[Congressional Record (Bound Edition), Volume 149 (2003), Part 9]
[House]
[Pages 11375-11435]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      PENSION SECURITY ACT OF 2003

  Mr. LINDER. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 230 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 230

       Resolved, That upon the adoption of this resolution it 
     shall be in order to consider in the House the bill (H.R. 
     1000) to amend title I of the Employee Retirement Income 
     Security Act of 1974 and the Internal Revenue Code of 1986 to 
     provide additional protections to participants and 
     beneficiaries in individual account plans from excessive 
     investment in employer securities and to promote the 
     provision of retirement investment advice to workers managing 
     their retirement income assets. The bill shall be considered 
     as read for amendment. The amendment recommended by the 
     Committee on Education and the Workforce now printed in the 
     bill shall be considered as adopted. All points of order 
     against the bill, as amended, are waived. The previous 
     question shall be considered as ordered on the bill, as 
     amended, and on any further amendment thereto to final 
     passage without intervening motion except: (1) one hour and 
     20 minutes of debate on the bill, as amended, equally divided 
     among and controlled by the chairmen and

[[Page 11376]]

     ranking minority members of the Committee on Education and 
     the Workforce and the Committee on Ways and Means; (2) the 
     further amendment printed in the report of the Committee on 
     Rules accompanying this resolution, if offered by 
     Representative George Miller of California or his designee, 
     which shall be in order without intervention of any point of 
     order, shall be considered as read, and shall be separately 
     debatable for one hour equally divided and controlled by the 
     proponent and an opponent; and (3) one motion to recommit 
     with or without instructions.

  The SPEAKER pro tempore. The gentleman from Georgia (Mr. Linder) is 
recognized for 1 hour.
  Mr. LINDER. Mr. Speaker, for the purpose of debate only, I yield the 
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter), 
pending which I yield myself such time as I may consume. During 
consideration of this resolution, all time yielded is for the purpose 
of debate only.
  Mr. Speaker, H. Res. 230 is a modified, closed rule that provides for 
the consideration of H.R. 1000, the Pension Security Act of 2003. This 
rule provides for 1 hour and 20 minutes of general debate, with 40 
minutes equally divided and controlled by the chairman and ranking 
minority member of the Committee on Education and the Workforce, and 40 
minutes equally divided and controlled by the chairman and ranking 
minority member of the Committee on Ways and Means. H.R. 230 provides 
that the amendment recommended by the Committee on Education and the 
Workforce now printed in the bill shall be considered as adopted. It 
waives all points of order against the bill, as amended.
  The rule makes in order the amendment printed in the report of the 
Committee on Rules accompanying the resolution, if offered, by the 
gentleman from California (Mr. George Miller) or his designee, which 
shall be considered as read and shall be separately debatable for 1 
hour, equally divided and controlled by the proponent and an opponent. 
H.R. 230 waives all points of order against the amendment printed in 
the report and provides one motion to recommit, with or without 
instructions.
  With respect to H.R. 1000, I want to again commend the gentleman from 
Ohio (Mr. Boehner), chairman of the full Committee on Education and the 
Workforce, for leadership that he is exhibiting to American workers who 
want and need enhanced retirement security here in the 21st century. To 
his credit, the gentleman from Ohio (Mr. Boehner) brought similar 
retirement security legislation to the House Floor in November of 2001. 
The House passed that bill, H.R. 2269, with a 230 to 144 vote. 
Unfortunately, that vote died in the Senate.

                              {time}  1200

  Again, in April of last year the gentleman from Ohio (Mr. Boehner) 
brought legislation to the floor that sought to implement a series of 
pension reforms sought by President Bush; and the House passed that 
bill, H.R. 3762, with a 255-163 vote. Again, the bill died in the 
Senate.
  Well, as the saying goes, the third time is a charm, as the gentleman 
from Ohio (Mr. Boehner) has brought retirement security legislation to 
the House floor today which the House should promptly pass over to the 
Senate so that the Chamber's new leadership has a chance to move it 
through the body. If so, I fully expect that President Bush would sign 
such a bill into law.
  Some of the key elements of H.R. 1000 include giving workers the 
flexibility and freedom to diversify the holdings within their 401(k) 
plans; providing workers with high-quality investment advice as they 
exert more and more control over their nest eggs; amending Federal law 
to ensure that employers have fiduciary responsibility for employees' 
savings during blackout periods when employees are barred from changing 
their 401(k) investments; requiring employers to provide quarterly 
benefit statements to workers about retirement accounts; and, finally, 
a series of reforms designed to simplify pension requirements for small 
businesses that want to offer their workers defined benefit plans.
  All of these reforms will help enhance the retirement security of 
millions of American workers. I look forward to supporting this bill.
  In conclusion, Mr. Speaker, H. Res. 230 is a modified closed rule 
that will give the full House an opportunity to work its will on H.R. 
1000 or the substitute put forward by the gentleman from California 
(Mr. George Miller). I urge my colleagues to support the rule so we can 
move on to the underlying legislation.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Maryland (Mr. Cardin), if he would like to make some comments on 
the bill.
  Mr. CARDIN. Mr. Speaker, let me thank my friend for his generosity 
considering I am on the other side of the issue on this rule. I very 
much appreciate him yielding me time.
  Mr. Speaker, I rise in opposition to this rule. The rule does deny 
any amendments. There are amendments that need to be considered by this 
body if we are going to protect workers.
  It is interesting, Mr. Speaker, that this bill comes to us as the 
workers' protection legislation, yet it does not afford adequate 
protection to our workers. But what concerns me the most, Mr. Speaker, 
is over the last 2 years our economy has lost 2.7 million private 
sector jobs. This is twice the amount of job loss as compared to the 
last recession, and yet we provide only one half of the amount of 
extended unemployment benefits to dislocated workers and their 
families.
  It is for that reason, Mr. Speaker, that at the end of our debate we 
will be asking the House to reject the previous question so that we can 
offer an amendment that will provide for the extension of Federal 
unemployment insurance benefits.
  This is urgent. The current Federal unemployment insurance benefit 
program is scheduled to terminate at the end of this month. Even though 
we know that one million workers, one million workers have already 
exhausted their Federal unemployment insurance benefits, the 
legislation that we have filed would give them an additional 13 weeks.
  Mr. Speaker, we know that in the next 6 months 2 million workers will 
exhaust their State unemployment insurance benefits. Now, the 
legislation that we have currently extended will only provide 
unemployment insurance benefits for those who are on the program. No 
new enrollees. Two million Americans will be affected during the next 6 
months. We had $21 billion in the Federal unemployment insurance funds 
to pay for those benefits, so it is paid for.
  The Committee on Rules allowed for provisions within the jurisdiction 
of the Committee on Ways and Means in the underlying legislation that 
we will be considering if this rule is approved, yet the legislation 
was not considered by the Committee on Ways and Means. So, therefore, 
Mr. Speaker, I think it is very appropriate that this body permit us to 
consider during the debate of this legislation, which is aimed at 
protecting workers, the extension of Federal unemployment insurance 
benefits. It is going to be one of the last opportunities that we will 
have to consider this before the Federal unemployment insurance benefit 
program has exhausted and those that are unemployed are going to be 
without.
  So, Mr. Speaker, I would urge my colleagues to defeat the previous 
question and, if necessary, defeat the rule so that we have an 
opportunity to take up the extension of the Federal unemployment 
insurance benefits that affect millions of our workers.
  Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, let me apologize for my misunderstanding of the time.
  Mr. Speaker, our workforce is what made the United States the great 
Nation it is, but here we are debating yet another bill that erodes 
protections for our workers. Here we go again sending another message 
to our workforce that we just do not care that short-term gain for a 
few is more important to us than the economic well-being of the Nation.

[[Page 11377]]

  Life for the American worker continues to be arduous and uncertain, 
Mr. Speaker. Unemployment has risen 6 percent. In my home State of New 
York, the unemployment rate is even higher at 6.3. Unemployment 
insurance benefits expire at the end of this month even though almost 9 
million Americans are without work. Nothing on the legislative horizon 
confronts the needs of the millions of the jobless.
  Mr. Speaker, this body and this administration have failed the 
American worker and continue to do so with this bill. Recently, this 
esteemed body had several opportunities to tackle the plight of the 
laidoff factory workers, the unemployed bookkeepers, and this Chamber 
squandered those chances. Today, the House has another opportunity to 
assist American workers by continuing the necessary reforms so 
painfully highlighted by the collapse of major corporations like Enron, 
WorldCom, Global Crossing. The employees of WorldCom lost $25 million. 
Enron employees lost $800 million. And the American workforce nervously 
looks to us to protect their pensions and their life savings. And 
unfortunately, H.R. 1000 does not go far enough to protect pensions. In 
fact, this legislation actually harms American workers with what it 
does and what it fails to do. We must show the people, whose faith and 
trust sent us here, that we did learn the painful lessons of the Enron, 
the WorldCom, and the Global Crossing crises.
  H.R. 1000 would permit companies to convert traditional defined 
benefit pension plans into cash balance pension plans. This saves the 
corporations millions of dollars, but it cuts by half the pension 
benefits of retired workers, and employees have no control over the 
conversion.
  Now, why is the control of your pension plan given to a company with 
the self-interest of saving millions of dollars? Even more egregious is 
that, as companies have been slashing benefits for their workers, they 
have been increasing compensation packages for their CEOs. Further, 
this bill handcuffs employees for 3 years after the contribution of 
company-matched stocks. Under current law, workers are protected from 
financial advisors with conflicts of interest. This bill strikes this 
protection from ERISA and allows financial advisors to recommend 
products from their own firms and even earn fees for pushing certain 
products. In fact, the Attorney General of the State of New York just 
settled with 10 of the most respected investment firms for $1.4 billion 
because these firms offered self-interested investment advice.
  H.R. 1000 further fails the American workers in its omission of 
requirements that companies inform employees when someone dumps large 
amounts of the company stock. You recall that was a serious issue for 
the Enron employees. When former Enron CEO Ken Lay sold his Enron 
stock, he unloaded 1.8 million shares for $101.3 million, did not tell 
his employees, left them in the dark, and they lost their life savings. 
Indeed, throughout that period, the employees were urged to buy more 
and more Enron stock.
  Last night the Committee on Rules passed a rule that does not allow 
this body through debate to delve into the complex issues of ERISA and 
securing retirement funds.
  H. Res. 230 allows only 80 minutes of debate on the bill. This rule 
is just another example of the erosion of this institution as a 
deliberative body.
  Mr. Speaker, the American workforce deserves our profound respect; 
and, Mr. Speaker, they have no one else to turn to but us. Over and 
over we have failed them. They deserve the pensions they were promised 
during their years of service. How heartbreaking it is for someone who 
has spent 30 years of their life with a single company, always being 
partially responsible for the profit of that company, to then lose a 
major part of that pension. And the almost 9 million unemployed deserve 
an extension on unemployment insurance to keep them afloat in a sea of 
economic uncertainty. I just had a letter in my office from a man who 
has been out of work now for 19 months with absolutely no outlook that 
he will find anything soon and asking me what in the world can he do. 
We try to answer that question often, Mr. Speaker; and it does this 
House no good that the answer we have is that we have refused to extend 
unemployment benefits.
  I urge my colleagues to oppose the rule and oppose the underlying 
bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LINDER. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Indiana (Mr. Buyer).
  Mr. BUYER. Mr. Speaker, before I address this issue, I would say to 
the gentlewoman that just spoke, I want to give people a job. I do not 
want to give people an unemployment check. Get them a job. Vote for the 
President's economic plan. So you can have your constituent get into 
the details of the plan.
  Right now I rise to talk about the rule for H.R. 1000, and, more 
importantly, on the opportunity Members of Congress have to make a 
change in law. The purpose of the Federal government is to help those 
who cannot help themselves.
  Earlier this year, a case was brought to my attention in Clermont, 
Indiana, that needs to be addressed. An employee of the town embezzled 
$70,000, an amount that may not seem like a lot of money to some of us 
here when our daily discussions revolve around billions of dollars and 
millions; but this is a significant sum to a very small town.
  After the former employee was found guilty, the town obtained a civil 
judgment for restitution for $51,000. So far the employee has paid only 
$510 in restitution. The former employee has a private pension. No 
other form of compensation. That is it. Under ERISA, the restitution 
order attained by the town cannot be attached to the pension, so the 
town loses out on $50,000 and the guilty avoids complying with the 
judgment.
  How can we allow the law to be manipulated like this? Clearly, there 
is a hole in the justice system that needs to be filled. The pension 
law is being used to avoid making victims whole. In this case, the 
victim is government. I had hoped to offer an amendment in the 
Committee on Rules to fill this hole. However, the amendment was not 
made in order. This amendment would permit States and local governments 
to obtain restitution from private pensions pursuant to court-ordered 
restitution for the embezzlement of State and local funds. Those 
communities, including Clermont, are true victims of embezzlement. This 
is a narrowly drafted amendment. And the very purpose of the 
restitution order is to make victims whole. So when you think about 
this, how is justice being served by allowing our present system to 
stay in place?
  Look at an example of an individual that is sentenced to 10 years in 
prison. Maybe they have a $20,000 pension that goes into an account, so 
when they get out of prison after a two-for-one good time, after 5 
years they have $100,000 sitting in an account. That is money which can 
make individuals whole, except under present law you cannot attach a 
garnishment to that civil order.

                              {time}  1215

  I think that is wrong.
  I know that there was an effort to make this ``a clean bill,'' and 
nobody wanted to have amendments to the bill. I think our job is to 
choose the harder right over the easier wrong.
  So what? If it is hard, do that which is hard, and make justice serve 
those of whom have been victimized. I am on the floor today greatly 
disappointed that we just wanted to get something done quickly rather 
than address a hole in the law.
  I am not pleased at all that this amendment was denied, but what I am 
most hopeful is that the committee of jurisdiction actually examines 
this, because I am not going to let this one go. I think this one, in 
fact, we have to address, and I will stand down to the Committee on 
Rules at this point.
  I wanted to bring this issue to the attention of the Members because 
my little town of Clermont, I am sure, is highly representative of 
other towns and communities, States and Federal and local governments 
of whom have been victimized by some form of embezzlement.

[[Page 11378]]


  Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Michigan (Mr. Levin).
  Mr. LEVIN. Mr. Speaker, the previous speaker has made it clear, I 
hope, to the country why we are asking that the previous question be 
voted down so we can bring up the unemployment comp issue. He has said 
let us get jobs for workers, not provide unemployment comp checks. 
Look, the people who are unemployed are looking for work. They want a 
job. There is no job when they seek it, and what the Republicans and 
the House are essentially saying to those workers who are looking for 
work and cannot find a job, tough luck. We can do much better.
  A recent survey indicated that the average unemployed worker has 
applied for 29 jobs without finding work, and the average unemployed 
worker over 45 has applied for 42 jobs without finding work. Almost 9 
million people out of work. Over 1 million have exhausted their 
benefits, and by the end of this month, it will be 1.4 million. And now 
each month another couple hundred thousand are going to be exhausting 
their benefits, out in the cold because of the cold shoulder of this 
House majority. That is why we are asking that the previous question be 
voted down.
  Ten years ago we did much better. We did not hear this talk, get a 
job, to people who are looking for work and cannot find it. So we will 
proudly ask, give us a chance. My colleagues have been on the 
Republican side derelict in their duty, and we are willing to stand up 
and say to the people who are unemployed, yes, keep looking for work. 
Unemployment comp benefits will help grow the economy because they will 
spend the money they receive on benefits, but we are also saying while 
they are looking for work, we are not going to turn a cold shoulder to 
the unemployed of the United States of America.
  Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from 
Ohio (Mr. Kucinich).
  Mr. KUCINICH. Mr. Speaker, this is a bad rule and this is a bad bill.
  Today the bulk of the Nation's pension plans have less than 100 
participants, and a gap in ERISA enforcement and in ERISA law leaves 
these workers' retirement savings at grave risk. Yet H.R. 1000 does 
nothing to correct this problem, and the majority refused to even 
consider a common-sense amendment I offered to protect workers' 
pensions through the most basic of means, simply by ensuring that plan 
fiduciaries actually file their forms.
  Eclipsed by the high-profile pension scandals at large corporations 
such as Enron, WorldCom and Global Crossing, thousands of other 
employees around the country have been no less harmed by gross 
fiduciary malfeasance at smaller, less notable companies.
  In my own district a group of 19 employees saw their retirement funds 
vanish as their employer, Lakewood Manufacturing Company, repeatedly 
dismissed employee requests for the release of plan documents, and 
ultimately closed, having lost over $2 million in pension funds, the 
entire pension plan.
  Later investigation revealed that over a period of 3 years, the 
plan's fiduciary, also the owner of the company, used funds from the 
employee pension plan to make dangerous and poorly diversified 
investments in companies for which he had a personal stake, such as the 
Psychic Discovery Network, now bankrupt. Even worse, the Department of 
Labor failed to investigate the plan even though the company did not 
file the most basic plan summary document, Form 5500, required by law, 
for 3 consecutive years. Though we may never see the case of Lakewood 
Manufacturing featured on the nightly news, its former employees face a 
financial future no different than that of Enron's employees.
  For small pension plans, Form 5500 is the only avenue for the 
Department of Labor to monitor compliance with ERISA. Yet, as the 
Lakewood case highlights, and a GAO report has confirmed, ERISA 
enforcement is such that fiduciaries of small plans may simply fail to 
file a Form 5500 while mismanaging or stealing money from the plan, 
knowing they will likely slip through the cracks.
  As a result, I proposed an amendment to fix this egregious 
enforcement gap in ERISA law. My amendment would have required plans to 
submit their forms within 3 months of the end of the plan year, not the 
9.5 months as is allowed in the current law. It also insists that the 
first priority of the Department of Labor should be to identify those 
companies that have not filed their documents by the deadline and give 
them the power to freeze assets of the plan fiduciary until the 
documents are submitted or the plan is thoroughly investigated.
  This bill does not fix that gap, this H.R. 1000, and, in fact, the 
majority even refused to consider this basic change in law. They did 
not want the opportunity to take a stand to protect workers whose 
retirement security is predicated on their boss' willingness to submit 
a form.
  I am going to introduce an amendment today to try to amend the bill 
at the correct time, and I appreciate the support of the Members for 
that. This rule will not correct the problem.
  Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from 
Vermont (Mr. Sanders).
  Mr. SANDERS. Mr. Speaker, I thank my friend, the gentlewoman from New 
York (Ms. Slaughter) for yielding me the time.
  Mr. Speaker, I rise in strong opposition to this rule. Yesterday I 
requested that two amendments be allowed, neither one of which was 
accepted.
  Mr. Speaker, I first became involved in the issue of pensions in the 
State of Vermont when hundreds of employees of IBM contacted my office 
because one day they learned that the promises that had been made to 
them in terms of their pension benefits was simply being pushed under 
the rug and being dismissed; that, in fact, the company had converted 
from a defined benefit pension plan to a so-called cash balance benefit 
plan; and that for many of the older workers, their benefits would have 
been reduced by up to 50 percent. People that had worked at the company 
for 20 or 30 years wake up one day and say, sorry, forget everything 
that we told you, because we are going to cut your pension benefits by 
up to 50 percent if you are an older worker.
  It turned out it was not just IBM, but companies all over this 
country. In Vermont IBM workers fought back. We had a town meeting with 
some 7- or 800 workers coming out, spread all over the country, and IBM 
had to rescind that proposal. But the reality is that the Bush 
administration has now come up with an idea that would make it easier 
for companies to slash the pensions of their workers by moving to cash 
balance programs.
  My amendment would do a very simple thing that some good companies 
have already done. Kodak has done it. Motorola has done it. To some 
degree IBM has done it. CSX, John Snow, Treasury Secretary's company 
has done it, and that says that if one is an older worker working for 
the company for at least 10 years, or they are 40 years of age, they 
will have the choice about which proposal they will take, and older 
workers, of course, will stay with the defined benefit pension plan.
  The second amendment that I introduced was a very interesting one, 
and I said if the Republicans think that cash balance payments are such 
a good idea, and we all have our pensions, why should we not go to cash 
balance benefits? The answer is that cash balance benefits will 
substantially lower the pensions that Members of Congress have. Of 
course, the Members of Congress will not reduce their own pensions, but 
they are prepared to force millions of American workers to lower their 
benefits by going to cash balance benefit plans. So my proposal said 
that if the President's idea goes forward, on that very day, Members of 
Congress will move to cash balance benefit pension plans as well and 
see the same reduction in their benefits as do millions of American 
workers. Amazingly enough, they did not put that amendment on the 
floor.
  Ms. SLAUGHTER. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from California (Ms. Woolsey).
  Ms. WOOLSEY. Mr. Speaker, I oppose this rule for excluding the 
conversation

[[Page 11379]]

and debate on unemployment insurance, and I support the Miller 
substitute because it levels the playing field between a corporation's 
top executives and the rest of the employees. This substitute actually 
supports what is good for the captain is good for the crew.
  It truly protects employees against the kinds of total pension loss 
experienced by Enron employees by requiring companies to give their 
employees full and accurate information about their pension benefits 
and about any employer's stock in the pension plan.
  It ensures employees are armed with good information and allows for 
timely discussions about investing the funds in the pension plan, and, 
Mr. Speaker, should the employee pension funds be misused, the Miller 
substitute gives employees a real opportunity to get their money back.
  My constituents just north of the Golden Gate Bridge, across from San 
Francisco, tell me they are disgusted by the special protections given 
to executives while employees are suffering. Only the Miller substitute 
provides the pension protections employees truly need, and only a rule 
that allows discussion for unemployment insurance being extended 
protects the workers in this country who have lost their employment 
because of a terrible, terrible economy, a war economy, caused by huge 
tax breaks for the wealthiest in the country.
  Mr. Speaker, I urge my colleagues to vote against this rule and vote 
for real reform by supporting the Miller substitute.
  Mr. LINDER. Mr. Speaker, may I inquire as to how much time is left on 
each side?
  The SPEAKER pro tempore (Mr. Bass). The gentleman from Georgia (Mr. 
Linder) has 20 minutes remaining. The gentlewoman from New York (Ms. 
Slaughter) has 15 minutes remaining.
  Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield 4 minutes to the gentleman from 
California (Mr. George Miller).
  Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentlewoman 
from New York for yielding me this time.
  Mr. Speaker, today we confront an issue that is absolutely 
fundamental to the interests of our constituents, to their well-being, 
and the question of whether or not they will have the assets to 
properly retire in the future, and that is because we address the 
issues of the security of the American pension system.
  In the wake of the worst pension scandals in recent history, the 
response of the Republican congressional leadership is to see no evil, 
hear no evil and do no good.
  Once again, in the shadow of the failures of Enron and Global 
Crossing, and with the new disclosures about Delta and American 
Airlines, the Republicans bring forward a pension bill that does 
nothing to help employees, but includes lucrative benefits for 
corporate interests. How tone-deaf can they be?
  Pension scandals that move from page 3 of the business section to 
page 1 in every newspaper and magazine of popular nature of this 
country, but it is still the business as usual for Republicans in 
Congress. The only problem they see is that the investment companies 
are making even more money, while pensions and 401(k)s of employees 
dwindle with less and less.
  The pension bill the Republicans want to steamroll through the House 
today fails to address the pension scandals that have outraged 
Americans and left so many Americans destitute. It is as though Enron 
and Global Crossing and these other pension scandals never happened. It 
is business as usual for business, and let the employees fend for 
themselves.
  The heart of the Republican bill would change the law to allow 
investment firms for the first time to give biased and conflicted 
financial advice to employees, something that is currently prohibited 
under the law. Does this make sense when many of these same investment 
firms that would be giving the employees this advice just copped a plea 
to Eliot Spitzer, the New York attorney general, if firms like Credit 
Suisse, First Boston, Bear Stearns, JP Morgan, Chase, Goldman Sachs and 
many others just paid out over a billion and a half dollars in 
committing these kinds of abuses?

                              {time}  1230

  Now, I recognize that they do not think they copped a plea, because 
they said they did not admit any wrongdoing. But they paid $1.5 billion 
just in case they might have. That $1.5 billion is chump change 
alongside the hundreds and hundreds of billions of dollars that people 
lost in their pension plans during the stock market bubble and because 
of conflicted advice and bad advice.
  Now, here we are 2 years after Enron, and we are coming back to 
simply allow the same thing to happen that happened in those corporate 
scandals. It is no wonder that the American public, the small investor 
is reluctant to return to the stock market. It is no wonder they are 
reluctant to invest again in mutual funds, because they recognize the 
devastation that they received at the hands of what was essentially 
criminal activity. Today, the Republican bill makes that activity 
legal.
  That is why the Attorney General, Eliot Spitzer, of New York said 
this about this legislation: ``This legislation opens the loophole that 
will sharply erode, rather than enhance, the safeguards for employees 
seeking independent and untainted advice about how to invest their 
retirement savings. Clearly, this bill puts the interests of Wall 
Street firms far ahead of the interests of millions of working 
Americans who simply want a fair shake in making sound decisions about 
their retirement investments.''
  That is what the American public is entitled to. That is what the 
people are entitled to as they contemplate how to provide for their 
future retirement. That is not what this legislation does. That is not 
what the Republican legislation proposes. It now says that those firms 
can provide that conflicted advice to our constituents and to the 
workers, and that is what we should not allow in this legislation.
  Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from 
New Jersey (Mr. Andrews).
  Mr. ANDREWS. Mr. Speaker, I thank my friend for yielding me this 
time.
  My colleagues, how does one get on the agenda of the United States 
House of Representatives? If you are in the financial industry and you 
are interested in changing the rules for giving pension advice, you can 
get on the agenda. If you are one of a plethora of special interests 
that is interested in changing the Internal Revenue Code, you can get 
on the agenda. But if you are one of the millions of people suffering 
unemployment in this country and you want this House to take up the 
question of whether your unemployment benefits ought to be extended, 
you cannot seem to get on the agenda.
  Now, I know that there are people who believe that some of the people 
who are on unemployment are not trying hard to find a job, and I am 
sure there are some for whom that description is accurate; but I know 
this is true: for every three Americans looking for a job today, there 
is one job. One. And there are hundreds of thousands of people who at 
the end of this month are going to lose their ability to pay their 
bills because they are one of the two people who cannot get that one 
job out of every three people who is unemployed.
  It is the business of this country, and it should be the business of 
this House, to debate whether or not an extension of unemployment 
benefits is justifiable for those people. I feel strongly that it is. I 
know there are Members who believe that it is not. I respect their 
views. The majority ought to respect our right to bring to this floor, 
before this House and before this country, the question as to whether 
those benefits ought to be extended.
  In many households, Mr. Speaker, this is not some theoretical debate. 
It is a question of whether you will be able to pay your rent on the 
first of June, whether you will be able to pay your other bills on the 
first of June. Let us do the people's business. Let us put on the 
agenda of this House the question of whether to extend unemployment 
benefits.

[[Page 11380]]

  Oppose the previous question.
  Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may consume 
to close.
  Mr. Speaker, if the previous question is defeated, I will offer an 
amendment to the rule. My amendment will provide that immediately after 
the House passes the Pension Security Act it will take up H.R. 1652, 
the Unemployment Benefits Extension Act. This bill will extend Federal 
unemployment benefits by 26 weeks and would also give a 13-week 
extension to those whose benefits have been exhausted.
  Mr. Speaker, with unemployment rates increasing daily, this is the 
third month in a row, now that we are in May, that this economy has 
lost jobs. Of the 8.8 million unemployed, 2 million out of work for 27 
weeks or more, the average length of unemployment is nearly 20 weeks, 
the highest since 1984. These Americans need relief, and they need it 
immediately.
  Current Federal unemployment benefits expire at the end of this 
month, just 2\1/2\ weeks away. On two separate occasions last week, the 
Republicans in this House voted to block an opportunity to extend these 
benefits. Let us not let unemployed Americans down a third time. Let us 
bring this greatly needed responsible legislation to the floor for a 
vote.
  Now, let me make very clear that a ``no'' vote on the previous 
question will not stop consideration of the pension security act. A 
``no'' vote will allow the House to vote on H.R. 1000 and on H.R. 1652, 
the Unemployment Benefits Extension Act as well. However, a ``yes'' 
vote on the previous question will prevent the House from passing the 
desperately needed extension of Federal employment benefits to our 
unemployed workers one more time.
  Make no mistake, this vote is the only opportunity the House will 
have to vote on extending Federal unemployment benefits. I urge a 
``no'' vote on the previous question and remind my colleagues that 
these unemployed workers have no one to turn to but us, and they sent 
us here to do our best for our communities.
  Mr. Speaker, I ask unanimous consent that the text of the amendment 
and a description of the amendment be printed in the Record immediately 
before the vote on the previous question.
  The SPEAKER pro tempore (Mr. Shimkus). Is there objection to the 
request of the gentlewoman from New York?
  There was no objection.
  The material previously referred to by Ms. Slaughter is as follows:

   Previous Question for H. Res. 230--Rule on H.R. 1000: The Pension 
                          Security Act of 2003

       At the end of the resolution add the following new section:
       Sec.   . Immediately after disposition of the bill H.R. 
     1000, it shall be in order without intervention of any point 
     of order to consider in the House the bill (H.R. 1652) to 
     provide extended unemployment benefits to displaced workers, 
     and to make other improvements in the unemployment insurance 
     system. The bill shall be considered as read for amendment. 
     The previous question shall be considered as ordered on the 
     bill to final passage without intervening motion except: 1) 
     one hour of debate equally divided and controlled by the 
     Chairman and ranking Minority Member of the Committee on the 
     Ways and Means; and 2) one motion to recommit with or without 
     instructions.

  Ms. SLAUGHTER. Mr. Speaker, I yield back the balance of my time.
  Mr. LINDER. Mr. Speaker, I urge my colleagues to vote ``yes'' on the 
previous question. I yield back the balance of my time, and I move the 
previous question on the resolution.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Ms. SLAUGHTER. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  Pursuant to clause 8 of rule XX, the Chair will reduce to 5 minutes 
the minimum time for electronic voting, if ordered, on the question of 
adoption of the resolution.
  The vote was taken by electronic device, and there were--yeas 218, 
nays 201, not voting 15, as follows:

                             [Roll No. 186]

                               YEAS--218

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bereuter
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     DeMint
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Greenwood
     Gutknecht
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Janklow
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     McCotter
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Paul
     Pearce
     Pence
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Toomey
     Turner (OH)
     Upton
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)

                               NAYS--201

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Ballance
     Becerra
     Bell
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Cardoza
     Carson (IN)
     Carson (OK)
     Case
     Clay
     Clyburn
     Conyers
     Cooper
     Costello
     Cramer
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley (CA)
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Filner
     Ford
     Frank (MA)
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Grijalva
     Gutierrez
     Hall
     Harman
     Hastings (FL)
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Lynch
     Majette
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McIntyre
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)

[[Page 11381]]


     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--15

     Combest
     Cox
     Doyle
     Fattah
     Istook
     McGovern
     Miller, Gary
     Oxley
     Peterson (PA)
     Petri
     Radanovich
     Rothman
     Schrock
     Turner (TX)
     Young (FL)


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Shimkus) (during the vote). Members are 
advised that 2 minutes remain in this vote.

                              {time}  1257

  Mr. BERRY and Mr. DAVIS of Tennessee changed their vote from ``yea'' 
to ``nay.''
  Mrs. WILSON of New Mexico changed her vote from ``nay'' to ``yea.''
  So the previous question was ordered.
  The result of the vote was announced as above recorded.
  Stated for:
  Mr. PETRI. Mr. Speaker, on rollcall No. 186, had I been present, I 
would have voted ``yea.''
  Stated against:
  Mr. McGOVERN. Mr. Speaker, on rollcall No. 186, had I been present, I 
would have voted ``nay.''
  The SPEAKER pro tempore. The question is on the resolution.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.
  Mr. BOEHNER. Mr. Speaker, pursuant to House Resolution 230, I call up 
the bill (H.R. 1000) to amend title I of the Employee Retirement Income 
Security Act of 1974 and the Internal Revenue Code of 1986 to provide 
additional protections to participants and beneficiaries in individual 
account plans from excessive investment in employer securities and to 
promote the provision of retirement investment advice to workers 
managing their retirement income assets, and ask for its immediate 
consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 230, the bill 
is considered read for amendment.
  The text of H.R. 1000 is as follows:

                               H.R. 1000

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Pension 
     Security Act of 2003''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.

               TITLE I--IMPROVEMENTS IN PENSION SECURITY

Sec. 101. Periodic pension benefits statements.
Sec. 102. Inapplicability of relief from fiduciary liability during 
              blackout periods.
Sec. 103. Informational and educational support for pension plan 
              fiduciaries.
Sec. 104. Diversification requirements for defined contribution plans 
              that hold employer securities.
Sec. 105. Prohibited transaction exemption for the provision of 
              investment advice.
Sec. 106. Study regarding impact on retirement savings of participants 
              and beneficiaries by requiring consultants to advise plan 
              fiduciaries of individual account plans.
Sec. 107. Treatment of qualified retirement planning services.
Sec. 108. Effective dates and related rules.

            TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

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

                     TITLE III--GENERAL PROVISIONS

Sec. 301. Provisions relating to plan amendments.

               TITLE I--IMPROVEMENTS IN PENSION SECURITY

     SEC. 101. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Requirements.--
       (A) In general.--Section 105(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to 
     read as follows:
       ``(a)(1)(A) The administrator of an individual account plan 
     shall furnish a pension benefit statement--
       ``(i) to each plan participant at least annually,
       ``(ii) to each plan beneficiary upon written request, and
       ``(iii) in the case of an applicable individual account 
     plan, to each individual who is a plan participant or 
     beneficiary and who has a right to direct investments, at 
     least quarterly.
       ``(B) The administrator of a defined benefit plan shall 
     furnish a pension benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a plan participant or plan beneficiary of the 
     plan upon written request.
       ``(2) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written form or in electronic or 
     other appropriate form to the extent that such form is 
     reasonably accessible to the recipient.
       ``(3)(A) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator, at least 
     once each year, provides the participant with notice, at the 
     participant's last known address, of the availability of the 
     pension benefit statement and the ways in which the 
     participant may obtain such statement. Such notice shall be 
     provided in written, electronic, or other appropriate form, 
     and may be included with other communications to the 
     participant if done in a manner reasonably designed to 
     attract the attention of the participant.
       ``(B) The Secretary may provide that years in which no 
     employee or former employee benefits (within the meaning of 
     section 410(b) of the Internal Revenue Code of 1986) under 
     the plan need not be taken into account in determining the 3-
     year period under paragraph (1)(B)(i).''.
       (B) Conforming amendments.--
       (i) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (ii) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     clause (i) or (ii) of subsection (a)(1)(A) or clause (i) or 
     (ii) of subsection (a)(1)(B), whichever is applicable, in any 
     12-month period. If such report is required under subsection 
     (a) to be furnished at least quarterly, the requirements of 
     the preceding sentence shall be applied with respect to each 
     quarter in lieu of the 12-month period.''.
       (2) Information required from applicable individual account 
     plans.--Section 105 of such Act (as amended by paragraph (1)) 
     is amended further by adding at the end the following new 
     subsection:
       ``(d)(1) The statements required to be provided at least 
     quarterly under subsection (a)(1)(A)(iii) in the case of 
     applicable individual account plans shall include (together 
     with the information required in subsection (a)) the 
     following:
       ``(A) the value of each investment to which assets in the 
     individual account have been allocated, determined as of the 
     most recent valuation date under the plan, including the 
     value of any assets held in the form of employer securities, 
     without regard to whether such securities were contributed by 
     the plan sponsor or acquired at the direction of the plan or 
     of the participant or beneficiary,
       ``(B) an explanation, written in a manner calculated to be 
     understood by the average

[[Page 11382]]

     plan participant, of any limitations or restrictions on the 
     right of the participant or beneficiary to direct an 
     investment, and
       ``(C) an explanation, written in a manner calculated to be 
     understood by the average plan participant, of the 
     importance, for the long-term retirement security of 
     participants and beneficiaries, of a well-balanced and 
     diversified investment portfolio, including a discussion of 
     the risk of holding more than 25 percent of a portfolio in 
     the security of any one entity, such as employer securities.
       ``(2) The Secretary shall issue guidance and model notices 
     which meet the requirements of this subsection.''.
       (3) Definition of applicable individual account plan.--
     Section 3 of such Act (29 U.S.C. 1002) is amended by adding 
     at the end the following new paragraph:
       ``(42)(A) The term `applicable individual account plan' 
     means any individual account plan, except that such term does 
     not include an employee stock ownership plan (within the 
     meaning of section 4975(e)(7) of the Internal Revenue Code of 
     1986) unless there are any contributions to such plan (or 
     earnings thereunder) held within such plan that are subject 
     to subsection (k)(3) or (m)(2) of section 401 of the Internal 
     Revenue Code of 1986. Such term shall not include a one-
     participant retirement plan.
       ``(B) The term `one-participant retirement plan' means a 
     pension plan with respect to which the following requirements 
     are met:
       ``(i) on the first day of the plan year--
       ``(I) the plan covered only one individual (or the 
     individual and the individual's spouse) and the individual 
     owned 100 percent of the plan sponsor (whether or not 
     incorporated), or
       ``(II) the plan covered only one or more partners (or 
     partners and their spouses) in the plan sponsor;
       ``(ii) the plan meets the minimum coverage requirements of 
     410(b) of the Internal Revenue Code of 1986 (as in effect on 
     the date of the enactment of this paragraph) without being 
     combined with any other plan of the business that covers the 
     employees of the business;
       ``(iii) the plan does not provide benefits to anyone except 
     the individual (and the individual's spouse) or the partners 
     (and their spouses);
       ``(iv) the plan does not cover a business that is a member 
     of an affiliated service group, a controlled group of 
     corporations, or a group of businesses under common control; 
     and
       ``(v) the plan does not cover a business that leases 
     employees.''.
       (4) Civil penalties for failure to provide quarterly 
     benefit statements.--Section 502 of such Act (29 U.S.C. 1132) 
     is amended--
       (A) in subsection (a)(6), by striking ``(6), or (7)'' and 
     inserting ``(6), (7), or (8)'';
       (B) by redesignating paragraph (8) of subsection (c) as 
     paragraph (9); and
       (C) by inserting after paragraph (7) of subsection (c) the 
     following new paragraph:
       ``(8) The Secretary may assess a civil penalty against any 
     plan administrator of up to $1,000 a day from the date of 
     such plan administrator's failure or refusal to provide 
     participants or beneficiaries with a benefit statement on at 
     least a quarterly basis in accordance with section 
     105(a)(1)(A)(iii).''.
       (5) Model statements.--The Secretary of Labor shall, not 
     later than 180 days after the date of the enactment of this 
     Act, issue initial guidance and a model benefit statement, 
     written in a manner calculated to be understood by the 
     average plan participant, that may be used by plan 
     administrators in complying with the requirements of section 
     105 of the Employee Retirement Income Security Act of 1974. 
     Not later than 75 days after the date of the enactment of 
     this Act, the Secretary shall promulgate interim final rules 
     necessary to carry out the amendments made by this 
     subsection.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Provision of investment education notices to 
     participants in certain plans.--Section 414 of the Internal 
     Revenue Code of 1986 (relating to definitions and special 
     rules) is amended by adding at the end the following:
       ``(w) Provision of Investment Education Notices to 
     Participants in Certain Plans.--
       ``(1) In general.--The plan administrator of an applicable 
     pension plan shall provide to each applicable individual an 
     investment education notice described in paragraph (2) at the 
     time of the enrollment of the applicable individual in the 
     plan and not less often than annually thereafter.
       ``(2) Investment education notice.--An investment education 
     notice is described in this paragraph if such notice 
     contains--
       ``(A) an explanation, for the long-term retirement security 
     of participants and beneficiaries, of generally accepted 
     investment principles, including principles of risk 
     management and diversification, and
       ``(B) a discussion of the risk of holding substantial 
     portions of a portfolio in the security of any one entity, 
     such as employer securities.
       ``(3) Understandability.--Each notice required by paragraph 
     (1) shall be written in a manner calculated to be understood 
     by the average plan participant and shall provide sufficient 
     information (as determined in accordance with guidance 
     provided by the Secretary) to allow recipients to understand 
     such notice.
       ``(4) Form and manner of notices.--The notices required by 
     this subsection shall be in writing, except that such notices 
     may be in electronic or other form (or electronically posted 
     on the plan's website) to the extent that such form is 
     reasonably accessible to the applicable individual.
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) Applicable individual.--The term `applicable 
     individual' means--
       ``(i) any participant in the applicable pension plan,
       ``(ii) any beneficiary who is an alternate payee (within 
     the meaning of section 414(p)(8)) under a qualified domestic 
     relations order (within the meaning of section 414(p)(1)(A)), 
     and
       ``(iii) any beneficiary of a deceased participant or 
     alternate payee.
       ``(B) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(i) a plan described in clause (i), (ii), or (iv) of 
     section 219(g)(5)(A), and
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A),

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

       ``(I) the plan covered only one individual (or the 
     individual and the individual's spouse) and the individual 
     owned 100 percent of the plan sponsor (whether or not 
     incorporated), or
       ``(II) the plan covered only one or more partners (or 
     partners and their spouses) in the plan sponsor;

       ``(ii) the plan meets the minimum coverage requirements of 
     410(b) without being combined with any other plan of the 
     business that covers the employees of the business;
       ``(iii) the plan does not provide benefits to anyone except 
     the individual (and the individual's spouse) or the partners 
     (and their spouses);
       ``(iv) the plan does not cover a business that is a member 
     of an affiliated service group, a controlled group of 
     corporations, or a group of businesses under common control; 
     and
       ``(v) the plan does not cover a business that leases 
     employees.
       ``(6) Cross reference.--

  ``For provisions relating to penalty for failure to provide the 
notice required by this section, see section 6652(m).''.

       (2) Penalty for failure to provide notice.--Section 6652 of 
     such Code (relating to failure to file certain information 
     returns, registration statements, etc.) is amended by 
     redesignating subsection (m) as subsection (n) and by 
     inserting after subsection (l) the following new subsection:
       ``(m) Failure to Provide Investment Education Notices to 
     Participants in Certain Plans.--In the case of each failure 
     to provide a written explanation as required by section 
     414(w) with respect to an applicable individual (as defined 
     in such section), at the time prescribed therefor, unless it 
     is shown that such failure is due to reasonable cause and not 
     to willful neglect, there shall be paid, on notice and demand 
     of the Secretary and in the same manner as tax, by the person 
     failing to provide such notice, an amount equal to $100 for 
     each such failure, but the total amount imposed on such 
     person for all such failures during any calendar year shall 
     not exceed $50,000.''.

     SEC. 102. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY 
                   DURING BLACKOUT PERIODS.

       (a) In General.--Section 404(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended by 
     adding at the end the following new paragraph:
       ``(4)(A) Paragraph (1)(B) shall not apply in connection 
     with the direction or diversification of assets credited to 
     the account of any participant or beneficiary during a 
     blackout period if, by reason of the imposition of such 
     blackout period, the ability of such participant or 
     beneficiary to direct or diversify such assets is suspended, 
     limited, or restricted.
       ``(B) If a fiduciary authorizing a blackout period meets 
     the requirements of this title in connection with authorizing 
     such blackout period, such fiduciary shall not be liable 
     under this title for any loss occurring during the blackout 
     period as a result of any exercise by the participant or 
     beneficiary of control over assets in his or her account 
     prior to the blackout period. Matters to be considered in 
     determining whether such fiduciary has met the requirements 
     of this title include whether such fiduciary--

[[Page 11383]]

       ``(i) has considered the reasonableness of the expected 
     length of the blackout period,
       ``(ii) has provided the notice required under section 
     101(i)(2), and
       ``(iii) has acted in accordance with the requirements of 
     subsection (a) in determining whether to enter into the 
     blackout period.
       ``(C) If a blackout period arises in connection with a 
     change in the investment options offered under the plan, a 
     participant or beneficiary shall be deemed to have exercised 
     control over the assets in his or her account prior to the 
     blackout period, if, after reasonable notice of the change in 
     investment options is given to such participant or 
     beneficiary before such blackout period, assets in the 
     account of the participant or beneficiary are transferred--
       ``(i) to plan investment options in accordance with the 
     affirmative election of the participant or beneficiary, or
       ``(ii) in any case in which there is no such election, in 
     the manner set forth in such notice.
       ``(D) Any imposition of any limitation or restriction that 
     may govern the frequency of transfers between investment 
     vehicles shall not be treated as the imposition of a blackout 
     period to the extent such limitation or restriction is 
     disclosed to participants or beneficiaries through the 
     summary plan description or materials describing specific 
     investment alternatives under the plan.
       ``(E) For purposes of this paragraph, the term `blackout 
     period' has the meaning given such term by section 
     101(i)(7).''.
       (b) Guidance.--The Secretary of Labor shall, on or before 
     December 31, 2004, issue interim final regulations providing 
     guidance on how plan sponsors or any other affected 
     fiduciaries can satisfy their fiduciary responsibilities 
     during any blackout period during which the ability of a 
     participant or beneficiary to direct the investment of assets 
     in his or her individual account is suspended.

