such amounts, property, 
     or rights,
     remain (until made available to the corporate insider or 
     other beneficiary under the arrangement) solely the property 
     and rights of the employer (without being restricted to the 
     provision of benefits under the arrangement), subject only to 
     the claims of the employer's general creditors.
       ``(ii) For purposes of clause (i), the term `corporate 
     insider' means, in connection with a corporation, any 
     individual who is subject to the requirements of section 
     16(a) of the Securities Exchange Act of 1934 with respect to 
     such corporation.
       ``(iii) In the case of any arrangement that is a pension 
     plan under clause (i)--
       ``(I) the corporation shall be treated as an employer 
     (within the meaning of paragraph (5)) of the corporate 
     insider,
       ``(II) the corporate insider shall be treated as an 
     employee (within the meaning of paragraph (6)) of the 
     corporation, and
       ``(III) the arrangement shall not be treated as an unfunded 
     arrangement.''.
       (b) Compliance With Certain Participation Standards.--
     Section 202 of such Act (29 U.S.C. 1052) is amended by adding 
     at the end the following new subsection:
       ``(c) An arrangement that is a pension plan under section 
     3(2)(C)(i) shall comply with the requirements of section 410 
     of the Internal Revenue Code of 1986 necessary for a trust 
     forming a part of such plan to constitute a qualified trust 
     under section 401(a) of such Code.''.

  Mr. GEORGE MILLER of California (during the reading). Mr. Speaker, I 
ask unanimous consent that the motion to recommit be considered as read 
and printed in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. George Miller) is recognized for 5 minutes in support 
of his motion to recommit.
  Mr. GEORGE MILLER of California. Mr. Speaker, one of the things we 
learn from the Enron tragedy and one of the things that we have learned 
from Global Crossing and so many other companies that have started to 
fail or turned on bad times is that the corporate elite, the CEO and 
others, have 401(k) plans that are absolutely protected. Their ability 
to collect on their pension plans has nothing to do with the financial 
health of the company, how well the company does or how poorly the 
company does. Yet we see the employees with their 401(k) plans; they 
are absolutely tied to how the company does. And in many instances, 
they are locked into the stock of the company.
  What we are seeing here is what the President said when he went to 
North Carolina, if it is good for the captain, it is good for the crew. 
We cannot have the executives ensuring their pension plans so that they 
walk off with millions and tens of millions of dollars, lifetime 
pensions, and the employees have got to go to bankruptcy court and hope 
that there is something left over for them. If we insure one, we insure 
others. If preference is given to one, preference is given to the 
other.
  Mr. Speaker, it is a very important principle. The theory of 
executive compensation is that we are rewarding an executive, one, for 
how well their company does. Yet we see time and again executive 
compensation has nothing to do with the performance of the company. 
Their pension plans are guaranteed; and yet the employee must be more 
productive, must do all that they can to make that company perform so 
that their stock is worth what it should be in their retirement plans.
  We think that they ought to be treated alike, and this is an 
opportunity to vote to make sure that there is parity among the elite 
executives of a corporation with respect to pension plans, and among 
the employees, that they not get left out.
  It is terribly important that as the executives walk off stage with 
tens of millions of dollars, that the employees not be left holding the 
bag; and that is the purpose of this amendment.
  Mr. Speaker, I yield to the gentleman from California (Mr. Matsui), 
who offered this in the Committee on Ways and Means.
  Mr. MATSUI. Mr. Speaker, I have to say what happened with the Enron 
situation was not unique because this is going to happen more and more. 
Essentially what has happened is CEOs and top management people in many 
corporations have set up a plan that basically violates the principles 
of our pension laws.
  Ken Lay, for example, was able to get deferred compensation, that is, 
he did not have to pay any taxes on his retirement program. Yet when 
Enron filed bankruptcy, he was able to collect about $2 million from 
that plan, whereas every other Enron employee lost valuable assets in 
their 401(k) plan. This would merely tighten that up and make it 
consistent where Members of both the House and the Senate, and 
certainly Democrats and Republicans would not want anyone to be able to 
defer taxes, and at the same time be able to get a fully funded program 
that is protected from bankruptcy.
  Mr. Speaker, this has to be tightened up. This is closing a loophole. 
This is something that we cannot allow to happen as we see more and 
more of these Enron scandals occur.
  Mr. GEORGE MILLER of California. Mr. Speaker, all of us in the 
Committee on Financial Services, the Committee on Energy and Commerce, 
and the Committee on Education and the Workforce have listened to these 
workers who have had their retirement plans destroyed, workers who are 
55, 59, 62 years old; their plans are destroyed, and they are now 
dependent on their children. The life they thought they were going to 
lead, they are not going to be able to.
  Yet Ken Lay, who looted this company and destroyed these people's 
retirement nest egg walks off stage with $475,000 a year in guaranteed 
income and a multimillion dollar house in Texas that is protected under 
bankruptcy law.
  Somehow there has to be parity and fairness. This is our chance to 
repair what is lacking in the Republican bill and provide fairness and 
protection for the employee, the same as the CEO and the chief 
operating officers of this corporation get, to make sure that employees 
are not left holding the bag.
  Mr. Speaker, I would urge an ``aye'' vote on the motion to recommit.
  Mr. BOEHNER. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Boehner) is 
recognized for 5 minutes in opposition to the motion to recommit.
  Mr. BOEHNER. Mr. Speaker, this is a rather unusual motion to 
recommit. It does not change the bill and allow it to move on; it 
actually would send the bill back to the committee. After all of the 
work that we have done in two committees, and all of the work we have 
done here, the last think we want to do is send this bill off to a 
black hole.
  But more importantly, what the gentleman from California (Mr. George 
Miller) is suggesting is that we try to change IRS code and bankruptcy 
code through ERISA, trying to get at the top end of employees who have 
deferred compensation plans.
  All of us know that deferred compensation plans are not tax-qualified 
pension plans. They are payment plans for high-level executives. I 
could not agree more with the gentleman from California (Mr. Matsui) 
that what Ken Lay and other executives at Enron did

[[Page 4352]]

was absolutely wrong. But to try to change bankruptcy protections 
through ERISA is not going to change the employees who we are 
attempting to help in the underlying bill.
  Mr. Speaker, I would ask my colleagues, considering the time, that we 
do not want to send this bill off to oblivion. We want to move this 
process on. This is not a very good idea and will not help the 
employees that we are attempting to help. I urge my colleagues to vote 
``no.''
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

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

                             [Roll No. 91]

                               AYES--204

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

                               NOES--212

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

                             NOT VOTING--19

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

                              {time}  1616

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


                             Recorded Vote

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

                             [Roll No. 92]

                               AYES--255

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bentsen
     Bereuter
     Berry
     Biggert
     Bilirakis
     Bishop
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boucher
     Boyd
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clement
     Coble
     Collins
     Combest
     Condit
     Cox
     Cramer
     Crane
     Crenshaw
     Crowley
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Hall (OH)
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hinojosa
     Hobson
     Hoekstra
     Holden
     Hooley
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     Kind (WI)
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Larsen (WA)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)

[[Page 4353]]


     Linder
     Lipinski
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Luther
     Maloney (CT)
     Manzullo
     Matheson
     McCarthy (NY)
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moran (KS)
     Moran (VA)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Pomeroy
     Portman
     Price (NC)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ryun (KS)
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Shuster
     Simmons
     Simpson
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Souder
     Stearns
     Stenholm
     Stump
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Turner
     Udall (CO)
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wu
     Young (AK)
     Young (FL)

                               NOES--163

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

                             NOT VOTING--17

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

                              {time}  1625

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

                          ____________________