II 

115TH CONGRESS 

1ST SESSION S. 1035 

To amend the Employee Retirement Income Security Act of 1974 with respect 

to the scope of employee pension benefit plans. 

IN THE SENATE OF THE UNITED STATES 

MAY 3, 2017 

Mr. HEINRICH (for himself, Mr. MURPHY, Mrs. MURRAY, Mr. WYDEN, Mr. 

DURBIN, Mr. VAN HOLLEN, Ms. HASSAN, Mr. CARPER, Mrs. FEINSTEIN, 

Mr. BLUMENTHAL, Mrs. SHAHEEN, Ms. HARRIS, Mr. BENNET, Mr. 

WHITEHOUSE, Mr. MERKLEY, Ms. DUCKWORTH, Mr. BOOKER, and Mr. 

CARDIN) introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 with respect to the scope of employee pension 

benefit plans. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Preserve Rights Of 

5 States and Political subdivisions to Encourage Retirement 

6 Savings Act’’ or the ‘‘PROSPERS Act’’. 


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1 SEC. 2. DEFINITIONS. 

2 Section 3 of the Employee Retirement Income Secu3 rity Act of 1974 (29 U.S.C. 1002) is amended— 

4 (1) in paragraph (2)— 

5 (A) in subparagraph (A), by striking ‘‘sub6 paragraph (B)’’ and inserting ‘‘subparagraphs 

7 (B) and (C)’’; and 

8 (B) by adding at the end the following: 

9 ‘‘(C)(i) The terms ‘employee pension benefit plan’ 

10 and ‘pension plan’ do not include an individual retirement 

11 plan (as defined in section 7701(a)(37) of the Internal 

12 Revenue Code of 1986) established and maintained pursu13 ant to a payroll deduction savings program of a State or 

14 qualified political subdivision of a State, provided that— 

15 ‘‘(I) the program is specifically established pur16 suant to State or qualified political subdivision law; 

17 ‘‘(II) the program is implemented and adminis18 tered by the State or qualified political subdivision 

19 establishing the program (or by a governmental 

20 agency or instrumentality of either), which is re21 sponsible for investing the employee savings or for 

22 selecting investment alternatives for employees to 

23 choose; 

24 ‘‘(III) the State or qualified political subdivision 

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1 roll deductions and employee savings, including by 

2 requiring that amounts withheld from wages by the 

3 employer be transmitted to the program promptly 

4 and by providing an enforcement mechanism to as5 sure compliance with this requirement; 

6 ‘‘(IV) the State or qualified political subdivision 

7 (or governmental agency or instrumentality of ei8 ther) adopts measures to ensure that employees are 

9 notified of their rights under the program, and cre10 ates a mechanism for enforcement of those rights; 

11 ‘‘(V) participation in the program is voluntary 

12 for employees; 

13 ‘‘(VI) all rights of the employee, former em14 ployee, or beneficiary under the program are en15 forceable only by the employee, former employee, or 

16 beneficiary, an authorized representative of such a 

17 person, or by the State or qualified political subdivi18 sion (or governmental agency or instrumentality of 

19 either); 

20 ‘‘(VII) the involvement of the employer is lim21 ited to— 

22 ‘‘(aa) collecting employee contributions 

23 through payroll deductions and remitting them 

24 to the program; 


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1 ‘‘(bb) providing notice to the employees 

2 and maintaining records regarding the employ3 er’s collection and remittance of payments 

4 under the program; 

5 ‘‘(cc) providing information to the State or 

6 qualified political subdivision (or governmental 

7 agency or instrumentality of either) necessary 

8 to facilitate the operation of the program; and 

9 ‘‘(dd) distributing program information to 

10 employees from the State or qualified political 

11 subdivision (or governmental agency or instru12 mentality of either) and permitting the State or 

13 qualified political subdivision (or governmental 

14 agency or instrumentality of either) to publicize 

15 the program to employees; 

16 ‘‘(VIII) the employer contributes no funds to 

17 the program and provides no bonus or other mone18 tary incentive to employees to participate in the pro19 gram; 

20 ‘‘(IX) the employer’s participation in the pro21 gram is required by the law of the State law or 

22 qualified political subdivision; 

23 ‘‘(X) the employer has no discretionary author24 ity, control, or responsibility under the program; and 


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1 ‘‘(XI) the employer receives no direct or indi2 rect consideration in the form of cash or otherwise, 

3 other than consideration (including tax incentives 

4 and credits) received directly from the State or 

5 qualified political subdivision (or governmental agen6 cy or instrumentality of either) that does not exceed 

7 an amount that reasonably approximates the em8 ployer’s (or a typical employer’s) costs under the 

9 program. 

10 ‘‘(ii) A State savings program will not fail to satisfy 

11 the requirements of subclauses (I) through (XI) of clause 

12 (i) merely because the program— 

13 ‘‘(I) is directed toward those employers that do 

14 not offer some other workplace savings arrangement; 

15 ‘‘(II) utilizes one or more service or investment 

16 providers to operate and administer the program, 

17 provided that the State (or governmental agency or 

18 instrumentality of the State) retains full responsi19 bility for the operation and administration of the 

20 program; or 

21 ‘‘(III) treats employees as having automatically 

22 elected payroll deductions in an amount or percent23 age of compensation, including any automatic in24 creases in such amount or percentage, unless the 

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1 tions made (or specifically elects to have the deduc2 tions made in a different amount or percentage of 

3 compensation allowed by the program), provided 

4 that the employee is given adequate advance notice 

5 of the right to make such elections and provided, 

6 further, that a program may also satisfy the require7 ments of such subclauses (I) through (XI) without 

8 requiring or otherwise providing for automatic elec9 tions such as those described in this subclause. 

10 ‘‘(iii) For purposes of this subparagraph, the term 

11 ‘‘qualified political subdivision’’ means any governmental 

12 unit of a State, including a city, county, or similar govern13 mental body, that— 

14 ‘‘(I) has the authority, implicit or explicit, 

15 under State law to require employers’ participation 

16 in the program as described in clause (i); and 

17 ‘‘(II) at the time of the establishment of the po18 litical subdivision’s payroll deduction savings pro19 gram— 

20 ‘‘(aa) has a population equal to or greater 

21 than the population of the least populated State 

22 (excluding the District of Columbia and terri23 tories listed in paragraph (10)); 

24 ‘‘(bb) has no geographic overlap with any 

25 other political subdivision that has enacted a 


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1 mandatory payroll deduction savings program 

2 for private-sector employees and is not located 

3 in a State that has enacted such a program 

4 statewide; and 

5 ‘‘(cc) has implemented and administers a 

6 plan, fund, or program that provides retirement 

7 income to its employees, or results in a deferral 

8 of income by its employees for periods extend9 ing to the termination of covered employment 

10 or beyond. 

11 ‘‘(iv) For purposes of clause (i)(III), amounts with12 held from an employee’s wages by the employer are 

13 deemed to be transmitted promptly if such amounts are 

14 transmitted to the program as of the earliest date on 

15 which such contributions can reasonably be segregated 

16 from the employer’s general assets, but in no event later 

17 than the last day of the month following the month in 

18 which such amounts would otherwise have been payable 

19 to the employee in cash.’’. 

Æ 


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