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

       Section 404 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1104) is amended by adding at the end the 
     following new subsection:
       ``(e) The Secretary shall establish a program under which 
     information and educational resources shall be made available 
     on an ongoing basis to persons serving as fiduciaries under 
     employee pension benefit plans so as to assist such persons 
     in diligently and effectively carrying out their fiduciary 
     duties in accordance with this part. Such program shall 
     provide information concerning the practices that define 
     prudent investment procedures for plan fiduciaries. 
     Information provided under the program shall address the 
     relevant investment considerations for defined benefit and 
     defined contribution plans, including investment in employer 
     securities by such plans. In developing such program, the 
     Secretary shall solicit information from the public, 
     including investment education professionals.''.

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

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

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

       ``(C) Elective deferrals treated as separate plan not 
     individual account plan.--For purposes of subparagraph (A), 
     the applicable percentage shall be 100 percent with respect 
     to--
       ``(i) employee contributions to a plan under which any 
     portion attributable to elective deferrals is treated as a 
     separate plan under section 407(b)(2) as of the date of the 
     enactment of this paragraph, and
       ``(ii) such elective deferrals.
       ``(D) Coordination with prior elections.--In any case in 
     which a divestiture of investment in employer securities of 
     any class held by an employee stock ownership plan prior to 
     the effective date of this subsection was undertaken pursuant 
     to other applicable Federal law prior to such date, the 
     applicable percentage (as determined without regard to this 
     subparagraph) in connection with such securities shall be 
     reduced to the extent necessary to account for the amount to 
     which such election applied.

[[Page 11384]]

       ``(8) Regulations.--The Secretary of the Treasury shall 
     prescribe regulations under this subsection in consultation 
     with the Secretary of Labor.''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Section 401(a) of the Internal Revenue 
     Code of 1986 (relating to requirements for qualification) is 
     amended by inserting after paragraph (34) the following new 
     paragraph:
       ``(35) Diversification requirements for defined 
     contribution plans that hold employer securities.--
       ``(A) In general.--An applicable defined contribution plan 
     shall meet the requirements of subparagraphs (B) and (C).
       ``(B) Employee contributions and elective deferrals 
     invested in employer securities.--In the case of the portion 
     of the account attributable to employee contributions and 
     elective deferrals which is invested in employer securities, 
     a plan meets the requirements of this subparagraph if each 
     applicable individual in such plan may elect to direct the 
     plan to divest any such securities in the individual's 
     account and to reinvest an equivalent amount in other 
     investment options which meet the requirements of 
     subparagraph (D).
       ``(C) Employer contributions invested in employer 
     securities.--
       ``(i) In general.--In the case of the portion of the 
     account attributable to employer contributions (other than 
     elective deferrals to which subparagraph (B) applies) which 
     is invested in employer securities, a plan meets the 
     requirements of this subparagraph if, under the plan--

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

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

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

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

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

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

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

       ``(iv) Contributions held within an esop.--In the case of 
     contributions (other than elective deferrals and employee 
     contributions) held within an employee stock ownership plan, 
     in the case of the 1st and 2nd plan years referred to in the 
     table in clause (ii), the applicable percentage shall be the 
     greater of the amount determined under clause (ii) or the 
     percentage determined under paragraph (28) (determined as if 
     paragraph (28) applied to a plan described in this 
     paragraph).
       ``(v) Coordination with prior elections under paragraph 
     (28).--In any case in which a divestiture of investment in 
     employer securities of any class held by an employee stock 
     ownership plan prior to the effective date of this paragraph 
     was undertaken pursuant to an election under paragraph (28) 
     prior to such date, the applicable percentage (as determined 
     without regard to this clause) in connection with such 
     securities shall be reduced to the extent necessary to 
     account for the amount to which such election applied.
       ``(H) Regulations.--The Secretary shall prescribe 
     regulations under this paragraph in consultation with the 
     Secretary of Labor.''.
       (2) Conforming amendments.--
       (A) Section 401(a)(28) of such Code is amended by adding at 
     the end the following new subparagraph:
       ``(D) Application.--This paragraph shall not apply to a 
     plan to which paragraph (35) applies.''.
       (B) Section 409(h)(7) of such Code is amended by inserting 
     before the period at the end ``or subparagraph (B) or (C) of 
     section 401(a)(35)''.
       (C) Section 4980(c)(3)(A) of such Code is amended by 
     striking ``if--'' and all that follows and inserting ``if the 
     requirements of subparagraphs (B), (C), and (D) are met.''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2) and 
     section 108, the amendments made by this section shall apply 
     to plan years beginning after December 31, 2003, and with 
     respect to employer securities allocated to accounts before, 
     on, or after the date of the enactment of this Act.
       (2) Exception.--The amendments made by this section shall 
     not apply to employer securities held by an employee stock 
     ownership plan which are acquired before January 1, 1987.

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

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Exemption from prohibited transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14)(A) Any transaction described in subparagraph (B) in 
     connection with the provision of investment advice described 
     in section 3(21)(A)(ii), in any case in which--
       ``(i) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(ii) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(iii) the requirements of subsection (g) are met in 
     connection with the provision of the advice.
       ``(B) The transactions described in this subparagraph are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;

[[Page 11385]]

       ``(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) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Exemption from prohibited transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions) 
     is amended--

[[Page 11386]]

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

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

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

       ``(I) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(II) a bank or similar financial institution referred to 
     in subsection (d)(4) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,

       ``(III) an insurance company qualified to do business under 
     the laws of a State,
       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in any of subclauses (I) through (V) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.

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

[[Page 11387]]

     202(a)(17) of the Investment Advisers Act of 1940 (15 U.S.C. 
     80b-2(a)(17)) (substituting the entity for the investment 
     adviser referred to in such section).''.

     SEC. 106. STUDY REGARDING IMPACT ON RETIREMENT SAVINGS OF 
                   PARTICIPANTS AND BENEFICIARIES BY REQUIRING 
                   CONSULTANTS TO ADVISE PLAN FIDUCIARIES OF 
                   INDIVIDUAL ACCOUNT PLANS.

       (a) Study.--As soon as practicable after the date of the 
     enactment of this Act, the Secretary of Labor shall undertake 
     a study of the costs and benefits to participants and 
     beneficiaries of requiring independent consultants to advise 
     plan fiduciaries in connection with individual account plans. 
     In conducting such study, the Secretary shall consider--
       (1) the benefits to plan participants and beneficiaries of 
     engaging independent advisers to provide investment and other 
     advice regarding the assets of the plan to persons who have 
     fiduciary duties with respect to the management or 
     disposition of such assets,
       (2) the extent to which independent advisers are currently 
     retained by plan fiduciaries,
       (3) the availability of assistance to fiduciaries from 
     appropriate Federal agencies,
       (4) the availability of qualified independent consultants 
     to serve the needs of individual account plan fiduciaries in 
     the United States,
       (5) the impact of the additional fiduciary duty of an 
     independent advisor on the strict fiduciary obligations of 
     plan fiduciaries,
       (6) the impact of new requirements (consulting fees, 
     reporting requirements, and new plan duties to prudently 
     identify and contract with qualified independent consultants) 
     on the availability of individual account plans, and
       (7) the impact of a new requirement on the plan 
     administration costs per participant for small and mid-size 
     employers and the pension plans they sponsor.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of Labor shall report 
     the results of the study undertaken pursuant to this section, 
     together with any recommendations for legislative changes, to 
     the Committee on Education and the Workforce of the House of 
     Representatives and the Committee on Health, Education, 
     Labor, and Pensions of the Senate.

     SEC. 107. TREATMENT OF QUALIFIED RETIREMENT PLANNING 
                   SERVICES.

       (a) In General.--Subsection (m) of section 132 of the 
     Internal Revenue Code of 1986 (defining qualified retirement 
     services) is amended by adding at the end the following new 
     paragraph:
       ``(4) No constructive receipt.--No amount shall be included 
     in the gross income of any employee solely because the 
     employee may choose between any qualified retirement planning 
     services provided by a qualified investment advisor and 
     compensation which would otherwise be includible in the gross 
     income of such employee. The preceding sentence shall apply 
     to highly compensated employees only if the choice described 
     in such sentence is available on substantially the same terms 
     to each member of the group of employees normally provided 
     education and information regarding the employer's qualified 
     employer plan.''.
       (b) Conforming Amendments.--
       (1) Section 403(b)(3)(B) of such Code is amended by 
     inserting ``132(m)(4),'' after ``132(f)(4),''.
       (2) Section 414(s)(2) of such Code is amended by inserting 
     ``132(m)(4),'' after ``132(f)(4),''.
       (3) Section 415(c)(3)(D)(ii) of such Code is amended by 
     inserting ``132(m)(4),'' after ``132(f)(4),''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 108. EFFECTIVE DATES AND RELATED RULES.

       (a) In General.--Except as otherwise provided in this title 
     or in subsection (b), the amendments made by this Act shall 
     apply with respect to plan years beginning on or after the 
     general effective date.
       (b) General Effective Date.--For purposes of this section, 
     the term ``general effective date'' means the date which is 1 
     year after the date of the enactment of this Act.
       (c) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``the general effective date'' 
     the date of the commencement of the first plan year beginning 
     on or after the earlier of--
       (1) the later of--
       (A) the date which is 1 year after the general effective 
     date, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) the date which is 2 years after the general effective 
     date.
       (d) Amendments Relating to Investment Advice.--The 
     amendments made by section 105 shall apply with respect to 
     advice referred to in section 3(21)(A)(ii) of the Employee 
     Retirement Income Security Act of 1974 or section 
     4975(c)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2005.

            TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

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

       (a) Transition Rule Made Permanent.--Paragraph (1) of 
     section 769(c) of the Retirement Protection Act of 1994 is 
     amended--
       (1) by striking ``transition'' each place it appears in the 
     heading and the text, and
       (2) by striking ``for any plan year beginning after 1996 
     and before 2010''.
       (b) Special Rules.--Paragraph (2) of section 769(c) of the 
     Retirement Protection Act of 1994 is amended to read as 
     follows:
       ``(2) Special rules.--The rules described in this paragraph 
     are as follows:
       ``(A) For purposes of section 412(l)(9)(A) of the Internal 
     Revenue Code of 1986 and section 302(d)(9)(A) of the Employee 
     Retirement Income Security Act of 1974, the funded current 
     liability percentage for any plan year shall be treated as 
     not less than 90 percent.
       ``(B) For purposes of section 412(m) of the Internal 
     Revenue Code of 1986 and section 302(e) of the Employee 
     Retirement Income Security Act of 1974, the funded current 
     liability percentage for any plan year shall be treated as 
     not less than 100 percent.
       ``(C) For purposes of determining unfunded vested benefits 
     under section 4006(a)(3)(E)(iii) of the Employee Retirement 
     Income Security Act of 1974, the mortality table shall be the 
     mortality table used by the plan.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2002.

     SEC. 202. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury and the 
     Secretary of Labor shall modify the requirements for filing 
     annual returns with respect to one-participant retirement 
     plans to ensure that such plans with assets of $250,000 or 
     less as of the close of the plan year need not file a return 
     for that year.
       (2) One-participant retirement plan defined.--For purposes 
     of this subsection, the term ``one-participant retirement 
     plan'' means a retirement plan with respect to which the 
     following requirements are met:
       (A) on the first day of the plan year--
       (i) the plan covered only one individual (or the individual 
     and the individual's spouse) and the individual owned 100 
     percent of the plan sponsor (whether or not incorporated), or
       (ii) the plan covered only one or more partners (or 
     partners and their spouses) in the plan sponsor;
       (B) the plan meets the minimum coverage requirements of 
     410(b) of the Internal Revenue Code of 1986 without being 
     combined with any other plan of the business that covers the 
     employees of the business;
       (C) the plan does not provide benefits to anyone except the 
     individual (and the individual's spouse) or the partners (and 
     their spouses);
       (D) the plan does not cover a business that is a member of 
     an affiliated service group, a controlled group of 
     corporations, or a group of businesses under common control; 
     and
       (E) the plan does not cover a business that leases 
     employees.
       (3) Other definitions.--Terms used in paragraph (2) which 
     are also used in section 414 of the Internal Revenue Code of 
     1986 shall have the respective meanings given such terms by 
     such section.
       (4) Effective date.--The provisions of this subsection 
     shall apply to plan years beginning on or after January 1, 
     2003.
       (b) Simplified Annual Filing Requirement for Plans With 
     Fewer Than 25 Employees.--In the case of plan years beginning 
     after December 31, 2004, the Secretary 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

[[Page 11388]]

     respect to the Employee Plans Compliance Resolution System 
     (or any successor program) and any other employee plans 
     correction policies, including the authority to waive income, 
     excise, or other taxes to ensure that any tax, penalty, or 
     sanction is not excessive and bears a reasonable relationship 
     to the nature, extent, and severity of the failure.

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

       (a) Nondiscrimination.--
       (1) In general.--The Secretary of the Treasury shall, by 
     regulation, provide that a plan shall be deemed to satisfy 
     the requirements of section 401(a)(4) of the Internal Revenue 
     Code of 1986 if such plan satisfies the facts and 
     circumstances test under section 401(a)(4) of such Code, as 
     in effect before January 1, 1994, but only if--
       (A) the plan satisfies conditions prescribed by the 
     Secretary to appropriately limit the availability of such 
     test; and
       (B) the plan is submitted to the Secretary for a 
     determination of whether it satisfies such test.

     Subparagraph (B) shall only apply to the extent provided by 
     the Secretary.
       (2) Effective dates.--
       (A) Regulations.--The regulation required by paragraph (1) 
     shall apply to years beginning after December 31, 2004.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under paragraph 
     (1)(A) shall not apply before the first year beginning not 
     less than 120 days after the date on which such condition is 
     prescribed.
       (b) Coverage Test.--
       (1) In general.--Section 410(b)(1) of the Internal Revenue 
     Code of 1986 (relating to minimum coverage requirements) is 
     amended by adding at the end the following:
       ``(D) In the case that the plan fails to meet the 
     requirements of subparagraphs (A), (B) and (C), the plan--
       ``(i) satisfies subparagraph (B), as in effect immediately 
     before the enactment of the Tax Reform Act of 1986,
       ``(ii) is submitted to the Secretary for a determination of 
     whether it satisfies the requirement described in clause (i), 
     and
       ``(iii) satisfies conditions prescribed by the Secretary by 
     regulation that appropriately limit the availability of this 
     subparagraph.
     Clause (ii) shall apply only to the extent provided by the 
     Secretary.''.
       (2) Effective dates.--
       (A) In general.--The amendment made by paragraph (1) shall 
     apply to years beginning after December 31, 2004.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under regulations 
     prescribed by the Secretary under section 410(b)(1)(D) of the 
     Internal Revenue Code of 1986 shall not apply before the 
     first year beginning not less than 120 days after the date on 
     which such condition is prescribed.
       (c) Line of Business Rules.--The Secretary of the Treasury 
     shall, on or before December 31, 2004, modify the existing 
     regulations issued under section 414(r) of the Internal 
     Revenue Code of 1986 in order to expand (to the extent that 
     the Secretary determines appropriate) the ability of a 
     pension plan to demonstrate compliance with the line of 
     business requirements based upon the facts and circumstances 
     surrounding the design and operation of the plan, even though 
     the plan is unable to satisfy the mechanical tests currently 
     used to determine compliance.

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

       (a) In General.--
       (1) Subparagraph (G) of section 401(a)(5) of the Internal 
     Revenue Code of 1986 and subparagraph (H) of section 
     401(a)(26) of such Code are each amended by striking 
     ``section 414(d))'' and all that follows and inserting 
     ``section 414(d)).''.
       (2) Subparagraph (G) of section 401(k)(3) of the Internal 
     Revenue Code of 1986 and paragraph (2) of section 1505(d) of 
     the Taxpayer Relief Act of 1997 are each amended by striking 
     ``maintained by a State or local government or political 
     subdivision thereof (or agency or instrumentality thereof)''.
       (b) Conforming Amendments.--
       (1) The heading for subparagraph (G) of section 401(a)(5) 
     of such Code is amended to read as follows: ``Governmental 
     plans.--''.
       (2) The heading for subparagraph (H) of section 401(a)(26) 
     of such Code is amended to read as follows: ``Exception for 
     governmental plans.--''.
       (3) Subparagraph (G) of section 401(k)(3) of such Code is 
     amended by inserting ``Governmental plans.--'' after ``(G)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2003.

     SEC. 206. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) Amendment of internal revenue code.--
       (A) In general.--Subparagraph (A) of section 417(a)(6) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``90-day'' and inserting ``180-day''.
       (B) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under sections 402(f), 
     411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
     substitute ``180 days'' for ``90 days'' each place it appears 
     in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), 
     and 1.417(e)-1(b).
       (2) Amendment of erisa.--
       (A) In general.--Section 205(c)(7)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(c)(7)(A)) is amended by striking ``90-day'' and 
     inserting ``180-day''.
       (B) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under part 2 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974 to the extent that they relate to 
     sections 203(e) and 205 of such Act to substitute ``180 
     days'' for ``90 days'' each place it appears.
       (3) Effective date.--The amendments made by paragraphs 
     (1)(A) and (2)(A) and the modifications required by 
     paragraphs (1)(B) and (2)(B) shall apply to years beginning 
     after December 31, 2003.
       (b) Consent Regulation Inapplicable to Certain 
     Distributions.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the regulations under section 411(a)(11) of the Internal 
     Revenue Code of 1986 and under section 205 of the Employee 
     Retirement Income Security Act of 1974 to provide that the 
     description of a participant's right, if any, to defer 
     receipt of a distribution shall also describe the 
     consequences of failing to defer such receipt.
       (2) Effective date.--
       (A) In general.--The modifications required by paragraph 
     (1) shall apply to years beginning after December 31, 2003.
       (B) Reasonable notice.--In the case of any description of 
     such consequences made before the date that is 90 days after 
     the date on which the Secretary of the Treasury issues a safe 
     harbor description under paragraph (1), a plan shall not be 
     treated as failing to satisfy the requirements of section 
     411(a)(11) of such Code or section 205 of such Act by reason 
     of the failure to provide the information required by the 
     modifications made under paragraph (1) if the Administrator 
     of such plan makes a reasonable attempt to comply with such 
     requirements.

     SEC. 207. ANNUAL REPORT DISSEMINATION.

       (a) Report Available Through Electronic Means.--Section 
     104(b)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1024(b)(3)) is amended by adding at the end 
     the following new sentence: ``The requirement to furnish 
     information under the previous sentence with respect to an 
     employee pension benefit plan shall be satisfied if the 
     administrator makes such information reasonably available 
     through electronic means or other new technology.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     2003.

     SEC. 208. TECHNICAL CORRECTIONS TO SAVER ACT.

       Section 517 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1147) is amended--
       (1) in subsection (a), by striking ``2001 and 2005 on or 
     after September 1 of each year involved'' and inserting 
     ``2006 and 2010'';
       (2) in subsection (e)(2)--
       (A) by striking ``Committee on Labor and Human Resources'' 
     in subparagraph (D) and inserting ``Committee on Health, 
     Education, Labor, and Pensions'';
       (B) by striking subparagraph (F) and inserting the 
     following:
       ``(F) the Chairman and Ranking Member of the Subcommittee 
     on Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the House of Representatives 
     and the Chairman and Ranking Member of the Subcommittee on 
     Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the Senate;'';
       (C) by redesignating subparagraph (G) as subparagraph (J); 
     and
       (D) by inserting after subparagraph (F) the following new 
     subparagraphs:
       ``(G) the Chairman and Ranking Member of the Committee on 
     Finance of the Senate;
       ``(H) the Chairman and Ranking Member of the Committee on 
     Ways and Means of the House of Representatives;
       ``(I) the Chairman and Ranking Member of the Subcommittee 
     on Employer-Employee Relations of the Committee on Education 
     and the Workforce of the House of Representatives; and'';
       (3) in subsection (e)(3)(B), by striking ``January 31, 
     1998'' and inserting ``2 months before the convening of each 
     summit;'';
       (4) in subsection (f)(1)(C), by inserting ``, no later than 
     60 days prior to the date of the commencement of the National 
     Summit,'' after ``comment'';
       (5) in subsection (i)--
       (A) by striking ``for fiscal years beginning on or after 
     October 1, 1997,''; and
       (B) by adding at the end the following new paragraph:
       ``(3) Reception and representation authority.--The 
     Secretary is hereby granted reception and representation 
     authority limited specifically to the events at the National 
     Summit. The Secretary shall use any private contributions 
     accepted in connection with the National Summit prior to 
     using

[[Page 11389]]

     funds appropriated for purposes of the National Summit 
     pursuant to this paragraph.''; and
       (6) in subsection (k)--
       (A) by striking ``shall enter into a contract on a sole-
     source basis'' and inserting ``may enter into a contract on a 
     sole-source basis''; and
       (B) by striking ``in fiscal year 1998''.

     SEC. 209. MISSING PARTICIPANTS.

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

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

       (a) In General.--Subparagraph (A) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(A)) is amended--
       (1) in clause (i), by inserting ``other than a new single-
     employer plan (as defined in subparagraph (F)) maintained by 
     a small employer (as so defined),'' after ``single-employer 
     plan,'',
       (2) in clause (iii), by striking the period at the end and 
     inserting ``, and'', and
       (3) by adding at the end the following new clause:
       ``(iv) in the case of a new single-employer plan (as 
     defined in subparagraph (F)) maintained by a small employer 
     (as so defined) for the plan year, $5 for each individual who 
     is a participant in such plan during the plan year.''.
       (b) Definition of New Single-Employer Plan.--Section 
     4006(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(F)(i) For purposes of this paragraph, a single-employer 
     plan maintained by a contributing sponsor shall be treated as 
     a new single-employer plan for each of its first 5 plan years 
     if, during the 36-month period ending on the date of the 
     adoption of such plan, the sponsor or any member of such 
     sponsor's controlled group (or any predecessor of either) did 
     not establish or maintain a plan to which this title applies 
     with respect to which benefits were accrued for substantially 
     the same employees as are in the new single-employer plan.
       ``(ii)(I) For purposes of this paragraph, the term `small 
     employer' means an employer which on the first day of any 
     plan year has, in aggregation with all members of the 
     controlled group of such employer, 100 or fewer employees.
       ``(II) In the case of a plan maintained by two or more 
     contributing sponsors that are not part of the same 
     controlled group, the employees of all contributing sponsors 
     and controlled groups of such sponsors shall be aggregated 
     for purposes of determining whether any contributing sponsor 
     is a small employer.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plans first effective after December 31, 2003.

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

       (a) New Plans.--Subparagraph (E) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(E)) is amended by adding at the end the 
     following new clause:
       ``(v) In the case of a new defined benefit plan, the amount 
     determined under clause (ii) for any plan year shall be an 
     amount equal to the product of the amount determined under 
     clause (ii) and the applicable percentage. For purposes of 
     this clause, the term `applicable percentage' means--
       ``(I) 0 percent, for the first plan year.
       ``(II) 20 percent, for the second plan year.
       ``(III) 40 percent, for the third plan year.
       ``(IV) 60 percent, for the fourth plan year.
       ``(V) 80 percent, for the fifth plan year.
     For purposes of this clause, a defined benefit plan (as 
     defined in section 3(35)) maintained by a contributing 
     sponsor shall be treated as a new defined benefit plan for 
     each of its first 5 plan years if, during the 36-month period 
     ending on the date of the adoption of the plan, the sponsor 
     and each member of any controlled group including the sponsor 
     (or any predecessor of either) did not establish or maintain 
     a plan to which this title applies with respect to which 
     benefits were accrued for substantially the same employees as 
     are in the new plan.''.
       (b) Small Plans.--Paragraph (3) of section 4006(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306(a)), as amended by section 210(b), is amended--
       (1) by striking ``The'' in subparagraph (E)(i) and 
     inserting ``Except as provided in subparagraph (G), the'', 
     and
       (2) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G)(i) In the case of an employer who has 25 or fewer 
     employees on the first day of the plan year, the additional 
     premium determined under subparagraph (E) for each 
     participant shall not exceed $5 multiplied by the number of 
     participants in the plan as of the close of the preceding 
     plan year.
       ``(ii) For purposes of clause (i), whether an employer has 
     25 or fewer employees on the first day of the plan year is 
     determined by taking into consideration all of the employees 
     of all members of the contributing sponsor's controlled 
     group. In the case of a plan maintained by two or more 
     contributing sponsors, the employees of all contributing 
     sponsors and their controlled groups shall be aggregated for 
     purposes of determining whether the 25-or-fewer-employees 
     limitation has been satisfied.''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply to plans first effective after December 31, 2003.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to plan years beginning after December 31, 2003.

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

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

     SEC. 213. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

       (a) Modification of Phase-In of Guarantee.--Section 
     4022(b)(5) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
       ``(5)(A) For purposes of this paragraph, the term `majority 
     owner' means an individual who, at any time during the 60-
     month period ending on the date the determination is being 
     made--
       ``(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.

[[Page 11390]]

     For purposes of clause (iii), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).
       ``(B) In the case of a participant who is a majority owner, 
     the amount of benefits guaranteed under this section shall 
     equal the product of--
       ``(i) a fraction (not to exceed 1) the numerator of which 
     is the number of years from the later of the effective date 
     or the adoption date of the plan to the termination date, and 
     the denominator of which is 10, and
       ``(ii) the amount of benefits that would be guaranteed 
     under this section if the participant were not a majority 
     owner.''.
       (b) Modification of Allocation of Assets.--
       (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
     striking ``section 4022(b)(5)'' and inserting ``section 
     4022(b)(5)(B)''.
       (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
     amended--
       (A) by striking ``(5)'' in paragraph (2) and inserting 
     ``(4), (5),'', and
       (B) by redesignating paragraphs (3) through (6) as 
     paragraphs (4) through (7), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to benefits 
     described in subparagraph (B) of that paragraph. If assets 
     allocated to such subparagraph (B) are insufficient to 
     satisfy in full the benefits described in that subparagraph, 
     the assets shall be allocated pro rata among individuals on 
     the basis of the present value (as of the termination date) 
     of their respective benefits described in that 
     subparagraph.''.
       (c) Conforming Amendments.--
       (1) Section 4021 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1321) is amended--
       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following new subsection:
       ``(d) For purposes of subsection (b)(9), the term 
     `substantial owner' means an individual who, at any time 
     during the 60-month period ending on the date the 
     determination is being made--
       ``(1) owns the entire interest in an unincorporated trade 
     or business,
       ``(2) in the case of a partnership, is a partner who owns, 
     directly or indirectly, more than 10 percent of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(3) in the case of a corporation, owns, directly or 
     indirectly, more than 10 percent in value of either the 
     voting stock of that corporation or all the stock of that 
     corporation.
     For purposes of paragraph (3), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).''.
       (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
     is amended by striking ``section 4022(b)(6)'' and inserting 
     ``section 4021(d)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to plan 
     terminations--
       (A) under section 4041(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)) with respect to 
     which notices of intent to terminate are provided under 
     section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after 
     December 31, 2003, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 2004.

     SEC. 214. BENEFIT SUSPENSION NOTICE.

       (a) Modification of Regulation.--The Secretary of Labor 
     shall modify the regulation under subparagraph (B) of section 
     203(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1053(a)(3)(B)) to provide that the 
     notification required by such regulation in connection with 
     any suspension of benefits described in such subparagraph--
       (1) in the case of an employee who returns to service 
     described in section 203(a)(3)(B)(i) or (ii) of such Act 
     after commencement of payment of benefits under the plan, 
     shall be made during the first calendar month or the first 4- 
     or 5-week payroll period ending in a calendar month in which 
     the plan withholds payments, and
       (2) in the case of any employee who is not described in 
     paragraph (1)--
       (A) may be included in the summary plan description for the 
     plan furnished in accordance with section 104(b) of such Act 
     (29 U.S.C. 1024(b)), rather than in a separate notice, and
       (B) need not include a copy of the relevant plan 
     provisions.
       (b) Effective Date.--The modification made under this 
     section shall apply to plan years beginning after December 
     31, 2003.

     SEC. 215. STUDIES.

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

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

       (a) In General.--Subclause (III) of section 412(l)(7)(C)(i) 
     of the Internal Revenue Code of 1986 is amended--
       (1) by striking ``2002 or 2003'' in the text and inserting 
     ``2001, 2002, or 2003'', and
       (2) by striking ``2002 and 2003'' in the heading and 
     inserting ``2001, 2002, and 2003''.
       (b) Special Rule.--Subclause (III) of section 
     302(d)(7)(C)(i) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1082(d)(7)(C)(i)) is amended--
       (1) by striking ``2002 or 2003'' in the text and inserting 
     ``2001, 2002, or 2003'', and
       (2) by striking ``2002 and 2003'' in the heading and 
     inserting ``2001, 2002, and 2003''.
       (c) PBGC.--Subclause (IV) of section 4006(a)(3)(E)(iii) of 
     such Act (29 U.S.C. 1306(a)(3)(E)(iii)) is amended to read as 
     follows--
       ``(IV) In the case of plan years beginning after December 
     31, 2001, and before January 1, 2004, subclause (II) shall be 
     applied by substituting `100 percent' for `85 percent' and by 
     substituting `115 percent' for `100 percent'. Subclause (III) 
     shall be applied for such years without regard to the 
     preceding sentence. Any reference to this clause or this 
     subparagraph by any other sections or subsections (other than 
     sections 4005, 4010, 4011 and 4043) shall be treated as a 
     reference to this clause or this subparagraph without regard 
     to this subclause.''.
       (d) Effective Date.--
       (1) General rule.--Subject to paragraph (2), the amendments 
     made by this section shall take effect as if included in the 
     amendments made by section 405 of the Job Creation and Worker 
     Assistance Act of 2002.
       (2) Election.--The plan sponsor or plan administrator of a 
     plan may elect whether to have the amendments made by 
     subsections (a) and (b) apply. Such election shall be made in 
     such manner and at such time as the Secretary of the Treasury 
     or his delegate may prescribe and, once made, may not be 
     revoked. An election to apply such amendments shall not be 
     treated as a prohibited change in actuarial assumptions for 
     purposes of reports required to be filed with the Secretary 
     of Labor, the Secretary of Treasury, or the Pension Benefit 
     Guaranty Corporation.

[[Page 11391]]



                     TITLE III--GENERAL PROVISIONS

     SEC. 301. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any plan or 
     contract amendment--
       (1) such plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A), and
       (2) except as provided by the Secretary of the Treasury, 
     such plan shall not fail to meet the requirements of section 
     411(d)(6) of the Internal Revenue Code of 1986 and section 
     204(g) of the Employee Retirement Income Security Act of 1974 
     by reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any plan or annuity contract which is made--
       (A) pursuant to any amendment made by section 101, 102, 
     103, or 104, by title II, or by title VI of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001, or pursuant 
     to any regulation issued by the Secretary of the Treasury or 
     the Secretary of Labor under any such section, title II, or 
     such title VI, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2006.
     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2008'' for ``2006''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan), and
       (ii) ending on the date described in paragraph (1)(B) (or, 
     if earlier, the date the plan or contract amendment is 
     adopted),
     the plan or contract is operated as if such plan or contract 
     amendment were in effect; and
       (B) such plan or contract amendment applies retroactively 
     for such period.

  The SPEAKER pro tempore. The amendment in the nature of a substitute 
printed in the bill is adopted.
  The text of H.R. 1000, as amended, is as follows:

                               H.R. 1000

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Pension 
     Security Act of 2003''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.

               TITLE I--IMPROVEMENTS IN PENSION SECURITY

Sec. 101. Periodic pension benefits statements.
Sec. 102. Inapplicability of relief from fiduciary liability during 
              blackout periods.
Sec. 103. Informational and educational support for pension plan 
              fiduciaries.
Sec. 104. Diversification requirements for defined contribution plans 
              that hold employer securities.
Sec. 105. Prohibited transaction exemption for the provision of 
              investment advice.
Sec. 106. Study regarding impact on retirement savings of participants 
              and beneficiaries by requiring consultants to advise plan 
              fiduciaries of individual account plans.
Sec. 107. Treatment of qualified retirement planning services.
Sec. 108. Effective dates and related rules.

            TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

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

                     TITLE III--GENERAL PROVISIONS

Sec. 301. Provisions relating to plan amendments.

               TITLE I--IMPROVEMENTS IN PENSION SECURITY

     SEC. 101. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Requirements.--
       (A) In general.--Section 105(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to 
     read as follows:
       ``(a)(1)(A) The administrator of an individual account plan 
     shall furnish a pension benefit statement--
       ``(i) to each plan participant at least annually,
       ``(ii) to each plan beneficiary upon written request, and
       ``(iii) in the case of an applicable individual account 
     plan, to each individual who is a plan participant or 
     beneficiary and who has a right to direct investments, at 
     least quarterly.
       ``(B) The administrator of a defined benefit plan shall 
     furnish a pension benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a plan participant or plan beneficiary of the 
     plan upon written request.

     Information furnished under clause (i) to a participant may 
     be based on reasonable estimates determined under regulations 
     prescribed by the Secretary, in consultation with the Pension 
     Benefit Guaranty Corporation.
       ``(2) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written form or in electronic or 
     other appropriate form to the extent that such form is 
     reasonably accessible to the recipient.
       ``(3)(A) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator, at least 
     once each year, provides the participant with notice, at the 
     participant's last known address, of the availability of the 
     pension benefit statement and the ways in which the 
     participant may obtain such statement. Such notice shall be 
     provided in written, electronic, or other appropriate form, 
     and may be included with other communications to the 
     participant if done in a manner reasonably designed to 
     attract the attention of the participant.
       ``(B) The Secretary may provide that years in which no 
     employee or former employee benefits (within the meaning of 
     section 410(b) of the Internal Revenue Code of 1986) under 
     the plan need not be taken into account in determining the 3-
     year period under paragraph (1)(B)(i).''.
       (B) Conforming amendments.--
       (i) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (ii) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     clause (i) or (ii) of subsection (a)(1)(A) or clause (i) or 
     (ii) of subsection (a)(1)(B), whichever is applicable, in any 
     12-month period. If such report is required under subsection 
     (a) to be furnished at least quarterly, the requirements of 
     the preceding sentence shall be applied with respect to each 
     quarter in lieu of the 12-month period.''.
       (2) Information required from applicable individual account 
     plans.--Section 105 of such Act (as amended by paragraph (1)) 
     is amended further by adding at the end the following new 
     subsection:
       ``(d)(1) The statements required to be provided at least 
     quarterly under subsection (a)(1)(A)(iii) in the case of 
     applicable individual account plans shall include (together 
     with the information required in subsection (a)) the 
     following:
       ``(A) the value of each investment to which assets in the 
     individual account have been allocated, determined as of the 
     most recent valuation date under the plan, including the 
     value of any assets held in the form of employer securities, 
     without regard to whether such securities were contributed by 
     the plan sponsor or acquired at the direction of the plan or 
     of the participant or beneficiary,
       ``(B) an explanation, written in a manner calculated to be 
     understood by the average plan participant, of any 
     limitations or restrictions on the right of the participant 
     or beneficiary to direct an investment, and
       ``(C) an explanation, written in a manner calculated to be 
     understood by the average plan participant, of the 
     importance, for the long-term retirement security of 
     participants and beneficiaries, of a well-balanced and 
     diversified investment portfolio, including a discussion of 
     the risk of holding more than 25 percent of a portfolio in 
     the security of any one entity, such as employer securities.
       ``(2) The Secretary shall issue guidance and model notices 
     which meet the requirements of this subsection.''.
       (3) Definition of applicable individual account plan.--
     Section 3 of such Act (29 U.S.C.

[[Page 11392]]

     1002) is amended by adding at the end the following new 
     paragraph:
       ``(42)(A) The term `applicable individual account plan' 
     means any individual account plan, except that such term does 
     not include an employee stock ownership plan (within the 
     meaning of section 4975(e)(7) of the Internal Revenue Code of 
     1986) unless there are any contributions to such plan (or 
     earnings thereunder) held within such plan that are subject 
     to subsection (k)(3) or (m)(2) of section 401 of the Internal 
     Revenue Code of 1986. Such term shall not include a one-
     participant retirement plan.
       ``(B) The term `one-participant retirement plan' means a 
     pension plan with respect to which the following requirements 
     are met:
       ``(i) on the first day of the plan year--
       ``(I) the plan covered only one individual (or the 
     individual and the individual's spouse) and the individual 
     owned 100 percent of the plan sponsor (whether or not 
     incorporated), or
       ``(II) the plan covered only one or more partners (or 
     partners and their spouses) in the plan sponsor;
       ``(ii) the plan meets the minimum coverage requirements of 
     section 410(b) of the Internal Revenue Code of 1986 (as in 
     effect on the date of the enactment of this paragraph) 
     without being combined with any other plan of the business 
     that covers the employees of the business;
       ``(iii) the plan does not provide benefits to anyone except 
     the individual (and the individual's spouse) or the partners 
     (and their spouses);
       ``(iv) the plan does not cover a business that is a member 
     of an affiliated service group, a controlled group of 
     corporations, or a group of businesses under common control; 
     and
       ``(v) the plan does not cover a business that leases 
     employees.''.
       (4) Civil penalties for failure to provide quarterly 
     benefit statements.--Section 502 of such Act (29 U.S.C. 1132) 
     is amended--
       (A) in subsection (a)(6), by striking ``(6), or (7)'' and 
     inserting ``(6), (7), or (8)'';
       (B) by redesignating paragraph (8) of subsection (c) as 
     paragraph (9); and
       (C) by inserting after paragraph (7) of subsection (c) the 
     following new paragraph:
       ``(8) The Secretary may assess a civil penalty against any 
     plan administrator of up to $1,000 a day for each day on 
     which the plan administrator has failed to comply with the 
     requirements of clause (iii) of section 105(a)(1)(A) and has 
     not corrected such failure by providing the required pension 
     benefit statements to the affected participants and 
     beneficiaries.''.
       (5) Model statements.--The Secretary of Labor shall, not 
     later than 180 days after the date of the enactment of this 
     Act, issue initial guidance and a model benefit statement, 
     written in a manner calculated to be understood by the 
     average plan participant, that may be used by plan 
     administrators in complying with the requirements of section 
     105 of the Employee Retirement Income Security Act of 1974. 
     Not later than 75 days after the date of the enactment of 
     this Act, the Secretary shall promulgate interim final rules 
     necessary to carry out the amendments made by this 
     subsection.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Provision of investment education notices to 
     participants in certain plans.--Section 414 of the Internal 
     Revenue Code of 1986 (relating to definitions and special 
     rules) is amended by adding at the end the following:
       ``(w) Provision of Investment Education Notices to 
     Participants in Certain Plans.--
       ``(1) In general.--The plan administrator of an applicable 
     pension plan shall provide to each applicable individual an 
     investment education notice described in paragraph (2) at the 
     time of the enrollment of the applicable individual in the 
     plan and not less often than annually thereafter.
       ``(2) Investment education notice.--An investment education 
     notice is described in this paragraph if such notice 
     contains--
       ``(A) an explanation, for the long-term retirement security 
     of participants and beneficiaries, of generally accepted 
     investment principles, including principles of risk 
     management and diversification, and
       ``(B) a discussion of the risk of holding substantial 
     portions of a portfolio in the security of any one entity, 
     such as employer securities.
       ``(3) Understandability.--Each notice required by paragraph 
     (1) shall be written in a manner calculated to be understood 
     by the average plan participant and shall provide sufficient 
     information (as determined in accordance with guidance 
     provided by the Secretary) to allow recipients to understand 
     such notice.
       ``(4) Form and manner of notices.--The notices required by 
     this subsection shall be in writing, except that such notices 
     may be in electronic or other form (or electronically posted 
     on the plan's website) to the extent that such form is 
     reasonably accessible to the applicable individual.
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) Applicable individual.--The term `applicable 
     individual' means--
       ``(i) any participant in the applicable pension plan,
       ``(ii) any beneficiary who is an alternate payee (within 
     the meaning of section 414(p)(8)) under a qualified domestic 
     relations order (within the meaning of section 414(p)(1)(A)), 
     and
       ``(iii) any beneficiary of a deceased participant or 
     alternate payee.
       ``(B) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(i) a plan described in clause (i), (ii), or (iv) of 
     section 219(g)(5)(A), and
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A),

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

       ``(I) the plan covered only one individual (or the 
     individual and the individual's spouse) and the individual 
     owned 100 percent of the plan sponsor (whether or not 
     incorporated), or
       ``(II) the plan covered only one or more partners (or 
     partners and their spouses) in the plan sponsor;

       ``(ii) the plan meets the minimum coverage requirements of 
     410(b) without being combined with any other plan of the 
     business that covers the employees of the business;
       ``(iii) the plan does not provide benefits to anyone except 
     the individual (and the individual's spouse) or the partners 
     (and their spouses);
       ``(iv) the plan does not cover a business that is a member 
     of an affiliated service group, a controlled group of 
     corporations, or a group of businesses under common control; 
     and
       ``(v) the plan does not cover a business that leases 
     employees.
       ``(6) Cross reference.--

  ``For provisions relating to penalty for failure to provide the 
notice required by this section, see section 6652(m).''.

       (2) Penalty for failure to provide notice.--Section 6652 of 
     such Code (relating to failure to file certain information 
     returns, registration statements, etc.) is amended by 
     redesignating subsection (m) as subsection (n) and by 
     inserting after subsection (l) the following new subsection:
       ``(m) Failure To Provide Investment Education Notices to 
     Participants in Certain Plans.--In the case of each failure 
     to provide a written explanation as required by section 
     414(w) with respect to an applicable individual (as defined 
     in such section), at the time prescribed therefor, unless it 
     is shown that such failure is due to reasonable cause and not 
     to willful neglect, there shall be paid, on notice and demand 
     of the Secretary and in the same manner as tax, by the person 
     failing to provide such notice, an amount equal to $100 for 
     each such failure, but the total amount imposed on such 
     person for all such failures during any calendar year shall 
     not exceed $50,000.''.

     SEC. 102. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY 
                   DURING BLACKOUT PERIODS.

       (a) In General.--Section 404(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended by 
     adding at the end the following new paragraph:
       ``(4)(A) Paragraph (1)(B) shall not apply in connection 
     with the direction or diversification of assets credited to 
     the account of any participant or beneficiary during a 
     blackout period if, by reason of the imposition of such 
     blackout period, the ability of such participant or 
     beneficiary to direct or diversify such assets is suspended, 
     limited, or restricted.
       ``(B) If the fiduciary authorizing a blackout period meets 
     the requirements of this title in connection with authorizing 
     such blackout period, no person who is a fiduciary shall be 
     liable under this title for any loss occurring during the 
     blackout period as a result of any exercise by the 
     participant or beneficiary of control over assets in his or 
     her account prior to the blackout period. Matters to be 
     considered in determining whether a fiduciary has met the 
     requirements of this title include whether such fiduciary--
       ``(i) has considered the reasonableness of the expected 
     length of the blackout period,
       ``(ii) has provided the notice required under section 
     101(i)(2), and
       ``(iii) has acted in accordance with the requirements of 
     subsection (a) in determining whether to enter into the 
     blackout period.
       ``(C) If a blackout period arises in connection with a 
     change in the investment options offered under the plan, a 
     participant or beneficiary shall be deemed to have exercised 
     control over the assets in his or her account prior to the 
     blackout period, if, after reasonable notice of the change in 
     investment options is given to such participant or 
     beneficiary before such blackout period, assets in the 
     account of the participant or beneficiary are transferred--
       ``(i) to plan investment options in accordance with the 
     affirmative election of the participant or beneficiary, or
       ``(ii) in any case in which there is no such election, in 
     the manner set forth in such notice.
       ``(D) Any imposition of any limitation or restriction that 
     may govern the frequency of transfers between investment 
     vehicles shall not be treated as the imposition of a blackout 
     period to the extent such limitation or restriction is 
     disclosed to participants or beneficiaries through the 
     summary plan description or materials describing specific 
     investment alternatives under the plan.
       ``(E) For purposes of this paragraph, the term `blackout 
     period' has the meaning given such term by section 
     101(i)(7).''.
       (b) Guidance.--The Secretary of Labor shall, on or before 
     December 31, 2004, issue interim

[[Page 11393]]

     final regulations providing guidance on how plan sponsors or 
     any other affected fiduciaries can satisfy their fiduciary 
     responsibilities during any blackout period during which the 
     ability of a participant or beneficiary to direct the 
     investment of assets in his or her individual account is 
     suspended.

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

       Section 404 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1104) is amended by adding at the end the 
     following new subsection:
       ``(e) The Secretary shall establish a program under which 
     information and educational resources shall be made available 
     on an ongoing basis to persons serving as fiduciaries under 
     employee pension benefit plans so as to assist such persons 
     in diligently and effectively carrying out their fiduciary 
     duties in accordance with this part. Such program shall 
     provide information concerning the practices that define 
     prudent investment procedures for plan fiduciaries. 
     Information provided under the program shall address the 
     relevant investment considerations for defined benefit and 
     defined contribution plans, including investment in employer 
     securities by such plans. In developing such program, the 
     Secretary shall solicit information from the public, 
     including investment education professionals.''.

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

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

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

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

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

[[Page 11394]]

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

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

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

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

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

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

       ``(iv) Contributions held within an esop.--In the case of 
     contributions (other than elective deferrals and employee 
     contributions) held within an employee stock ownership plan, 
     in the case of the 1st and 2nd plan years referred to in the 
     table in clause (ii), the applicable percentage shall be the 
     greater of the amount determined under clause (ii) or the 
     percentage determined under paragraph (28) (determined as if 
     paragraph (28) applied to a plan described in this 
     paragraph).
       ``(v) Coordination with prior elections under paragraph 
     (28).--In any case in which a divestiture of investment in 
     employer securities of any class held by an employee stock 
     ownership plan prior to the effective date of this paragraph 
     was undertaken pursuant to an election under paragraph (28) 
     prior to such date, the applicable percentage (as determined 
     without regard to this clause) in connection with such 
     securities shall be reduced to the extent necessary to 
     account for the amount to which such election applied.
       ``(H) Regulations.--The Secretary shall prescribe 
     regulations under this paragraph in consultation with the 
     Secretary of Labor.''.
       (2) Conforming amendments.--
       (A) Section 401(a)(28) of such Code is amended by adding at 
     the end the following new subparagraph:
       ``(D) Application.--This paragraph shall not apply to a 
     plan to which paragraph (35) applies.''.
       (B) Section 409(h)(7) of such Code is amended by inserting 
     before the period at the end ``or subparagraph (B) or (C) of 
     section 401(a)(35)''.
       (C) Section 4980(c)(3)(A) of such Code is amended by 
     striking ``if--'' and all that follows and inserting ``if the 
     requirements of subparagraphs (B), (C), and (D) are met.''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2) and 
     section 108, the amendments made by this section shall apply 
     to plan years beginning after December 31, 2003, and with 
     respect to employer securities allocated to accounts before, 
     on, or after the date of the enactment of this Act.
       (2) Exception.--The amendments made by this section shall 
     not apply to employer securities held by an employee stock 
     ownership plan which are acquired before January 1, 1987.

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

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Exemption from prohibited transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14)(A) Any transaction described in subparagraph (B) in 
     connection with the provision of investment advice described 
     in section 3(21)(A)(ii), in any case in which--
       ``(i) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(ii) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(iii) the requirements of subsection (g) are met in 
     connection with the provision of the advice.
       ``(B) The transactions described in this subparagraph are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.''.
       (2) Requirements.--Section 408 of such Act is amended 
     further by adding at the end the following new subsection:
       ``(g) Requirements Relating to Provision of Investment 
     Advice by Fiduciary Advisers.--
       ``(1) In general.--The requirements of this subsection are 
     met in connection with the provision of investment advice 
     referred to in section 3(21)(A)(ii), provided to an employee 
     benefit plan or a participant or beneficiary of an employee 
     benefit plan by a fiduciary adviser with respect to the plan 
     in connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of 
     amounts held by the plan, if--
       ``(A) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--
       ``(i) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(ii) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(iii) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(iv) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(v) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice, and
       ``(vi) that a recipient of the advice may separately 
     arrange for the provision of advice by another adviser, that 
     could have no material affiliation with and receive no fees 
     or other compensation in connection with the security or 
     other property,
       ``(B) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale,

[[Page 11395]]

     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) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Exemption from prohibited transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions) 
     is amended--
       (A) in paragraph (14), by striking ``or'' at the end;
       (B) in paragraph (15), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following new paragraph:
       ``(16) any transaction described in subsection (f)(7)(A) in 
     connection with the provision of investment advice described 
     in subsection (e)(3)(B)(i), in any case in which--
       ``(A) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(B) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(C) the requirements of subsection (f)(7)(B) are met in 
     connection with the provision of the advice.''.
       (2) Allowed transactions and requirements.--Subsection (f) 
     of such section 4975 (relating to other definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(7) Provisions relating to investment advice provided by 
     fiduciary advisers.--
       ``(A) Transactions allowable in connection with investment 
     advice provided by fiduciary advisers.--The transactions 
     referred to in subsection (d)(16), in connection with the 
     provision of investment advice by a fiduciary adviser, are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.
       ``(B) Requirements relating to provision of investment 
     advice by fiduciary advisers.--The requirements of this 
     subparagraph (referred to in subsection (d)(16)(C)) are met 
     in connection with the provision of investment advice 
     referred to in subsection (e)(3)(B), provided to a plan or a 
     participant or beneficiary of a plan by a fiduciary adviser 
     with respect to the plan in connection with any sale, 
     acquisition, or holding of a security or other property for 
     purposes of investment of amounts held by the plan, if--
       ``(i) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

       ``(I) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(II) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,

[[Page 11396]]

       ``(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) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(III) an insurance company qualified to do business under 
     the laws of a State,
       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in any of subclauses (I) through (V) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.

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

     SEC. 106. STUDY REGARDING IMPACT ON RETIREMENT SAVINGS OF 
                   PARTICIPANTS AND BENEFICIARIES BY REQUIRING 
                   CONSULTANTS TO ADVISE PLAN FIDUCIARIES OF 
                   INDIVIDUAL ACCOUNT PLANS.

       (a) Study.--As soon as practicable after the date of the 
     enactment of this Act, the Secretary of Labor shall undertake 
     a study of the costs and benefits to participants and 
     beneficiaries of requiring independent consultants to advise 
     plan fiduciaries in connection with individual account plans. 
     In conducting such study, the Secretary shall consider--
       (1) the benefits to plan participants and beneficiaries of 
     engaging independent advisers to provide investment and other 
     advice regarding the assets of the plan to persons who have 
     fiduciary duties with respect to the management or 
     disposition of such assets,
       (2) the extent to which independent advisers are currently 
     retained by plan fiduciaries,
       (3) the availability of assistance to fiduciaries from 
     appropriate Federal agencies,
       (4) the availability of qualified independent consultants 
     to serve the needs of individual account plan fiduciaries in 
     the United States,
       (5) the impact of the additional fiduciary duty of an 
     independent advisor on the strict fiduciary obligations of 
     plan fiduciaries,
       (6) the impact of new requirements (consulting fees, 
     reporting requirements, and new plan duties to prudently 
     identify and contract with qualified independent consultants) 
     on the availability of individual account plans, and
       (7) the impact of a new requirement on the plan 
     administration costs per participant for small and mid-size 
     employers and the pension plans they sponsor.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of Labor shall report 
     the results of the study undertaken pursuant to this section, 
     together with any recommendations for legislative changes, to 
     the Committee on Education and the Workforce of the House of 
     Representatives and the Committee on Health, Education, 
     Labor, and Pensions of the Senate.

     SEC. 107. TREATMENT OF QUALIFIED RETIREMENT PLANNING 
                   SERVICES.

       (a) In General.--Subsection (m) of section 132 of the 
     Internal Revenue Code of 1986 (defining qualified retirement 
     services) is amended by adding at the end the following new 
     paragraph:
       ``(4) No constructive receipt.--No amount shall be included 
     in the gross income of any employee solely because the 
     employee may choose between any qualified retirement planning 
     services provided by a qualified investment advisor and 
     compensation which would otherwise be includible in the gross 
     income of such employee. The preceding sentence shall apply 
     to highly compensated employees only if the choice described 
     in such sentence is available on substantially the same terms 
     to each member of the group of employees normally provided 
     education and information regarding the employer's qualified 
     employer plan.''.
       (b) Conforming Amendments.--
       (1) Section 403(b)(3)(B) of such Code is amended by 
     inserting ``132(m)(4),'' after ``132(f)(4),''.
       (2) Section 414(s)(2) of such Code is amended by inserting 
     ``132(m)(4),'' after ``132(f)(4),''.
       (3) Section 415(c)(3)(D)(ii) of such Code is amended by 
     inserting ``132(m)(4),'' after ``132(f)(4),''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 108. EFFECTIVE DATES AND RELATED RULES.

       (a) In General.--Except as otherwise provided in the 
     preceding provisions of this title or in subsections (c) and 
     (d), the amendments made by this Act shall apply with respect 
     to plan

[[Page 11397]]

     years beginning on or after the general effective date.
       (b) General effective date.--For purposes of this section, 
     the term ``general effective date'' means the date which is 1 
     year after the date of the enactment of this Act.
       (c) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``the general effective date'' 
     the date of the commencement of the first plan year beginning 
     on or after the earlier of--
       (1) the later of--
       (A) the date which is 1 year after the general effective 
     date, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) the date which is 2 years after the general effective 
     date.
       (d) Amendments Relating to Investment Advice.--The 
     amendments made by section 105 shall apply with respect to 
     advice referred to in section 3(21)(A)(ii) of the Employee 
     Retirement Income Security Act of 1974 or section 
     4975(c)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2005.

            TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

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

       (a) Transition Rule Made Permanent.--Section 769(c) of the 
     Retirement Protection Act of 1994 (26 U.S.C. 412 note) is 
     amended--
       (1) in the heading, by striking ``Transition''; and
       (2) in paragraph (1), by striking ``transition'' and by 
     striking ``for any plan year beginning after 1996 and before 
     2010''.
       (b) Special Rules.--Paragraph (2) of section 769(c) of the 
     Retirement Protection Act of 1994 is amended to read as 
     follows:
       ``(2) Special rules.--The rules described in this paragraph 
     are as follows:
       ``(A) For purposes of section 412(l)(9)(A) of the Internal 
     Revenue Code of 1986 and section 302(d)(9)(A) of the Employee 
     Retirement Income Security Act of 1974, the funded current 
     liability percentage for any plan year shall be treated as 
     not less than 90 percent.
       ``(B) For purposes of section 412(m) of the Internal 
     Revenue Code of 1986 and section 302(e) of the Employee 
     Retirement Income Security Act of 1974, the funded current 
     liability percentage for any plan year shall be treated as 
     not less than 100 percent.
       ``(C) For purposes of determining unfunded vested benefits 
     under section 4006(a)(3)(E)(iii) of the Employee Retirement 
     Income Security Act of 1974, the mortality table shall be the 
     mortality table used by the plan.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2002.

     SEC. 202. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury and the 
     Secretary of Labor shall modify the requirements for filing 
     annual returns with respect to one-participant retirement 
     plans to ensure that such plans with assets of $250,000 or 
     less as of the close of the plan year need not file a return 
     for that year.
       (2) One-participant retirement plan defined.--For purposes 
     of this subsection, the term ``one-participant retirement 
     plan'' means a retirement plan with respect to which the 
     following requirements are met:
       (A) on the first day of the plan year--
       (i) the plan covered only one individual (or the individual 
     and the individual's spouse) and the individual owned 100 
     percent of the plan sponsor (whether or not incorporated), or
       (ii) the plan covered only one or more partners (or 
     partners and their spouses) in the plan sponsor;
       (B) the plan meets the minimum coverage requirements of 
     section 410(b) of the Internal Revenue Code of 1986 without 
     being combined with any other plan of the business that 
     covers the employees of the business;
       (C) the plan does not provide benefits to anyone except the 
     individual (and the individual's spouse) or the partners (and 
     their spouses);
       (D) the plan does not cover a business that is a member of 
     an affiliated service group, a controlled group of 
     corporations, or a group of businesses under common control; 
     and
       (E) the plan does not cover a business that leases 
     employees.
       (3) Other definitions.--Terms used in paragraph (2) which 
     are also used in section 414 of the Internal Revenue Code of 
     1986 shall have the respective meanings given such terms by 
     such section.
       (4) Effective date.--The provisions of this subsection 
     shall apply to plan years beginning on or after January 1, 
     2003.
       (b) Simplified Annual Filing Requirement for Plans With 
     Fewer Than 25 Employees.--In the case of plan years beginning 
     after December 31, 2004, the Secretary of the Treasury and 
     the Secretary of Labor shall provide for the filing of a 
     simplified annual return for any retirement plan which covers 
     less than 25 employees on the first day of a plan year and 
     which meets the requirements described in subparagraphs (B), 
     (D), and (E) of subsection (a)(2).

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

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

     The Secretary of the Treasury shall have full authority to 
     effectuate the foregoing with respect to the Employee Plans 
     Compliance Resolution System (or any successor program) and 
     any other employee plans correction policies, including the 
     authority to waive income, excise, or other taxes to ensure 
     that any tax, penalty, or sanction is not excessive and bears 
     a reasonable relationship to the nature, extent, and severity 
     of the failure.

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

       (a) Nondiscrimination.--
       (1) In general.--The Secretary of the Treasury shall, by 
     regulation, provide that a plan shall be deemed to satisfy 
     the requirements of section 401(a)(4) of the Internal Revenue 
     Code of 1986 if such plan satisfies the facts and 
     circumstances test under section 401(a)(4) of such Code, as 
     in effect before January 1, 1994, but only if--
       (A) the plan satisfies conditions prescribed by the 
     Secretary to appropriately limit the availability of such 
     test; and
       (B) the plan is submitted to the Secretary for a 
     determination of whether it satisfies such test.

     Subparagraph (B) shall only apply to the extent provided by 
     the Secretary.
       (2) Effective dates.--
       (A) Regulations.--The regulation required by paragraph (1) 
     shall apply to years beginning after December 31, 2004.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under paragraph 
     (1)(A) shall not apply before the first year beginning not 
     less than 120 days after the date on which such condition is 
     prescribed.
       (b) Coverage Test.--
       (1) In general.--Section 410(b)(1) of the Internal Revenue 
     Code of 1986 (relating to minimum coverage requirements) is 
     amended by adding at the end the following:
       ``(D) In the case that the plan fails to meet the 
     requirements of subparagraphs (A), (B) and (C), the plan--
       ``(i) satisfies subparagraph (B), as in effect immediately 
     before the enactment of the Tax Reform Act of 1986,
       ``(ii) is submitted to the Secretary for a determination of 
     whether it satisfies the requirement described in clause (i), 
     and
       ``(iii) satisfies conditions prescribed by the Secretary by 
     regulation that appropriately limit the availability of this 
     subparagraph.

     Clause (ii) shall apply only to the extent provided by the 
     Secretary.''.
       (2) Effective dates.--
       (A) In general.--The amendment made by paragraph (1) shall 
     apply to years beginning after December 31, 2004.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under regulations 
     prescribed by the Secretary under section 410(b)(1)(D) of the 
     Internal Revenue Code of 1986 shall not apply before the 
     first year beginning not less than 120 days after the date on 
     which such condition is prescribed.
       (c) Line of Business Rules.--The Secretary of the Treasury 
     shall, on or before December 31, 2004, modify the existing 
     regulations issued under section 414(r) of the Internal 
     Revenue Code of 1986 in order to expand (to the extent that 
     the Secretary determines appropriate) the ability of a 
     pension plan to demonstrate compliance with the line of 
     business requirements based upon the facts and circumstances 
     surrounding the design and operation of the plan, even though 
     the plan is unable to satisfy the mechanical tests currently 
     used to determine compliance.

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

       (a) In General.--
       (1) Subparagraph (G) of section 401(a)(5) of the Internal 
     Revenue Code of 1986 and subparagraph (H) of section 
     401(a)(26) of such Code are each amended by striking 
     ``section 414(d))'' and all that follows and inserting 
     ``section 414(d)).''.
       (2) Subparagraph (G) of section 401(k)(3) of the Internal 
     Revenue Code of 1986 and paragraph (2) of section 1505(d) of 
     the Taxpayer Relief Act of 1997 (26 U.S.C. 401 note) are each 
     amended by striking ``maintained by a State or local 
     government or political subdivision thereof (or agency or 
     instrumentality thereof)''.
       (b) Conforming Amendments.--
       (1) The heading for subparagraph (G) of section 401(a)(5) 
     of such Code is amended to read as follows: ``Governmental 
     plans.--''.

[[Page 11398]]

       (2) The heading for subparagraph (H) of section 401(a)(26) 
     of such Code is amended to read as follows: ``Exception for 
     governmental 
     plans.--''.
       (3) Subparagraph (G) of section 401(k)(3) of such Code is 
     amended by inserting ``Governmental plans.--'' after ``(G)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2003.

     SEC. 206. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) Amendment of internal revenue code.--
       (A) In general.--Subparagraph (A) of section 417(a)(6) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``90-day'' and inserting ``180-day''.
       (B) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under sections 402(f), 
     411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
     substitute ``180 days'' for ``90 days'' each place it appears 
     in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), 
     and 1.417(e)-1(b).
       (2) Amendment of erisa.--
       (A) In general.--Section 205(c)(7)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(c)(7)(A)) is amended by striking ``90-day'' and 
     inserting ``180-day''.
       (B) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under part 2 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974 to the extent that they relate to 
     sections 203(e) and 205 of such Act to substitute ``180 
     days'' for ``90 days'' each place it appears.
       (3) Effective date.--The amendments made by paragraphs 
     (1)(A) and (2)(A) and the modifications required by 
     paragraphs (1)(B) and (2)(B) shall apply to years beginning 
     after December 31, 2003.
       (b) Consent Regulation Inapplicable to Certain 
     Distributions.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the regulations under section 411(a)(11) of the Internal 
     Revenue Code of 1986 and under section 205 of the Employee 
     Retirement Income Security Act of 1974 to provide that the 
     description of a participant's right, if any, to defer 
     receipt of a distribution shall also describe the 
     consequences of failing to defer such receipt.
       (2) Effective date.--
       (A) In general.--The modifications required by paragraph 
     (1) shall apply to years beginning after December 31, 2003.
       (B) Reasonable notice.--In the case of any description of 
     such consequences made before the date that is 90 days after 
     the date on which the Secretary of the Treasury issues a safe 
     harbor description under paragraph (1), a plan shall not be 
     treated as failing to satisfy the requirements of section 
     411(a)(11) of such Code or section 205 of such Act by reason 
     of the failure to provide the information required by the 
     modifications made under paragraph (1) if the Administrator 
     of such plan makes a reasonable attempt to comply with such 
     requirements.

     SEC. 207. ANNUAL REPORT DISSEMINATION.

       (a) Report Available Through Electronic Means.--Section 
     104(b)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1024(b)(3)) is amended by adding at the end 
     the following new sentence: ``The requirement to furnish 
     information under the previous sentence with respect to an 
     employee pension benefit plan shall be satisfied if the 
     administrator makes such information reasonably available 
     through electronic means or other new technology.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     2003.

     SEC. 208. TECHNICAL CORRECTIONS TO SAVER ACT.

       Section 517 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1147) is amended--
       (1) in subsection (a), by striking ``2001 and 2005 on or 
     after September 1 of each year involved'' and inserting 
     ``2006 and 2010'';
       (2) in subsection (e)(2)--
       (A) by striking ``Committee on Labor and Human Resources'' 
     in subparagraph (D) and inserting ``Committee on Health, 
     Education, Labor, and Pensions'';
       (B) by striking subparagraph (F) and inserting the 
     following:
       ``(F) the Chairman and Ranking Member of the Subcommittee 
     on Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the House of Representatives 
     and the Chairman and Ranking Member of the Subcommittee on 
     Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the Senate;'';
       (C) by redesignating subparagraph (G) as subparagraph (J); 
     and
       (D) by inserting after subparagraph (F) the following new 
     subparagraphs:
       ``(G) the Chairman and Ranking Member of the Committee on 
     Finance of the Senate;
       ``(H) the Chairman and Ranking Member of the Committee on 
     Ways and Means of the House of Representatives;
       ``(I) the Chairman and Ranking Member of the Subcommittee 
     on Employer-Employee Relations of the Committee on Education 
     and the Workforce of the House of Representatives; and'';
       (3) in subsection (e)(3)(B), by striking ``January 31, 
     1998'' and inserting ``2 months before the convening of each 
     summit'';
       (4) in subsection (f)(1)(C), by inserting ``, no later than 
     60 days prior to the date of the commencement of the National 
     Summit,'' after ``comment'';
       (5) in subsection (i)--
       (A) by striking ``for fiscal years beginning on or after 
     October 1, 1997,''; and
       (B) by adding at the end the following new paragraph:
       ``(3) Reception and representation authority.--The 
     Secretary is hereby granted reception and representation 
     authority limited specifically to the events at the National 
     Summit. The Secretary shall use any private contributions 
     accepted in connection with the National Summit prior to 
     using funds appropriated for purposes of the National Summit 
     pursuant to this paragraph.''; and
       (6) in subsection (k)--
       (A) by striking ``shall enter into a contract on a sole-
     source basis'' and inserting ``may enter into a contract on a 
     sole-source basis''; and
       (B) by striking ``in fiscal year 1998''.

     SEC. 209. MISSING PARTICIPANTS AND BENEFICIARIES.

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

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

       (a) In General.--Subparagraph (A) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(A)) is amended--
       (1) in clause (i), by inserting ``other than a new single-
     employer plan (as defined in subparagraph (F)) maintained by 
     a small employer (as so defined),'' after ``single-employer 
     plan,'',
       (2) in clause (iii), by striking the period at the end and 
     inserting ``, and'', and
       (3) by adding at the end the following new clause:
       ``(iv) in the case of a new single-employer plan (as 
     defined in subparagraph (F)) maintained by a small employer 
     (as so defined) for the plan year, $5 for each individual who 
     is a participant in such plan during the plan year.''.
       (b) Definition of New Single-Employer Plan.--Section 
     4006(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(F)(i) For purposes of this paragraph, a single-employer 
     plan maintained by a contributing sponsor shall be treated as 
     a new single-employer plan for each of its first 5 plan years 
     if, during the 36-month period ending on the date of the 
     adoption of such plan, the sponsor or any member of such 
     sponsor's controlled group (or any predecessor of either) did 
     not establish or maintain a plan to which this title applies 
     with respect to which benefits were accrued for substantially 
     the same employees as are in the new single-employer plan.

[[Page 11399]]

       ``(ii)(I) For purposes of this paragraph, the term `small 
     employer' means an employer which on the first day of any 
     plan year has, in aggregation with all members of the 
     controlled group of such employer, 100 or fewer employees.
       ``(II) In the case of a plan maintained by two or more 
     contributing sponsors that are not part of the same 
     controlled group, the employees of all contributing sponsors 
     and controlled groups of such sponsors shall be aggregated 
     for purposes of determining whether any contributing sponsor 
     is a small employer.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plans first effective after December 31, 2003.

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

       (a) New Plans.--Subparagraph (E) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(E)) is amended by adding at the end the 
     following new clause:
       ``(v) In the case of a new defined benefit plan, the amount 
     determined under clause (ii) for any plan year shall be an 
     amount equal to the product of the amount determined under 
     clause (ii) and the applicable percentage. For purposes of 
     this clause, the term `applicable percentage' means--
       ``(I) 0 percent, for the first plan year.
       ``(II) 20 percent, for the second plan year.
       ``(III) 40 percent, for the third plan year.
       ``(IV) 60 percent, for the fourth plan year.
       ``(V) 80 percent, for the fifth plan year.

     For purposes of this clause, a defined benefit plan (as 
     defined in section 3(35)) maintained by a contributing 
     sponsor shall be treated as a new defined benefit plan for 
     each of its first 5 plan years if, during the 36-month period 
     ending on the date of the adoption of the plan, the sponsor 
     and each member of any controlled group including the sponsor 
     (or any predecessor of either) did not establish or maintain 
     a plan to which this title applies with respect to which 
     benefits were accrued for substantially the same employees as 
     are in the new plan.''.
       (b) Small Plans.--Paragraph (3) of section 4006(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306(a)), as amended by section 210(b), is amended--
       (1) by striking ``The'' in subparagraph (E)(i) and 
     inserting ``Except as provided in subparagraph (G), the'', 
     and
       (2) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G)(i) In the case of an employer who has 25 or fewer 
     employees on the first day of the plan year, the additional 
     premium determined under subparagraph (E) for each 
     participant shall not exceed $5 multiplied by the number of 
     participants in the plan as of the close of the preceding 
     plan year.
       ``(ii) For purposes of clause (i), whether an employer has 
     25 or fewer employees on the first day of the plan year is 
     determined by taking into consideration all of the employees 
     of all members of the contributing sponsor's controlled 
     group. In the case of a plan maintained by two or more 
     contributing sponsors, the employees of all contributing 
     sponsors and their controlled groups shall be aggregated for 
     purposes of determining whether the 25-or-fewer-employees 
     limitation has been satisfied.''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply to plans first effective after December 31, 2003.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to plan years beginning after December 31, 2003.

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

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

     SEC. 213. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

       (a) Modification of Phase-In of Guarantee.--Section 
     4022(b)(5) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
       ``(5)(A) For purposes of this paragraph, the term `majority 
     owner' means an individual who, at any time during the 60-
     month period ending on the date the determination is being 
     made--
       ``(i) owns the entire interest in an unincorporated trade 
     or business,
       ``(ii) in the case of a partnership, is a partner who owns, 
     directly or indirectly, 50 percent or more of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(iii) in the case of a corporation, owns, directly or 
     indirectly, 50 percent or more in value of either the voting 
     stock of that corporation or all the stock of that 
     corporation.

     For purposes of clause (iii), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).
       ``(B) In the case of a participant who is a majority owner, 
     the amount of benefits guaranteed under this section shall 
     equal the product of--
       ``(i) a fraction (not to exceed 1) the numerator of which 
     is the number of years from the later of the effective date 
     or the adoption date of the plan to the termination date, and 
     the denominator of which is 10, and
       ``(ii) the amount of benefits that would be guaranteed 
     under this section if the participant were not a majority 
     owner.''.
       (b) Modification of Allocation of Assets.--
       (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
     striking ``section 4022(b)(5)'' and inserting ``section 
     4022(b)(5)(B)''.
       (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
     amended--
       (A) by striking ``(5)'' in paragraph (2) and inserting 
     ``(4), (5),'', and
       (B) by redesignating paragraphs (3) through (6) as 
     paragraphs (4) through (7), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to benefits 
     described in subparagraph (B) of that paragraph. If assets 
     allocated to such subparagraph (B) are insufficient to 
     satisfy in full the benefits described in that subparagraph, 
     the assets shall be allocated pro rata among individuals on 
     the basis of the present value (as of the termination date) 
     of their respective benefits described in that 
     subparagraph.''.
       (c) Conforming Amendments.--
       (1) Section 4021 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1321) is amended--
       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following new subsection:
       ``(d) For purposes of subsection (b)(9), the term 
     `substantial owner' means an individual who, at any time 
     during the 60-month period ending on the date the 
     determination is being made--
       ``(1) owns the entire interest in an unincorporated trade 
     or business,
       ``(2) in the case of a partnership, is a partner who owns, 
     directly or indirectly, more than 10 percent of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(3) in the case of a corporation, owns, directly or 
     indirectly, more than 10 percent in value of either the 
     voting stock of that corporation or all the stock of that 
     corporation.
     For purposes of paragraph (3), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).''.
       (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
     is amended by striking ``section 4022(b)(6)'' and inserting 
     ``section 4021(d)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to plan 
     terminations--
       (A) under section 4041(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)) with respect to 
     which notices of intent to terminate are provided under 
     section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after 
     December 31, 2003, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 2004.

     SEC. 214. BENEFIT SUSPENSION NOTICE.

       (a) Modification of Regulation.--The Secretary of Labor 
     shall modify the regulation under subparagraph (B) of section 
     203(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1053(a)(3)(B)) to provide that the 
     notification required by such regulation in connection with 
     any suspension of benefits described in such subparagraph--
       (1) in the case of an employee who returns to service 
     described in section 203(a)(3)(B)(i) or (ii) of such Act 
     after commencement of payment of benefits under the plan, 
     shall be made during the first calendar month or the first 4- 
     or 5-week payroll period ending in a calendar month in which 
     the plan withholds payments, and
       (2) in the case of any employee who is not described in 
     paragraph (1)--
       (A) may be included in the summary plan description for the 
     plan furnished in accordance with section 104(b) of such Act 
     (29 U.S.C. 1024(b)), rather than in a separate notice, and
       (B) need not include a copy of the relevant plan 
     provisions.
       (b) Effective Date.--The modification made under this 
     section shall apply to plan years beginning after December 
     31, 2003.

     SEC. 215. STUDIES.

       (a) Model Small Employer Group Plans Study.--As soon as 
     practicable after the date of the enactment of this Act, the 
     Secretary of Labor, in consultation with the Secretary of the 
     Treasury, shall conduct a study to determine--
       (1) the most appropriate form or forms of--
       (A) employee pension benefit plans which would--
       (i) be simple in form and easily maintained by multiple 
     small employers, and
       (ii) provide for ready portability of benefits for all 
     participants and beneficiaries,
       (B) alternative arrangements providing comparable benefits 
     which may be established by employee or employer 
     associations, and

[[Page 11400]]

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

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

       (a) In General.--Subclause (III) of section 412(l)(7)(C)(i) 
     of the Internal Revenue Code of 1986 is amended--
       (1) by striking ``2002 or 2003'' in the text and inserting 
     ``2001, 2002, or 2003'', and
       (2) by striking ``2002 and 2003'' in the heading and 
     inserting ``2001, 2002, and 2003''.
       (b) Special Rule.--Subclause (III) of section 
     302(d)(7)(C)(i) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1082(d)(7)(C)(i)) is amended--
       (1) by striking ``2002 or 2003'' in the text and inserting 
     ``2001, 2002, or 2003'', and
       (2) by striking ``2002 and 2003'' in the heading and 
     inserting ``2001, 2002, and 2003''.
       (c) PBGC.--Subclause (IV) of section 4006(a)(3)(E)(iii) of 
     such Act (29 U.S.C. 1306(a)(3)(E)(iii)) is amended to read as 
     follows--
       ``(IV) In the case of plan years beginning after December 
     31, 2001, and before January 1, 2004, subclause (II) shall be 
     applied by substituting `100 percent' for `85 percent' and by 
     substituting `115 percent' for `100 percent'. Subclause (III) 
     shall be applied for such years without regard to the 
     preceding sentence. Any reference to this clause or this 
     subparagraph by any other sections or subsections (other than 
     sections 4005, 4010, 4011 and 4043) shall be treated as a 
     reference to this clause or this subparagraph without regard 
     to this subclause.''.
       (d) Effective Date.--
       (1) General rule.--Subject to paragraph (2), the amendments 
     made by this section shall take effect as if included in the 
     amendments made by section 405 of the Job Creation and Worker 
     Assistance Act of 2002.
       (2) Election.--The plan sponsor or plan administrator of a 
     plan may elect whether to have the amendments made by 
     subsections (a) and (b) apply. Such election shall be made in 
     such manner and at such time as the Secretary of the Treasury 
     or his delegate may prescribe and, once made, may not be 
     revoked. An election to apply such amendments shall not be 
     treated as a prohibited change in actuarial assumptions for 
     purposes of reports required to be filed with the Secretary 
     of Labor, the Secretary of Treasury, or the Pension Benefit 
     Guaranty Corporation.

                     TITLE III--GENERAL PROVISIONS

     SEC. 301. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any pension 
     plan or contract amendment--
       (1) such pension plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A), and
       (2) except as provided by the Secretary of the Treasury, 
     such pension plan shall not fail to meet the requirements of 
     section 411(d)(6) of the Internal Revenue Code of 1986 and 
     section 204(g) of the Employee Retirement Income Security Act 
     of 1974 by reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any pension plan or annuity contract which is made--
       (A) pursuant to any amendment made by this Act or by title 
     VI of the Economic Growth and Tax Relief Reconciliation Act 
     of 2001, or pursuant to any regulation issued by the 
     Secretary of the Treasury or the Secretary of Labor under 
     this Act or such title VI, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2006.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2008'' for ``2006''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan), and
       (ii) ending on the date described in paragraph (1)(B) (or, 
     if earlier, the date the plan or contract amendment is 
     adopted),

     the plan or contract is operated as if such plan or contract 
     amendment were in effect; and
       (B) such plan or contract amendment applies retroactively 
     for such period.

                              {time}  1300

  The SPEAKER pro tempore (Mr. Shimkus). After 1 hour and 20 minutes of 
debate on the bill, as amended, it shall be in order to consider a 
further amendment printed in House Report 108-98, if offered by the 
gentleman from California (Mr. George Miller), or his designee, which 
shall be considered read, and shall be debatable for 1 hour, equally 
divided and controlled by the proponent and an opponent.
  The gentleman from Ohio (Mr. Boehner), the gentleman from California 
(Mr. George Miller), the gentleman from California (Mr. Thomas), and 
the gentleman from California (Mr. Matsui) each will control 20 minutes 
of debate on the bill.
  The Chair recognizes the gentleman from Ohio (Mr. Boehner).


                             General Leave

  Mr. BOEHNER. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks on H.R. 1000.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, last year the Congress responded to the Enron and Global 
Crossing financial collapses by passing bipartisan legislation to 
strengthen worker retirement security and enhance corporate 
responsibility. And thanks largely to the work of the gentleman from 
Ohio (Mr. Oxley) and a bipartisan team of legislators, President Bush 
signed into law corporate accountability legislation that holds 
companies to the highest standards of auditor independence and ethics 
for America's investors.
  But on the issue of pension security, as the chart shows, we have got 
some unfinished business yet to complete. Last year the House responded 
quickly to these corporate failures by passing the Pension Security 
Act, the comprehensive pension protection bill backed by President Bush 
that would give millions of Americans new tools to help them better 
manage and expand their retirement security. We passed the bill with 
significant bipartisan support, with 46 Democrats joining 209 
Republicans in supporting the bill. Unfortunately, the Senate did not 
act on any pension reform legislation last year.
  Before I talk about the protections included in the bill, I am proud 
to say that two key Pension Security Act provisions were signed into 
law last summer as part of the Sarbanes-Oxley corporate accountability 
law. These provisions bar company insiders from selling their own stock 
during blackout periods when workers cannot make changes to their own 
accounts and to require companies to give 30 days' advanced notice 
before a blackout period would begin.
  These provisions give workers parity with corporate executives and 
should provide workers with additional security of knowing that 
Congress is acting to better protect them. But we have more work to do.
  Let us be very clear. Worker retirement savings remain vulnerable to 
corporate meltdowns today, and it should not take another Enron or 
WorldCom for Congress to act on bipartisan pension protections. That is 
why we are here today. The gentleman from Texas

[[Page 11401]]

(Mr. Sam Johnson) and I introduced the Pension Protection Act because 
workers desperately need access to professional investment advice and 
the ability to diversify their 401(k) savings and other safeguards to 
help them enhance their retirement security, as this chart shows us.
  Enron barred workers from selling company stock until age 50; and as 
a result, thousands of Enron employees watched helplessly as their 
retirement savings were lost. The Pension Security Act gives workers 
new freedoms to sell their company stock within 3 years. This is a 
dramatic change that gives workers unprecedented control over their 
retirement accounts and personal savings.
  Today, the vast majority of American workers receive no investment 
advice on how best to structure their 401(k) retirement plans, and most 
cannot afford to pay for it on their own, like company executives can. 
Not surprisingly, Enron, WorldCom, Global Crossing, and others did not 
provide their workers with access to professional investment advice. 
This type of investment guidance would have alerted these workers to 
the need to diversify their accounts and enabled many of them to have 
preserved their retirement savings.
  An Enron executive acknowledged before our committee that she 
diversified out of Enron stock before it collapsed and saved hundreds 
of thousands of dollars. Why are we denying rank-and-file employees the 
same opportunity to receive access to high-quality investment advice? 
And the answer to that is quite obvious. We should not be.
  The Pension Security Act changes outdated Federal rules and 
encourages employers to provide their workers with access to this type 
of advice. With the 30-day blackout protection now the law of the land, 
investment advice becomes even more critical for employees who cannot 
make changes to their 401(k) accounts during a company-imposed blackout 
period. Importantly, the bill includes new fiduciary and disclosure 
protections to ensure that workers receive quality advice that is 
solely in their best interests. The average investor will have much 
more protection under our bill than under current law.
  The bill also requires companies to give workers quarterly benefits 
statements that include information about accounts, including the value 
of their assets, their right to diversify, and the importance of 
maintaining a diverse portfolio. And lastly, the bill empowers workers 
to hold company insiders accountable for abuses by clarifying that 
companies are responsible for workers' savings during blackout periods.
  Congress should take action to protect Americans' retirement 
benefits, not endanger them. On a bipartisan basis, Congress has 
rejected extreme proposals, such as efforts to place arbitrary caps on 
company stock, that could jeopardize Americans' retirement security or 
spell the death of 401(k) accounts altogether. The bill before us is a 
balanced one that protects workers, but does not jeopardize the 
willingness of employers to offer retirement plans to their employees.
  American workers deserve the security of knowing that their savings 
will be there when they retire. This bill could have made a real 
difference for the workers at WorldCom or Global Crossing or Enron. 
Current pension laws are simply outdated, and we have a responsibility 
to change that.
  I want to thank the gentleman from Texas (Mr. Sam Johnson), my 
colleague and friend, who has once again proven instrumental in moving 
this issue forward here in the House, and I would also like to thank 
the gentleman from California (Chairman Thomas) on the Committee on 
Ways and Means for their cooperation in helping us bring this bill to 
the floor today.
  Mr. Speaker, I include the following letters for the Record:

         House of Representatives, Committee on Education and the 
           Workforce,
                                      Washington, DC, May 7, 2003.
     Hon. William M. Thomas,
     Chairman, Committee on Ways and Means, Longworth House Office 
         Building, Washington, DC.
       Dear Chairman Thomas: Thank you for your May 6, 2003 letter 
     regarding H.R. 1000, the ``Pension Security Act of 2003,'' 
     which was referred to the Committee on Education and the 
     Workforce and in addition the Committee on Ways and Means. 
     The Education and the Workforce Committee ordered the bill 
     favorably reported on March 6, 2003 and I filed the report on 
     March 18, 2003, House Report 108-43. I thank you for working 
     with me, specifically regarding the provisions amending the 
     Internal Revenue Code. While these provisions are within the 
     sole jurisdiction of the Committee on Ways and Means, I 
     appreciate your willingness to work with me in moving H.R. 
     1000 forward without the need for additional legislative 
     consideration by your Committee.
       I agree that this procedural route should not be construed 
     to prejudice the jurisdictional interest and prerogatives of 
     the Committee on Ways and Means on these provisions or any 
     other similar legislation and will not be considered as 
     precedent for consideration of matters of jurisdictional 
     interest to your Committee in the future.
       I thank you for working with me regarding this matter and 
     look forward to continuing our work and cooperation on this 
     bill and similar legislation. This letter and your response 
     will be included in the Congressional Record during the floor 
     consideration of this bill. If you have questions regarding 
     this matter, please do not hesitate to call me.
           Sincerely,
                                                     John Boehner,
     Chairman.
                                  ____



                                  Committee on Ways and Means,

                                      Washington, DC, May 6, 2003.
     Hon. John Boehner,
     Chairman, Committee on Education and the Workforce, Rayburn 
         House Office Building, Washington, DC.
       Dear Chairman Boehner: I am writing you concerning H.R. 
     1000, the ``Pension Security Act of 2003,'' which was 
     sequentially referred to the Committee on Ways and Means 
     until Friday, May 9, 2003.
       As you know, the Committee on Ways and Means has 
     jurisdiction over matters concerning the Internal Revenue 
     Code. However, in order to expedite this legislation for 
     floor consideration, we will not take action on this 
     particular proposal. This is being done with the 
     understanding that it does not in any way prejudice the 
     Committee with respect to the appointment of conferees or its 
     jurisdictional prerogatives on this or similar legislation.
       I would appreciate your response to this letter, confirming 
     this understanding with respect to H.R. 1000, and would ask 
     that a copy of our exchange of letters on this matter be 
     included in the Congressional Record during floor 
     consideration.
           Best regards,
                                                      Bill Thomas,
                                                         Chairman.

  Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 8 
minutes.
  Mr. Speaker, today we will have a choice about what to do on behalf 
of America's future retirees, the employees of America's corporations 
and the protection of their pensions. We can do, as has been suggested 
in the Republican bill, a bill that essentially does nothing for 
retirees and for employees. What it says is that employees should be 
offered advice, and then it also suggests that that advice can be 
conflicted, it can be biased, it can be compromised, because under the 
current law, if we are given investment advice, we cannot be given 
conflicted advice.
  And yet in the wake of Enron and Global Crossing, the answer to the 
Republicans is to change the current law to allow advice to be given to 
employees about their retirement futures but to allow that advice to be 
conflicted, to allow that advice to be conflicted by the very same 
institutions that just recently settled for $1.4 billion because they 
had offered conflicted advice and bad advice to their clients. $1.4 
billion, that is what those companies agreed to pay. That does not even 
begin to speak to the hundreds of billions of dollars that the 
shareholders lost, that employees lost in their mutual funds, their 
retirement plans because of those conflicts and that essentially 
criminal behavior. Yes, the deal was struck for $1.4 billion.
  Now along comes the Republicans 2 years after Enron, and they say we 
are going to give them the right to have advice, but that advice gets 
to be conflict. How tone deaf can one be? How shocked will the American 
public be when they find out they took their retirement plans and put 
them exactly in

[[Page 11402]]

the hands of people who just copped a plea for a billion and a half 
dollars for giving people bad advice, maybe illegal advice, almost 
criminal activity, if the Members will. The Republicans' answer is to 
take America's retirees and turn them over to those firms.
  One has to fail to understand what America saw after Enron, what they 
saw after the bust in the stock market of their retirement plans being 
depleted, the same kind of outrage that Americans felt when they saw 
the CEOs and executive officers of American Airlines guarantee their 
pensions at the same time they were negotiating several billions in 
givebacks from pilots and flight attendants and workers. They were 
shocked when they heard this. So shocked and so bad was the reaction, 
that the CEO of American Airlines had to resign, and they had to give 
back their compensation package.
  Delta Airlines, going through givebacks of billions of dollars from 
their workers, secures and guarantees their compensation and pension 
for the CEOs, where former Delta executives, corporate executives, 
write Delta and say it is a shameless act, an embarrassing act that 
they would do this. And yet today, after all of those actions, after 
that public response to that failure to protect the employees, the 
reaction of the Congress is to essentially do nothing.
  But the Democrats offer a different alternative because I think we 
are listening to the public and to the employees. Yes, pensions is a 
dull subject. It has not captured the imagination of all the 
politicians. But the fact of the matter is it has moved from the back 
pages of the business section to the cover of every major business 
magazine and every major business; journal, and Fortune Magazine got it 
about right and that is the oink factor. How far will these corporate 
executives go? How far will these pigs go at the trough to grab hold of 
the assets of a corporation at the same time that they are letting 
their employees go down the tubes? Yes, it is the oink factor. It is 
CEO pay, it is guaranteed pension plans.
  These captains of capitalists, these crusaders of the capitalist 
system, what do they want out of the system? They want a guarantee that 
no matter if the company goes bankrupt, no matter if they run the 
company into the ground, no matter if the company is successful, they 
want a guarantee that they will be protected financially forever into 
the future. That is what they wanted at American Airlines. That is what 
they wanted at Delta Airlines. That is what they wanted at Enron.

                              {time}  1315

  Today, the Republican bill is silent on that greed, on that oink 
factor.
  But the Democratic bill offers something different to the Members of 
this House, who have heard from their constituents about the 
devastation of their retirement plans. There is none of us in this 
House that have not gone to a picnic, have not gone to a family 
gathering, have not gone to a graduation where people have not said 
that they are postponing their retirement because the retirement plan 
is not all they thought it would be, who say their spouse is going to 
have to work a little longer than they thought, who thought the place 
they were going to retire to in another State or in the country is not 
available to them any longer because their retirement plans have been 
devastated because of the activities of so many corporations.
  Today we have a chance to take the oink, to take the oink, out of 
this pension system. We will be given the opportunity to vote on a 
substitute to where the problem is when executives loot, as the Delta 
people tried to loot the pension plan of the Delta workers, but to 
guarantee and insure their own pension plans. The Republican answer is 
oink. The answer in the Democratic bill is equity for employees.
  As the President said at the beginning of the Enron scandal, what is 
good for the captain is good for the sailor. But the Republicans in 
Congress do not think so, and the Delta executives did not think so 2 
years later, where executives lie to their employees and do not provide 
full disclosure about what the executives are doing with the corporate 
assets and with the pension assets. Once again, there is nothing in 
their bill, just a big oink for those executives. We require full 
disclosure for those employees.
  With regard to the conflicts of interest on investment advice, the 
heart of the Republican bill is to provide that conflicted investment 
advice to flow to those employees; not independent investment 
counselors, but the very people who will be earning commissions and 
fees from the investment of those funds.
  The question is, are the American public and employees not entitled 
to better? These are the same people who will allow corporate 
executives to dedicate hundreds of thousands of dollars to giving 
investment advice of all different kinds to the executives of those 
corporations, but do not want to give that kind of advice or help those 
people out with respect to advice for the employees.
  Finally, with regard to older workers, now with hundreds of companies 
poised to move from a defined benefit plan to a cash balance plan, 
where the shorthand is this, that older workers in their fifties who 
have been with companies 10 or 15 years stand to lose 30 to 50 percent 
of their retirement assets. This is not speculation, this is what 
happened last time they did this. We have a bar on them doing that 
again. This administration wants to remove that bar.
  There are hundreds of corporations who are poised to make this 
conversion, and those employees will lose those pension assets. If you 
are 50 or 55 years old, there is no place you can go to make that up. 
But the company thinks that they can loot your pension assets to help 
out their bottom line.
  So there is a stark contrast to be offered to the Members of 
Congress. There is a stark contrast to be offered to the workers of 
this country about the protection and the security of America's 
pensions, about the protection and the security, because that is the 
issue here today. It is not whether or not employees should have access 
to conflicted information. That is of no real value to those employees.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from Tennessee (Mrs. Blackburn), a member of our committee.
  Mrs. BLACKBURN. Mr. Speaker, today Congress can take action to give 
employees more options in how to manage their 401(k)s and other 
investment plans. H.R. 1000, the Pension Security Act, includes 
important financial safeguards and new disclosure protections for 
America's workers. It will help ensure that employees receive the 
advice they need to plan and invest for their future, and it provides 
Americans the power they need and deserve to manage their retirement 
funds.
  This bill helps American workers in three important ways: First, it 
provides companies with guidelines on how to advise workers about 
investing. To enhance investment plan protections, this bill requires 
that financial advisers let people know that they have the right to 
third-party advisers, enabling employees to get the advice that they 
need. Today we are giving employees the power to choose alternative 
advisers.
  In addition, H.R. 1000 works to provide the educational tools for 
employees who are investing in the companies they are working for. It 
significantly improves an employee's access to information regarding 
their accounts by requiring that they be provided with quarterly 
statements. By educating America's workers on investing, they will be 
better able to plan for their own retirement.
  Third, this legislation helps make it clear to employees that 
diversifying their investments is absolutely essential. Each quarterly 
statement will reiterate the point. Too many people are unaware of the 
risks they take by holding large portions of stock in a single company.
  Most employers want to do right by their employees, but there are 
exceptions, either by accident or gross negligence. The tools of 
advice, education and diversification, all of which H.R. 1000 provides 
for, will enable employees to make informed decisions about their

[[Page 11403]]

investments and their 401(k)s. This bill recognizes that no one will 
guard their financial future as well as they will do for themselves.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to 
the gentleman from Massachusetts (Mr. Tierney), a member of the 
committee.
  Mr. TIERNEY. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I rise today in opposition to this bill, the so-called 
Pension Security Act. I cannot help but be struck by a sense of deja 
vu, because it was just about a year ago today that the majority 
brought a similar bill to the floor with the same inadequate, harmful 
political fig leaf for their dismal record, just covering that dismal 
record on their retirement security.
  Republicans have ignored the problems brought to light by last year's 
scandals and by all the scandals in the 13 months since that period of 
time. This legislation does address those dangers and challenges and 
uncertainties that threaten the retirement security of America's 
workers. In some cases it actually rolls back those protections.
  For example, the bill opens up a whole new dangerous loophole that 
allows for self-interested investment advice to be provided to 
employees. For the first time since ERISA was enacted almost three 
decades ago, investment firms can be permitted to serve as both the 
principal financial adviser and the investment managers to employees.
  The bill would permit investment advisers to recommend their firm's 
products and earn additional fees on those recommended products if they 
just disclose the fact that they are in conflict. It does not require 
access to independent advice, nor does it assure any independent 
oversight. Conflicts between the adviser's profits and the fiduciary 
duty to the worker would be explicitly authorized.
  The rollback of these critical protections to workers is an act that 
flies in the face of the past year and a half of corporate scandals. On 
April 27, the Securities and Exchange Commission and New York Attorney 
General's office reached a $1.4 billion settlement with the 10 largest 
Wall Street firms. Among other things, it will, for the first time, 
require independent investment research to be provided to investors.
  This settlement was based on mountains of evidence that the 
investment advice that major firms were providing to investors was 
corrupted by conflicts of interest. This costs investors billions of 
dollars through poor decisions tainted by their adviser's self-dealing.
  The very same firms covered by this settlement have demonstrated that 
they felt no responsibility to the investing company, only to their 
profit margins. They are the same firms who have demonstrated that if a 
conflict is possible, they will exploit it, and even if a conflict is 
illegal, they will exploit it, and they will be explicitly authorized 
to have that conflicted advice presented under this bill.
  There are other problems with this bill. It allows for the conversion 
of defined benefit plans to less generous cash balance plans, as just 
mentioned by my colleague from California. The majority actually voted 
down an amendment in committee to add protections for workers on that 
aspect.
  Further, this legislation leaves in place practices that Enron and 
WorldCom and other companies that caused unwitting workers to lose 
billions of dollars benefited from.
  There are three examples. The bill continues to lock employees into 
company-matched stock for 3 years after the contributions have been 
made; it fails to require companies to provide notice to employees that 
executives are dumping the company's stock, which should be a key 
indicator to workers that may wish to divest; and it also continues 
special treatment to company executive pensions at the expense of rank-
and-file members.
  Mr. Speaker, we should put what is happening today into context. This 
debate today is not just about pension security, just like last week's 
debate was not just about taxes. This is about an arrogance of power by 
this majority. While our economy struggles, and while families across 
America watch helplessly as their retirement savings dwindle away as a 
result of corporate greed and mismanagement, while health care costs 
soar to ever higher rates, while prescription drug prices rise at five 
times the rate of inflation, the Republican leadership in this House 
can still be counted on to protect the interest of corporate moguls and 
wealthy special interests at the expense of hard-working American 
families.
  There is something wrong when a party uses Enron and investment 
scandals of Wall Street as justification for rolling back pension 
protections for American workers. There is something wrong when a party 
uses the economic misery of regular Americans to cut the taxes of the 
super-rich. And there is something wrong when the majority uses the 
crisis of skyrocketing prescription drug prices to privatize Medicare 
as a favor to the insurance industry.
  This bill exploits the suffering of many to reward the few. It is a 
pattern in this House, Mr. Speaker, and I urge my colleagues to oppose 
it.
  Mr. BOEHNER. Mr. Speaker, I yield 5 minutes to the gentleman from 
Texas (Mr. Sam Johnson), chairman of the Subcommittee on Employer-
Employee Relations.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I thank the chairman for 
yielding me time.
  Mr. Speaker, I am glad you all asked us to look at this, because I 
want to help Americans who are working hard and saving for their 
retirement. They deserve more information about what is happening to 
their retirement plans. They deserve help in making financial decisions 
that can often be overwhelming. They deserve the right to diversify 
their money in their retirement accounts.
  The Pension Security Act that we are debating today lets all 
Americans do all this. Unfortunately, we have been here and done this 
before. We passed this bill in the last Congress, but it went to the 
other side of the Capitol, where nothing happened. Hopefully it will be 
enacted this year.
  The Pension Security Act gives employees the freedom to diversify 
their retirement savings, but does not force them to do so. Free 
enterprise works best when individuals have the freedom to put their 
money where their mouths are.
  It gives employees information on the importance of diversification, 
but, ultimately, the individual knows their own situation better than 
some arbitrary rule that Congress might have imposed.
  I have heard from many constituents about the fact that they do not 
want the government imposing caps on how much company stock they can 
hold. The Pension Security Act not only gives employees the freedom to 
diversify, but it also gives them a new tool to help them, and, more 
importantly, to help them understand their investments. Employees will 
be able to receive professional advice so they can turn to a fiduciary 
adviser who can help them decide what the right investments are for 
their individual situation.
  During the drafting of this bill about 1 year ago, we worked very 
hard to be sure that the employee-owned companies would not be required 
to set aside reserves to buy back company stock that might have been 
subject to the diversification requirements. The diversification 
requirements for privately held ESOP companies would have been a direct 
call on capital, requiring these companies to set aside cash or 
obligate lines of credit for the possible repurchase of shares, rather 
than for building the business. I am glad we dealt with this issue 
fairly and quickly.
  As chairman of the Subcommittee on Employer-Employee Relations, I 
want to add that the bill is simply reiterating current law regarding 
fiduciary liability during a blackout. The concept of a blackout was 
written into ERISA last year as part of the Corporate Accountability 
Act. The provision in this bill is meant as a tag-along with those 
changes. Employers are still not liable for market swings during a 
blackout period, as long as they provide advance notice of a blackout, 
they have a legitimate reason for doing it, and generally acting as a 
good fiduciary during these periods.

[[Page 11404]]

  This bill also contains several ERISA provisions that have been 
blocked by arcane Senate rules from moving forward in a tax bill. This 
bill will expand the missing participants program at the Pension 
Benefits Guaranty Corporation so that 401(k) plan participants can be 
reunited with their money if their company ceases to exist.
  The bill also simplifies the annual reports that pension plans are 
required to file with the Department of Labor. The new form should be 
only one page long, and is a step in the right direction to cutting red 
tape that has caused so many small businesses to simply terminate their 
retirement plans. Small business owners have told me that this change 
could go a long way to reducing the cost of maintaining a retirement 
plan.
  There are several other good changes in this bill, but I just want to 
mention two more small business provisions that are long overdue.

                              {time}  1330

  One of them would reduce the PBGC insurance premium for the new 
defined benefit plan and for small plans in order to reduce costs 
associated with setting up pension plans. Also, current law prohibits 
small business owners who pay insurance premiums to PBGC from receiving 
retirement benefits if the business fails. We reversed that.
  So this bill, in effect, is going to help Americans prepare for their 
financial security in retirement. It must pass. It needs to be signed 
into law.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to 
the gentleman from New Jersey (Mr. Andrews), the senior Democrat on the 
subcommittee.
  Mr. ANDREWS. Mr. Speaker, I thank the gentleman from California for 
yielding me this time. I rise in strong opposition to the bill that is 
on the floor.
  There have been two trends taking place in American life in recent 
months and years. The first is an outbreak of conflict of interest in 
the financial world of America. A few days ago, the attorney general of 
New York State, together with other law enforcement officials, 
announced a global settlement against a large number of investment 
firms because those firms were rather routinely giving advice that was 
conflicted and, therefore, not in the best interests of investors. The 
common practice was that the investment banking side of the firm was 
out hawking certain securities and trying to sell certain deals. And 
then the advice side of the firm was telling the retail clients of the 
firm to buy into those very same deals. It became obvious that the 
advice being given by these financial houses was not in the best 
interests of the investor; it was in the best interests of the 
financial house.
  It was a scandal that has rocked Wall Street to its foundations. It 
has caused some significant problems in the market. It caused this 
Congress to take significant steps in the Sarbanes-Oxley legislation of 
last year. It was an unwelcome intrusion into the marketplace of 
American finance.
  The second trend is that more and more Americans have become their 
own board of trustees for their own pension fund. Twenty-five years 
ago, the way most people's pensions were is that they worked for an 
employer, the employer put money into a pension fund, there was a board 
of directors or board of trustees for that pension fund that invested 
the money, and, when you retired, every month you got a check based 
upon how much money you were entitled to under that plan.
  In recent years many employers have shifted to self-directed 
accounts. Commonly these are known as 401(k)s, where instead of the 
employer deciding how the money is invested, the constituent, the 
individual, decides how the money is invested, and, in effect, our 
constituents become their own board of trustees for their own pension 
plans. There is today $1.8 trillion of American pension money invested 
in these 401(k)s.
  Now, one would think that when we have a trend of tremendous conflict 
of interest problems in the financial industry and a huge jump in the 
number of pension dollars in self-directed accounts that the House 
would be about the business of trying to find ways to assure that we 
eliminated any possibility for conflict of interest when people give 
advice to pensioners and workers as to how to invest their pension 
funds. In fact, since 1974, that has been the law. It is illegal under 
present law for a conflicted adviser to give advice.
  The bill before the House today lifts that prohibition and makes it 
legal. In other words, what the attorney general of New York and the 
securities agencies of the Federal Government labored so hard to make 
unlawful in the rest of the economy, the House is now trying to make 
lawful with respect to people's pension funds.
  Common sense tells us we want to go in the other direction. We want 
to reduce or eliminate conflicts of interest in investment advice. This 
bill authorizes and legalizes those conflicts of interest. It makes no 
sense. If one liked the Enron scandal, one will love what will happen 
if conflicted, unfettered investment advice visits the $1.8 trillion of 
America's pensions held in these funds.
  Mr. Speaker, this bill should be rejected, and the Democratic 
substitute that we will debate later should be adopted.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentleman from California (Mr. McKeon), the chairman of the 
Subcommittee on 21st Century Competitiveness.
  Mr. McKEON. Mr. Speaker, I rise in strong support of this Pension 
Security Act of 2003, and I commend the gentleman from Ohio (Chairman 
Boehner) and the subcommittee chairman, the gentleman from Texas (Mr. 
Johnson), for their leadership in getting this bill to the floor to 
help America's workers.
  In the wake of the Enron and WorldCom scandals, this Congress must 
ensure that innocent, hard-working, dedicated employees have safeguards 
to protect their savings. When Enron stock was dropping, its employees 
had no other option but to ride its tidal wave until it ran aground and 
crashed.
  As a former small business owner, I understand the desires of an 
employer to provide his or her employees with good, stable pension 
plans to ensure a comfortable retirement. By providing sound retirement 
benefits, employees' productivity increases through the peace of mind 
that they will have a financial future long after they retire.
  With the ever-changing economy and the differing retirement plans 
that are available to employees, it is the responsibility of an 
employer to ensure that his or her workers are given the freedom to 
direct the course of their financial future. We must increase workers' 
access to financial advice to help them choose the best investment for 
their individual needs.
  It is for this reason that I am pleased that the Pension Security Act 
will allow investment advisers to work in a purely fiduciary capacity 
to help employees understand the complexities, advantages, and 
opportunities in diversification of their investment pensions. If Enron 
workers had had the same sound advice from unbiased, trustworthy 
sources, many former employees would not have incurred the great 
financial losses that most employees have had to undergo as a result of 
the company's failure.
  When large corporations go bankrupt for whatever reason, whether it 
be through corruption or through innocent financial problems, 
management is generally more insulated from the blow than the employees 
because of their freedom to invest and their access to information. 
This bill will simply give employees the same benefits as management: 
the flexibility to make individual decisions with their money. They 
should not be penalized for the failure of management or the company.
  This bill will greatly alleviate the problems illustrated by Enron 
and WorldCom and fill a gaping hole, and I urge my colleagues to 
support this bill.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from Arizona (Mr. Grijalva), a member of the committee.
  Mr. GRIJALVA. Mr. Speaker, I thank the gentleman from California for 
yielding me this time.

[[Page 11405]]

  I rise today in opposition to H.R. 1000 and in support of the Pension 
Fairness Act. As has been stated before, the collapse of WorldCom, 
Enron, Global Crossing, and other corporate abuses we have seen in the 
news has highlighted the need for critical pension reform to eliminate 
abuses and to protect workers. The Pension Fairness Act, the Democratic 
substitute, deals with meaningful reform and protections from abuse 
against workers. I would like to take the 1 minute to compare the 
Democratic substitute and H.R. 1000.
  The Democratic substitute gives workers the right to independent, 
unbiased investment advice. H.R. 1000 does not. In fact, it creates the 
opposite effect.
  The Democratic substitute provides workers with a voice in running 
defined contribution plans. H.R. 1000 leaves decision-making in the 
hands of corporate executives.
  The Democratic substitute gives workers notice when executives are 
selling company stocks. H.R. 1000 does not.
  The Democratic substitute protects older workers when a company 
converts from traditional pension plans to a cash balance plan. H.R. 
1000 does not.
  The Democratic substitute requires that executive pensions be subject 
to the same pension rules as rank-and-file workers. H.R. 1000 offers no 
such fairness.
  Mr. Speaker, H.R. 1000 is unfair and destined for abuse and conflict 
and offers no protections or security to workers. The Pension Fairness 
Act, the Democratic substitute, is fair, just, and destined for real 
reform and protection and security for the workers. I urge a ``yes'' 
vote on the Democratic substitute and a ``no'' vote on H.R. 1000.
  Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentlewoman from Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  Mr. Speaker, I rise to support the substitute that has been offered 
by the gentleman from California (Mr. Miller) and the gentleman from 
New York (Mr. Rangel), because I speak both in metaphor, but as well in 
reality. I rise in tribute to the 53 Democrats in Texas that have had 
to leave because of processes like this where we have a bill on the 
floor of the House that does not, in fact, represent the solution to 
the problem. Why do I know the problem? Because I come from a community 
where thousands of employees were laid off within 48 hours to 24 hours, 
laid off, because Enron went bankrupt, and they lost everything. Why 
did they lose everything? Because they had pension programs that would 
not be supportive of the freedom to engage in choice.
  The Republican bill on the floor of the House does nothing. This bill 
opens a dangerous loophole that jeopardizes employee retirement 
savings. It fails to protect the sailor, even when the captain is 
protected. The bill fails to protect long service workers' pension and 
cash balance pension convergence. It fails to address the need for an 
employee to have a voice on a pension board. It leaves employees locked 
into company stock for long periods of time. That was, if you will, the 
undermining of Enron employees and other employees. They could not get 
out. We had retirees that lost $1 million, $1 million because they 
could not get out of their pension plan. They simply could only stand 
by and cry as their savings crumbled.
  Mr. Speaker, if we are going to be serious about the corporate 
systems who have failed us, if we are going to pay tribute to those 
employees and retirees who have catastrophic illnesses and lost loved 
ones because of what happened in our community and in Houston, if we 
are going to be supportive of a Democratic process, then I believe it 
is important to support the Miller-Rangel bill and vote ``no'' on H.R. 
1000.
  Mr. Speaker, I rise in opposition to H.R. 1000, the ``Pension 
Security Act of 2003,'' because this bill fails to sufficiently address 
the devastating impact of corporate misconduct on employee retirement 
plans.
  Congress has the responsibility to provide American citizens with 
legislation that protects them and their families. This legislature 
should support legislation that ensures the pension plan protects 
employees' retirement accounts, by requiring the pension plan be 
diversified. We should also draft legislation that compels companies to 
provide employees with investment advice about pension plans and the 
assets included in the pension plan. Finally, Congress should draft 
legislation that both imposes and expands both civil and criminal 
liability malfeasance of pension plan fiduciaries and administrators.
  H.R. 1000 does not adequately address the many issues facing 
employees pertaining to their pension plans. H.R. 1000 allows employees 
to sell company stock after 3 years, and requires pension plan 
administrators to give employees 30 days written notice prior to any 
lockdown. On the surface these provisions seem like improvements to 
existing law and relief for America's employees. However, H.R. 1000 
simply fails to sufficiently amend current pension plan law to account 
for and remedy disasters like the collapse of Enron.
  Under H.R. 1000, companies would be free to provide investment advice 
that is not necessarily in the best interest of the workers. After 
companies provide this poor advice, they would be free from legal 
liability as long as the investment advisors disclose any conflict of 
interests.
  Under H.R. 1000, pension plan participants would continue to be 
denied representation on pension boards resulting in employees having 
no voice in important pension plan decisions. In addition H.R. 1000 
omits any provisions that would provide employees with notice when top 
management is contemplating dumping their stock. H.R. 1000 also fails 
to hold such administrators liable for knowingly making material 
misrepresentations or concealing such information from plan 
participants.
  The Enron collapse is a paradigm example of what can happen when 
there is not full disclosure of corporate decision making in pension 
plans. In the Enron case, executives and senior management staff were 
encouraging employees to by company stock. At the same time, those same 
executives and senior managers were cashing out millions of dollars 
shortly before the company declared bankruptcy in December of 2001. 
Full disclosure and liability would have protected the 4,500 Enron 
employees who lost their jobs in my home district alone.
  H.R. 1000 is also potentially dangerous to employees because it fails 
to impose limitations on assets that the corporation can hold its stock 
reserves. Limiting the amount of stock the corporation holds would 
result in diversification of the plan and guarantee there was adequate 
revenue and protection in the employees' retirement accounts. Once 
again, the Enron case illustrates the importance of limiting corporate 
stock ownership. In December of 2000, 62 percent of the assets in Enron 
Corporation's 401(k) plan consisted of shares of Enron stock. This lack 
of diversification meant financial ruin for thousands of Enron 
employees. Exxon Mobil is another example. That corporation, the 2nd 
Largest Fortune 500 Company in America, holds an estimated 77 percent 
of plan assets in company stock.
  Diversification reduces the risk that a pension fund would become 
insolvent as a result of the company that sponsors the plan going 
bankrupt. Congress has required Defined Benefit Plans to diversify 
assets beyond 10 percent and also has generally exempted defined 
contribution plans from any type of risk reduction requirements that 
would provide plan protection through diversification.
  The Democratic substitute to H.R. 1000 addresses the many flaws in 
the original bill. The democratic substitute would give employees the 
power to protect their retirement investments and provide for a more 
comprehensive bill that addresses the many problems raised by the Enron 
tragedy. The Democratic substitute will effectively prevent plan 
administrators from engaging in unlawful and unethical practices, and 
will ensure that plan participants are allowed to diversify their 
interests. The Democratic substitute also guarantees that employees are 
adequately represented on pension boards and that they receive adequate 
independent investment advice.
  Mr. Speaker, I oppose H.R. 1000. This legislation does not provide 
adequate protection to employees. I support the Democratic substitute 
to H.R. 1000 because it protects employees from corporate malfeasance 
in the management of their pension plans.
  The SPEAKER pro tempore (Mr. Linder). The time of the gentleman from 
California (Mr. George Miller) has expired.
  Mr. BOEHNER. Mr. Speaker, I yield myself the balance of the time.
  There has been a lot said today about the fact that this bill may not 
go far

[[Page 11406]]

enough, and the substitute that we are about to debate in the coming 
hours goes much, much further.
  The issue here that Members need to understand is that our pension 
system is a voluntary system on behalf of employers for their 
employees. And while we will have much more debate on this when we get 
into the substitute, we walk a very fine line when we bring pension 
issues to this floor.
  The retirement security for American workers in most cases is one of 
their largest assets. It has to be treated with great respect. And all 
of us who have served in a legislative body, and especially here in 
Congress, know that we always have to deal with the law of unintended 
consequences. If we make one mistake, we could cost millions of 
Americans the right to their own retirement. So we have to be very 
careful.
  That is why, if we look at the bill that we have before us, we make 
modest reforms to correct problems that we found in the wake of Enron 
and WorldCom, and others. We do not do a wholesale overhaul of our 
pension security laws, because, in honesty, it is not needed.
  Now, the most substantive part of this bill would allow employers to 
offer to their employees real investment advice. We have over 60 
million Americans who have self-directed accounts today, and most of 
whom have no access to real investment advice. The substitute that we 
are about to consider, given all of the rules they have around advice, 
will mean exactly what we see in the marketplace today: no advice.
  Yes, we do allow those who sell products to offer advice. We do 
require them to provide notice to the employees of potential conflicts. 
We hold them to the highest fiduciary duty. If there is any difference 
in fees, they have to let the employee know. But our goal here is to 
get real investment advice into the hands of everyday, working people 
who want and need this advice, and they need it now. With these new 
self-directed accounts, if they are going to really have the kind of 
retirement security that they expect and that we want, they need real 
investment advice.
  Current law, written in 1974, before the birth of the current 
financial services firms, barred those who sell product from giving 
advice. Now, if you are not in a retirement plan, and you are going to 
spend your money, you can get all the advice you want from all of the 
people in the world who sell products. But, oh, no, we cannot do that 
if you are in a qualified retirement plan. That is wrong. We should not 
lock out those firms that are the most successful firms in the country 
from offering their advice and their expertise to American workers. 
Workers do not have to take it.
  Secondly, in the bill we have an above-the-line tax deduction for 
employees in order to go out and seek their own investment advice if 
they do not want what the employer offers.

                              {time}  1345

  Now, I think between both of these issues employees need to have 
options to go get the kind of advice that will benefit their own 
retirement security. The underlying bill is a very good bill. It had 
passed this House with broad bipartisan support about a year ago, and I 
expect that it will have broad bipartisan support today.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Linder). For the remainder of the 
debate, the gentleman from Texas (Mr. Sam Johnson) and the gentleman 
from California (Mr. Matsui) each will control 20 minutes of debate on 
the bill.
  The Chair recognizes the gentleman from Texas (Mr. Sam Johnson).
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, PBGC, substantial owner. This important provision was 
approved by the Committee on Ways and Means last week, and I am glad 
that we are also including it in this bill today.
  This provision could help breathe life into defined benefit plans in 
small businesses. Right now the owners of small businesses have several 
disincentives to offering traditional pension plans. Aside from the 
fact that these plans are too expensive to maintain because of too much 
red tape, owners of small businesses are prohibited from receiving 
guaranteed benefits from PBGC should their businesses fail. It is crazy 
to think that small businessmen would offer traditional defined benefit 
plans, pay the expensive insurance premiums to the PBGC, and then be 
prohibited from receiving the same insurance benefit that all their 
employees receive if the company fails. This provision fixes that and 
allows owners to get some benefits from PBGC.
  This bill also reduces PBGC premiums for new pension plans and for 
small pension plans. Those premiums are an expensive barrier to those 
few employers who are willing to set up traditional defined benefit 
pension plans. Reducing premiums could help bring back this type of 
pension plan. This bill is long overdue. It should have been approved 
in our other body during the last session, but this time it looks like 
it can be and should be, for the benefit of all Americans.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MATSUI. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, it is kind of astonishing 2 years after Enron and 
WorldCom we are finally, again, taking up a bill that presumably is 
supposed to deal with the particular issues that Enron and WorldCom 
raise. Unfortunately, I do not think the bill does, which is really 
tragic in America today.
  Almost every study I have seen and many people have seen over the 
last 5 years has indicated that the baby boom population, which is now 
retiring, does not have adequate retirement benefits for their future. 
And as a result of that, many Americans are going to be working longer, 
even though the unemployment rate is going up.
  This legislation on the floor presented by my Republican colleagues 
unfortunately does not address the issue of pension benefits and 
retirement security for Americans that are about to retire. Let me just 
give you some examples of that.
  The gentleman from Ohio (Mr. Boehner) talked about, well, we are 
going to allow independent investment advice for some of these 
companies for their employees. The only problem is it is kind of a 
ruse, because, in fact, this legislation will allow a conflict of 
interest for those investment advisers that they will then be able to 
make misleading information and statements to their employees.
  Secondly, which is probably even more difficult to understand, is 
that this legislation, believe it or not, holds harmless from liability 
the employer when these advisers give misleading advice or fraudulent 
advice. So the worker is basically left without any remedy or resources 
and at the same time probably will be able to get advice that is 
misleading and full of conflicts of interest.
  It allows cash balance plans. The only problem is if you are 50 or 
older, you can end up losing your retirement benefits because, as all 
of us know when you are in the workforce, the closer you get to 
retirement the greater benefit you get; but if you move to a cash 
balance, that is eliminated. And it does not give the employee the 
option to say, I want to go into a new plan or stay in my old plan. So 
automatically the employee is going to be damaged.
  Our substitute, which will come up later, will address that issue, 
just like it will address the issue of independent advice.
  In addition to that, which is somewhat surprising, is the whole issue 
of executive compensation, the whole issue of executive compensation 
which was the issue of Enron and WorldCom. It states that in terms of 
the 401(k) plan that the Enron employees had, they had to hold that 
Enron stock in there for an indefinite period of time.
  The gentleman from Ohio's (Mr. Boehner) bill says you can take it out 
after 3 years. The problem is it is discretionary with the employer. So 
Enron could have made them keep the money in beyond 3 years, and that

[[Page 11407]]

would have resulted in the same problem. So this bill does not do 
anything to overcome the Enron problem. In fact, the Attorney General 
of the State of New York, Eliot Spitzer, said, ``This legislation opens 
a loophole that will sharply erode, rather than enhance, safeguard for 
employees seeking independent and untainted advice how to invest in 
their retirement savings.''
  The Attorney General of New York has said this; this legislation will 
actually do more harm than good.
  Let me just conclude by making a couple other observations in my 
time, Mr. Speaker. This bill also would currently allow Ken Lay, the 
CEO of Enron Corporation, to keep his retirement benefits even though 
the company had filed bankruptcy and even though almost every Enron 
employee ended up losing their entire retirement benefits because most 
of their stock was held in Enron company stock in their 401(k) plans. 
This bill would have allowed that to continue on.
  In addition, this bill would do nothing to help the American Airline 
employees, and all of us know the American Airline executives attempted 
to preserve a golden parachute for themselves and at the same time ask 
their employees, which is somewhat ironic, to cut their benefits.
  So this bill does not address some of the major issues that I think 
the American public are concerned about in terms of its own income 
security.
  Let me just say this, in terms of coming up with legislation to 
protect income security and fraud, we need to reexamine this 
legislation. Our Democratic substitute to be offered by the gentleman 
from California (Mr. George Miller) will address these issues, but this 
bill does not.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 3 minutes to the 
gentleman from Pennsylvania (Mr. English).
  Mr. ENGLISH. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I rise today in strong support of the Pension Security 
Act, which is very similar to legislation that was passed last year by 
the House of Representatives in response to the Enron crisis.
  This is mainstream legislation that provides fundamental protections 
to American workers and American pension systems.
  Now, as I listen to the debate here, I am struck by a certain Alice 
in Wonderland quality to the entire proposal because we have heard on 
the other side an enumeration of some of the things that they think 
this bill does not do. They do not focus on the fact that this does 
include fundamental protections.
  They complain that this has taken a long time to do, and yet it was 
their party in the U.S. Senate that held up the proceedings on this 
bill after we passed it in the last Congress.
  This is clearly legislation whose time has come, and I am very proud 
of the work that two of our committees have done, in the Committee on 
Education and the Workforce and in the Committee on Ways and Means, on 
which I serve, to make this legislation possible. Ultimately, the bill 
before us is one of the most important measures to secure Americans' 
retirement futures that we will work on this year.
  Our working families clearly deserve to know that their hard-earned 
dollars invested in pension and retirement savings are secure. We have 
seen the devastating effect of corporate scandal on employees' 
pensions. The House again is responding to the challenge to make sure 
that the Enrons and WorldComs of the corporate world do not destroy the 
savings of their employees. This bill clearly provides rights to 
workers to diversify pension plan assets and protections against 
corporate abuses and pension mismanagement; and it also helps small 
businesses provide retirement security for their workers, which is one 
of the most fundamental reforms given, that so many small businesses 
currently do not extend to their workers those options.
  By giving small businesses just a little relief from burdensome and 
costly regulations, millions of small business employees will now have 
retirement security. This is a worthy goal. This is worthy legislation. 
And I hope in the end when the smoke clears that this body will support 
it on a bipartisan basis.
  Mr. MATSUI. Mr. Speaker, I yield 2 minutes to the distinguished 
gentlewoman from the State of Connecticut (Ms. DeLauro).
  Ms. DeLAURO. Mr. Speaker, I rise in strong opposition to this bill.
  It has been a year and a half since the collapse of Enron, a year 
since the collapse of WorldCom. What has this body done to protect the 
pensions of American workers? Nothing.
  We have indeed passed legislation, but legislation that fails to 
allow employees the right to fully diversify their stock, legislation 
that fails to hold executives who are fiduciaries in the pension plan 
accountable if they violate the law. Executives like Ken Lay. 
Legislation that allows employers to give the same conflicted financial 
advice the Republicans tried to push on the American workers before the 
Enron scandal broke.
  With this bill we head down the same road. Xerox, Georgia Pacific, 
Bank of Boston already have switched from traditional defined benefit 
plans to cash balance pension plans that leave older employees with 
their pensions slashed up to 50 percent. This bill would actually make 
it easier for more companies to adopt such practices. It would make it 
easier for companies like Motorola to put another $38 million into the 
retirement funds of their executives while they contribute not one cent 
to their workers' already underfunded pension funds.
  Quite frankly, this bill does absolutely nothing to limit runaway 
executive compensation or protect employees from these unfair benefit 
cuts. It is obvious to everyone but this Republican majority that our 
pension rules do not do enough to protect helpless employees. It does 
not protect them from being locked out of their pension plans while 
their life savings go down the drain or protect them from venal 
executives who would take their money and run.
  The majority seems to think that this is somehow acceptable behavior. 
You tell the folks in Westbrook, Connecticut, people who lost $2 
million from their pension plan. I met with these men and women. We 
worked to win back their hard-earned retirement savings. This is about 
what this kind of reckless behavior does to a family that is struggling 
to pay a mortgage, to pay for their children's college education fund. 
No one should have to go through what families have been put through.
  There is a Democratic substitute today. We have an opportunity to 
protect the working men and women in this country. Vote against this 
flawed Republican bill, and vote for the Democratic substitute.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 2 minutes to the 
gentleman from Delaware (Mr. Castle).
  Mr. CASTLE. Mr. Speaker, I thank the gentleman for yielding me time.
  I congratulate him and others who worked on this, the gentleman from 
Ohio (Mr. Boehner) and others who worked on the legislation before us.
  Mr. Speaker, I would like to get out of that a little bit and talk 
about where we are going. I do not disagree with the gentlewoman from 
Connecticut (Ms. DeLauro). There are a lot of problems out there that 
need to be fixed.

                              {time}  1400

  It seems to me, Mr. Speaker, we started with Sarbanes-Oxley, and we 
started to address a lot of those problems in terms of employees, 
corporate management, those questions.
  We then went on to dealing with the issue of management on retirement 
funds. That is what we are doing for the most part out there in this 
country today. Whether we like it or not, that is happening, and 
basically this bill, if we take the time to really read it and be 
thoughtful about it, really provides more flexibility and 
diversification for the employees so they can make decisions and are 
not going to be bound in to something like their own company's stock 
and locked in such a way they cannot make the right decision, and it

[[Page 11408]]

provides for more investment advice for that.
  Some argue it is not independent. In my view of reading it, it is. 
Those are the kinds of thing we need to do. I believe if we had taken 
those steps, we would have avoided a lot of the problems that we had in 
places like Enron and WorldCom.
  This measure requires companies to give workers, for example, 
quarterly benefits statements that include information about accounts, 
including the value of their assets, the right to diversify and the 
importance of maintaining a diversified portfolio.
  We need to educate people in America about retirement needs, about 
what investments are. We need to work very hard on this because that is 
what they have to do anyhow, so we ought to have legislation which 
enables them to know more about it so they can make sound investments 
in light of whatever they want to do in the future.
  I believe that this brings unprecedented new retirement security 
protections and literally would protect thousands of workers who got 
burned very badly in the last 3 years and hopefully are in some sort of 
recovery now. I would encourage everyone to support it.
  I do not know much about the substitute. We will hear more about that 
here in a few minutes, but I will tell my colleagues, the underlying 
bill is something that is helpful.
  Mr. Speaker, I rise today in strong support of H.R. 1000, the 
``Pension Security Act.'' I am proud to be a cosponsor of this measure 
that passed the House with bipartisan support in the 107th Congress and 
I thank Chairman Boehner and Subcommittee Chairman Sam Johnson for 
bringing this matter to the floor again. I am hopeful the measure will 
again pass as it provides important protections to working Americans 
with employer-based retirement plans.
  Sadly, we have watched many Americans see their retirement savings 
plummet. Congress took a much needed step in enacting the Sarbanes-
Oxley Act and this legislation further strengthens those reforms. This 
legislation gives workers greater ability to manage and expand their 
retirement savings.
  Congressional hearings in 2002 established that inadequate worker 
access to investment advice contributed significantly to retirement 
security losses by employees at Enron. This bill provides greater 
resources to American workers by allowing employers to provide their 
workers with high-quality, professional investment advice as an 
employee benefit, while maintaining safeguards to protect the interests 
of workers and investors. This measure requires companies to give 
workers quarterly benefit statements that include information about 
accounts, including the value of their assets, their rights to 
diversify, and the importance of maintaining a diversified portfolio.
  The ``Pension Security Act'' would give workers unprecedented new 
retirement security protections and would have helped to protect 
thousands of Enron and WorldCom employees who lost their savings during 
the company's collapse. Workers must be fully protected and fully 
prepared with the tools they need to protect and enhance their 
retirement savings. The ``Pension Security Act'' accomplishes these 
goals and I urge my colleagues to join me in supporting this important 
legislation.
  Mr. MATSUI. Mr. Speaker, I yield myself 30 seconds.
  I would just like to say to the gentleman from Delaware, I know he 
read the bill, but the problem with the bill that the Republicans have 
offered us is it actually makes the situation worse. Instead of giving 
independent advice, as the gentleman stated, it actually cloaks it in 
independent advice, it really does not.
  What it basically does is allow conflicts of interest and hold 
harmless to the employer, and at the same time I think the whole issue 
of diversification, no, only subject to the whims of the employer will 
that be allowed. Enron would have not allowed it. So nothing would 
change. That is the problem.
  The Democratic substitute, I am sure the gentleman has read that, 
will take care of these problems that the gentleman has raised and 
talked about, but not the Republican bill.
  Mr. Speaker, I yield 2\1/2\ minutes to the distinguished gentleman 
from Massachusetts (Mr. Delahunt).
  Mr. DELAHUNT. Mr. Speaker, I thank the gentleman for yielding me the 
time, and he is absolutely correct. What this bill does is bad enough, 
but what it fails to do is even worse.
  The sponsors have named it the Pension Security Act, but it does 
nothing to protect workers and retirees from the corporate abuses that 
have put their hard-earned savings at risk. If this is the Republican's 
pension security plan, one shudders to think what they would do with 
Social Security.
  At company after company, top executives have awarded themselves 
millions in bonuses, stock options, severance packages, driving their 
companies into bankruptcy and leaving their workers holding the bag. 
What does the Pension Security Act do for them? Not a thing.
  Airline executives lose billions, lay off thousands of workers, but 
then go and set up secret trusts to protect their own retirement assets 
and put it out of the reach of creditors. What does this bill do for 
them? Not a thing.
  Polaroid executives in my home State of Massachusetts cancelled 
retirees' health insurance and terminated workers on long-term 
disability, all the while awarding themselves millions in bonuses and 
severance packages. Once the company was sold, the new CEO terminated 
the pension plan as well. What does the Pension Security Act do for 
them? Not a thing.
  We are in the midst of an unprecedented wave of business failures, 
rising unemployment and growing numbers of Americans who cannot afford 
health insurance premiums, let alone a 401(k) plan. What will the 
Pension Security Act do for them? Not a thing, nothing at all.
  This bill is a fraud, and it deserves to be defeated.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 2 minutes to the 
gentleman from Georgia (Mr. Isakson).
  Mr. ISAKSON. Mr. Speaker, I thank the distinguished gentleman from 
Texas for yielding me the time.
  I want to clear something up, and I would appreciate if the ranking 
member, the distinguished gentleman from California, would look this 
way.
  In rising to take my 2 minutes, I want to clear something up. I am on 
the Committee on Education and the Workforce, and I have great regard 
for the gentleman's work in the Committee on Ways and Means, but is it 
not true that the legislation includes both the Boehner and the Portman 
provision that allows an individual employee to choose their 
professional adviser and to deduct as a deduction the cost of that 
advice on their tax forms? Is that not true?
  Mr. MATSUI. Mr. Speaker, will the gentleman yield?
  Mr. ISAKSON. I yield to the gentleman from California.
  Mr. MATSUI. Mr. Speaker, it allows them to do this, but with a 
potential conflict of interest, obviously the disclosure conflict of 
interest, but the problem is that the employer is held harmless from 
liability. That is what the problem with the bill is.
  Mr. ISAKSON. Let me answer that part, too. If the employer provides 
the advice, the adviser is liable. They are liable under the Boehner 
bill and the one that came out of the Committee on Education and the 
Workforce. If the employer provides it, they are liable.
  If that had been true under Enron's case, if it had been true under 
WorldCom's case, I doubt we would be sitting here today. We would be 
reading stories about those advisers who were in jail.
  Secondly, if the employee chooses not to want the advice of the 
adviser that is liable from the company, then they are free to choose 
their professional adviser and use the cost as a legitimate deduction 
on their taxes.
  The point I want to make is we can argue about executive 
compensation. We can argue about health plans, which are not even in 
this legislation. We can argue about anything, but the fact of the 
matter is with the passage of this bill, an individual is encouraged to 
seek independent advice. If it is not independent advice, the dependent 
adviser is liable to them if they do anything not in the interest of 
the employee, and if they seek advice independent, they are allowed to 
use as a legitimate deduction the cost of that

[[Page 11409]]

individual they choose for the advice they got.
  I would submit to my colleague it would not have taken a whistle-
blower at Enron to blow it sky high. Under this bill we would have had 
an employee getting legitimate advice who would have understood long 
before that there was a problem, and millions of dollars would have 
been saved in the pensions of employees.
  Mr. MATSUI. Mr. Speaker, I yield 3 minutes to the gentleman from 
Maryland (Mr. Cardin), a distinguished member of the House Committee on 
Ways and Means, ranking member of the committee, who will actually 
address this issue.
  Mr. CARDIN. Mr. Speaker, let me try to explain the problem with the 
advice sections of the bill that is on the floor.
  What my colleagues have done in this legislation is remove the 
prohibited transaction on giving advice by the agent that is selling 
the product to the employee. What does that mean? That means an 
employer can hire an investment company that will be responsible for 
the investment options that the participant must participate in, and 
the actual person giving the advice to the participant makes a 
commission based upon what product that individual sells.
  Under current law, that is a prohibited transaction and is not 
allowed. Under the legislation that has been reported to the floor, 
that is now permitted without any protection basically in the bill at 
all.
  I regret that I cannot support this legislation. Let me just take my 
colleagues back to the last Congress where I thought we tried to work 
in a bipartisan way to deal with the problems of Enron and WorldCom, 
and we made some progress, but then somehow when the legislation got 
reported to the floor, all that cooperation, all that bipartisan 
working together was lost when the Committee on Rules reported out a 
bill that contained many provisions that were never agreed upon in 
trying to resolve the issues before us.
  We are now faced with legislation that opens up a huge loophole that 
could magnify the problems we had in Enron and WorldCom by giving 
congressional sanction to individuals who are more interested in 
getting a commission from the participant in the plan than giving sound 
advice as to what will work with that individual's need. Do we need to 
pass legislation? Absolutely. But this is not the right bill.
  Fortunately, there will be a Democratic substitute, Mr. Speaker, that 
will address the legitimate concerns that are out there, and I regret 
that we have not been able to work together to develop the type of 
legislation that is needed to deal with the Enron-type scandals. We 
should have done that. We should have worked together, but for reasons 
unknown to me, the majority has decided to go this route, which I think 
could very well cause more harm than benefit to the beneficiaries.
  I urge my colleagues to support the Democratic substitute and, if 
that is not accepted, to reject the underlying bill.
  Mr. MATSUI. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished 
gentleman from California (Mr. Becerra), a member of the House 
Committee on Ways and Means.
  Mr. BECERRA. Mr. Speaker, I thank the gentleman for yielding the 
time.
  Mr. Speaker, Enron, Global Crossing, WorldCom, the recent record of 
investment advisers serving their own interests above those of 
employees or investors is an unambiguous one and is not a pretty one. 
The time is not right for this particular idea because opening up a 
loophole to allow an employer to offer conflicted investment advice to 
its employee shareholders is something that, with previous history 
right before us, makes it very clear that we open up a Pandora's box.
  Maybe sometime in the future we can figure out how to do this the 
right way, and I believe the Democratic alternative does exactly that. 
It finds ways to make sure that our investment by employees who work 
very hard not only are protected, not only is there flexibility, but 
that it can be done in a way that gives the employer the best 
opportunity to make sure employees are making the most of their 
investments, but to today believe that we can open the door to 
permitting conflicted investment advice is to not look at history and 
to not look at history of just the recent past.
  Has the scandal of Enron left our mind so quickly that we believe we 
could do this? Are we still not aware that Global Crossing is still in 
the bankruptcy court? Did we forget that WorldCom could not provide to 
its employees its 401(k)s? It does not make any sense, and when we take 
a closer look at this legislation and see that for older workers we are 
not only harming them and encouraging more risk, but we are actually 
making it more difficult to protect older workers' investments, that 
does not seem like a very smart thing to do.
  Then finally when we add to that that we do not provide to rank-and-
file employees the type of flexibility they would need so we could have 
avoided the Enron scandal, because remember, in the Enron scandal, a 
lot of employees saw their stock, the value of their 401(k), tanking, 
just going down to nothing, and a lot of them, before it turned out to 
be valued at zero, said, let me pull it out, but they could not. They 
were stuck. The way the law was written, they could not pull it out. 
Executives could, but the rank-and-file employees could not.
  If we are going to reform pension opportunities, why do we not reform 
that to provide employees more flexibility? Democrats tried to do that. 
This bill does not. This is not the right bill at the right time. Let 
us vote this down and vote for the Democratic substitute.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, could I inquire as to how many 
more speakers the gentleman has?
  Mr. MATSUI. I have an additional speaker here.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I reserve the balance of my 
time.
  Mr. MATSUI. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Massachusetts (Mr. Frank), the ranking member of the 
Committee on Financial Services.
  Mr. FRANK of Massachusetts. Mr. Speaker, sadly this bill reminds me 
of some comments we heard just a week or so ago from leading corporate 
executives who, having signed an agreement in which it was clear that 
their companies had abused the trust of investors, tried by public 
statements to water that down, and I admire the vigor with which the 
new head of the Securities and Exchange Commission Mr. Donaldson, who 
appears to be doing a good job, spoke out harshly against them.
  What he said was, look, we have got to acknowledge that we made, as a 
society, serious errors, and we have to be willing to make a whole-
hearted effort to correct them, and essentially what we saw were chief 
executives of culpable corporations who were making it clear that 
whatever reforms they had agreed to came grudgingly and reluctantly.
  That is what this bill is. It is a grudging, reluctant acknowledgment 
that something had to be done, and it is an effort in the face of 
serious wrongdoing that took hard-earned money away from large numbers 
of people to do as little as people think they can get by with.

                              {time}  1415

  This is a time for us to be forthcoming. This is a time for us to do 
an expansive piece of legislation protecting people. We are not dealing 
with speculative ills here. We are dealing with real harm that was done 
to real people. And a bill such as this, a grudging and partial 
acknowledgment that there were some mistakes but a refusal to deal with 
them in their entirety, is the same spirit that we saw from these 
corporate executives: you caught us, and you are going to make us do 
something; but we are going to fight you every step of the way, and we 
are not going to give any wholehearted endorsement to measures that 
will change things.
  The measures that are in the Democratic substitute that will be 
coming forward represent, frankly, the spirit in which the head of the 
SEC spoke, and I hope we adopt it.

[[Page 11410]]


  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 4\1/2\ minutes to the 
gentleman from Ohio (Mr. Portman).
  Mr. PORTMAN. Mr. Speaker, I thank Chairman Johnson for yielding me 
this time, and I thank him for his work both on the Committee on Ways 
and Means and on the Committee on Education and the Workforce on this 
very important issue of helping people save more for their retirement.
  I have not been here to hear all the debate today, but I understand 
there has been a lot of discussion of investment advice; and I did hear 
someone say, gee, did we forget about WorldCom and Enron. No, we did 
not. The lesson of so much of what has happened in the last couple of 
years is the need for more investment advice and, in particular, more 
diversification. And I know on the other side of the aisle there are 
those who share that view strongly. We may disagree on how to do it, 
but to say this legislation is somehow to encourage people to get stuck 
in pension plans they do not want to be in with corporate stock they do 
not want is exactly the opposite.
  In fact, what this legislation says is that we are going to change 
the rules so that, number one, for people who end up with matching 
stock from a company because they are in a 401(k) plan or some other 
kind of defined contribution plan, those people can get out of that 
stock. They are not told they have to stay in it.
  In Enron, matching stock could not be sold until an employee was 50 
years old and had 10 years of service. In other words, people got stuck 
with the stock. So when Enron's stock went down, that is all they had 
in their retirement plan. And it is horrible because they are left with 
nothing. We are saying, instead, after the vesting period, which is 
only 3 years, those people should be able to diversify out of that 
stock. That is a good idea, and it is a new idea this Congress has 
voted on last year; but it is a change in current law and a very 
important one.
  Secondly, we say people should have more information, so when you get 
into a plan, you have to have notice from the employer saying 
diversification is a good thing. You ought to diversify. And on a 
quarterly basis you are now going to be able to get information you 
cannot get now as a participant in the plan, as an employee.
  So these are all good things that are in this legislation. Again, it 
has passed the Congress before with very strong bipartisan support. 
This is something we should have done last year but could not get that 
part through the other body. Hopefully we will be able to do that this 
year because it all makes sense. And it does relate directly to the 
scandals of the last couple of years.
  The final piece of this is investment advice. This legislation picks 
up something that was in the Portman-Cardin legislation, which allows 
people to take pretax money and apply it toward retirement planning. 
What does that mean? Well, I think the next frontier in terms of 
helping people save more for retirement is in part better educating the 
consumer, educating people who are in these plans as to the need to 
diversify and to diversify wisely depending on their situation in life.
  Some people want to be in riskier investments because they are 
younger and want to build up that nest egg; others, closer to 
retirement, will want to be in something less risky. Folks need to be 
able to adjust. They need the information, the advice, the help. So 
this lets people take, on a pretax basis, purchase investment advice. 
It is like a cafeteria plan, or some other plan that people might want 
to take at their place of business.
  This is a good idea. Not everybody will take advantage of it. But 
investment advice is expensive. This lets people take that pretax 
dollar and apply it towards investment advice. I hope there is not 
disagreement on that on a bipartisan basis. I think it is a good use of 
our Tax Code. I think it is a good way to get over that hump and to get 
people better educated.
  The second piece in this advice legislation, which I think has had 
more discussion today, is the question of should companies be able to 
bring in advisers to advise their employees. Again, the situation is 
people are not getting the education information they need. How can 
they get that good advice? This says let us give those companies the 
ability to do that, but let us establish some rules.
  Number one, people have to be certified; they have to be qualified to 
do it. That is in the legislation. It is good that that is in the 
statute. Second, let us establish a fiduciary relationship that this 
adviser would have to the individual employees who would be advised and 
consulted with. That means the person giving advice would be personally 
liable if that person were to do something that would create a problem 
for that participant.
  Finally, it says that you have to disclose any potential conflict of 
interest. So if there is any potential conflict, in other words if you 
are giving advice, such as you should buy this particular kind of 
mutual fund or this one, and that person sells that mutual fund, you 
have to advise the person of any potential conflict of interest.
  Now, we may be able to work over time to make this a better approach 
in terms of that specific issue of bringing investment advisers in. We 
would love to work with the other body on this. We have not been able 
to do so successfully. But we should stop this notion of partisan 
rhetoric against the idea, because the education advice is absolutely 
needed. We should be able to do it and get it done for the participants 
in the plan.
  Mr. MATSUI. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished 
gentleman from Washington (Mr. McDermott), a member of the House 
Committee on Ways and Means.
  Mr. McDERMOTT. Mr. Speaker, sometimes when I come to the floor, I 
think I have come back into the French Theater of the Absurd.
  Here we have a bill that we are going to allow employers to provide 
financial advice to their employees but does not require sufficient 
safeguards to ensure that the advisers do not have a conflict of 
interest.
  The country has gotten a better idea about the Republican idea of 
fiscal management recently, and I am sure that that would be the kind 
of people they would want their employees to get their information 
from. Despite running a budget of $400 billion in debt this year, they 
continue to spend money for their affluent supporters in trying to keep 
them from cutting taxes. They have really turned a modest government 
surplus into a prescription drug problem for the next 25 years. We are 
drunk on giving tax relief.
  If we look at Mr. Bush's economic report on page 58, he says: ``A 
conservative rule of thumb is that interest rates rise about three 
basis points for every additional $200 billion in government debt.'' 
Now he tells us that things are going to go up. He tells us, and yet he 
continues to drive us into the hole.
  Now, I was thinking about the kind of advisers that the company might 
recommend. They might recommend Bear Stearns or Credit Suisse or 
Deutsch Bank or Goldman Sachs, or any one of a dozen companies here 
that the Attorney General of New York has just fined $1.4 billion for 
misleading their investors. If you are an employer, and you want them 
to buy the stock in your company so you have some dough, and you send 
them to your credit bank that floats your bonds, it would not be very 
surprising if they recommend that people buy your company, even if it 
was like Ken Lay and Enron and it was going in the tank within a week. 
But there is nothing in this bill that says you cannot do that. Any way 
you can manipulate your workers is fair game.
  Now, there is a legitimate role for government, and that is to 
protect the American people. And not only to protect them from 
terrorists and al Qaeda or whatever is going on in the rest of the 
world, but from the financial rapacious people in New York City.
  The SPEAKER pro tempore (Mr. Linder). The gentleman from California 
(Mr. Matsui) has 1 minute remaining, and the gentleman from Texas (Mr. 
Sam Johnson) has 6\1/2\ minutes remaining, and the gentleman from Texas 
has the right to close.
  Mr. MATSUI. Mr. Speaker, I yield myself the balance of my time, 1 
minute, to close.

[[Page 11411]]

  If I may, Mr. Speaker, because a lot has been said to address the 
issue of the independent advice that my colleagues seem to be really 
hung up on, it is a question of definition. The way they say 
independent advice is that if the independent adviser says I may have a 
conflict of interest, one time, then after that it is Katy, bar the 
door. They can say whatever they want.
  Most employees do not just work 3 days a week, on Tuesday, Wednesday, 
and Thursday, like we in the House of Representatives do. They have 
kids to take to school. They have a lot of obligations. They do not 
remember when people say I may have a conflict of interest. And as a 
result of that, it is meaningless what my colleagues on the other side 
of the aisle are doing. There will be conflicts of interest; but the 
real problem is, obviously, that the employer will be held harmless 
from liability when the conflict of interest actually does damage to 
the employee.
  I am just going to conclude by saying this. This bill will not help 
the average American, this will not help individuals who have 401(k) 
plans, and it definitely will not help the baby boom population that is 
about to retire now and who has inadequate funds for their income 
security. We need to address this in a much larger context and actually 
not do the kinds of damage that this bill will do under the so-called 
ruse of being good government.
  This is not a good government bill. It will do more damage than the 
status quo.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I just would like to make the statement that my friend 
on the other side voted for H.R. 2269, which was the original 
Investment Advice Act, in November of 2001.
  The minority is comparing the investment advice that this bill would 
allow with the recently concluded Global settlement involving several 
Wall Street firms, the SEC, and the New York Attorney General. It is a 
bad comparison. It suggests they do not understand the bill or the 
Global settlement.
  The so-called Global settlement involved claims about individual 
company stocks which analysts were allegedly recommending while their 
firms were seeking investment banking business from the same companies 
without telling them, individual investors, about the relationship.
  H.R. 1000, which we are discussing today, is about 401(k) 
allocations, which mostly involve mutual funds. Mutual funds and the 
advisers who provide guidance about mutual funds are in no way 
implicated in the Global settlement. But because they also provide 
investment advice, the minority is tarring them with the same brush.
  In addition, the Global settlement was about potential conflict of 
interests which were not disclosed to investors. This bill requires 
clear disclosure of any such relationship so that investors can make 
the decision themselves about whether to accept or reject the advice.
  Finally, the Global settlement was just a settlement in exchange for 
a number of reforms aimed at making sure investment analysis is without 
conflict of interest. The investigators who police Wall Street have 
dropped their lawsuit and settled their disagreement.
  I would like to also include at this time the statement from the 
administration on their policy: ``The administration strongly supports 
passage of H.R. 1000, which encompasses important principles outlined 
in the President's pension retirement security plan. Like the 
President's plan, this bill strengthens workers' ability to manage 
their retirement funds by giving them more freedom to diversify their 
investments and by providing better information to workers through 
improved 401(k) and pension plan statements. The bill will also permit 
employers to provide their employees with access to professional 
investment advice. H.R. 1000 would give American workers access to 
information through expert advisers.''
  The White House strongly supports this bill. I believe it requires a 
``yes'' vote.
  The statement of administration policy follows:

         Executive Office of the President, Office of Management 
           and Budget,
                                     Washington, DC, May 14, 2003.

                   Statement of Administration Policy


                H.R. 1000--Pension Security Act of 2003

                  (Boehner (R) Ohio and 54 cosponsors)

       The Administration strongly supports House passage of H.R. 
     1000, which encompasses important principles outlined in the 
     President's Pension Retirement Security Plan. These 
     principles were included in last year's pension reform bill 
     that passed the House with significant bipartisan support. 
     The Administration looks forward to working with Congress to 
     ensure the legislation moves quickly through the process and 
     is consistent with the President's budget.
       Like the President's plan, this bill would strengthen 
     workers' ability to manage their retirement funds by giving 
     them more freedom to diversify their investments and by 
     providing better information to workers through improved 401k 
     and pension plan statements. This bill will also permit 
     employers to provide their employees with access to 
     professional investment advice. H.R. 1000 would give American 
     workers access to information through expert advisers, who 
     assume full fiduciary responsibility for their counsel and 
     disclose relationships and fees associated with investment 
     alternatives, so that they can make better retirement 
     decisions. The bill also contains other important provisions 
     that will help strengthen America's private retirement 
     system.
       The Administration will oppose legislation that discourages 
     employers from sponsoring and making contributions to 
     retirement plans for American workers and their families.

                         Pay-As-You-Go Scoring

       The Budget Enforcement Act's pay-as-you-go requirements and 
     discretionary spending caps expired on September 30, 2002. 
     The Administration supports the extension of these budget 
     enforcement mechanisms in a manner that ensures fiscal 
     discipline and is consistent with the President's budget. 
     OMB's cost estimate of this bill currently is under 
     development.

  Mr. CONYERS. Mr. Speaker, with the passage of the Fairness Act of 
2003, the Republicans are once again placing corporate special 
interests ahead of the public interest. This bill is heavily stacked in 
favor of corporations and corporate executives with few, if any, 
protections for the average working American. It does little, if 
anything, to insure that working Americans retain the hard fought 
pension plans that they have worked so hard to attain. Alternatively, 
the Democratic pension plan would help level the playing field by 
subjecting executive pensions to the same pension rules that apply to 
rank and file workers. The Democratic plan closes loopholes that allow 
special executive pension plans, such as deferred compensation plans, 
trusts and split dollar plans, to escape taxation and to receive 
special protection against creditors. Further, the Democratic plan 
would also apply the same uniform and fair vesting and contribution 
limits to executives that apply to ranks and file employees.
  Instead of protecting pensions, the Republican plan increases the 
vulnerability of the hard earned retirement income of workers by 
allowing investment advice which is tainted by conflicts of interest.
  Under the Republican plan, provisions currently in place under ERISA 
would be undermined by allowing employers to give biased, self-
interested advice to workers concerning the investment of plan assets, 
as long as the investment advisor discloses a conflict of interest.
  The Democratic plan is truly a plan to help average workers, it 
protects older workers' pensions when a company converts from a 
traditional pension plan to a cash pension plan. Under the GOP plan, 
million of workers, especially senior workers, could see their pensions 
cut by as much as 50 percent. The Democratic plans also ends secret 
pensions schemes, whereas, the Republican plan locks rank and file 
workers into company stocks for long periods of time without any legal 
options. Additionally, the Democratic Plan seeks to limit pension 
abuses by preventing firms from deducting more than 1 million in 
executive performance-based compensation if it is obtained through 
manipulation of the company's pension funds, by imposing an excise tax 
on executive golden parachutes when they leave behind companies with 
plummeting shareholder values or which are facing bankruptcy 
proceedings.
  Mr. FRELINGHUYSEN. Mr. Speaker, today I rise in strong support of 
H.R. 1000, the Pension Security Act of 2003. I believe the time to 
update Federal pension law is now! I also believe this legislation 
could have prevented the tragic financial consequences of the Enron 
collapse, which is why I strongly support H.R. 1000.

[[Page 11412]]

  This legislation will help ensure the safety of the American workers' 
pension fund savings through the following ways:
  First, this legislation holds businesses to a higher standard of 
accountability. Specifically, it clarifies that company pension 
officials who do not act in the best interests of pension 
beneficiaries, can be held liable for breaching their fiduciary duty. 
Thus, this legislation ensures that America's CEOs, do not get rich at 
the expense of the American workers' pension fund savings.
  Second, this legislation empowers the American worker by protecting 
employees against future abuses by giving them more control over their 
investments. Specifically, the American worker is empowered with the 
right to diversify employer stock contributions and the option to sell 
company stock three years after receiving it.
  Third, this legislation also empowers the American worker by 
increasing their access to quality investment advice and by providing 
them with more information about their pensions. Specifically, it 
encourages employers to make investment advice available to their 
employees; it allows workers to use a tax-free payroll deduction to 
purchase investment advice on their own; and it requires companies to 
give quarterly reports that include account information, as well as 
their rights to diversify.
  Notably, the Democrat's alternative for pension reform does not 
address the current shortcomings in the pension system. Instead, the 
Democratic alternative increases mandates and regulations that will 
result in increased costs, which will ultimately discourage employers 
from offering retirement plans altogether.
  Finally, this legislation will help restore confidence in America's 
pension fund system. A generation of American workers have enjoyed a 
safe and secure retirement. By passing H.R. 1000 today, we will ensure 
future generations enjoy the same safe and secure retirement.
  Mr. ETHERIDGE. Mr. Speaker, I rise in opposition to H.R. 1000, the 
so-called Pension Security Act, and in support of the Andrews 
Substitute.
  Once again, this body finds itself considering a recycled bill that 
is harmful to America's working families. More than one year ago, this 
House passed seriously flawed legislation similar to H.R. 1000. 
Fortunately, that bill was wisely stopped in the Senate. But instead of 
taking time to write a bipartisan bill to protect worker pensions, here 
we are again debating another terrible bill.
  As I did during the 107th Congress, I will vote against this 
misguided bill because it does not protect employee pensions, fails to 
prevent future corporate scandals, and creates a new loophole in the 
law jeopardizing employee savings.
  Among the most egregious portions of this bill are the provisions 
relating to retirement investment advice. Under current law, employees 
are allowed to receive independent, comprehensive investment 
information as part of their employee benefits package. H.R. 1000 would 
overturn current law to allow employers to offer conflicted investment 
advice to their workers. While the sponsors of this legislation argue 
these provisions would help prevent future corporate scandals like 
Enron and Global Crossing, nothing could be farther from the truth. 
Financial institutions should not be able to give out investment advice 
if they stand to make a profit as a result of that advice.
  Instead I am voting for the Andrews Substitute Amendment, otherwise 
known as the Pension Fairness Act. This important amendment requires 
executive pensions to be subject to the same pension rules that apply 
to rank-and-file workers, protects older workers' pensions when their 
companies convert to cash balance plans, and stops secret pensions 
schemes that allow corporate fat cats to get rich while workers suffer 
after their companies goes broke.
  In this era, when people are saving less, we must ensure that the 
pensions of our working families are protected. H.R. 1000 will not 
achieve that goal, Mr. Speaker. In fact, it will make matters worse.
  I urge all my colleagues to oppose H.R. 1000, and to support the 
Andrews Subsitute.
  Mr. BACA. Mr. Speaker, I rise in strong opposition of H.R. 1000, the 
so-called Pension Fairness Act.
  Congress adjourned last year after failing to address the faults in 
our pension system. A pension system that has been laid bare by 
catastrophic losses for thousands of workers, the tumbling stock 
market, and corporate abuse of retirement plans. We are now setting 
ourselves up to make the system even worse with this bill.
  Proponents of this bill claim that the bill will prevent future 
Enron's and increase retirement security for workers. That is 
completely false. Despite the recycled and tired rhetoric, the bill 
would do nothing to prevent the kind of devastating retirement losses 
suffered by millions of employees and retirees at Enron, WorldCom, and 
other companies. In fact, it would weaken and even eliminate existing 
safeguards.
  To make matters worse, this bill combined with the Treasury 
Department's decision to all conversions from traditional pension plans 
to cash balance plans, is a deadly two-hit combination against our 
Nation's workers. I thought the purpose of this bill was to benefit 
workers, not to leave them poor and with a black eye.
  Evidence shows that older workers who are employed at companies that 
have made this switch have seen their retirement nest eggs shrink by 20 
percent to 50 percent. In other words, these regulations would 
undermine a relatively safe retirement benefit and add to households' 
retirement security woes.
  This proposal does not address the three primary problems with 
today's pension system: lack of coverage for half the workforce, 
inadequate pension income for low- and middle-income workers, and an 
unacceptable risk of pension losses for all workers. Clear strategies 
exist to address each of these issues, but the Pension Security Act of 
2003 and the proposed regulatory changes miss the mark entirely.
  Only half of America's workers have pension coverage at any given 
time. Just 50 percent of private sector workers had pension coverage in 
2000, a level that has increased only slightly since 1970.
  In 2000, 73 percent of our Nation's highest earners had pension 
coverage, compared with just 18 percent of our Nation's lowest earners. 
Hispanic workers are covered at a startlingly low rate of 29 percent, 
compared with 43 percent and 55 percent for their African American and 
white counterparts, respectively.
  Like pension coverage, levels of retirement wealth depend on several 
factors; however, our retirement income level is still primarily 
determined by race, income, and gender. Hispanic retirees are far more 
likely to experience poverty in retirement. As of 1998, a startling 43 
percent of Hispanic workers age 47-64 could expect retirement incomes 
below the poverty line, compared with 13 percent of whites.
  The Federal Government spent over $89 billion in 2000 alone, to 
subsidize employee pensions. Under current law, employers that receive 
these Federal subsidies must pass a ``non-discrimination test,'' under 
which firms can exclude some lower-income employees from coverage, but 
not all.
  But H.R. 1000 will effectively destroy this already thin layer of 
protection for low-income workers.
  Under the guise of the now-familiar refrain of ``increased 
flexibility,'' a goal that has meant more money for employers and less 
money and fewer rights for workers, the House bill would allow 
companies to exclude more of their employees from pension coverage and 
avoid the test for fairness.
  This bill is not flawed; it is deliberate. Deliberate in its 
intention to destroy what few pension protections exist for workers.
  H.R. 1000 deliberately intends, like the tax cut, to deceive the 
working class by claiming to work in their favor, but instead shift 
those benefits to the wealthy.
  I urge my colleagues to defeat this thinly veiled effort to legalize 
Enron pension scams.
  I urge my colleagues to stand up for workers and vote ``no'' on this 
bill.
  Mr. STARK. Mr. Speaker, I rise today to oppose H.R. 1000, the Pension 
Security Act of 2003. This bill does protect pensions--for CEOs and 
business owners. This bill doesn't do a thing to secure pensions for 
the rank and file worker. The bill actually hurts the average worker by 
weakening the non-discrimination rules that require employers to give 
the rank and file adequate pensions if they give lucrative pensions to 
those at the top. H.R. 1000 further hurts the average worker by eroding 
the conflicted advice rules which currently prohibits consultants from 
profiting from the investments they recommend to employees. It seems 
that my Republican colleagues have selective memory when it comes to 
the scandals of Enron and other corporations who led their employees 
into retirement pension devastation just last year. The bill before us 
today does nothing more than promote the behaviors of the greedy 
corporate executives at the peril of the average workers' retirement 
savings.
  Current rules, enacted in 1986 to protect the average worker from 
getting left out of the tax-preferred retirement vehicles used by the 
top brass, require the pension plans to meet very specific tests for 
the balance between benefits for lower paid and higher paid workers. 
Today's bill seeks to delegate a significant amount of discretion to 
the Treasury Department concerning these so-called ``non-
discrimination'' rules governing pension plans.

[[Page 11413]]

Treasury would have the flexibility to permit pension plans to apply a 
``facts and circumstances'' test to the benefits provided under the 
plan. This could result in disproportionately larger benefits going to 
the highly-paid employees compared to the benefits for the rank and 
file workers. At a time when 50 percent of the workforce doesn't even 
have a pension and the other 50 percent are trying to hold on to what 
they might have after last year's corporate debacles, Congress ought 
not to put retirement pensions into further jeopardy.
  This bill goes a step further to hurt the rank and file workers' 
pension plans by allowing ``conflicted advice.'' Wall Street recently 
agreed to pay about $2 billion in penalties for the money it made off 
of investors by giving conflicted advice--advising investors to invest 
in the same companies from which they were receiving consulting and 
initial public offering fees. The SEC is currently trying to devise 
ways to keep investment advice separate from consulting dealings in 
order to protect investors. Now, the Republican party wants to take 
anything we learned from Enron about what not to do with pensions and 
turn it on its head. This is class warfare because the Republican party 
has made it class warfare. They aren't interested in helping the 
average worker who saves a lifetime in order to achieve an adequate 
secure retirement. The Republicans in Congress and in the White House 
would rather pass legislation to help their wealthy Wall Street 
campaign contributors.
  The Democratic alternative is a sound bill that would truly protect 
all workers' pensions, not just those of the CEOs. The Democratic bill 
would require employers to provide conflict-free investment advice to 
employees. Our bill would also provide for worker representation on 
401(k) boards of trustees. Who better to protect workers' pensions than 
a worker representative? Finally, the Democratic substitute bill would 
close the loopholes that permit companies to protect millions of 
dollars in pension benefits for a few top executives while the 
retirement savings of rank and file workers are lost.
  The Democratic bill brings parity to the pensions of the rank and 
file worker by requiring executive pensions to be subject to the same 
pension rules that apply to rank-and-file workers. It would close 
loopholes that allow special executive pension plans (such as deferred 
compensation plans, trusts and split dollar plans) to escape taxation, 
to receive special protection against creditors, and to end-run pension 
laws that require wide employee participation (of both high and low 
wage workers) at the company. It would also apply to executives the 
same uniform and fair vesting and contribution limits that apply to 
rank and file employees. This bill fulfills President Bush's promise to 
provide equitable treatment to the captain and the sailor.
  I urge my colleagues to put a stop to raids on retirement pensions by 
voting ``no'' on H.R. 1000 and ``yes'' on the Democratic substitute 
bill.
  Mr. CASTLE. Mr. Speaker, I rise today in strong support of H.R. 1000, 
the ``Pension Security Act.'' I am proud to be a cosponsor of this 
measure that passed the House with bipartisan support in the 107th 
Congress and I thank Chairman Boehner and Subcommittee Chairman Sam 
Johnson for bringing this matter to the floor again. I am hopeful the 
measure will again pass as it provides important protections to working 
Americans with employer-based retirement plans.
  Sadly, we have watched many Americans see their retirement savings 
plummet. Congress took a much needed step in enacting the Sarbanes-
Oxley Act and this legislation further strengthens those reforms. This 
legislation gives workers greater ability to manage and expand their 
retirement savings.
  Congressional hearings in 2002 established that inadequate worker 
access to investment advice contributed significantly to retirement 
security losses by employees at Enron. This bill provides greater 
resources to American workers by allowing employers to provide their 
workers with high-quality, professional investment advice as an 
employee benefit, while maintaining safeguards to protect the interests 
of workers and investors. This measure requires companies to give 
workers quarterly benefit statements that include information about 
accounts, including the value of their assets, their rights to 
diversify, and the importance of maintaining a diversified portfolio.
  The ``Pension Security Act'' would give workers unprecedented new 
retirement security protections and would have helped to protect 
thousands of Enron and WorldCom employees who lost their savings during 
the company's collapse. Workers must be fully protected and fully 
prepared with the tools they need to protect and enhance their 
retirement savings. The ``Pension Security Act'' accomplishes these 
goals and I urge my colleagues to join me in supporting this important 
legislation.
  Ms. WATERS. Mr. Speaker, we find ourselves with yet another 
Republican bill that does not deliver what its title promises. H.R. 
1000 is not a true pension security bill. We can and must do better 
than this bill.
  Since 2001, our country has experienced what has seemed to be almost 
weekly bankruptcies of some of the Nation's largest companies. Many of 
these bankruptcies were accompanied by corporate mismanagement and, in 
some cases, looting of employee pensions.
  Enron, Tyco, Global Crossing--and many other companies are household 
names because of their executives' disgraceful actions. Some of the 
largest airlines have provided golden parachutes for their senior 
executives, even as their pilots, stewards and maintenance workers 
accept pay and benefit cuts to help these companies survive.
  The President and his party have been talking tough about the need to 
protect workers' pensions and to combat corporate misdeeds. The 
President has been trying to make it sound as if he wanted to pursue 
tough reforms to strengthen employee protections and protect pensions. 
Yet, he is supporting this inadequate bill. A bill where, once again, 
the Republicans have sided with the worst CEOs and the special 
interests, rather than with our country's workers.
  Witness, for example, how this bill locks employees into company 
stock for excessively long periods of time, putting at risk their 
retirement savings while company executives are allowed to sell off 
their stocks at any time. Enron's employees were forced to watch their 
retirement savings disappear as the company's stock went from a high of 
$80 to just a few pennies. They were not allowed to sell their stock. 
Enron executives, on the other hand, sold their holdings as they 
pleased. Enron's CEO, Kenneth Lay, made almost $50 million; and the 
Chief Financial Officer made $21 million last year. The company managed 
to pay out $744 million in salaries, bonuses and stock grants to the 
company's 140 senior officers just before it collapsed.
  The same thing happened with Global Crossing. As the company mislead 
the public and its employees about its finances, many of the Crossing 
officials sold their stocks and made millions of dollars. Gary Winnick, 
the company's Chairman of the Board, sold about 9 percent of his stake 
in the company for $123.5 million. Each one of his deputies made out 
just as well. Meanwhile, the company laid off thousands of people. 
Those Global Crossing employees who managed to survive these job cuts, 
saw their retirement savings vanish.
  Mr. Speaker, with all its many shortcomings, the greatest problem 
with this bill is that it repeals the law that prohibits employers from 
offering ``conflicted advice.'' It will now be legal for companies to 
offer financial advice even though it might be tainted with conflicts 
of interest. If Congress were to take any steps in this area, we should 
be strengthening provisions to protect employees and their pensions 
from such conflicted advice, not eliminating laws that prohibit them.
  This legislation is an insult to the millions of people who lost 
billions in retirement savings while they watched their company leaders 
continue to enrich themselves. We should not pass this bill.
  Ms. MAJETTE. Mr. Speaker, in our rush to pass this legislation, we 
have failed to consider the needs of the American worker today. I would 
like to note my thoughts about this legislation, including what it does 
and also, importantly, what it does not do. This bill includes a number 
of provisions that are necessary, including some that are long overdue, 
but fails to consider some other needs that should be addressed.
  For too long, investors have been putting their hard-earned money 
into investments, including the stock market, without understanding all 
of the benefits of diversification into different investment options. 
This bill will allow employers to provide workers with investment 
advice concerning the divestiture of their plan assets. I am very 
pleased that this bill also requires investment advisors to disclose 
any conflicts of interest. I know that plan fiduciaries take their 
obligations to provide good advice seriously and workers should expect 
from these advisors no less than the best, most honest financial advice 
possible. It is my hope that workers, armed with competent, 
professional investment advice, will translate this knowledge into 
secure retirement plans that meet their individual needs. I am pleased 
that workers will no longer be making investment decisions without 
receiving this financial education.
  For too long, workers have been forced by some companies to hold the 
majority of their assets in their own company's stock. This requirement 
resulted in many workers holding all

[[Page 11414]]

of their eggs in one basket and, for many, this requirement resulted in 
their losing all of their retirement savings (along with their jobs) 
when companies went bankrupt. This law was outdated and overly-
restrictive. I am excited that this bill prohibits employers from 
forcing workers to keep savings in their own company's stock for more 
than three years. Employees must be given the opportunity to diversify 
their investments and, where necessary, rescue their savings when the 
company's fortunes turn bad.
  Unfortunately, these changes to pension law fall short of the broad 
reform needed to adequately protect workers' retirement savings. 
Workers specifically need legislation today that will protect their 
pensions when a company converts to a cash balance plan. Many companies 
are considering adopting these plans without maintaining the benefits 
upon which many senior workers have planned their retirements. For a 
company to strip away promised benefits by changing the rules just 
before workers retire, is unconscionable; moreover, it should be 
criminal. This bill's failure to address the serious concerns many 
workers have about their pensions is simply unacceptable.
  Furthermore, this body's continued unwillingness to allow sufficient 
debate on significant issues is a practice that must end--and end soon. 
By disallowing debate on important amendments, we are failing to live 
up to our constituents' expectations. Our constituents sent us to 
Washington to discuss the nation's difficult issues and to debate these 
issues on their merits. Today, the important issue of whether we would 
extend unemployment benefits, currently set to expire at the end of the 
month, was not discussed. When we fail to allow discussion of important 
issues we are failing the American people.
  I vote in opposition of the ``pension security act'' for its failure 
to address the pressing needs of the American people today. I earnestly 
hope that consideration of future bills will include substantial debate 
on all of the issues that warrant attention, not just those that are 
easy to talk about.
  Mr. KIND. Mr. Speaker, the Education and Workforce Committee, of 
which I am a member, recently passed H.R. 1000, legislation to protect 
workers hard earned pensions as well as expanding their retirement 
savings. While the bill will not necessarily end all corruption and 
abuse in our Nation's pension system, I feel that it is a step in the 
right direction.
  As we all know over the past year, thousands of Enron, Global 
Crossing and WorldCom employees, stockholders, and their families saw 
their life savings disappear. While their nest eggs were being crushed, 
top executives were selling stock at top dollar and the auditors were 
shredding documents. These recent scandals shook the foundation of our 
country's private pension system and caused many people to wonder if 
the same thing could happen to them. Today, 46 million Americans 
participate in 401(k) and other pension programs with more then $4 
trillion invested in the private pension system.
  Congress has a responsibility to improve retirement security and 
restore confidence in the pension system for millions of Americans. In 
1974, Congress enacted the Employee Retirement Income Security Act 
(ERISA) to provide protection of pension benefits for America's private 
sector employees. While ERISA made great strides, the growth of 401(k) 
plans and increased participation in the securities markets call for 
improved safeguards to protect these individually controlled pension 
accounts.
  Our Democratic substitute includes important provisions that should 
be included in the underlying bill. For example, the Miller bill seeks 
parity of benefits for executives and rank-in-file workers by closing a 
current loophole that gives special treatment for executive pension 
plans. In addition, the substitute requires that executive compensation 
packages, including pensions, are approved by the board of directors 
and that shareholders and employees are notified of any new benefits 
awarded to executives 100 days before their adoption.
  While I would prefer that the legislation on the floor today contain 
some of the provisions included in the Miller substitute, H.R. 1000 
ultimately provides employees more control and decisionmaking over 
their 401(k) plans. Pension reform must be carefully done so as not to 
impose such onerous new restrictions that employers would be unwilling 
to offer pension plans, or might be encouraged to discontinue the plans 
they already offer.
  Specifically H.R. 3762 would allow employees to sell their company-
contributed stock after three years; ensures that corporate executives 
are held to the same restrictions as average American workers during 
``lockdown'' periods, provide workers quarterly statements about their 
investments and their rights to diversify them, makes certain that 
employers assume full fiduciary responsibility during ``lockdown'' 
periods; and expand workers' access to investment advice.
  These are common sense reforms that will help employees make better, 
more informed investment choices to prepare for their golden years. The 
recent corporate scandals exposed weaknesses in our pension laws that 
could jeopardize many workers retirement savings.
  Mr. Speaker, hardworking Americans should not lose all of their 
retirement savings due to the wrong-doing of corporate executives and 
loopholes in our pension laws. This legislation, while not perfect, 
will bring much needed improvements to our private pension system and 
help millions of American workers save for a happy and healthy 
retirement.
  Mr. EVERETT. Mr. Speaker, I rise in support of this legislation to 
improve pension security for American workers. However, I come to the 
floor today to express my serious concerns about the actions of some 
corporate decision makers, which has resulted in the sometimes criminal 
raiding and robbing of pension funds. I fear that we have not seen the 
last of the corporate malfeasance exhibited by the Enrons, Worldcoms, 
Global Crossings and HealthSouths. It is clear to me that consumer 
confidence in the American economy will not improve until corporate 
governance in America changes.
  I am concerned about what appears to be a growing number of 
executives in America who do not feel they should be accountable to 
their shareholders or employees. Moreover, some of these same corporate 
executives have been walking the halls of Congress looking for a 
taxpayer bailout for their failing industries. The sad fact is some 
continue to demand and receive outrageous salaries and perks while 
their companies flounder and, in some cases, face civil and criminal 
investigations for fraud and corruption.
  One of the most disturbing facts of these misguided or criminal 
actions by corporate leaders is that their employees see their hard-
earned profit sharing plans disappear. The corporate ``rock star'' 
rides off with his guaranteed benefits package intact, while the 
workers and shareholders take it on the chin. Their investments and 
savings, tied to corporate growth and built up over the years, have 
vanished. Plans of retirement are halted, either permanently or 
indefinitely; and many workers find themselves forced to work in their 
golden years.
  Mr. Speaker, this legislation will do much to improve the security of 
private pension funds, but until the actions of corporate boardrooms 
reflect a new sense of responsibility and accountability to their 
employees and investors, consumer confidence in our economy will be a 
long time in coming.
  Mr. DAVIS of Illinois. Mr. Speaker, I rise today in opposition to 
H.R. 1000, the ``Pension Security Act.'' Last year, our country was in 
disbelief to witness the scandals that occurred in corporate America. 
We all heard the countless stories of workers who lost everything--from 
their jobs, their homes to their retirement savings. And then we heard 
the stories of the executives and the CEOs of the corporations who were 
still living in their million dollar homes with no change to their 
luxurious lifestyle.
  Not only did America lose confidence in corporations or begin to 
question their employer, America began to lose confidence in the 
market, and our economy has paid the price. As Representatives of the 
American workers, we must ensure that this does not occur again. We 
must ensure that all of our workers are protected, especially our older 
workers. Older workers should not be penalized for their dedication and 
years of hard work. We also need to ensure that workers be active 
participants on their pension boards, receive independent investment 
advice, and should not have a significant wait period to diversify 
their own money.
  We all know the Enron story, the Tyco story, the WorldCom story. And 
America knows of these stories, too. Let's show America that we are 
putting an end to these sagas! Let's stand strong in support of 
workers, in obtaining jobs for workers and putting in safeguards that 
would prevent our workers pensions from disappearing.
  Mr. SAM JACKSON of Texas. Mr. Speaker, I yield back the balance of my 
time.
  The SPEAKER pro tempore. All time for debate on the bill has expired.

                              {time}  1430


     Amendment in the Nature of a Substitute Offered by Mr. Andrews

  Mr. ANDREWS. Mr. Speaker, as the designee of the ranking member, I 
offer an amendment in the nature of a substitute.
  The SPEAKER pro tempore (Mr. Linder). The Clerk will designate the

[[Page 11415]]

amendment in the nature of a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Pension 
     Fairness Act of 2003''.
       (b) Table of Contents.--The table of contents is as 
     follows:
Sec. 1. Short title and table of contents.

                  TITLE I--IMPROVEMENTS IN DISCLOSURE

Sec. 101. Pension benefit information.
Sec. 102. Immediate warning of excessive stock holdings.
Sec. 103. Report to participants and beneficiaries of trades in 
              employer securities.
Sec. 104. Enforcement of information and disclosure requirements.

    TITLE II--FREEDOM TO MAKE INVESTMENT DECISIONS WITH PLAN ASSETS.

Sec. 201. Amendments to the Internal Revenue Code of 1986.
Sec. 202. Amendments to the Employee Retirement Income Security Act of 
              1974.
Sec. 203. Recommendations relating to non-publicly traded stock.
Sec. 204. Effective date of title.

                   TITLE III--EMPLOYEE REPRESENTATION

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

                   TITLE IV--INCREASED ACCOUNTABILITY

Sec. 401. Bonding or insurance adequate to protect interest of 
              participants and beneficiaries.
Sec. 402. Liability for breach of fiduciary duty.
Sec. 403. Preservation of rights or claims.
Sec. 404. Office of pension participant advocacy.
Sec. 405. Study regarding insurance system for individual account 
              plans.
Sec. 406. Excise tax on failure of pension plans to provide notice of 
              transaction restriction periods.

     TITLE V--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

Sec. 501. Independent investment advice.
Sec. 502. Tax treatment of qualified retirement planning services.

                 TITLE VI--PARITY IN EMPLOYEE BENEFITS

Sec. 601. Inclusion in gross income of funded deferred compensation of 
              corporate insiders if corporation funds defined 
              contribution plan with employer stock.
Sec. 602. Performance-based compensation exception to $1,000,000 
              limitation on deductible compensation not to apply in 
              certain cases.

            TITLE VII--PROTECTION OF RETIREMENT EXPECTATIONS

Sec. 701. Protection of participants from conversions to hybrid defined 
              benefit plans.

              TITLE VIII--TREATMENT OF CORPORATE INSIDERS

Sec. 801. Special rules for executive perks and retirement benefits.
Sec. 802. Golden parachute excise tax to apply to deferred compensation 
              paid by corporation after major decline in stock value or 
              corporation declares bankruptcy.
Sec. 803. Adequate disclosure regarding executive compensation 
              packages.

                   TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 901. Corporate deduction for reinvested ESOP dividends subject to 
              deductible limits.
Sec. 902. Credit for elective deferrals and IRA contributions by 
              certain individuals made permanent (saver's tax credit).
Sec. 903. Authority to rescind transfers to plans made for the benefit 
              of highly compensated employees.

                      TITLE X--GENERAL PROVISIONS

Sec. 1001. General effective date.
Sec. 1002. Plan amendments.

                  TITLE I--IMPROVEMENTS IN DISCLOSURE

     SEC. 101. PENSION BENEFIT INFORMATION.

       (a) Pension Benefit Statements Required on Periodic 
     Basis.--
       (1) In general.--Subsection (a) of section 105 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1025) is amended--
       (A) by striking ``shall furnish to any plan participant or 
     beneficiary who so requests in writing,'' and inserting 
     ``shall furnish at least once every 3 years, in the case of a 
     participant in a defined benefit plan who has attained age 
     35, and annually, in the case of an individual account plan, 
     to each plan participant, and shall furnish to any plan 
     participant or beneficiary who so requests,'', and
       (B) by adding at the end the following flush sentence:
     ``Information furnished under the preceding sentence to a 
     participant in a defined benefit plan (other than at the 
     request of the participant) may be based on reasonable 
     estimates determined under regulations prescribed by the 
     Secretary.''.
       (2) Model statement.--Section 105 of such Act (29 U.S.C. 
     1025) is amended by adding at the end the following new 
     subsection:
       ``(e)(1) The Secretary of Labor shall develop a model 
     benefit statement which shall be used by plan administrators 
     in complying with the requirements of subsection (a). Such 
     statement shall include--
       ``(A) the amount of nonforfeitable accrued benefits as of 
     the statement date which is payable at normal retirement age 
     under the plan,
       ``(B) the amount of accrued benefits which are forfeitable 
     but which may become nonforfeitable under the terms of the 
     plan,
       ``(C) the amount or percentage of any reduction due to 
     integration of the benefit with the participant's Social 
     Security benefits or similar governmental benefits,
       ``(D) information on early retirement benefit and joint and 
     survivor annuity reductions, and
       ``(E) in the case of an individual account plan, the 
     percentage of the net return on investment of plan assets for 
     the preceding plan year (or, with respect to investments 
     directed by the participant, the net return on investment of 
     plan assets for such year so directed), itemized with respect 
     to each type of investment, and, stated separately, the 
     administrative and transaction fees incurred in connection 
     with each such type of investment, and
       ``(F) in the case of an individual account plan, the amount 
     and percentage of assets in the individual account that 
     consists of employer securities and employer real property 
     (as defined in paragraphs (1) and (2), respectively, of 
     section 407(d)), as determined as of the most recent 
     valuation date of the plan.
       ``(2) The Secretary shall also develop a separate notice, 
     which shall be included by the plan administrator with the 
     information furnished pursuant to subsection (a), which 
     advises participants and beneficiaries of generally accepted 
     investment principles, including principles of risk 
     management and diversification for long-term retirement 
     security and the risks of holding substantial assets in a 
     single asset such as employer securities.''.
       (3) Rule for multiemployer plans.--Subsection (d) of 
     section 105 of such Act (29 U.S.C. 1025) is amended to read 
     as follows:
       ``(d) Each administrator of a plan to which more than 1 
     unaffiliated employer is required to contribute shall furnish 
     to any plan participant or beneficiary who so requests in 
     writing, a statement described in subsection (a).''.
       (b) Disclosure of Benefit Calculations.--
       (1) In general.--Section 105 of such Act (as amended by 
     subsection (a)) is amended further--
       (A) by redesignating subsections (b), (c), (d), and (e) as 
     subsections (c), (d), (e), and (f), respectively; and
       (B) by inserting after subsection (a) the following new 
     subsection:
       ``(b)(1) In the case of a participant or beneficiary who is 
     entitled to a distribution of a benefit under an employee 
     pension benefit plan, the administrator of such plan shall 
     provide to the participant or beneficiary the information 
     described in paragraph (2) upon the written request of the 
     participant or beneficiary.
       ``(2) The information described in this paragraph 
     includes--
       ``(A) a worksheet explaining how the amount of the 
     distribution was calculated and stating the assumptions used 
     for such calculation,
       ``(B) upon written request of the participant or 
     beneficiary, any documents relating to the calculation (if 
     available), and
       ``(C) such other information as the Secretary may 
     prescribe.
     Any information provided under this paragraph shall be in a 
     form calculated to be understood by the average plan 
     participant.''.
       (2) Conforming amendments.--
       (A) Section 101(a)(2) of such Act (29 U.S.C. 1021(a)(2)) is 
     amended by striking ``105(a) and (c)'' and inserting 
     ``105(a), (b), and (d)''.
       (B) Section 105(c) of such Act (as redesignated by 
     paragraph (1)(A) of this subsection) is amended by inserting 
     ``or (b)'' after ``subsection (a)''.
       (C) Section 106(b) of such Act (29 U.S.C. 1026(b)) is 
     amended by striking ``sections 105(a) and 105(c)'' and 
     inserting ``subsections (a), (b), and (d) of section 105''.
       (c) Amendments to Internal Revenue Code of 1986.--
       (1) In general.--Chapter 43 of the Internal Revenue Code of 
     1986 (relating to qualified pension, etc., plans) is amended 
     by adding at the end the following new section:

     ``SEC. 4980G. FAILURE OF APPLICABLE PLANS TO PROVIDE NOTICE 
                   OF GENERALLY ACCEPTED INVESTMENT PRINCIPLES.

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of any applicable pension plan to meet the 
     requirements of subsection (e) with respect to any applicable 
     individual.
       ``(b) Amount of Tax.--The amount of the tax imposed by 
     subsection (a) on any failure with respect to any applicable 
     individual

[[Page 11416]]

     shall be $100 for each day in the noncompliance period with 
     respect to such failure.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Tax not to apply to failures corrected within 30 
     days.--No tax shall be imposed by subsection (a) on any 
     failure if--
       ``(A) any person subject to liability for the tax under 
     subsection (d) exercised reasonable diligence to meet the 
     requirements of subsection (e), and
       ``(B) such person provides the notice described in 
     subsection (e) during the 30-day period beginning on the 
     first date such person knew, or exercising reasonable 
     diligence should have known, that such failure existed.
       ``(2) Overall limitation for unintentional failures.--
       ``(A) In general.--If the person subject to liability for 
     tax under subsection (d) exercised reasonable diligence to 
     meet the requirements of subsection (e) and paragraph (1) is 
     not otherwise applicable, the tax imposed by subsection (a) 
     for failures during the taxable year of the employer (or, in 
     the case of a multiemployer plan, the taxable year of the 
     trust forming part of the plan) shall not exceed $500,000. 
     For purposes of the preceding sentence, all multiemployer 
     plans of which the same trust forms a part shall be treated 
     as 1 plan.
       ``(B) Taxable years in the case of certain controlled 
     groups.--For purposes of this paragraph, if all persons who 
     are treated as a single employer for purposes of this section 
     do not have the same taxable year, the taxable years taken 
     into account shall be determined under principles similar to 
     the principles of section 1561.
       ``(3) Waiver by secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive or otherwise inequitable relative to the 
     failure involved.
       ``(d) Liability for Tax.--The following shall be liable for 
     the tax imposed by subsection (a):
       ``(1) In the case of a plan other than a multiemployer 
     plan, the employer.
       ``(2) In the case of a multiemployer plan, the plan.
       ``(e) Notice of Generally Accepted Investment Principles.--
       ``(1) In general.--The plan administrator of an applicable 
     pension plan shall provide notice of generally accepted 
     investment principles, including principles of risk 
     management and diversification, to each applicable 
     individual.
       ``(2) Notice.--The notice required by paragraph (1) shall 
     be written in a manner calculated to be understood by the 
     average plan participant and shall provide sufficient 
     information (as determined in accordance with rules or other 
     guidance adopted by the Secretary) to allow applicable 
     individuals to understand generally accepted investment 
     principles, including principles of risk management and 
     diversification.
       ``(3) Timing of notice.--The notice required by paragraph 
     (1) shall be provided upon enrollment of the applicable 
     individual in such plan and at least once per plan year 
     thereafter.
       ``(4) Form and manner of notice.--The notice required by 
     paragraph (1) shall be in writing, except that such notice 
     may be in electronic or other form to the extent that such 
     form is reasonably accessible to the applicable individual.
       ``(f) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable individual.--The term `applicable 
     individual' means with respect to an applicable pension 
     plan--
       ``(A) any participant in the applicable pension plan,
       ``(B) any beneficiary who is an alternate payee (within the 
     meaning of section 414(p)(8)) under an applicable qualified 
     domestic relations order (within the meaning of section 
     414(p)(1)(A)), and
       ``(C) any beneficiary of a deceased participant or 
     alternate payee described in subparagraph (A) or (B), as the 
     case may be,

     who has an accrued benefit under the plan and who is entitled 
     to direct the investment (or hypothetical investment) of some 
     or all of such accrued benefit.
       ``(2) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(A) a plan described in section 219(g)(5)(A) (other than 
     in clause (iii) thereof), and
       ``(B) an eligible deferred compensation plan (as defined in 
     section 457(b)) of an eligible employer described in section 
     457(e)(1)(A),

     which permits any participant to direct the investment of 
     some or all of his account in the plan or under which the 
     accrued benefit of any participant depends in whole or in 
     part on hypothetical investments directed by the 
     participant.''.
       (1) Clerical amendment.--The table of sections for chapter 
     43 of such Code is amended by adding at the end the following 
     new item:
 ``Sec. 4980G. Failure of applicable plans to provide notice of 
              generally accepted investment principles.''.
       (3) Effective date.--
       (A) In general.--The amendments made by this subsection 
     shall take effect 60 days after the adoption of rules or 
     other guidance to carry out the amendments made by this 
     subsection, which shall include a model notice of generally 
     accepted investment principles, including principles of risk 
     management and diversification.
       (B) Model investment principles.--For purposes of 
     subparagraph (A), not later than 120 days after the date of 
     the enactment of this Act, the Secretary of the Treasury, in 
     consultation with the Secretary of Labor, shall issue rules 
     or other guidance and a model notice which meets the 
     requirements of section 4980G of the Internal Revenue Code of 
     1986 (as added by this section).

     SEC. 102. IMMEDIATE WARNING OF EXCESSIVE STOCK HOLDINGS.

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

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

     SEC. 103. REPORT TO PARTICIPANTS AND BENEFICIARIES OF TRADES 
                   IN EMPLOYER SECURITIES.

       (a) In General.--Section 104 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1024) is amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) In any case in which assets in the individual 
     account of a participant or beneficiary under an individual 
     account plan include employer securities, if any person 
     engages in a transaction constituting a direct or indirect 
     purchase or sale of employer securities and--
       ``(A) such transaction is required under section 16 of the 
     Securities Exchange Act of 1934 to be reported by such person 
     to the Securities and Exchange Commission, or
       ``(B) such person is a named fiduciary of the plan,

     such person shall comply with the requirements of paragraph 
     (2).
       ``(2) A person described in paragraph (1) complies with the 
     requirements of this paragraph in connection with a 
     transaction described in paragraph (1) if such person 
     provides to the plan administrator of the plan a written 
     notification of the transaction not later than 1 business day 
     after the date of the transaction.
       ``(3)(A) If the plan administrator is made aware, on the 
     basis of notifications received pursuant to paragraph (2) or 
     otherwise, that the proceeds from any transaction described 
     in paragraph (1), constituting direct or indirect sales of 
     employer securities by any person described in paragraph (1), 
     exceed $100,000, the plan administrator of the plan shall 
     provide to each participant and beneficiary a notification of 
     such transaction. Such notification shall be in writing, 
     except that such notification may be in electronic or other 
     form to the extent that such form is reasonably accessible to 
     the participant or beneficiary.
       ``(B) In any case in which the proceeds from any 
     transaction described in paragraph (1) (with respect to which 
     a notification has not been provided pursuant to this 
     paragraph), together with the proceeds from any other such 
     transaction or transactions described in paragraph (1) 
     occurring during the preceding one-year period, constituting 
     direct or indirect sales of employer securities by any person 
     described in paragraph (1), exceed (in the aggregate) 
     $100,000, such series of

[[Page 11417]]

     transactions by such person shall be treated as a transaction 
     described in subparagraph (A) by such person.
       ``(C) Each notification required under this paragraph shall 
     be provided as soon as practicable, but not later than 3 
     business days after receipt of the written notification or 
     notifications indicating that the transaction (or series of 
     transactions) requiring such notice has occurred.
       ``(4) Each notification required under paragraph (2) or (3) 
     shall be made in such form and manner as may be prescribed in 
     regulations of the Secretary and shall include the number of 
     shares involved in each transaction and the price per share, 
     and the notification required under paragraph (3) shall be 
     written in language designed to be understood by the average 
     plan participant. The Secretary may provide by regulation, in 
     consultation with the Securities and Exchange Commission, for 
     exemptions from the requirements of this subsection with 
     respect to specified types of transactions to the extent that 
     such exemptions are consistent with the best interests of 
     plan participants and beneficiaries. Such exemptions may 
     relate to transactions involving reinvestment plans, stock 
     splits, stock dividends, qualified domestic relations orders, 
     and similar matters.
       ``(5) For purposes of this subsection, the term `employer 
     security' has the meaning provided in section 407(d)(1).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to transactions occurring after 90 
     days after the date of the enactment of this Act.

     SEC. 104. ENFORCEMENT OF INFORMATION AND DISCLOSURE 
                   REQUIREMENTS.

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

    TITLE II--FREEDOM TO MAKE INVESTMENT DECISIONS WITH PLAN ASSETS

     SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

       (a) In General.--Subsection (a) of section 401 of the 
     Internal Revenue Code of 1986 (relating to requirements for 
     qualification) is amended by adding at the end the following 
     new paragraph:
       ``(35) Diversification requirements for defined 
     contribution plans that hold employer securities.--
       ``(A) In general.--In the case of a defined contribution 
     plan described in this subsection that includes a trust which 
     is exempt from tax under section 501(a) and which holds 
     employer securities that are readily tradable on an 
     established securities market, such trust shall not 
     constitute a qualified trust under this section unless such 
     plan meets the requirements of subparagraphs (B) and (C).
       ``(B) Elective deferrals invested in employer securities.--
       ``(i) In general.--In the case of the portion of the 
     account attributable to elective deferrals which is invested 
     in employer securities, a plan meets the requirements of this 
     subparagraph if each applicable individual in such plan may 
     elect to direct the plan to divest any portion of such 
     securities in the individual's account and to reinvest an 
     equivalent amount in other investment options which meet the 
     requirements of subparagraph (D). The preceding sentence 
     shall apply to the extent that the amount attributable to 
     reinvested portion exceeds the amount to which a prior 
     election under this subparagraph or paragraph (28) applies.
       ``(ii) Applicable individual.--For purposes of this 
     subparagraph, the term `applicable individual' means--

       ``(I) any participant in the plan,
       ``(II) any beneficiary who is an alternate payee (within 
     the meaning of section 414(p)(8)) under an applicable 
     qualified domestic relations order (within the meaning of 
     section 414(p)(1)(A)), and
       ``(III) any beneficiary of a deceased participant or 
     alternate payee.

       ``(C) Other employer contributions.--
       ``(i) In general.--In the case of the portion of the 
     account attributable to employer contributions (other than 
     elective deferrals) which is invested in employer securities, 
     a plan meets the requirements of this subparagraph if each 
     qualified participant in the plan may elect to direct the 
     plan to divest any portion of such securities in the 
     participant's account and to reinvest an equivalent amount in 
     other investment options which meet the requirements of 
     subparagraph (E). The preceding sentence shall apply to the 
     extent that the amount attributable to such reinvested 
     portion exceeds the amount to which a prior election under 
     this subparagraph or paragraph (28) applies.
       ``(ii) Qualified participant.--For purposes of this 
     subparagraph, the term `qualified participant' means--

       ``(I) any participant in the plan who has completed at 
     least 3 years of service (as determined under section 411(a)) 
     under the plan,
       ``(II) any beneficiary who, with respect to a participant 
     who met the service requirement in subclause (I), is an 
     alternate payee (within the meaning of section 414(p)(8)) 
     under an applicable qualified domestic relations order 
     (within the meaning of section 414(p)(1)(A)), and
       ``(III) any beneficiary of a deceased participant who met 
     the service requirement in subclause (I) or alternate payee 
     described in subclause (II).

       ``(D) Investment options.--The requirements of this 
     subparagraph are met if the plan offers not less than 3 
     investment options (not inconsistent with regulations 
     prescribed by the Secretary) other than employer securities.
       ``(E) Preservation of authority of plan to limit 
     investment.--Nothing in this paragraph shall be construed to 
     limit the authority of a plan to impose limitations on the 
     portion of plan assets in any account which may be invested 
     in employer securities.
       ``(E) Other definitions and rules.--For purposes of this 
     paragraph--
       ``(i) Employer securities.--The term `employer securities' 
     shall have the meaning given such term by section 407(d)(1) 
     of the Employee Retirement Income Security Act of 1974.
       ``(ii) Elective deferrals.--For purposes of this 
     subparagraph, the term `elective deferrals' means an employer 
     contribution described in section 402(g)(3)(A) and any 
     employee contribution.
       ``(iii) Election.--Elections under this paragraph shall be 
     not less frequently than quarterly.
       ``(iv) Employee stock ownership plan.--The term `employee 
     stock ownership plan' shall have the same meaning given to 
     such term by section 4975(e)(7).''.
       (b) Conforming Amendments.--
       (1) Section 401(a)(28) of such Code is amended by adding at 
     the end the following new subparagraph:
       ``(D) Application.--This paragraph shall not apply with 
     respect to employer securities which are readily tradable on 
     an established securities market.''.
       (2) Section 409(h)(7) of such Code is amended by inserting 
     at the end ``or subparagraph (B) or (C) of section 
     401(a)(35)''.
       (3) Section 4975(e)(7) of such Code is amended by adding at 
     the end the following new sentence: ``A plan shall not fail 
     to be treated as an employee stock ownership plan merely 
     because the plan meets the requirements of section 401(a)(35) 
     (or provides greater diversification rights) or because 
     participants in such plan exercise diversification rights 
     under such section (or greater diversification rights 
     available under the plan).''.
       (4) Section 4980(c)(3)(A) of such Code is amended by 
     striking ``if--'' and all that follows and inserting ``if the 
     requirements of subparagraphs (B) and (C) are met.''.
       (5) Section 407 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1107) is amended by adding at the end 
     the following new subsection:
       ``(g) Notwithstanding section 408(e) or any other provision 
     of this title, an individual account plan may not include 
     provisions that do not meet the requirements of section 
     401(a)(35)(B) of the Internal Revenue Code of 1986.''.

     SEC. 202. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME 
                   SECURITY ACT OF 1974.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--Section 404 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1104) is amended by adding at 
     the end the following new subsection:
       ``(e) Diversification of Investment of Account Assets Held 
     Under Individual Account Plans.--
       ``(1) In general.--In the case of an individual account 
     plan under which a participant or beneficiary is permitted to 
     exercise control over assets in his or her account, with 
     respect to the assets in the account to which the participant 
     or beneficiary has a nonforfeitable right and which consist 
     of employer securities which are readily tradable on an 
     established securities market, the plan shall meet the 
     requirements of paragraphs (2), (3), (4), (5), (6), and (7).
       ``(2) Assets attributable to employee contributions.--In 
     the case of any portion of the account assets described in 
     paragraph (1) which is attributable to employee 
     contributions, there shall be no restrictions on the right of 
     a participant or beneficiary to allocate the assets in such 
     portion to any investment option provided under the plan.
       ``(3) Elective deferrals invested in employer securities.--
       ``(A) In general.--In the case of the portion of the 
     account assets described in paragraph (1) which is 
     attributable to elective deferrals and is invested in 
     employer securities, a plan meets the requirements of this 
     paragraph if each applicable individual in

[[Page 11418]]

     such plan may elect to direct the plan to divest any portion 
     of such securities in the individual's account and to 
     reinvest an equivalent amount in other investment options 
     which meet the requirements of paragraph (5). The preceding 
     sentence shall apply to the extent that the amount 
     attributable to such reinvested portion exceeds the amount to 
     which a prior election under this paragraph or section 
     401(a)(28) of the Internal Revenue Code of 1986 applies.
       ``(B) Applicable individual.--For purposes of this 
     paragraph, the term `applicable individual' means--
       ``(i) any participant in the plan,
       ``(ii) any beneficiary who is an alternate payee (within 
     the meaning of section 206(d)(3)(K)) under an applicable 
     qualified domestic relations order (within the meaning of 
     section 206(d)(3)(B)(i)), and
       ``(iii) any beneficiary of a deceased participant or 
     alternate payee.
       ``(4) Other employer contributions.--
       ``(A) In general.--In the case of the portion of the 
     account assets described in paragraph (1) which is 
     attributable employer contributions (other than elective 
     deferrals) and is invested in employer securities, a plan 
     meets the requirements of this paragraph if each qualified 
     participant in the plan may elect to direct the plan to 
     divest any portion of such securities in the participant's 
     account and to reinvest an equivalent amount in other 
     investment options which meet the requirements of paragraph 
     (6). The preceding sentence shall apply to the extent that 
     the amount attributable to such reinvested portion exceeds 
     the amount to which a prior election under this paragraph or 
     section 401(a)(28) of such Code applies.
       ``(B) Qualified participant.--For purposes of this 
     paragraph, the term `qualified participant' means--
       ``(i) any participant in the plan who has completed at 
     least 3 years of service (as determined under section 203(a)) 
     under the plan,
       ``(ii) any beneficiary who, with respect to a participant 
     who met the service requirement in clause (i), is an 
     alternate payee (within the meaning of section 206(d)(3)(K)) 
     under an applicable qualified domestic relations order 
     (within the meaning of section 206(d)(3)(B)(i)), and
       ``(iii) any beneficiary of a deceased participant who met 
     the service requirement in clause (i) or alternate payee 
     described in clause (ii).
       ``(5) Investment options.--The requirements of this 
     paragraph are met if, with respect to the account assets 
     described in paragraph (1), the plan offers not less than 3 
     investment options (not inconsistent with regulations 
     prescribed by the Secretary) other than employer securities.
       ``(6) Prompt compliance with directions to allocate 
     investments.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a plan meets the requirements of this paragraph with respect 
     to plan assets described in paragraph (1) if the plan 
     provides that, within 5 days after the date of any election 
     by a participant or beneficiary allocating any such assets to 
     any investment option provided under the plan, the plan 
     administrator shall take such actions as are necessary to 
     effectuate such allocation.
       ``(B) Special rule for periodic elections.--In any case in 
     which the plan provides for elections periodically during 
     prescribed periods, the 5-day period described in 
     subparagraph (A) shall commence at the end of each such 
     prescribed period.
       ``(7) Notice of rights and of importance of 
     diversification.--A plan meets the requirements of this 
     paragraph if the plan provides that, not later than 30 days 
     prior to the date on which the right of a participant under 
     the plan to his or her accrued benefit becomes 
     nonforfeitable, the plan administrator shall provide to such 
     participant and his or her beneficiaries a written notice--
       ``(A) setting forth their rights under this section with 
     respect to the accrued benefit, and
       ``(B) describing the importance of diversifying the 
     investment of account assets.
       ``(8) Preservation of authority of plan to limit 
     investment.--Nothing in this subsection shall be construed to 
     limit the authority of a plan to impose limitations on the 
     portion of plan assets in any account which may be invested 
     in employer securities.
       ``(9) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Employer securities.--The term `employer securities' 
     shall have the meaning given such term by section 407(d)(1) 
     of the Employee Retirement Income Security Act of 1974.
       ``(B) Elective deferrals.--The term `elective deferrals' 
     means an employer contribution described in section 
     402(g)(3)(A) of such Code and any employee contribution.
       ``(C) Election.--Elections under this subsection shall be 
     not less frequently than quarterly.
       ``(D) Employee stock ownership plan.--The term `employee 
     stock ownership plan' shall have the same meaning given to 
     such term by section 4975(e)(7) of such Code.

     SEC. 203. RECOMMENDATIONS RELATING TO NON-PUBLICLY TRADED 
                   STOCK.

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

     SEC. 204. EFFECTIVE DATE OF TITLE.

       (a) In General.--Except as provided in subsection (b), the 
     amendments made by this title shall apply with respect to 
     plan years beginning after December 31, 2003.
       (b) Exception.--The amendments made by this section shall 
     not apply to employer securities held by an employee stock 
     ownership plan which are not subject to section 401(a)(28) of 
     the Internal Revenue Code of 1986 by reason of section 
     1175(a)(2) of the Tax Reform Act of 1986 (100 Stat. 2519).
       (c) Delayed Effective Date of Existing Holdings.--In any 
     case in which a portion of the nonforfeitable accrued benefit 
     of a participant or beneficiary is held in the form of 
     employer securities (as defined in section 407(d)(1) of the 
     Employee Retirement Income Security Act of 1974) immediately 
     before the first date of the first plan year to which the 
     amendments made by this title apply, such portion shall be 
     taken into account only with respect to plan years beginning 
     on or after January 1, 2005.

                   TITLE III--EMPLOYEE REPRESENTATION

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

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

                   TITLE IV--INCREASED ACCOUNTABILITY

     SEC. 401. BONDING OR INSURANCE ADEQUATE TO PROTECT INTEREST 
                   OF PARTICIPANTS AND BENEFICIARIES.

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

[[Page 11419]]

     any failure to meet the requirements of this part.''.

     SEC. 402. LIABILITY FOR BREACH OF FIDUCIARY DUTY.

       (a) Additional Equitable or Remedial Relief.--Section 409 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1109) is amended--
       (1) by redesignating subsection (b) as subsection (c);
       (2) in subsection (a), by striking ``, including removal of 
     such fiduciary''; and
       (3) by inserting after subsection (a) the following new 
     subsection:
       ``(b) The equitable or remedial relief referred to in 
     subsection (a) may include (but is not limited to) a court 
     order removing the fiduciary from the plan referred to in 
     subsection (a) and a court order prohibiting, conditionally 
     or unconditionally, and permanently or for such period of 
     time as the court shall determine, the fiduciary from 
     serving--
       ``(1) as an administrator, fiduciary, officer, trustee, 
     custodian, counsel, agent, employee, or representative in any 
     capacity of any employee benefit plan,
       ``(2) as a consultant or adviser to an employee benefit 
     plan, including but not limited to any entity whose 
     activities are in whole or substantial part devoted to 
     providing goods or services to any employee benefit plan, or
       ``(3) in any capacity that involves decisionmaking 
     authority or custody or control of the moneys, funds, assets, 
     or property of any employee benefit plan.''.
       (b) Liability for Participating In or Concealing Fiduciary 
     Breach in Connection with Individual Account Plans.--
       (1) Application to participants and beneficiaries of 401(k) 
     plans.--
       (A) In general.--Part 4 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1101 et seq.) is amended by adding after section 409 the 
     following new section:

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

       ``(a) Any person who is a fiduciary with respect to an 
     individual account plan that includes a qualified cash or 
     deferred arrangement under section 401(k) of the Internal 
     Revenue Code of 1986 who breaches any of the 
     responsibilities, obligations, or duties imposed upon 
     fiduciaries by this title shall be personally liable to make 
     good to each participant and beneficiary of the plan any 
     losses to such participant or beneficiary resulting from each 
     such breach, and to restore to such participant or 
     beneficiary any profits of such fiduciary which have been 
     made through use of assets of the plan by the fiduciary, and 
     shall be subject to such other equitable or remedial relief 
     as the court may deem appropriate, including removal of such 
     fiduciary. A fiduciary may also be removed for a violation of 
     section 411 of this Act.
       ``(b) The right of participants and beneficiaries under 
     subsection (a) to sue for breach of fiduciary duty with 
     respect to an individual account plan that includes a 
     qualified cash or deferred arrangement under section 401(k) 
     of such Code shall be in addition to all existing rights that 
     participants and beneficiaries have under section 409, 
     section 502, and any other provision of this title, and shall 
     not be construed to give rise to any inference that such 
     rights do not already exist under section 409, section 502, 
     or any other provision of this title.
       ``(c) No fiduciary shall be liable with respect to a breach 
     of fiduciary duty under this title if such breach was 
     committed before he or she became a fiduciary or after he or 
     she ceased to be a fiduciary.''
       (B) Conforming amendment.--The table of contents for part 4 
     of subtitle B of title I of such Act is amended by inserting 
     the following new item after the item relating to section 
     409:
``Sec. 409A. Liability for breach of fiduciary duty in 401(k) plans.''
       (2) Insider liability.--
       (A) In general.--Section 409 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1109) is amended by 
     redesignating subsection (b) as subsection (c) and by 
     inserting after subsection (a) the following new subsection:
       ``(b)(1)(A) If an insider with respect to the plan sponsor 
     of an individual account plan that holds employer securities 
     that are readily tradable on an established securities 
     market--
       ``(i) knowingly participates in a breach of fiduciary 
     responsibility to which subsection (a) applies, or
       ``(ii) knowingly undertakes to conceal such a breach,
     such insider shall be personally liable under this subsection 
     for such breach in the same manner as the fiduciary who 
     commits such breach.
       ``(B) For purposes of subparagraph (A), the term `insider' 
     means, with respect to any plan sponsor of a plan to which 
     subparagraph (A) applies--
       ``(i) any officer or director with respect to the plan 
     sponsor, or
       ``(ii) any independent qualified public accountant of the 
     plan or of the plan sponsor.
       ``(3) Any relief provided under this subsection or section 
     409A--
       ``(A) if provided to an individual account plan, shall 
     inure to the individual accounts of the affected participants 
     or beneficiaries, and
       ``(B) if provided to a participant or beneficiary, shall be 
     payable to the individual account plan on behalf of such 
     participant or beneficiary unless such plan has been 
     terminated.''
       (B) Conforming amendment.--Section 409(c) of such Act (29 
     U.S.C. 1109(c)), as redesignated by subparagraph (A), is 
     amended by inserting before the period the following: ``, 
     unless such liability arises under subsection (b)''.
       (c) Maintenance of Fiduciary Liability.--Section 
     404(c)(1)(B) of such Act (29 U.S.C. 1104(c)(1)(B)) is amended 
     by inserting before the period the following: ``, except that 
     this subparagraph shall not be construed to exempt any 
     fiduciary from liability for any violation of subsection 
     (e)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to breaches occurring on or after 
     the date of the enactment of this Act.

     SEC. 403. PRESERVATION OF RIGHTS OR CLAIMS.

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

     SEC. 404. OFFICE OF PENSION PARTICIPANT ADVOCACY.

       (a) In General.--Subtitle A of title III of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 3001 et 
     seq.) is amended by inserting after section 3004 the 
     following new section:


                ``office of pension participant advocacy

       ``Sec. 3005. (a) Establishment.--
       ``(1) In general.--There is established in the Department 
     of Labor an office to be known as the `Office of Pension 
     Participant Advocacy'.
       ``(2) Pension participant advocate.--The Office of Pension 
     Participant Advocacy shall be under the supervision and 
     direction of an official to be known as the `Pension 
     Participant Advocate' who shall--
       ``(A) have demonstrated experience in the area of pension 
     participant assistance, and
       ``(B) be selected by the Secretary after consultation with 
     pension participant advocacy organizations.
     The Pension Participant Advocate shall report directly to the 
     Secretary and shall be entitled to compensation at the same 
     rate as the highest rate of basic pay established for the 
     Senior Executive Service under section 5382 of title 5, 
     United States Code.
       ``(b) Functions of Office.--It shall be the function of the 
     Office of Pension Participant Advocacy to--
       ``(1) evaluate the efforts of the Federal Government, 
     business, and financial, professional, retiree, labor, 
     women's, and other appropriate organizations in assisting and 
     protecting pension plan participants, including--
       ``(A) serving as a focal point for, and actively seeking 
     out, the receipt of information with respect to the policies 
     and activities of the Federal Government, business, and such 
     organizations which affect such participants,
       ``(B) identifying significant problems for pension plan 
     participants and the capabilities of the Federal Government, 
     business, and such organizations to address such problems, 
     and
       ``(C) developing proposals for changes in such policies and 
     activities to correct such problems, and communicating such 
     changes to the appropriate officials,
       ``(2) promote the expansion of pension plan coverage and 
     the receipt of promised benefits by increasing the awareness 
     of the general public of the value of pension plans and by 
     protecting the rights of pension plan participants, 
     including--
       ``(A) enlisting the cooperation of the public and private 
     sectors in disseminating information, and
       ``(B) forming private-public partnerships and other efforts 
     to assist pension plan participants in receiving their 
     benefits,
       ``(3) advocating for the full attainment of the rights of 
     pension plan participants, including by making pension plan 
     sponsors and fiduciaries aware of their responsibilities,
       ``(4) giving priority to the special needs of low and 
     moderate income participants,
       ``(5) developing needed information with respect to pension 
     plans, including information on the types of existing pension 
     plans, levels of employer and employee contributions, vesting 
     status, accumulated benefits, benefits received, and forms of 
     benefits, and
       ``(6) pursuing claims on behalf of participants and 
     beneficiaries and providing appropriate assistance in the 
     resolution of disputes between participants and beneficiaries 
     and pension plans, including assistance in obtaining 
     settlement agreements.
       ``(c) Reports.--

[[Page 11420]]

       ``(1) Annual report.--Not later than December 31 of each 
     calendar year, the Pension Participant Advocate shall report 
     to the Committee on Education and the Workforce and the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Health, Education, Labor, and Pensions 
     and the Committee on Finance of the Senate on its activities 
     during the fiscal year ending in the calendar year. Such 
     report shall--
       ``(A) identify significant problems the Advocate has 
     identified,
       ``(B) include specific legislative and regulatory changes 
     to address the problems, and
       ``(C) identify any actions taken to correct problems 
     identified in any previous report.
     The Advocate shall submit a copy of such report to the 
     Secretary and any other appropriate official at the same time 
     it is submitted to the committees of Congress.
       ``(2) Specific reports.--The Pension Participant Advocate 
     shall report to the Secretary or any other appropriate 
     official any time the Advocate identifies a problem which may 
     be corrected by the Secretary or such official.
       ``(3) Reports to be submitted directly.--The report 
     required under paragraph (1) shall be provided directly to 
     the committees of Congress without any prior review or 
     comment by the Secretary or any other Federal officer or 
     employee.
       ``(d) Specific Powers.--
       ``(1) Receipt of information.--Subject to such 
     confidentiality requirements as may be appropriate, the 
     Secretary and other Federal officials shall, upon request, 
     provide such information (including plan documents) as may be 
     necessary to enable the Pension Participant Advocate to carry 
     out the Advocate's responsibilities under this section.
       ``(2) Appearances.--The Pension Participant Advocate may 
     represent the views and interests of pension plan 
     participants before any Federal agency, including, upon 
     request of a participant, in any proceeding involving the 
     participant.
       ``(3) Contracting authority.--In carrying out 
     responsibilities under subsection (b)(5), the Pension 
     Participant Advocate may, in addition to any other authority 
     provided by law--
       ``(A) contract with any person to acquire statistical 
     information with respect to pension plan participants, and
       ``(B) conduct direct surveys of pension plan 
     participants.''
       (b) Conforming Amendment.--The table of contents in section 
     1 of such Act is amended by inserting after the item relating 
     to section 3004 the following new item:
``Sec. 3051. Office of Pension Participant Advocacy.''.
       (c) Effective Date.--The amendment made by this section 
     shall take effect on January 1, 2004.

     SEC. 405. STUDY REGARDING INSURANCE SYSTEM FOR INDIVIDUAL 
                   ACCOUNT PLANS.

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

     SEC. 406. EXCISE TAX ON FAILURE OF PENSION PLANS TO PROVIDE 
                   NOTICE OF TRANSACTION RESTRICTION PERIODS.

       (a) In General.--Chapter 43 of the Internal Revenue Code of 
     1986 (relating to qualified pension, etc., plans) is amended 
     by adding at the end the following new section:

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

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of any applicable pension plan to meet the 
     requirements of subsection (e) with respect to any applicable 
     individual.
       ``(b) Amount of Tax.--The amount of the tax imposed by 
     subsection (a) on any failure with respect to any applicable 
     individual shall be $100 for each day in the noncompliance 
     period with respect to such failure.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Tax not to apply to failures corrected as soon as 
     reasonably practicable.--No tax shall be imposed by 
     subsection (a) on any failure if--
       ``(A) any person subject to liability for the tax under 
     subsection (d) exercised reasonable diligence to meet the 
     requirements of subsection (e), and
       ``(B) such person provides the notice described in 
     subsection (e) as soon as reasonably practicable after the 
     first date such person knew, or exercising reasonable 
     diligence should have known, that such failure existed.
       ``(2) Overall limitation for unintentional failures.--
       ``(A) In general.--If the person subject to liability for 
     tax under subsection (d) exercised reasonable diligence to 
     meet the requirements of subsection (e) and paragraph (1) is 
     not otherwise applicable, the tax imposed by subsection (a) 
     for failures during the taxable year of the employer (or, in 
     the case of a multiemployer plan, the taxable year of the 
     trust forming part of the plan) shall not exceed $500,000. 
     For purposes of the preceding sentence, all multiemployer 
     plans of which the same trust forms a part shall be treated 
     as 1 plan.
       ``(B) Taxable years in the case of certain controlled 
     groups.--For purposes of this paragraph, if all persons who 
     are treated as a single employer for purposes of this section 
     do not have the same taxable year, the taxable years taken 
     into account shall be determined under principles similar to 
     the principles of section 1561.
       ``(3) Waiver by secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive or otherwise inequitable relative to the 
     failure involved.
       ``(d) Liability for Tax.--The following shall be liable for 
     the tax imposed by subsection (a):
       ``(1) In the case of a plan other than a multiemployer 
     plan, the employer.
       ``(2) In the case of a multiemployer plan, the plan.
       ``(e) Notice of Transaction Restriction Periods.--
       ``(1) Duties of plan administrator.--In advance of the 
     commencement of any transaction restriction period with 
     respect to an applicable pension plan, the plan administrator 
     shall notify the plan participants and beneficiaries who are 
     affected by such action in accordance with this subsection.
       ``(2) Notice requirements.--
       ``(A) In general.--The notices described in paragraph (1) 
     shall be written in a manner calculated to be understood by 
     the average plan participant and shall include--
       ``(i) the reasons for the transaction restriction period,
       ``(ii) an identification of the investments and other 
     rights affected,
       ``(iii) the expected beginning date and length of the 
     transaction restriction period,
       ``(iv) in the case of investments affected, a statement 
     that the applicable individual should evaluate the 
     appropriateness of their current investment decisions in 
     light of their inability to direct or diversify assets 
     credited to their accounts during the transaction restriction 
     period, and
       ``(v) such other matters as the Secretary may require by 
     regulation.
       ``(B) Notice to participants and beneficiaries.--Except as 
     otherwise provided in this subsection, notices described in 
     paragraph (1) shall be furnished to all participants and 
     beneficiaries under the plan to whom the transaction 
     restriction period applies at least 30 days in advance of the 
     transaction restriction period.
       ``(C) Exception to 30-day notice requirement.--In any case 
     in which--
       ``(i) a deferral of the transaction restriction period 
     would violate the requirements of subparagraph (A) or (B) of 
     section 404(a)(1) of the Employee Retirement Income Security 
     Act of 1974, and a fiduciary (within the meaning of section 
     3(21) of such Act) of the plan reasonably so determines in 
     writing, or
       ``(ii) the inability to provide the 30-day advance notice 
     is due to events that were unforeseeable or circumstances 
     beyond the reasonable control of the plan administrator, and 
     a fiduciary of the plan reasonably so determines in writing,

     subparagraph (B) shall not apply, and the notice shall be 
     furnished to all participants and beneficiaries under the 
     plan to whom the transaction restriction period applies as 
     soon as reasonably possible under the circumstances unless 
     such a notice in advance of the termination of the 
     transaction restriction period is impracticable.
       ``(D) Written notice.--The notice required to be provided 
     under this subsection shall be in writing, except that such 
     notice may be in electronic or other form to the extent that 
     such form is reasonably accessible to the recipient.
       ``(E) Notice to issuers of employer securities subject to 
     transaction restriction period.--In the case of any 
     transaction restriction period in connection with an 
     applicable pension plan, the plan administrator shall provide 
     timely notice of such transaction restriction period to the 
     issuer of any employer securities subject to such transaction 
     restriction period.
       ``(3) Exception for transaction restriction periods with 
     limited applicability.--In any case in which the transaction 
     restriction period applies to 1 or more participants or 
     beneficiaries in connection with a merger, acquisition, 
     divestiture, or similar transaction involving the plan or 
     plan sponsor and occurs solely in connection with becoming or 
     ceasing to be an applicable individual under the plan by 
     reason of such merger, acquisition, divestiture, or 
     transaction, the requirement of this subsection that the 
     notice be provided to all participants and beneficiaries 
     shall be treated as met if the notice required

[[Page 11421]]

     under paragraph (1) is provided to such participants or 
     beneficiaries to whom the transaction restriction period 
     applies as soon as reasonably practicable.
       ``(4) Changes in length of transaction restriction 
     period.--If, following the furnishing of the notice pursuant 
     to this subsection, there is a change in the beginning date 
     or length of the transaction restriction period (specified in 
     such notice pursuant to paragraph (2)(A)(iii)), the 
     administrator shall provide affected participants and 
     beneficiaries notice of the change as soon as reasonably 
     practicable. In relation to the extended transaction 
     restriction period, such notice shall meet the requirements 
     of paragraph (2)(D) and shall specify any material change in 
     the matters referred to in clauses (i) through (v) of 
     paragraph (2)(A).
       ``(5) Regulatory exceptions.--The Secretary may provide by 
     regulation for additional exceptions to the requirements of 
     this subsection which the Secretary determines are in the 
     interests of participants and beneficiaries.
       ``(6) Guidance and model notices.--The Secretary shall 
     issue guidance and model notices which meet the requirements 
     of this subsection.
       ``(7) Transaction restriction period.--For purposes of this 
     subsection--
       ``(A) In general.--The term `transaction restriction 
     period' means, in connection with an applicable pension plan, 
     any period for which any ability of participants or 
     beneficiaries under the plan, which is otherwise available 
     under the terms of such plan, to direct or diversify assets 
     credited to their accounts, to obtain loans from the plan, or 
     to obtain distributions from the plan is temporarily 
     suspended, limited, or restricted, if such suspension, 
     limitation, or restriction is for any period of more than 3 
     consecutive business days.
       ``(B) Exclusions.--The term `transaction restriction 
     period' does not include a suspension, limitation, or 
     restriction--
       ``(i) which occurs by reason of the application of the 
     securities laws (as defined in section 3(a)(47) of the 
     Securities Exchange Act of 1934),
       ``(ii) which is a change to the plan which provides for a 
     regularly scheduled suspension, limitation, or restriction 
     which is disclosed to participants or beneficiaries through 
     any summary of material modifications, any materials 
     describing specific investment alternatives under the plan, 
     or any changes thereto, or
       ``(iii) which applies to 1 or more individuals, each of 
     whom is the participant, an alternate payee (as defined in 
     section 414(p)(8)), or any other beneficiary pursuant to a 
     qualified domestic relations order (as defined in section 
     414(p)(1)).
       ``(8) Applicable individual.--For purposes of this section, 
     the term `applicable individual' means--
       ``(A) any participant in the applicable pension plan,
       ``(B) any beneficiary who is an alternate payee (within the 
     meaning of section 414(p)(8)) under an applicable qualified 
     domestic relations order (within the meaning of section 
     414(p)(1)(A)), and
       ``(C) any beneficiary of a deceased participant or 
     alternate payee,

     who has an accrued benefit under the plan and who is entitled 
     to direct the investment (or hypothetical investment) of some 
     or all of such accrued benefit.
       ``(9) Applicable pension plan.--For purposes of this 
     subsection, the term `applicable pension plan' means--
       ``(A) a plan described in section 219(g)(5)(A) (other than 
     in clause (iii) thereof), and
       ``(B) an eligible deferred compensation plan (as defined in 
     section 457(b)) of an eligible employer described in section 
     457(e)(1)(A),

     which permits any participant to direct the investment of 
     some or all of his account in the plan or under which the 
     accrued benefit of any participant depends in whole or in 
     part on hypothetical investments directed by the 
     participant.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     43 of such Code is amended by adding at the end the following 
     new item:
 ``Sec. 4980H. Failure of applicable plans to provide notice of 
              transaction restriction periods.''.

       (c) Effective Date and Related Rules.--
       (1) Effective date.--The amendments made by this section 
     shall take effect 180 days after the date of the enactment of 
     this Act. Good faith compliance with the requirements of such 
     amendments in advance of the issuance of applicable 
     regulations thereunder shall be treated as compliance with 
     such provisions.
       (2) Issuance of initial guidance and model notice.--The 
     Secretary of the Treasury shall, in consultation with the 
     Secretary of Labor, issue initial guidance and a model notice 
     pursuant to section 4980H(e)(6) of the Internal Revenue Code 
     of 1986 (as added by this section) not later than January 1, 
     2005. Not later than 75 days after the date of the enactment 
     of this Act, the Secretary shall promulgate interim final 
     rules necessary to carry out the amendments made by this 
     section.
       (3) Plan amendments.--If any amendment made by this section 
     requires an amendment to any plan, such plan amendment shall 
     not be required to be made before the first plan year 
     beginning on or after the effective date of this section, 
     if--
       (A) during the period after such amendment made by this 
     section takes effect and before such first plan year, the 
     plan is operated in good faith compliance with the 
     requirements of such amendment made by this section, and
       (B) such plan amendment applies retroactively to the period 
     after such amendment made by this section takes effect and 
     before such first plan year.

     TITLE V--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

     SEC. 501. INDEPENDENT INVESTMENT ADVICE.

       (a) In General.--Section 404(c)(1) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(1)) 
     (as amended by section 102(c)) is amended further--
       (1) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively, and by inserting ``(A)'' after 
     ``(c)(1)''; and
       (2) by adding at the end the following new subparagraphs:
       ``(B)(i) In the case of a pension plan described in 
     subparagraph (A) which provides investment in employer 
     securities as at least one option for investment of plan 
     assets at the direction of the participant or beneficiary, 
     such plan shall make available to the participant or 
     beneficiary the services of a qualified fiduciary adviser for 
     purposes of providing investment advice described in section 
     3(21)(A)(ii) regarding investment in such securities.
       ``(ii) No person who is otherwise a fiduciary shall be 
     liable by reason of any investment advice provided by a 
     qualified fiduciary adviser pursuant to a request under 
     clause (i) if--
       ``(I) the plan provides for selection and monitoring of 
     such adviser in a prudent and effective manner,
       ``(II) such adviser is a named fiduciary under the plan in 
     connection with the provision of such advice, and
       ``(III) in the provision of the advice, such adviser is not 
     conflicted in connection with the provision of the advice, in 
     accordance with subparagraph (C).
       ``(C) A qualified fiduciary adviser is not conflicted in 
     the provision of investment advice if, with respect to any 
     product taken into account in determining the asset 
     allocation with respect to which such advice is provided--
       ``(i) the adviser has no material interest in such product, 
     or
       ``(ii) the adviser discloses any material interest the 
     adviser has in such product to the recipient of the advice 
     and refers the recipient to an alternative qualified 
     fiduciary adviser made available by the plan under 
     subparagraph (B)(i) who has no material interest in any 
     product taken into account in the recommended asset 
     allocation.
       ``(D) For purposes of subparagraph (B)--
       ``(i) The term `qualified fiduciary adviser' means, with 
     respect to a plan, a person who--
       ``(I) is a fiduciary of the plan by reason of the provision 
     of qualified investment advice by such person to a 
     participant or beneficiary,
       ``(II) has no material interest in, and no material 
     affiliation or contractual relationship with any third party 
     having a material interest in, the employer (other than such 
     person's relationship with the employer in the capacity of a 
     qualified fiduciary adviser),
       ``(III) meets the independence requirements of clause (ii) 
     in connection with investment advice provided by such person 
     pursuant to services rendered pursuant to clause (i),
       ``(IV) meets the qualifications of clause (iii), and
       ``(V) meets the additional requirements of clause (iv).
       ``(ii) A person meets the independence requirements of this 
     clause if--
       ``(I) the amount of compensation payable to any entity in 
     connection with the provision of the advice is not dependent 
     on any particular product with respect to which the advice is 
     rendered or the value of any such product,
       ``(II) no recordkeeping is maintained by such person, the 
     plan, the plan sponsor, or any other fiduciary with respect 
     to the plan with respect to which products are recommended by 
     such person,
       ``(III) such person has no material interest in, and no 
     material affiliation or contractual relationship with any 
     third party having a material interest in, any other person 
     whose analysis, with respect to any security or other 
     property with respect to which the advice is being provided, 
     is employed in developing recommendations included in such 
     advice, and
       ``(IV) the plan provides for prompt disclosure of material 
     interests and for the services of alternative qualified 
     fiduciary advisers, sufficient to meet the requirements of 
     subparagraph (C).
       ``(iii) A person meets the qualifications of this 
     subparagraph if such person--
       ``(I) is registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.),
       ``(II) if not registered as an investment adviser under 
     such Act by reason of section 203A(a)(1) of such Act (15 
     U.S.C. 80b-3a(a)(1)),

[[Page 11422]]

     is registered under the laws of the State in which the 
     fiduciary maintains its principal office and place of 
     business, and, at the time the fiduciary last filed the 
     registration form most recently filed by the fiduciary with 
     such State in order to maintain the fiduciary's registration 
     under the laws of such State, also filed a copy of such form 
     with the Secretary,
       ``(III) is registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(IV) is a bank or similar financial institution referred 
     to in section 408(b)(4),
       ``(V) is an insurance company qualified to do business 
     under the laws of a State, or
       ``(VI) is any other comparable entity which satisfies such 
     criteria as the Secretary determines appropriate.
       ``(iv) A person meets the additional requirements of this 
     clause if every individual who is employed (or otherwise 
     compensated) by such person and whose scope of duties 
     includes the provision of qualified investment advice on 
     behalf of such person to any participant or beneficiary is--
       ``(I) a registered representative of such person,
       ``(II) an individual described in subclause (I), (II), or 
     (III) of clause (i), or
       ``(III) such other comparable qualified individual as may 
     be designated in regulations of the Secretary.''.
       (b) Maintenance of Fiduciary Liability.--Section 
     404(c)(1)(B) of such Act (29 U.S.C. 1104(c)(1)(B)) is amended 
     by inserting before the period the following: ``, except that 
     this subparagraph shall not be construed to exempt any 
     fiduciary from liability for any violation of this section''.

     SEC. 502. TAX TREATMENT OF QUALIFIED RETIREMENT PLANNING 
                   SERVICES.

       (a) In General.--Subsection (m) of section 132 of the 
     Internal Revenue Code of 1986 (defining qualified retirement 
     services) is amended by adding at the end the following new 
     paragraph:
       ``(4) No constructive receipt.--No amount shall be included 
     in the gross income of any employee solely because the 
     employee may choose between any qualified retirement planning 
     services provided by a qualified investment advisor and 
     compensation which would otherwise be includible in the gross 
     income of such employee. The preceding sentence shall apply 
     to highly compensated employees only if the choice described 
     in such sentence is available on substantially the same terms 
     to each member of the group of employees normally provided 
     education and information regarding the employer's qualified 
     employer plan.''.
       (b) Conforming Amendments.--
       (1) Section 403(b)(3)(B) of such Code is amended by 
     inserting ``132(m)(4),'' after ``132(f)(4),''.
       (2) Section 414(s)(2) of such Code is amended by inserting 
     ``132(m)(4),'' after ``132(f)(4),''.
       (3) Section 415(c)(3)(D)(ii) of such Code is amended by 
     inserting ``132(m)(4),'' after ``132(f)(4),''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

                 TITLE VI--PARITY IN EMPLOYEE BENEFITS

     SEC. 601. INCLUSION IN GROSS INCOME OF FUNDED DEFERRED 
                   COMPENSATION OF CORPORATE INSIDERS IF 
                   CORPORATION FUNDS DEFINED CONTRIBUTION PLAN 
                   WITH EMPLOYER STOCK.

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

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

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

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

     If the employer and employee agree to a modification of the 
     plan that accelerates the time for payment of any deferred 
     compensation, then all compensation previously deferred under 
     the plan shall be includible in gross income for the taxable 
     year during which such modification takes effect and the 
     taxpayer shall pay interest at the underpayment rate on the 
     underpayments that would have occurred had the deferred 
     compensation been includible in gross income in the taxable 
     years deferred.
       ``(B) Creditor's rights.--A plan shall be treated as 
     failing to meet the requirements of paragraph (1)(B) with 
     respect to amounts set aside in a trust unless--
       ``(i) the employee has no beneficial interest in the trust,
       ``(ii) assets in the trust are available to satisfy claims 
     of general creditors at all times (not merely after 
     bankruptcy or insolvency), and
       ``(iii) there is no factor (such as the location of the 
     trust outside the United States) that would make it more 
     difficult for general creditors to reach the assets in the 
     trust than it would be if the trust assets were held directly 
     by the employer in the United States.
       ``(c) Corporate Insider.--For purposes of this section, the 
     term `corporate insider' means, with respect to a 
     corporation, any individual who is subject to the 
     requirements of section 16(a) of the Securities Exchange Act 
     of 1934 with respect to such corporation.
       ``(d) Other definitions.--For purposes of this section--
       ``(1) Plan includes arrangements, etc.--The term `plan' 
     includes any agreement or arrangement.
       ``(2) Substantial risk of forfeiture.--The rights of a 
     person to compensation are subject to a substantial risk of 
     forfeiture if such person's rights to such compensation are 
     conditioned upon the future performance of substantial 
     services by any individual.''
       (b) Clerical Amendment.--The table of sections for such 
     subpart A is amended by adding at the end the following new 
     item:
``Sec. 409A. Denial of deferral for funded deferred compensation of 
              corporate insiders if corporation funds defined 
              contribution plan with employer stock.''

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

     SEC. 602. PERFORMANCE-BASED COMPENSATION EXCEPTION TO 
                   $1,000,000 LIMITATION ON DEDUCTIBLE 
                   COMPENSATION NOT TO APPLY IN CERTAIN CASES.

       (a) In General.--Paragraph (4) of section 162(m) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new subparagraph:
       ``(G) Certain factors not permitted to be taken into 
     account in determining whether performance goals are met.--
     Subparagraph (C) shall not apply if, in determining whether 
     the performance goals are met, any of the following are taken 
     into account:
       ``(i) Cost savings as a result of changes to any qualified 
     employer plan (as defined in section 4972(d)).
       ``(ii) Excess assets of such a plan or earnings thereon.
       ``(iii) Any excess of the amount assumed to be the return 
     on the assets of such a plan over the actual return on such 
     assets.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

            TITLE VII--PROTECTION OF RETIREMENT EXPECTATIONS

     SEC. 701. PROTECTION OF PARTICIPANTS FROM CONVERSIONS TO 
                   HYBRID DEFINED BENEFIT PLANS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Election to maintain rate of accrual in effect before 
     plan amendment.--Section 204(b)(1) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1054(b)(1)) is amended 
     by adding at the end the following new subparagraph:
       ``(I)(i) Notwithstanding the preceding subparagraphs, in 
     the case of a plan amendment to a defined benefit plan--
       ``(I) which has the effect of converting the plan to a plan 
     under which the accrued benefit is expressed to participants 
     and beneficiaries as an amount other than an annual benefit 
     commencing at normal retirement age (or which has a similar 
     effect as determined under regulations issued under clause 
     (iii)), and

[[Page 11423]]

       ``(II) which has the effect of reducing the rate of future 
     benefit accrual of 1 or more participants,

     such plan shall be treated as not satisfying the requirements 
     of this paragraph unless such plan meets the requirements of 
     clause (ii).
       ``(ii) A plan meets the requirements of this clause if the 
     plan provides each participant who has attained 10 years of 
     service (as determined under section 203) under the plan at 
     the time such amendment takes effect with--
       ``(I) notice of the plan amendment indicating that it has 
     such effect, including a comparison of the present and 
     projected values of the accrued benefit determined both with 
     and without regard to the plan amendment, and
       ``(II) an election, on the date of the conversion, to 
     either receive benefits under the terms of the plan as in 
     effect on or after the effective date of such plan amendment 
     or to receive benefits under the terms of the plan as in 
     effect immediately before the effective date of such plan 
     amendment (taking into account all benefit accruals under 
     such terms since such date).
       ``(iii) The Secretary shall issue regulations under which 
     any plan amendment which has an effect similar to the effect 
     described in clause (i)(I) shall be treated as a plan 
     amendment described in clause (i)(I). Such regulations may 
     provide that if a plan sponsor represents in communications 
     to participants and beneficiaries that a plan amendment has 
     an effect described in the preceding sentence, such plan 
     amendment shall be treated as a plan amendment described in 
     clause (i)(I).''.
       (2) Early retirement subsidy taken into account for 
     purposes of opening balance of hybrid defined benefit plan.--
     Section 204(g) of such Act (29 U.S.C. 1054(g)) is amended by 
     adding at the end the following new paragraph:
       ``(6) In the case of a plan amendment to a defined benefit 
     plan which has the effect of converting the plan to a plan 
     under which the accrued benefit is expressed to participants 
     and beneficiaries as an amount other than an annual benefit 
     commencing at normal retirement age (or a plan amendment to 
     such plan having a similar effect as determined under 
     regulations issued under subsection (b)(1)(I)(iii)), such 
     amendment shall not be treated as reducing accrued benefits 
     merely because under such amendment any early retirement 
     benefit or retirement-type subsidy (within the meaning of 
     paragraph (2)(A)) is taken into account for purposes of the 
     opening balance of the amended plan.''.
       (3) Interest rate for determinations relating to plan 
     conversions.--Section 204(g) of such Act (as amended by 
     paragraph (2)) is amended further by adding at the end the 
     following new paragraph:
       ``(7) Interest rate.--For purposes of this paragraph--
       ``(A) in the case of an amendment described in paragraph 
     (1) which takes effect on or after the enactment of this 
     paragraph, the interest rate and mortality tables to be used 
     in determining the present value of the accrued benefit under 
     such amendment shall be the applicable rate and tables under 
     section 417(e)(3) of the Internal Revenue Code of 1986 as of 
     the date on which such amendment takes effect, and
       ``(B) in the case of amendments described in paragraph (1) 
     which took effect before the enactment of this paragraph, the 
     interest rate and mortality tables to be used in determining 
     the present value of the accrued benefit under such 
     amendments shall be the applicable rate and tables which were 
     in effect under section 412(l) of the Internal Revenue Code 
     of 1986 as of the effective date of the respective 
     amendment.''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Election to maintain rate of accrual in effect before 
     plan amendment.--Section 411(b)(1) of the Internal Revenue 
     Code of 1986 (relating to accrued benefit requirements for 
     defined benefit plans) is amended by adding at the end the 
     following new subparagraph:
       ``(I) Election to maintain rate of accrual in effect before 
     certain plan amendments.--
       ``(i) In general.--Notwithstanding the preceding 
     subparagraphs, in the case of a plan amendment to a defined 
     benefit plan--

       ``(I) which has the effect of converting the plan to a plan 
     under which the accrued benefit is expressed to participants 
     and beneficiaries as an amount other than an annual benefit 
     commencing at normal retirement age (or which has a similar 
     effect as determined under regulations issued under clause 
     (iii)), and
       ``(II) which has the effect of reducing the rate of future 
     benefit accrual of 1 or more participants,

     such plan shall be treated as not satisfying the requirements 
     of this paragraph unless such plan meets the requirements of 
     clause (ii).
       ``(ii) Requirements.--A plan meets the requirements of this 
     clause if the plan provides each participant who has attained 
     10 years of service (as determined under section 203) under 
     the plan at the time such amendment takes effect with--

       ``(I) notice of the plan amendment indicating that it has 
     such effect, including a comparison of the present and 
     projected values of the accrued benefit determined both with 
     and without regard to the plan amendment, and
       ``(II) an election, on the date of the conversion, to 
     either receive benefits under the terms of the plan as in 
     effect on or after the effective date of such plan amendment 
     or to receive benefits under the terms of the plan as in 
     effect immediately before the effective date of such plan 
     amendment (taking into account all benefit accruals under 
     such terms since such date).

       ``(iii) Regulations.--The Secretary shall issue regulations 
     under which any plan amendment which has an effect similar to 
     the effect described in clause (i)(I) shall be treated as a 
     plan amendment described in clause (i)(I). Such regulations 
     may provide that if a plan sponsor represents in 
     communications to participants and beneficiaries that a plan 
     amendment has an effect described in the preceding sentence, 
     such plan amendment shall be treated as a plan amendment 
     described in clause (i)(I).''.
       (2) Early retirement subsidy taken into account for 
     purposes of opening balance of hybrid defined benefit plan.--
     Paragraph (6) of section 411(d) (relating to accrued benefit 
     not to be decreased by amendment) is amended by adding at the 
     end the following new subparagraph:
       ``(F) Early retirement subsidy taken into account for 
     purposes of opening balance of hybrid defined benefit plan.--
     In the case of a plan amendment to a defined benefit plan 
     which has the effect of converting the plan to a plan under 
     which the accrued benefit is expressed to participants and 
     beneficiaries as an amount other than an annual benefit 
     commencing at normal retirement age (or a plan amendment to 
     such plan having a similar effect as determined under 
     regulations issued under subsection (b)(1)(I)(iii)), such 
     amendment shall not be treated as reducing accrued benefits 
     merely because under such amendment any early retirement 
     benefit or retirement-type subsidy (within the meaning of 
     section subparagraph (B)(i)) is taken into account for 
     purposes of the opening balance of the amended plan.''.
       (3) Interest rate for determinations relating to plan 
     conversions.--
       Paragraph (6) of section 411(d) of such Code (as amended by 
     paragraph (2)) is amended further by adding at the end the 
     following new subparagraph:
       ``(G) Interest rate.--For purposes of this paragraph--
       ``(i) in the case of an amendment described in subparagraph 
     (A) which takes effect on or after the enactment of this 
     subparagraph, the interest rate and mortality tables to be 
     used in determining the present value of the accrued benefit 
     under such amendment shall be the applicable rate and tables 
     under section 417(e)(3) as of the date on which such 
     amendment takes effect, and
       ``(ii) in the case of amendments described in subparagraph 
     (A) which took effect before the enactment of this 
     subparagraph, the interest rate and mortality tables to be 
     used in determining the present value of the accrued benefit 
     under such amendments shall be the applicable rate and tables 
     which were in effect under section 412(l) as of the effective 
     date of the respective amendment.''.
       (b) Effective Date and Related Rules.--
       (1) In general.--The amendments made by this section shall 
     apply to plan amendments taking effect after the date of the 
     enactment of this Act.
       (2) Plan amendments subject to litigation.--The amendments 
     made by this section also shall apply to any plan amendment 
     taking effect on or before such date if--
       (A) no determination letter is issued on or before such 
     date by the Internal Revenue Service which has the effect of 
     approving the plan amendment, and
       (B) such plan amendment is, on April 8, 2003, subject to a 
     court action based on age discrimination.
       (3) Special rule.--In the case of a plan amendment taking 
     effect before 90 days after the date of the enactment of this 
     Act, the requirements of section 204(b)(1)(I) of the Employee 
     Retirement Income Security Act of 1974 (as added by this 
     section) and section 411(b)(1)(I) of the Internal Revenue 
     Code of 1986 (as added by this section) shall be treated as 
     satisfied in connection with such plan amendment, in the case 
     of any participant described in such sections 204(b)(1)(I) 
     and 411(b)(1)(I) in connection with such plan amendment, if, 
     as of the end of such 90-day period--
       (A) the notice described in clause (i)(I) of such section 
     204(b)(1)(I) and clause (i)(I) of such section 411(b)(1)(I) 
     in connection with such plan amendment has been provided to 
     such participant, and
       (B) the plan provides for the election described in clause 
     (i)(II) of such section 204(b)(1)(I) and clause (i)(II) of 
     such section 411(b)(1)(I) in connection with such 
     participant's retirement under the plan.

              TITLE VIII--TREATMENT OF CORPORATE INSIDERS

     SEC. 801. SPECIAL RULES FOR EXECUTIVE PERKS AND RETIREMENT 
                   BENEFITS.

       (a) In General.--Part I of subchapter D of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to pension, profit-
     sharing, stock bonus plans, etc.) is amended by adding at the 
     end the following new subpart:

[[Page 11424]]




 ``Subpart F--Special Rules for Executive Perks and Retirement Benefits

``Sec. 420A. Holding period requirement for stock acquired through 
              exercise of option.
``Sec. 420B. Additional tax on nondisclosed retirement perks.
``Sec. 420C. Definitions and special rule.

     ``SEC. 420A. HOLDING PERIOD REQUIREMENT FOR STOCK ACQUIRED 
                   THROUGH EXERCISE OF OPTION.

       ``(a) In General.--In the case of a corporate insider with 
     respect to a corporation, the tax imposed by this chapter on 
     a corporate insider for any taxable year shall be increased 
     by 50 percent of the amount realized by such insider from the 
     disqualified disposition during such year of stock acquired 
     by the corporate insider upon the exercise of a stock option 
     granted by the corporation with respect to which such 
     individual is a corporate insider.
       ``(b) Disqualified Disposition of Stock.--
       ``(1) In general.--For purposes of subsection (a), the term 
     `disqualified disposition of stock' means any sale, exchange, 
     or other disposition of stock which, if such stock were 
     employer securities held in a qualified cash or deferred 
     arrangement (as defined in section 401(k)(2)), would violate 
     any restriction imposed on the sale or other disposition of 
     such securities by the plan of which such arrangement is a 
     part.
       ``(2) Special rule for 2 or more cash or deferred 
     arrangements.--If a corporation has more than 1 qualified 
     cash or deferred arrangement (as so defined), the 
     restrictions which apply for purposes of paragraph (1) shall 
     be the most restrictive provisions relating to the 
     disposition of employer securities held pursuant to any such 
     arrangements.

     ``SEC. 420B. ADDITIONAL TAX ON NONDISCLOSED RETIREMENT PERKS.

       ``(a) In General.--In the case of a publicly traded 
     corporation, the tax imposed by this chapter for the taxable 
     year shall be increased by 50 percent of the net cost to the 
     corporation for the taxable year of personal perks provided 
     to a retired executive of the corporation.
       ``(b) Waiver If Perks Provided Pursuant to Shareholder 
     Approval.--Subsection (a) shall not apply with respect to any 
     personal perks provided pursuant to a contract if--
       ``(1) all of the material terms of such contract (including 
     a description of the benefits to be provided to the executive 
     and the extent of such benefits) are disclosed to 
     shareholders, and
       ``(2) such contract is approved by a majority of the vote 
     in a separate shareholder vote before any benefits are 
     provided under the contract.
       ``(c) Net Cost of Personal Perks.--
       ``(1) In general.--For purposes of subsection (a), the net 
     cost of personal perks provided to a retired executive is the 
     excess of--
       ``(A) the cost to the corporation of such perks, over
       ``(B) the amount paid in cash during the taxable year by 
     the executive to reimburse the corporation for the cost of 
     such perks.
       ``(2) Personal perks.--For purposes of paragraph (1), the 
     term `personal perks' means--
       ``(A) the use of corporate-owned property,
       ``(B) travel expenses, including meals and lodging, unless 
     such expenses are directly related to the performance of 
     services by the executive for the corporation and the 
     business relationship of such expenses is substantiated under 
     the requirements of section 274,
       ``(C) tickets to sporting or other entertainment events,
       ``(D) amounts paid or incurred for membership in any club 
     organized for business, pleasure, recreation, or other social 
     purpose, and
       ``(E) other personal services, including services related 
     to maintenance or protection of any personal residence of the 
     executive.
       ``(3) Cost relating to use of corporate-owned property.--
     For purposes of this subsection--
       ``(A) In general.--The cost taken into account with respect 
     to the use of corporate-owned property shall be the allocable 
     portion of the total cost of operating such property.
       ``(B) Allocable portion.--For purposes of subparagraph (A), 
     the allocable portion of total cost is--
       ``(i) the portion of the total cost (including 
     depreciation) incurred by the corporation for operating and 
     maintaining such property during the corporation's taxable 
     year in which such use occurred,
       ``(ii) which is allocable to the use (determined on the 
     basis of the relationship of such use to the total use of the 
     property during the taxable year).

     ``SEC. 420C. DEFINITIONS AND SPECIAL RULE.

       ``(a) Definitions.--For purposes of this subpart--
       ``(1) Corporate insider.--The term `corporate insider' 
     means, with respect to a corporation, any individual--
       ``(A) who is subject to the requirements of section 16(a) 
     of the Securities Exchange Act of 1934 with respect to such 
     corporation, or
       ``(B) who would be subject to such requirements if such 
     corporation were an issuer of equity securities referred to 
     in such section.
       ``(2) Retired executive.--The term `retired executive' 
     means any corporate insider who is no longer performing 
     services on a substantially full time basis in the capacity 
     that resulted in being subject to the requirements of section 
     16(a) of the Securities Exchange Act of 1934.
       ``(3) Publicly traded corporation.--The term `publicly 
     traded corporation' means any corporation issuing any class 
     of securities required to be registered under section 12 of 
     the Securities Exchange Act of 1934.
       ``(4) Corporate-owned property.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `corporate-owned property' means any of the 
     following property owned by a corporation--
       ``(i) planes,
       ``(ii) apartments or other residences,
       ``(iii) vacation, sports, and entertainment facilities, and
       ``(iv) cars.

     Such term includes any such property which is leased or 
     chartered by the corporation.
       ``(B) Exceptions.--Such term does not include any property 
     used directly by the corporation in providing transportation, 
     lodging, or entertainment services to the general public.
       ``(b) Additions to Tax Not Treated As Tax for Certain 
     Purposes.--The tax imposed by sections 420A and 420B shall 
     not be treated as a tax imposed by this chapter for purposes 
     of determining--
       ``(1) the amount of any credit allowable under this 
     chapter, or
       ``(2) the amount of the minimum tax imposed by section 
     55.''.
       (b) Clerical Amendment.--The table of subparts for part I 
     of subchapter D of chapter 1 of such Code is amended by 
     adding at the end the following new item:
``Subpart F. Special Rules for Executive Perks and Retirement 
              Benefits.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect as follows:
       (1) Section 420A of the Internal Revenue Code of 1986 (as 
     added by this section) shall apply to stock acquired pursuant 
     to the exercise of an option after the date of the enactment 
     of this Act.
       (2)(A) Except as provided by subparagraph (B), section 420B 
     of such Code (as so added) shall apply to perks provided 
     after the date of the enactment of this Act.
       (B) In the case of perks provided pursuant to a contract in 
     existence on the date of the enactment of this Act, such 
     section 420B shall apply to such perks after the date of the 
     first annual shareholders meeting after the date of the 
     enactment of this Act.

     SEC. 802. GOLDEN PARACHUTE EXCISE TAX TO APPLY TO DEFERRED 
                   COMPENSATION PAID BY CORPORATION AFTER MAJOR 
                   DECLINE IN STOCK VALUE OR CORPORATION DECLARES 
                   BANKRUPTCY.

       (a) In General.--Section 4999 of the Internal Revenue Code 
     of 1986 (relating to golden parachute payments) is amended by 
     redesignating subsection (c) as subsection (d) and by 
     inserting after subsection (b) the following new subsection:
       ``(c) Tax To Apply to Deferred Compensation Paid After 
     Major Stock Value Decline or Bankruptcy.--
       ``(1) In general.--For purposes of this section, the term 
     `excess parachute payment' includes severance pay, and any 
     other payment of deferred compensation, which is received by 
     a corporate insider after the date that the insider ceases to 
     be employed by the corporation if--
       ``(A) there is at least a 75-percent decline in the value 
     of the stock in such corporation during the 1-year period 
     ending on such date, or
       ``(B) such corporation becomes a debtor in a title 11 or 
     similar case (as defined in section 368(a)(3)(A)) during the 
     180-day period beginning 90 days before such date.

     Such term shall not include any payment from a qualified 
     employer plan.
       ``(2) Corporate insider.--For purposes of paragraph (1), 
     the term `corporate insider' means, with respect to a 
     corporation, any individual who is subject to the 
     requirements of section 16(a) of the Securities Exchange Act 
     of 1934 with respect to such corporation.''
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to cessations of employment after 
     the date of the enactment of this Act.

     SEC. 803. ADEQUATE DISCLOSURE REGARDING EXECUTIVE 
                   COMPENSATION PACKAGES.

       (a) In General.--Section 402 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1102) is amended by 
     inserting after subsection (c) the following new subsection:
       ``(d) Disclosure Regarding Executive Compensation 
     Packages.--
       ``(1) In general.--In any case in which an employer takes 
     any action to establish or substantially improve an executive 
     compensation package with respect to any employee, such 
     action may not take effect unless the employer has met the 
     requirements of paragraph (2).
       ``(2) Requirements.--An employer meets the requirements of 
     this paragraph if--
       ``(A) not less than 100 days prior to the effective date of 
     the action described in paragraph (1), the employer provides 
     written notification of the action to--
       ``(i) each employee of the employer,

[[Page 11425]]

       ``(ii) each employee organization representing employees of 
     the employer (if any), and
       ``(iii) in the case of an employer that is a corporation, 
     the board of directors, and
       ``(B) in the case of an employer that is a corporation, the 
     board of directors has approved such action.

     Any such written notification shall be written in language 
     calculated to be understood by the average plan participant.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Executive compensation package.--The term `executive 
     compensation package' means a combination of pay, benefits 
     under employee benefit plans, and other forms of compensation 
     provided by an employer primarily for employees who are 
     members of a select group of management or highly compensated 
     employees.
       ``(B) Substantial improvement.--An executive compensation 
     package is `substantially improved' if the present value of 
     such package is increased by not less than 10 percent.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to actions taken after the date of 
     the enactment of this Act.

                   TITLE IX--MISCELLANEOUS PROVISIONS

     SEC. 901. CORPORATE DEDUCTION FOR REINVESTED ESOP DIVIDENDS 
                   SUBJECT TO DEDUCTIBLE LIMITS.

       (a) In General.--Subsection (a) of section 404 of the 
     Internal Revenue Code of 1986 (relating to general rule) is 
     amended by adding at the end the following new paragraph:
       ``(13) Certain dividends reinvested in employee stock 
     ownership plans subject to deductible limits.--For purposes 
     of this subsection, an applicable dividend described in 
     subsection (k)(2)(A)(iii)(I) shall be treated as 
     compensation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 902. CREDIT FOR ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS 
                   BY CERTAIN INDIVIDUALS MADE PERMANENT (SAVER'S 
                   TAX CREDIT).

       Section 25B of the Internal Revenue Code of 1986 is amended 
     by striking subsection (h) (relating to termination).

     SEC. 903. AUTHORITY TO RESCIND TRANSFERS TO PLANS MADE FOR 
                   THE BENEFIT OF HIGHLY COMPENSATED EMPLOYEES.

       Section 403 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1103) is amended by adding at the end the 
     following new subsection:
       ``(e) The plan administrator or any person acting as the 
     plan administrator may avoid a transfer of an interest in 
     property to any trust or similar arrangement for the benefit 
     of any insider or other management employee to fund 
     supplemental retirement benefits or other deferred 
     compensation.''.

                      TITLE X--GENERAL PROVISIONS

     SEC. 1001. GENERAL EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this Act, 
     the amendments made by this Act shall apply with respect to 
     plan years beginning on or after January 1, 2004.
       (b) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``January 1, 2004'' the date of 
     the commencement of the first plan year beginning on or after 
     the earlier of--
       (1) the later of--
       (A) January 1, 2005, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 2006.

     SEC. 1002. PLAN AMENDMENTS.

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

  The SPEAKER pro tempore. Pursuant to House Resolution 230, the 
gentleman from New Jersey (Mr. Andrews) and the gentleman from Ohio 
(Mr. Boehner) each will control 30 minutes.
  The Chair recognizes the gentleman from New Jersey (Mr. Andrews).
  Mr. ANDREWS. Mr. Speaker, I yield myself 2 minutes.
  I would urge our colleagues to support this well-reasoned and well-
thought-out Democratic substitute. It differs in many ways, and it is 
an improvement in many ways from the underlying bill. I would like to 
highlight a few of those improvements, first in the area of investment 
advice.
  This substitute does provide for investment advice for workers and 
pensioners, but it clearly favors independent investment advice. It 
provides that workers and pensioners will receive advice from qualified 
individuals who do not have an interest in the outcome of the advice 
that they are giving.
  Second, this substitute, unlike the underlying bill, deals with the 
problem of cash balance plans. Cash balance plans, which I believe have 
been improperly used in many cases, have become a nightmare for 
pensioners, where people who thought that they had a guaranteed income 
at a set level for the rest of their lives have confronted the 
nightmare scenario where they, in fact, have much less, sometimes as 
much as 50 percent less than they thought they had in their pensions.
  This substitute contains a very simple provision that empowers each 
employee to choose between conversion of his or her pension to a cash 
balance plan or retention of his or her pension in its more traditional 
form. This bill puts a stop to the secret transactions involving 
executive pension compensation and pension provisions. This substitute 
also requires that in collective bargaining negotiations, that 
companies be candid and comprehensive in their disclosures to 
bargaining units with whom they are negotiating.
  Very recently in the problems regarding American Airlines, we saw the 
situation where unions received significant misrepresentations as to 
the financial provisions of their employers and agreed to massive 
cutbacks in their compensation packages based upon those 
misrepresentations. This substitute would outlaw such a provision.
  In summary, the substitute addresses the underlying problems and 
causes of the Enron scandal. I would urge its adoption.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield 10 minutes to the gentleman from 
Texas (Mr. Sam Johnson) and ask unanimous consent that he be permitted 
to control that time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, today we have before us a pension security bill that 
passed the House last year with broad bipartisan support. That is the 
underlying bill, with two exceptions, two issues that were contained in 
last year's Sarbanes-Oxley bill, the 30-day notice of a blackout period 
and the prohibition on company insiders selling stock during a blackout 
period. Those issues have been signed into law. But the balance of that 
bill is what we have before us today. It is a reasonable and 
responsible approach to address the problems that were identified 
during our investigation of Enron, WorldCom and others. More 
specifically and more importantly, it does not overreach and begin to 
delve into areas where there are likely to be very serious unintended 
consequences.
  The substitute that is being offered by my friends on the other side 
is well-meaning, well-intentioned, and we have worked closely on these 
issues for many years, but the fact is that if Members look at the 
substitute that we have before us, it will cause serious concern in the 
employer community, and I would suggest many employees across the 
country will no longer have pensions because of the onerous regulations 
and excessive litigation that would result if the substitute that is 
offered were, in fact, adopted and signed into law.
  Specifically, it does, in fact, increase liability for employers 
under ERISA, new rights to sue, additional penalties that I think are 
unnecessary. The current protections within ERISA provide a solid 
framework for addressing grievances from employees.

[[Page 11426]]

  Secondly, it would require every plan fiduciary to have insurance to 
meet whatever the size of the pension plan is. It would be expensive, 
costly, and would create a situation where no one will want to serve as 
the fiduciary; and if, in fact, they can find someone, the cost of 
providing the insurance will drive up the cost of providing pensions.
  We have worked for years in this body to try to make it easier for 
businesses to set up pensions. We have tried to encourage businesses to 
cover more employees with pensions. The last thing we want to do is to 
dump cold water on this movement by again increasing cost and 
increasing regulation. We could talk about the regulatory bombardment 
in here when it comes to company insiders selling stock, regardless of 
what the reason is. Under this bill they would have to report it within 
1 day. Employees would be getting these notices on an ongoing basis, 
and to what purpose? I do not know.
  But, more importantly, the substitute tries to regulate corporate 
salaries and corporate governance issues, but through the pension 
system. The Congress passed the Sarbanes-Oxley bill last year that 
dealt with large corporate governance issues. Most all Members of this 
body on both sides of the aisle supported it. It was a very good bill. 
One could argue it might be overreaching in some areas, but by and 
large addressing the serious issues that were uncovered during Enron 
and WorldCom. I do not think that we need to readdress corporate 
governance issues and executive pay issues in a pension bill.
  But most importantly, the substitute that we have before us guts the 
serious investment advice language that we have in the underlying bill. 
We have heard a lot today about the need for investment advice for the 
61, 62 million Americans who have self-directed accounts who have been 
so protected by this law passed in 1974 that their ability to get 
investment advice is almost nil. As I have said before, the only place 
they can really get investment advice is from Bob at the coffee shop. 
What we seek to do in the underlying bill is to provide a framework and 
safeguards for them to get investment advice from the real experts in 
the industry. If they do not want to take employer-provided investment 
advice, the Committee on Ways and Means as part of this bill provides a 
tax deduction, an above-the-line tax deduction for them to go out and 
get their own investment advice. But I think all of us agree that 
having real investment advice in the marketplace for those with self-
directed accounts has to happen, and the sooner it happens, the better.
  But under the bill that we have before us, it says you can only get 
third-party independent investment advice. There is no reason to even 
have it in the bill because that is what you can get today. And you do 
not get real investment advice because, one, employees do not want to 
have to pay for it; and, secondly, the so-called independent advice 
that is out there today is generic, very generic, whatever your age is, 
whatever your income is, whatever the assets in your plan are.
  I would suggest to my colleagues that if we are serious about having 
real investment advice in the marketplace today for America's 
employees, that this will not get there. I would ask my colleagues and 
urge them to look at the substitute and vote against it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. ANDREWS. Mr. Speaker, I yield such time as he may consume to the 
distinguished gentleman from California (Mr. George Miller), the author 
of the substitute.
  Mr. GEORGE MILLER of California. Mr. Speaker, the Democratic 
substitute that we offer today is based on a very simple principle. It 
is a principle that we all grew up with. It was a principle that was 
articulated by the President of the United States just days after the 
Enron catastrophe when America saw that so many people who worked for 
Enron were trapped in a system during the meltdown of that company, 
during the corruption in that company, during the unlawfulness in that 
company, that they were trapped in that system and unable to protect 
their retirement while corporate executives in the penthouse suites 
were unloading stock, getting golden parachutes, getting secured 
pension plans, getting insured pension plans, having pension plans put 
into trusts. They took good care of themselves even though they took 
the company over the edge. But down below, just like in the Titanic, 
just like in the Lusitania, the poor people were trapped as the ship 
was going down. They were trapped because of a class system.
  That very simple principle that has been articulated by the President 
was that if it is okay for the sailor, it ought to be okay for the 
captain. What the President was saying there was those protections that 
are in place for the executives should have been in place for the 
employees, that employees' pensions ought to be treated as executive 
pensions are treated.
  We grew up with this. Our parents told us when you got into a fight 
with our brothers and sisters and maybe it did not go our way, they 
said, ``What's good for the goose is good for the gander.'' What is 
good for the captain is good for the sailor. We have said it to our 
spouse, we have said it to our children, we have said it to our 
partners in business, we have said it to our staff. It is about 
fairness.
  What the Democratic alternative recognizes is the basic dignity of 
the American worker and the right of that worker to control the pension 
plan, which is their money. This is money that was given to them for 
the work that they gave to the corporation. It was figured out by the 
corporation, how much they would pay them an hour, how much they would 
give them in health care, how much they would give them in pension 
benefits, and they went to work for them. When they gave it to them 
each month, it is theirs. But now they do not want to have them have 
any control over it. They do not want them to have the same protections 
as the corporate elite. They do not want them to have the same rights 
as those individuals. Why?
  Enron was not just built on the back of Ken Lay. Big parts of that 
company were built on the utility workers in the Pacific Northwest, the 
pipeline workers in the Southwest, the power plant workers in 
California and everybody in between. Why were they not entitled to 
these protections? Why were they not entitled to these rights?
  But the Republican bill today, as the Republican bill last year, 
keeps in place that class system, that the corporate elites will get 
taken care of, these great captains of capitalists, these crusaders of 
the free enterprise system, the people who come to Congress and talk 
about risk, that they take risk. What we now see is the CEO of Delta 
Airlines, we see the CEO of American Airlines, we see the CEOs of so 
many companies and the board of directors, they do not want any risk, 
they want their compensation guaranteed, they want their golden 
parachute guaranteed, and they want their pension plan guaranteed. Even 
if they drive the company into the ground, even if they take it into 
bankruptcy, they will be protected.
  That is what has so incensed the American public, and the pilots, and 
the flight attendants, and the machinists, and the workers at American 
Airlines that they were willing to risk their whole future to say, that 
is unfair. And America recognized it like that, Wall Street recognized 
it like that, and the chairman of American Airlines resigned, admitting 
that he had made a tragic mistake in being so selfish on behalf of the 
board of directors and himself at a time he was asking workers to give 
back billions of dollars.
  So what do we say? We say that workers are entitled to advice about 
the selling and the coming and going in the corporate suites when they 
are selling their stock because they do not think the corporation is 
doing so well; we are entitled to know that on those inside sales. We 
say that workers are entitled, if they have their pensions guaranteed, 
that the crew, the workers, will have their pensions guaranteed just 
like the people in the corporate suites. We are saying for those

[[Page 11427]]

workers, that they should be represented on the boards of the 
retirement plan so that they will have the information, because as we 
saw in Enron, the executive representative on the retirement plan, the 
captain, so to speak, never told the crew that she was selling her 
stock because she had investment advice to get out of the company. 
Those people lost their fortune. She walked away with hundreds and 
hundreds of thousands of dollars because she did not tell them.
  We are simply saying, you must tell them, that you must be on the 
board so you have a chance. That is what this bill does. It is about 
the equity for the worker, it is about the dignity of the worker, and 
it is about the rights of the worker to be protected.
  They say this will cause trouble in corporations, this will cause 
concern. A little democracy? A little democracy in the corporation? A 
little recognition that the corporate body is more than just the CEOs 
and the executives, that it is also the workers? That causes concern?
  Ladies and gentlemen, that is what we are talking about spreading to 
the rest of the world, the free enterprise system. We are talking about 
spreading the democratic system. But somehow when it comes to carving 
up billions of dollars, we cannot have too much democracy in the 
workplace.

                              {time}  1445

  It is simply unfair to the workers. This bill also closes a loophole 
of having conflicted advice that the Republican bill opens for the 
first time, and this bill responds to the concerns of the Attorney 
General of New York, who just settled a case for $1.4 billion, when he 
said that this bill would open up a huge loophole, a huge loophole for 
conflicted advice, and put at risk the pensions of these individuals, 
that this bill goes too far. That conflicted advice, Jane Bryant Quinn, 
the financial columnist in Newsweek magazine, says they might as well 
give their money to an Olympic ice-skating judge as give it to this 
conflicted advice. These are the very same people who just agreed to 
pay a $1.4 billion fine for their activity. They did not admit that 
they did anything wrong, but they put up $1.4 billion. We have got to 
understand that we cannot turn the pension assets, the retirement 
assets of those workers over to those individuals. The workers in this 
country and their families and their future and their children and 
their retirement plans deserve better. They deserve the Democratic 
substitute.
  Mr. BOEHNER. Mr. Speaker, I yield 3 minutes to the gentleman from 
Sacramento, California (Mr. Ose).
  Mr. OSE. Mr. Speaker, I rise today to support the legislation that 
the gentleman from Ohio (Mr. Boehner) has brought forward, and I thank 
him for yielding me this time to come to the floor and speak to it.
  I am opposed to the substitute. I did want to come down and talk 
about one issue here in particular, and that is this issue of highly 
compensated individuals within corporate America and the treatment that 
their retirement plans and retirement planning get versus the run-of-
the-mill pension plans that the everyday worker gets. We have asked, 
and unfortunately the Committee on Rules ruled out of order, to place 
an amendment in that would have directed the Department of Labor to do 
a study as to the broad variety of plans that are available to highly 
compensated individuals and the manner in which they are funded and 
then compare that with the manner in which the pension plans for 
ordinary Americans who might work in corporate America might be 
receiving. And the reason we asked for that is that there is 
significant anecdotal evidence that while retirement plans in corporate 
America for the run-of-the-mill worker are in many cases underfunded, 
this cafeteria of plans for highly compensated individuals may well be 
getting fully funded using corporate assets.
  As I said, I did propose an amendment that was unfortunately ruled 
out of order by the Committee on Rules to this, and I will be 
introducing a bill entitled The Employees' Pension Equity Act of 2003 
to address this situation. I think we are all concerned here on the 
floor of the House that Americans be treated equitably. This particular 
proposal that I will be putting forward will do that.
  We do need to look at the manner in which highly compensated 
individuals as defined under ERISA, how they take care of their pension 
planning as compared with the regular American retirement programs that 
the corporation provides under the pension plans that occur. We need to 
make sure that both groups are treated equitably. We need to make sure 
that if the regular American, the regular Joe and the regular Jane, if 
their pension plans are funded to a 60 percent level, then the highly 
compensated individuals cannot take corporate assets and fund their 
retirement programs at a 100 percent level and the like. We are looking 
for equity here. We are looking for some means of leveling the playing 
field so that the corporate assets cannot be used disproportionately to 
benefit employees of corporate America.
  In my travels around my district, I hear about this regularly. It 
sticks in people's craw that the occasion arises where highly 
compensated individuals get to take corporate assets and use them to 
secure their retirements using any one of the vehicles identified under 
the ERISA plan act for their purpose and regular Joes cannot do the 
same thing.
  Mr. Speaker, I rise today to support this legislation, which will 
provide greater security for the pensions of American workers, and to 
oppose the substitute. In this time of economic instability in the 
world, it is essential that our hard-working constituents know that 
their financial future is safe.
  Today's bill is focused on securing employee pensions. This is a 
truly noble cause.
  However, many Americans are skeptical about the security of their 
pension funds. They are also concerned with reports that the managers, 
whose actions may have damaged the stability of their retirement, walk 
away with a ``golden parachute'' package of guaranteed money. In short, 
American workers want to make sure that they are treated fairly and 
that their funds are equally capable of meeting liabilities as the 
pension plans of the highly compensated individuals who run their 
companies.
  I recently began investigating just how often employees are left 
holding the bag while senior executives are fully compensated. I was 
surprised to learn how little data there is on this topic.
  There have been numerous reports on the instability of employee 
pensions and other retirement plans in recent years. Such reports 
helped spur the legislation currently before us. There has also been 
research into the variety of compensation vehicles for corporate 
executives. However, little of the research compares the two systems or 
examines why one side may face a shortfall while other employees in the 
same company are assured of their compensation.
  Last night, I proposed an amendment to this bill which the rules, 
unfortunately, does not allow us to consider. It was quite simple: it 
called for the Secretary of Labor to conduct a study on the funding and 
under-funding of pension plans and similar arrangements for both 
employee plans and the plans of highly compensated individuals.
  Most American workers simply want to be treated fairly. When they 
succeed, they are pleased that their coworkers also benefit. When they 
fall short, they recognize that everyone gave their best. But, what 
really sticks in their ``craw'' is when they lose out and the people in 
charge don't care because they are paid either way. We need to look 
carefully at situations where employees and executives face different 
results in the same situation. This report would help us better 
understand such occurrences.
  It is for this reason that I recently introduced ``The Employees' 
Pension Equity Act of 2003,'' a bill that will prevent executives from 
walking away with ``golden parachutes'' while employees are left 
holding the bag.
  How does it happen that the ``highly compensated individuals,'' an 
actual legal term, do not suffer when their decisions leave a business 
floundering while the foot-soldiers of the business are left unemployed 
and facing financial hardships?
  My legislation seeks to right that wrong.
  The Employees' Pension Equity Act requires that the employee funds be 
just as sound as executive funds. Employees need to know that their 
pensions will not be left to ``wither on the vine'' while executives 
walk away with big, guaranteed checks in their pockets.
  This legislation is another straightforward bill that requires an 
annual comparison of employees' and executives' plans, and an annual 
additional contribution to the employees' fund

[[Page 11428]]

when they are not in the same fiscal shape as their executives' 
counterparts.
  Mr. Speaker, H.R. 1000 is a good bill that will help protect our 
constituents. I am pleased to support this legislation and hope the 
House will take the next step in passing my Employees' Pension Equity 
Act in the near future.
  Mr. ANDREWS. Mr. Speaker, I yield 3 minutes to the gentleman from 
Vermont (Mr. Sanders), who is the author of a key provision of the 
substitute regarding the prevention of the abuse of cash balance plans.
  Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  I rise in strong support of the George Miller-Rangel substitute, and 
this substitute includes legislation that I introduced last month that 
now has 133 co-sponsors and has been endorsed by the 35 million members 
of the AARP and the 13 million workers in the AFL-CIO. And this 
legislation is a very simple piece of legislation included in this 
amendment, and it says that when a company converts to a cash balance 
plan after promising its workers a certain pension benefit that one 
cannot simply, like that, cut somebody's pension by up to 50 percent.
  They cannot renege on the promise that they made to that worker and 
one of the reasons why that worker worked at that company for 10, 20 or 
30 years. I ran into this experience in Vermont when hundreds of IBM 
workers called me up and they said that the promise that the company 
had made to them was rescinded and the pensions that they had been 
promised were now out the window. In Vermont, the IBM workers fought 
back, and they fought back all over the country; and as a result, IBM 
partially withdrew what they did, and they ended up protecting the 
older workers and Kodak protected older workers and Motorola protected 
older workers. But the reality is that millions of American workers 
today are at risk in seeing huge reductions in the pensions that they 
were expecting.
  Pension anxiety is running rampant all over this country, and if we 
do not pass this amendment, workers will have good reason to worry that 
the pensions promised to them will not be there. What this amendment 
says is very simple. It says that if one is 40 years of age or if one 
has been with a company for 10 years and is on a defined benefit plan 
and the company goes to cash balance, they have got to give them a 
choice. What is wrong with giving workers a choice and not taking away 
the benefits that they had worked their whole lives for? I would like 
my Republican friends to tell me that. Some of the good companies have 
given workers a choice. We should give workers a choice right here. 
That is the amendment that I have included in this bill.
  But there is another issue that was not included. The Members of the 
United States Congress have a defined benefit pension plan. And the 
amendment that I offered said if they think cash balance is such a good 
idea, why do we not adopt it in the Congress? If they want to tell 
millions of American workers to see a substantial reduction in their 
pensions, why do we not do the same thing? If it is good for the 
workers of America, surely it must be good for the Members of the 
Congress. I offered that amendment. Everyone will be shocked to know 
the Republican leadership denied it.
  Mr. ANDREWS. Mr. Speaker, may I inquire how much time we have left on 
our side.
  The SPEAKER pro tempore (Mr. Linder). The gentleman from New Jersey 
(Mr. Andrews) has 17 minutes remaining. The gentleman from Ohio (Mr. 
Boehner) has 11\1/2\ minutes remaining, and the gentleman from Texas 
(Mr. Sam Johnson) has 10 minutes remaining.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, we just heard about IBM and some of the other large 
companies. But guess what? They fixed the problem; so there is no 
longer a problem. Why are we talking about it? Because all of this 
stuff is voluntary anyway.
  The Democrat substitute proposes to limit the types of defined 
benefit plans that companies can offer. Specifically, the substitute 
limits companies in converting to cash balance plans even though there 
is substantial evidence that 80 percent of workers fare better under a 
cash balance plan. The Democrats are attempting to force companies to 
stay with an outdated, arcane pension system that does not really work 
in today's market.
  We need to allow companies the freedom to provide the best possible 
benefits to their employees with advice.
  Mr. Speaker, I reserve the balance of my time.
  Mr. ANDREWS. Mr. Speaker, I yield 30 seconds to the gentleman from 
Vermont (Mr. Sanders).
  Mr. SANDERS. Mr. Speaker, my friend said that we do not have to do 
anything. My friend said that it should be voluntary. What happened at 
IBM is that thousands of workers stood up and fought back. 
Unfortunately, hundreds of thousands, if not millions, of other workers 
did not even know what was happening to them. They could not fight 
back. If the gentleman thinks that giving people a choice is a bad 
idea, why do the 35 million members of AARP think it is a good idea and 
the 13 million members of the AFL-CIO? Choice is right.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I reserve the balance of my 
time.
  Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
California (Ms. Solis), who speaks with passion and conviction for 
people struggling to get ahead around our country.
  Ms. SOLIS. Mr. Speaker, I also rise today in opposition. Almost a 
year ago I recall as a member of the Committee on Education and the 
Workforce voting against this similar proposal that is now before us. 
H.R. 1000 is really an act; and when I say that, it is an act by the 
Members on the other side of the aisle to give the impression that this 
piece of legislation will protect working men and women's pensions, and 
it will not do that, in my opinion. It puts their pensions at risk by 
allowing self-interested accounting firms to advise employees. That 
sounds to me like the fox guarding the hen house. This does not work; 
and if we did not learn from Enron, then we do have some serious 
problems in this House.
  This bill allows high-living executives to continue to skirt pension 
rules, have their pensions, and ride off into the sunset, while their 
companies fall into bankruptcy and lay off workers every single day. 
And I see it happening in my district in Los Angeles County. For the 
millions of people who have worked hard to put aside money so that one 
day that little token of security would be there for them is long gone, 
and it is really unfortunate because I would like to tell the Members 
that in my own district where many union members thought that they had 
their pensions protected have now found themselves bankrupt as well, 
and they are having to borrow from their own family members. This is 
the wrong thing to do.
  In my district people have lost their jobs. Unemployment is above 9 
percent; and we are not even talking about that. We are not even 
talking about those people that are really hurting. President Bush 
seems to have closed his ears to the concerns and the voice of America, 
working America. I urge my colleagues to support the George Miller-
Rangel substitute, and I thank the gentleman from California (Mr. 
George Miller) for offering this true Pension Security and Fairness Act 
because it provides fairness and equity for all workers. I oppose H.R. 
1000 and support the Miller substitute.
  Mr. BOEHNER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Nebraska (Mr. Osborne).
  Mr. OSBORNE. Mr. Speaker, I come from a family that has been in a 
small business operation for the last 100 years, and the biggest 
concern that I hear in small businesses is government regulation; and I 
agree with many of the gentleman's proposals here. Some are good, but 
it does add complexity. It adds cost. And right now what we are seeing 
is a huge exodus from the retirement plan operations of so many 
companies. I am afraid that this would exacerbate the problem.

[[Page 11429]]

  For example, expanding the remedies of ERISA will quite likely lead 
to more litigation and more expense. Requiring 401(k) insurance is 
already provided by many plans but adds cost. Making it mandatory will 
cause people to exit the system. Reporting of insider sales is already 
governed by the Securities and Exchange Commission; so we think this is 
somewhat redundant.

                              {time}  1500

  I am as embarrassed as the author of this substitute with some of the 
compensation plans that we have seen by various executives, and I agree 
this needs to be addressed. However, when we are dealing with something 
that has to do with pension reform, I do not believe that this is the 
appropriate vehicle to use at this time.
  So overall what I am saying is I believe the base bill provides sound 
pension reform without promoting so much complexity and expense that we 
would eliminate retirement plans. If we do so, we simply throw out the 
baby with the bath water; and I think as a result, we cause more 
problems than we solve.
  So, Mr. Speaker, I urge passage of this base bill and rejection of 
the substitute.
  Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentleman from 
Oregon (Mr. Blumenauer).
  Mr. BLUMENAUER. Mr. Speaker, I listened to the comments about some 
increased complexity and efforts that may be required. I find it ironic 
that as we look at some of the complexity we have now for the 
protection of those who need it the least, we do not get too upset 
about it; but when we are talking about ordinary working men and women, 
a little bit of complexity, a little bit of regulation I think is not 
only in order, but I represent thousands of people in my community who 
would welcome it today.
  Enron purchased a locally owned electric utility in my community 
called Portland General Electric, a straightforward organization that 
had been working providing service in our community for generations.
  In a few short years, because of the manipulation, the lack of 
complexity, the lack of oversight, these people had their lives turned 
upside down. Men and women who had been investing for years took the 
representations of what you can only regard as corporate bandits at 
face value and ended up losing hundreds of thousands of dollars, 
pushing back their retirement for years.
  We found the manipulation of Texas-based Enron wash through the West. 
It has raised utility rates dramatically in our community, putting 
people out of work and some companies out of business.
  I welcome the Miller substitute that would make sure that everybody 
plays by the same rules; that everybody has perhaps a little bit of 
complexity, but a whole lot of security. It will protect older 
employees with a choice on pension conversion, and it will provide more 
freedom and better information about how their money is managed.
  Mr. Speaker, if this had been in place 5 years ago, there would be 
thousands of Oregonians that could retire today in dignity, not having 
their lives turned upside down.
  I urge support of the Miller substitute.
  The SPEAKER pro tempore. The Chair would inform the managers that the 
gentleman from New Jersey (Mr. Andrews) has 12\1/2\ minutes remaining, 
the gentleman from Ohio (Mr. Boehner) has 9\1/2\ minutes remaining, and 
the gentleman from Texas (Mr. Sam Johnson) has 9 minutes remaining.
  Mr. ANDREWS. Mr. Speaker, I yield such time as he may consume to the 
gentleman from California (Mr. George Miller), the author of the 
substitute.
  Mr. GEORGE MILLER of California. Mr. Speaker, the suggestion again 
has been made on the other side of the aisle that somehow this would be 
a burden or somehow this would be complex if we required that workers 
be treated the same as executives.
  They do very complex things in the corporate suites. They create 
various accounts to pay for the pension benefit of executives. They go 
out and buy various insurance schemes to pay for the benefit of 
executives. They create special tax treatment. They come to Congress 
and get special tax treatment for the pension plans of executives. All 
very complex. But at the end of the day, it means that that executive 
will know, no matter what happens to that company, that they and their 
family and their children will be protected forever into the future 
because it will be outside of the bankruptcy, it will be outside of the 
corporate failure.
  So complexity is not a problem when the executives want to protect 
their income. They have been doing it for years. But somehow now to say 
that we ought to send notice, send an e-mail to your employees and tell 
them that the president is selling 100,000 shares, that the President 
is doing an inside deal on a stock option, send an e-mail, you send 
them all day long, there is nothing complex about it, you type it out 
and push send; it is not complex. But they do not want the employees to 
know this. That is why so many people have been trapped in the 
financial collapse of these companies.
  In the middle of the negotiations with the flight attendants, the 
pilots, the machinists, the ramp workers, when American Airlines was 
asking those people for $2.3 billion in givebacks from their vacation 
time, from their pay, from their health benefits, give it back to help 
the company fly, they were secretly, quietly and in a very complex 
fashion protecting and guaranteeing hundreds of millions of dollars in 
compensation for the executives; and they got caught. Once the light 
was shined on them, they scrambled like rats for the door, because they 
knew they could not sustain it; and the CEO resigned and they had to 
give back the compensation package, and then the flight attendants and 
others agreed to try to help the company stay out of bankruptcy.
  That is all this bill does. It says that you ought to know about that 
when they are negotiating your union contract, what they are doing for 
the executives. That is why the pension story today is no longer a 
back-page story. That is why it is on the cover of Fortune Magazine, 
not exactly a left-wing journal. But Fortune Magazine captured the 
context when it said oink, the pigs in the suits are jeopardizing your 
corporation, your compensation and your pension plans. Oink.
  Earlier, Fortune Magazine asked America, is your retirement at risk, 
and why? Because of what is going on in terms of corporate financial 
gimmickry. It is why millions and millions of Americans have left the 
stock market and why the stock market laments that they have not 
returned. They do not have confidence in this system. They do not have 
confidence in this system any longer. They understand it is rigged on 
Wall Street against them and it is rigged in the Congress of the United 
States against them.
  Where do these families go to get justice? Where do these families go 
to get equity? Where do these families go to get fairness, if they 
cannot come to the Congress of the United States?
  So now what we say in the Republican bill is we are going to give 
them additional advice about what to do with their savings, and we are 
going to give that advice from the very same people that just had an 
out-of-court settlement of $1.4 billion because they lied to their 
clients. They had financial arrangements that prevented them from being 
independent. They had financial arrangements, so they misrepresented 
how a stock was doing, how a company was doing, because they were 
getting fees, they were getting commissions, they were getting 
percentages of deals. Those are the very same people the Republicans 
say now that Mr. and Mrs. Jones and Mr. and Mrs. Smith ought to go to 
and trust that they are going to give them independent advice.
  The Democratic bill says you can go to those people, you can make 
them available, but you also must make an independent adviser available 
to these people as they plan for their retirements.
  When things go wrong for people in their retirement plans, as they 
did over the last couple of years, and you are 50

[[Page 11430]]

or 55 years old, you do not have much chance to make it up.
  Again, we have all heard from our constituents about people who 
thought they were going to retire a year ago, a year and a half ago. 
From Pacific Gas and Electric, the Portland company, not the California 
one, a person came before our committee, the Committee on Education and 
the Workforce, who had $650,000 in Enron stock. He and his wife bought 
a small farm that they were going to use to run a care center for 
retarded children. By the time they got to our committee, he had $6,000 
in stock. He is 60 years old. Where does he go to get back his money? 
Where does he go to get made whole?
  Well, unless we want that to happen to another generation of workers 
planning for their retirement, planning for their families, unless we 
want that to happen again, we have got to support the Democratic 
substitute, because it is about justice, it is about fairness and it is 
about getting away from the conflicted advice, from the manipulation, 
from the dishonesty, from the criminal activity of the financial 
markets.
  Mr. Speaker, $7 trillion was lost in the markets, $7 trillion. These 
are the people who want to take you out of Social Security and put you 
into that market. Social Security did not lose a dime. Wall Street lost 
$7 trillion, and hundreds and thousands and millions of Americans had 
their entire retirement future changed overnight.
  We thought, well, that is the free enterprise system. That is the 
market system. But what we find out now every day is, no, like the 
California energy crisis, that was a manipulated system, that was a 
dishonest system, that was a criminal system.
  All the Democratic bill says is give people some notice, give people 
some rights, give people control over their money so they can escape 
the ship. The CEOs, the board presidents, the presidents of companies, 
they are heading for the lifeboats. They do not even have the decency 
to hit the alarm bell to tell you the ship is going down.
  We say at least you have to sound the alarm and tell the workers that 
they may want to jump too. That is the decent thing to do if you care 
about your workers, if you respect them, if you appreciate what they 
have done for the corporations. But that is not what is going on in 
America today, and that is not what will go on in America under the 
Republican bill.
  Mr. Speaker, you must vote for the Democratic substitute if you 
believe that workers and their families are entitled to the decent 
protections for their retirement funds. I urge Members to vote for the 
Democratic substitute.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I am glad that was brought out. All of the reasons to 
not vote for this substitute, we just heard them. The Democrat 
substitute unwisely expands remedies available under ERISA. Under the 
Democrat substitute, employers, administrators and service providers 
can expect a wave of new litigation from participants alleging economic 
and noneconomic losses stemming from ERISA violations. It can only lead 
to higher costs. Employers will become more reluctant to offer 
retirement savings plans to their workers. ERISA already provides for 
comprehensive penalties and enforcement mechanisms in the case of 
wrongdoing.
  The Democrat substitute also tries to reform salaries and corporate 
governance through the guise of pension reform. These provisions 
regarding corporate compensation are not really about pensions; they 
are about punishment for corporations.
  The Democrat punitive corporate provision will not enhance pension 
coverage or protection for one rank-and-file member. Instead, it will 
only make it likely that corporations will be discouraged from offering 
pensions because of the complex and heavy-handed pension rules.
  Mr. Speaker, I urge a vote against the Democrat substitute.
  Mr. Speaker, I yield back the balance of my time.
  Mr. ANDREWS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would urge our colleagues to vote in favor of the 
Miller substitute. If there is one asset that should be sacrosanct, if 
there is one asset that should be solid as a rock, it is our pensions. 
Prior to 1974, there were numerous problems with pensions as corrupt or 
incompetent boards of trustees mismanaged workers' funds.
  Twenty-nine years ago this Congress did something about that by 
passing the ERISA law. Since then, scandals and misappropriation of 
pension funds have been few and far between. They have been rare, and 
pensions have been largely safe.
  But there is a new kind of pension. It is a self-directed pension 
account, commonly called a 401(k). The problem with the 401(k) has 
admittedly been that workers who do not have sound advice have 
sometimes made unsound decisions and lost their money.
  There is no dispute that there is a need to provide solid and sound 
investment advice, but there is a strong dispute about how to do so. 
The substitute provides for advice; but frankly, it favors independent 
advice so the advice given is not given from the point of view of self-
interest. The substitute provides a remedy.

                              {time}  1515

  When someone entrusted with fiduciary responsibility under the ERISA 
law does wrong by the pensioner or by the worker, there are 
consequences. My friend from Texas a few minutes ago said that there 
would be an expansion of remedies under ERISA. He is absolutely 
correct, because as the workers at Enron can tell us, the remedies that 
the present law contains do not do them very much good at all when they 
see their future security evaporate in the new pension scandals of our 
time.
  The Miller substitute provides for sound investment advice, it ceases 
the practice of fraudulent misrepresentation during collective 
bargaining, it stops secret pension deals on behalf of highly 
compensated employees and executives, and it provides for meaningful 
remedies for those who have been wronged. It stops the abuse of cash 
balance plans and makes sure that every American pensioner is made 
whole. It is a realistic and meaningful response to the scandals of the 
last 24 to 36 months.
  Mr. Speaker, I would urge all of my colleagues to vote ``yes'' in 
favor of the Miller substitute.
  Mr. Speaker, I yield back the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, there is a lot that has been said here today about the 
need for pension reform. Certainly, in the wake of the Enron and 
WorldCom scandals and the collapse of the stock market, Congress had a 
duty and a responsibility to look at our pension system, and we did. 
That was over a year ago. Out of that we learned that there were some 
deficiencies in our current pension system, such as the fact that 
company insiders could sell the company stock during a blackout period, 
while employees could not sell stock in their 401(k) plan. That has 
been fixed and signed into law. We found that there was no notice of a 
potential blackout period, not enough notice to employees of these 
blackout periods. Again, that has been fixed, both issues signed into 
law in the Sarbanes-Oxley bill.
  But there are other issues out there that need to be addressed, and I 
think the underlying bill addresses them in a fair and expansive way. 
With all due respect to my friends on the other side, the substitute 
that we have before us is nothing more than overkill.
  Now, if we are worried about people's pensions in America, then 
people who have pensions in America ought to be really worried about 
the substitute that we have before us, because if the substitute were 
to become law, virtually no employer in America could offer their 
employees pensions. And that is not an exaggeration at all.
  Pension plans are voluntary plans offered by employers to their 
employees, and the fact that they are voluntary means that we have to 
walk a delicate line. All one has to do is look at the regulatory 
impact, the legislative impact, well-meaning, well-intentioned during 
the 1980s that Congress and the agencies imposed on defined benefit

[[Page 11431]]

plans. We nearly are making them extinct because of the cost, the 
litigation, and the regulatory nightmare that is involved with offering 
a traditional defined benefit plan. That is why we see this huge 
conversion from defined benefit plans, the traditional plan, to defined 
contribution plans like 401(k) plans. And nothing that we do here 
today, in my view, is going to slow that conversion down.
  And for many of us who are concerned about defined benefit plans, the 
traditional benefit plans, we ought not take up the issue that is 
contained in the substitute that would defy the conversion to a cash 
balance plan. A cash balance pension plan is a defined benefit plan. 
Those employers and those employees are covered under the Pension 
Benefit Guaranty Corporation. They pay premiums to the employer, and 
the employee's pension is protected, and the cash balance plan is 
protected there. And there has been no convergence of these over the 
last 2 years, as there is a moratorium in effect as the Treasury 
Department and others try to determine what the appropriate rules 
should be for conversions.
  Well, let us be honest. There have been over 500 conversions over the 
last 15 years. In virtually every single one of them, the employer made 
every employee whole. And it is almost impossible to find a case where 
an employer did not keep an employee whole. And, as we have heard 
before from the gentleman from Texas (Mr. Johnson), 80 percent of 
workers do better under cash balance plans than under traditional 
plans. Let us not forget, under a traditional plan, if you are a 
younger worker and you leave, you take nothing with you, zero. Under a 
cash balance plan, if you are a younger worker and you change jobs, you 
can take the net benefits that you have got vested and move them just 
like you can with a 401(k) account.
  So we can sit here and castigate one or two examples of companies who 
tried to do it the wrong way, who fixed it, but let us not castigate 
the other 500 plus employers across the country who made these 
conversions and did them successfully, working with their employees.
  When it is all said and done, Mr. Speaker, we want to encourage more 
employers to cover more of their employees with pension plans. We will 
not accomplish that goal, and that is a bipartisan goal, if we 
overregulate and drive up the cost of operating these plans. The 
substitute offered by my friends across the aisle will do just that. It 
is overkill. It should be defeated, and we should pass the underlying 
bill.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Quinn). Pursuant to House Resolution 
230, the previous question is ordered on the bill, as amended, and on 
the further amendment by the gentleman from New Jersey (Mr. Andrews).
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from New Jersey (Mr. Andrews).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. ANDREWS. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 193, 
nays 236, not voting 5, as follows:

                             [Roll No. 187]

                               YEAS--193

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Ballance
     Becerra
     Bell
     Bereuter
     Berkley
     Berman
     Berry
     Bilirakis
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Brown-Waite, Ginny
     Capps
     Capuano
     Cardin
     Cardoza
     Carson (IN)
     Case
     Clay
     Clyburn
     Conyers
     Cooper
     Costello
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Frost
     Gonzalez
     Gordon
     Green (TX)
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lynch
     Majette
     Maloney
     Markey
     Marshall
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Petri
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tauscher
     Taylor (MS)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--236

     Akin
     Alexander
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Biggert
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boyd
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carson (OK)
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Combest
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     DeMint
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dooley (CA)
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Greenwood
     Gutknecht
     Hall
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hill
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Janklow
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     Matheson
     McCotter
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Moore
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stenholm
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thornberry
     Tiahrt
     Tiberi
     Toomey
     Turner (OH)
     Turner (TX)
     Upton
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)

                             NOT VOTING--5

     Aderholt
     Gephardt
     Miller, Gary
     Schrock
     Young (FL)


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Quinn) (during the vote). The Chair 
would remind Members there are 2 minutes remaining in this vote.

[[Page 11432]]



                              {time}  1542

  Messrs. SOUDER, FRANKS of Arizona, GINGREY, SHAW, CARSON of Oklahoma, 
TAUZIN and LEWIS of California changed their vote from ``yea'' to 
``nay.''
  Messrs. BILIRAKIS, PETRI, THOMPSON of Mississippi, SNYDER and CROWLEY 
changed their vote from ``nay'' to ``yea.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  Stated against:
  Mr. ADERHOLT. Mr. Speaker, on rollcall No. 187 I was inadvertently 
detained. Had I been present, I would have voted ``nay.''
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


     Motion To Recommit Offered by Mr. George Miller of california

  Mr. GEORGE MILLER of California. Mr. Speaker, I offer a motion to 
recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. GEORGE MILLER of California. I am, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:
       Mr. George Miller of California moves to recommit the bill 
     H.R. 1000 to the Committee on Education and the Workforce 
     with instructions to report the same back to the House 
     forthwith with the following amendment:
       Page 92, insert after line 21 the following new section:

     SEC. 217. PROTECTION OF PARTICIPANTS FROM CONVERSIONS TO 
                   HYBRID DEFINED BENEFIT PLANS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Election to maintain rate of accrual in effect before 
     plan amendment.--Section 204(b)(1) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1054(b)(1)) is amended 
     by adding at the end the following new subparagraph:
       ``(I)(i) Notwithstanding the preceding subparagraphs, in 
     the case of a plan amendment to a defined benefit plan--
       ``(I) which has the effect of converting the plan to a plan 
     under which the accrued benefit is expressed to participants 
     and beneficiaries as an amount other than an annual benefit 
     commencing at normal retirement age (or which has a similar 
     effect as determined under regulations issued under clause 
     (iii)), and
       ``(II) which has the effect of reducing the rate of future 
     benefit accrual of 1 or more participants,

     such plan shall be treated as not satisfying the requirements 
     of this paragraph unless such plan meets the requirements of 
     clause (ii).
       ``(ii) A plan meets the requirements of this clause if the 
     plan provides each participant who has attained 10 years of 
     service (as determined under section 203) under the plan at 
     the time such amendment takes effect with--
       ``(I) notice of the plan amendment indicating that it has 
     such effect, including a comparison of the present and 
     projected values of the accrued benefit determined both with 
     and without regard to the plan amendment, and
       ``(II) an election, on the date of the conversion, to 
     either receive benefits under the terms of the plan as in 
     effect on or after the effective date of such plan amendment 
     or to receive benefits under the terms of the plan as in 
     effect immediately before the effective date of such plan 
     amendment (taking into account all benefit accruals under 
     such terms since such date).
       ``(iii) The Secretary shall issue regulations under which 
     any plan amendment which has an effect similar to the effect 
     described in clause (i)(I) shall be treated as a plan 
     amendment described in clause (i)(I). Such regulations may 
     provide that if a plan sponsor represents in communications 
     to participants and beneficiaries that a plan amendment has 
     an effect described in the preceding sentence, such plan 
     amendment shall be treated as a plan amendment described in 
     clause (i)(I).''.
       (2) Early retirement subsidy taken into account for 
     purposes of opening balance of hybrid defined benefit plan.--
     Section 204(g) of such Act (29 U.S.C. 1054(g)) is amended by 
     adding at the end the following new paragraph:
       ``(6) In the case of a plan amendment to a defined benefit 
     plan which has the effect of converting the plan to a plan 
     under which the accrued benefit is expressed to participants 
     and beneficiaries as an amount other than an annual benefit 
     commencing at normal retirement age (or a plan amendment to 
     such plan having a similar effect as determined under 
     regulations issued under subsection (b)(1)(I)(iii)), such 
     amendment shall not be treated as reducing accrued benefits 
     merely because under such amendment any early retirement 
     benefit or retirement-type subsidy (within the meaning of 
     paragraph (2)(A)) is taken into account for purposes of the 
     opening balance of the amended plan.''.
       (3) Interest rate for determinations relating to plan 
     conversions.--Section 204(g) of such Act (as amended by 
     paragraph (2)) is amended further by adding at the end the 
     following new paragraph:
       ``(7) For purposes of this subsection--
       ``(A) in the case of an amendment described in paragraph 
     (1) which takes effect on or after the enactment of this 
     paragraph, the interest rate and mortality tables to be used 
     in determining the present value of the accrued benefit under 
     such amendment shall be the applicable rate and tables under 
     section 417(e)(3) of the Internal Revenue Code of 1986 as of 
     the date on which such amendment takes effect, and
       ``(B) in the case of amendments described in paragraph (1) 
     which took effect before the enactment of this paragraph, the 
     interest rate and mortality tables to be used in determining 
     the present value of the accrued benefit under such 
     amendments shall be the applicable rate and tables which were 
     in effect under section 412(l) of the Internal Revenue Code 
     of 1986 as of the effective date of the respective 
     amendment.''.
       (b) Effective Date and Related Rules.--
       (1) In general.--The amendments made by this section shall 
     apply to plan amendments taking effect after the date of the 
     enactment of this Act.
       (2) Plan amendments subject to litigation.--The amendments 
     made by this section also shall apply to any plan amendment 
     taking effect on or before the date of the enactment of this 
     Act if--
       (A) no determination letter is issued on or before such 
     date by the Internal Revenue Service which has the effect of 
     approving the plan amendment, and
       (B) such plan amendment is, on April 8, 2003, subject to a 
     court action based on age discrimination.
       (3) Special rule.--In the case of a plan amendment taking 
     effect before 90 days after the date of the enactment of this 
     Act, the requirements of section 204(b)(1)(I) of the Employee 
     Retirement Income Security Act of 1974 (as added by this 
     section) shall be treated as satisfied in connection with 
     such plan amendment, in the case of any participant described 
     in such section 204(b)(1)(I) in connection with such plan 
     amendment, if, as of the end of such 90-day period--
       (A) the notice described in clause (i)(I) of such section 
     204(b)(1)(I) in connection with such plan amendment has been 
     provided to such participant, and
       (B) the plan provides for the election described in clause 
     (i)(II) of such section 204(b)(1)(I) in connection with such 
     participant's retirement under the plan.

                              {time}  1545

  Mr. GEORGE MILLER of California (during the reading). Mr. Speaker, I 
ask unanimous consent that the motion to recommit be considered as read 
and printed in the Record.
  The SPEAKER pro tempore (Mr. Quinn). Is there objection to the 
request of the gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. The gentleman from California (Mr. George 
Miller) is recognized for 5 minutes in support of his motion to 
recommit.
  Mr. GEORGE MILLER of California. Mr. Speaker, this motion to recommit 
provides that workers with 10 years of service with a company would 
have the choice of whether or not to accept a cash balance retirement 
plan or a defined benefit plan when a corporation decides that they 
want to switch from a defined benefit plan to a cash balance plan.
  We do nothing about the corporation's right to do so. That is simply 
up to the corporations. Many corporations are doing this in an attempt 
to save money. The question that my colleagues must answer is should 
they be able to save that money by dramatically jeopardizing the 
retirement nest egg and the retirement benefits of older workers in 
that corporation.
  The last time corporations did this before the moratorium, workers 
lost somewhere up to 50 percent. Last time, according to the GAO, older 
workers lost up to 50 percent of their retirement benefits. Individuals 
that were 50, 55, 60 years old, they had no ability to recapture those 
benefits. They could not work long enough. They could not make enough 
money. They could not save enough in those jobs.
  The question is whether we will allow them the election. Secretary 
Treasurer Snow said that when he was chairman of the board at CSX 
Corporation, he recommended and the corporation did

[[Page 11433]]

this because it was fair. He reminded us that when Congress switched 
its retirement plan, we allowed every Member in Congress at that time 
to have an election. He said that was the fair thing to do.
  He said when he was on the board of Verizon, that he insisted that 
they allow workers to have a choice in that plan to see which one they 
would do better under. The company could save the money for all new 
workers, and older workers would be made whole.
  The gentleman from Ohio will tell my colleagues that some 500 
corporations have converted, and they have made workers whole. That is 
because that is the law. They are changing the law. They will no longer 
be required to do that under the law.
  When Jesse James and Billy the Kid and Bonnie and Clyde stole the 
life savings of people in this country, we hunted them down like dogs. 
Right now there are 300 corporations that have filed notice all over 
the country, all different sizes, affecting thousands of workers, that 
they are going to convert immediately upon the new Treasury ruling to a 
cash balance system. The question is whether or not we will protect 
these people against having their retirement benefits looted.
  After a person gives this kind of service to a company, and they are 
too old to recoup it, they ought to make sure that they do not lose 
that benefit. That is what this amendment does, and I am going to tell 
my colleagues, for those who do not think this will affect them, 
several years ago we had this operation before the moratorium, IBM, 
Kodak and others, and it blew up. On a bipartisan vote of over 300 
Members of Congress, we sought to end that practice.
  The Clinton administration put on a moratorium. Those companies ended 
up giving their workers an election. It is the just and fair thing to 
do. There is no other remedy other than this amendment for those 
workers if the Treasury Department decides, as their original proposal 
did, that it did not matter whether we gave workers a choice or not.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield to the 
gentleman from Illinois (Mr. Emanuel).
  Mr. EMANUEL. Mr. Speaker, I rise in strong support of the Democratic 
substitute to H.R. 1000, the Pension Security Act.
  The Republican bill just does not do enough to take care of 
retirement security for American families. In particular, I support the 
substitute's fight against cash balance conversion, which pulls the rug 
out from under employees midcareer.
  I worked on the moratorium that my colleague talked about when I was 
in the White House. Today 500 companies have converted to cash balance. 
There have been more than 1,000 age discrimination claims filed with 
the EEOC over these plans. Three hundred fifty companies are on the 
sidelines waiting to convert, which affects thousands upon thousands of 
employees.
  Cash balance conversion can be done right. They are a good financial 
instrument if done effectively, but if we create winners and losers, 
that is the wrong approach.
  The right approach is to include a grandfather clause to ensure 
workers who are 55 or older have a choice, that can work both for the 
employees and the employers. There is a right way and a wrong way to go 
about this.
  I want to also speak about another situation in the bill. Even worse 
than the cash balance, the bill fails to require companies to notify 
employees when executives dump company stock or provide adequate notice 
to employees of excessive stock holdings. This bill treats the CEO 
retirement one way and treats employees' retirement another way: Two 
sets of books, two sets of standards and two sets of values.
  Mr. Speaker, in contrast, the Democratic substitute does two 
important things. It protects workers when their pensions are converted 
to cash balance plans, and it ensures that workers' and executives' 
pension plans are treated equally.
  Mr. BOEHNER. Mr. Speaker, I am opposed to the motion.
  The SPEAKER pro tempore. The gentleman from Ohio is recognized for 5 
minutes.
  Mr. BOEHNER. Mr. Speaker, I appreciate the indulgence of the Members.
  We all know that pension plans are voluntarily offered by employers 
to their employees. For those of us that have worked in the pension 
area for some time, we know that we have to walk a very delicate line 
in terms of the regulations that we put around these plans so that we 
do not drive employers and their employees out of the system.
  We spend a lot of time on a bipartisan basis here trying to find ways 
to encourage more companies to offer plans to their employees. Most of 
those plans today would be defined contribution plans, like 401(k) 
plans.
  The traditional defined benefit plan that we would have and all 
Federal employees would have is in serious trouble in America today. In 
1986, we had 176,000 defined benefit plans in America. Today, we have 
less than 50,000, and the conversion from traditional pension plans to 
401(k)-type plans is going to continue. Why? We have so overregulated 
and driven up the cost of offering defined benefit plans that these 
conversions continue.
  The whole issue of cash balance plans boils down to this: Cash 
balance plans are a way to save defined benefit plans. Cash balance 
plans are those where employers pay premiums into the Pension Benefit 
Guaranty Corporation. Employees who have cash balance plans are 
protected by the Pension Benefit Guaranty Corporation. So for those of 
us who have tried to find ways to help save the traditional defined 
benefit plan, the cash balance conversions are a way to save them.
  There have been over 500 conversions over the last 15 years. 
Virtually every single one of them have been successful, where 
employers have found ways to make sure that all employees are made 
whole. But do not be misunderstood. Eighty percent of employees benefit 
greater under a cash balance plan than they would under a defined 
benefit plan, and for younger workers who change jobs under a defined 
benefit plan, a traditional plan, they do not get to move anything with 
them, zero, but if they are vested in their cash balance plan, they can 
move that, and it is much more portable than a traditional plan.
  What the gentleman from California (Mr. George Miller) seeks to do is 
to require employers to offer two plans, the traditional plan and the 
cash balance plan. What this means is that the employer has to continue 
offering both plans, which will mean we will not have conversions, and 
if we do not have conversions, here is what will happen: The defined 
benefit plans will continue to be scrapped. Let us watch when the 
market begins to recover and the plans are healthier, companies will 
eliminate their defined benefit plan and move to a defined contribution 
plan, like a 401(k) plan. I do not think that is what most employees in 
America want.
  I would ask all of my colleagues, because on a bipartisan basis we 
have worked to make sure that these cash balance plans worked, and they 
worked fairly, my colleagues should also know there have been no 
conversions the last 2 years, and that is because there is a moratorium 
in effect. The Treasury Department had regulations out for comment. 
They got lots of comments. They withdrew them. They are continuing to 
work to find the right set of regulations to regulate these conversions 
to cash balance plans. Let us let them do the technical work.
  For Members on both sides of the aisle who have worked on these 
pension issues in a bipartisan way, we understand that these 
conversions will help save these plans. The underlying bill passed this 
House with 209 Republican votes and 46 Democrat votes a year ago. The 
underlying bill is a good bill that would help protect the pensions of 
American workers. Let us stand up for American workers today.
  Defeat the motion to recommit and vote for the underlying bill.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.

[[Page 11434]]

  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage.
  The vote was taken by electronic device, and there were--yeas 202, 
nays 226, not voting 6, as follows:

                             [Roll No. 188]

                               YEAS--202

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Ballance
     Becerra
     Bell
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Cardoza
     Carson (IN)
     Carson (OK)
     Case
     Clay
     Clyburn
     Conyers
     Cooper
     Costello
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley (CA)
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Frost
     Gonzalez
     Goode
     Gordon
     Green (TX)
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lynch
     Majette
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Ose
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Petri
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Turner (TX)
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Whitfield
     Woolsey
     Wu
     Wynn

                               NAYS--226

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bereuter
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Combest
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     DeMint
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Greenwood
     Gutknecht
     Hall
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Janklow
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCotter
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stenholm
     Sullivan
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Toomey
     Turner (OH)
     Upton
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)

                             NOT VOTING--6

     Gephardt
     Jefferson
     Miller, Gary
     Schrock
     Towns
     Young (FL)


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Quinn) (during the vote). There are 2 
minutes remaining in this vote.

                              {time}  1612

  Messrs. SMITH of Michigan, GALLEGLY, and CRAMER changed their vote 
from ``yea'' to ``nay.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 271, 
nays 157, not voting 6, as follows:

                             [Roll No. 189]

                               YEAS--271

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bell
     Bereuter
     Berry
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boswell
     Boyd
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Cardoza
     Carson (IN)
     Carson (OK)
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Combest
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Crowley
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     DeMint
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dooley (CA)
     Doolittle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Frost
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Gonzalez
     Goode
     Goodlatte
     Goss
     Granger
     Green (TX)
     Green (WI)
     Greenwood
     Hall
     Harman
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hill
     Hobson
     Hoekstra
     Holden
     Holt
     Hooley (OR)
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Israel
     Issa
     Istook
     Janklow
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kind
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Maloney
     Manzullo
     Marshall
     Matheson
     McCarthy (NY)
     McCotter
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Moore
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Neal (MA)
     Nethercutt
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Pomeroy
     Porter
     Portman
     Price (NC)
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ruppersberger
     Ryan (WI)
     Ryun (KS)
     Sabo
     Sandlin
     Saxton

[[Page 11435]]


     Scott (GA)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Snyder
     Souder
     Stearns
     Stenholm
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Toomey
     Turner (OH)
     Turner (TX)
     Upton
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wu
     Young (AK)

                               NAYS--157

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Ballance
     Becerra
     Berkley
     Berman
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boucher
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Case
     Clay
     Clyburn
     Conyers
     Cooper
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Gordon
     Grijalva
     Gutierrez
     Gutknecht
     Hastings (FL)
     Hinchey
     Hinojosa
     Hoeffel
     Honda
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Lynch
     Majette
     Markey
     Matsui
     McCarthy (MO)
     McCollum
     McDermott
     McGovern
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Rahall
     Rangel
     Reyes
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Scott (VA)
     Serrano
     Sherman
     Slaughter
     Smith (WA)
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wynn

                             NOT VOTING--6

     Blunt
     Gephardt
     Graves
     Miller, Gary
     Schrock
     Young (FL)


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Quinn) (during the vote). Members are 
advised that less than 2 minutes remain in this vote.

                              {time}  1619

  Mr. WYNN changed his vote from ``yea'' to ``nay.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________