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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 633 Introduced in House (IH)]

106th CONGRESS
  1st Session
                                H. R. 633

 To provide for investment in broad-based private equities indices of 
amounts held in trust for payment of benefits from the Federal Old-Age 
 and Survivors Insurance Trust Fund, the Federal Disability Insurance 
 Trust Fund, the Federal Hospital Insurance Trust Fund, the Department 
 of Defense Military Retirement Fund, the Civil Service Retirement and 
  Disability Fund, and the Railroad Retirement Account, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            February 9, 1999

   Mr. Bartlett of Maryland introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
     Committees on Armed Services, Government Reform, the Budget, 
  Transportation and Infrastructure, and Commerce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL

 
 To provide for investment in broad-based private equities indices of 
amounts held in trust for payment of benefits from the Federal Old-Age 
 and Survivors Insurance Trust Fund, the Federal Disability Insurance 
 Trust Fund, the Federal Hospital Insurance Trust Fund, the Department 
 of Defense Military Retirement Fund, the Civil Service Retirement and 
  Disability Fund, and the Railroad Retirement Account, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Retirement Trust Fund Integrity Act 
of 1999''.

SEC. 2. INVESTMENT OF SURPLUS IN RETIREMENT TRUST FUNDS

    Notwithstanding any other provision of law, it shall be the duty of 
the managing trustee of each participating trust fund to transfer, from 
time to time, to the Retirement Trust Fund Investment Board such 
portion of each of the trust funds as is not, in his judgment, required 
to meet current withdrawals.

SEC. 3. RETIREMENT TRUST FUNDS INVESTMENT PROGRAM.

    (a) In General.--There is created in the Treasury of the United 
States a trust fund to be known as the ``Retirement Investment Fund''. 
The Retirement Investment Fund shall consist of such amounts as may be 
appropriated to, or deposited in, such fund as provided in this Act. 
Such Fund shall be available--
            (1) for investment in accordance with this Act,
            (2) to be transferred to the managing trustees of the 
        participating trust funds, and
            (3) to pay the operational and administrative expenses of 
        the Board.
    (b) Transfers From the Retirement Investment Fund.--Upon receipt by 
the Executive Director of a written request from the managing trustee 
of any participating trust fund that a transfer of a designated amount 
of funds from the Retirement Investment Fund to that fund is necessary 
to meet current withdrawals, the Executive Director shall transfer such 
amount to the such managing trustee, who shall deposit that amount in 
such trust fund. In no event may the amount so transferred to a 
participating trust fund exceed the current market value of shares in 
the Common Stock Index Investment Fund purchased with funds transferred 
to the Fund by the managing trustee of that participating trust fund.

SEC. 4. INVESTMENT OF TRUST FUNDS IN COMMON STOCK.

    (a) In General.--(1) The Retirement Trust Fund Investment Board 
shall establish for the Retirement Investment Fund a Common Stock Index 
Investment Fund under which sums shall be invested as provided in 
subsection (b).
    (2) It shall be the duty of the Executive Director to enter into 
such investments and to liquidate such investments in accordance with 
the investment policies which shall be prescribed by the Board. Any 
interest earned on such investments, and the proceeds from any 
liquidation of such investments, including any income derived from such 
liquidation, shall be credited to and form a part of the Retirement 
Investment Fund.
    (b) Common Stock Investment Fund.--
            (1) In general.--The Common Stock Index Investment Fund 
        shall consist of amounts held in the Retirement Investment Fund 
        invested as provided in this subsection.
            (2) Selection of index and portfolio design.--
                    (A) Selection of index.--The Board shall select for 
                purposes of this subsection an index which is a 
                commonly recognized index comprised of common stock the 
                aggregate market value of which is a reasonably 
                complete representation of the United States equity 
                markets. Common stock of companies may not be included 
                or excluded because of political, social, or religious 
                considerations.
                    (B) Portfolio design.--Amounts held in the Common 
                Stock Index Investment Fund shall be invested in a 
                portfolio designed to replicate the performance of the 
                index selected under subparagraph (A). The portfolio 
                shall be designed such that, to the extent practicable, 
                the percentage of the Common Stock Index Investment 
                Fund that is invested in each stock is the same as the 
                percentage determined by dividing the aggregate market 
                value of all shares of that stock by the aggregate 
                market value of all shares of all stocks included in 
                such index.
            (3) No voting rights in securities.--The Board and the 
        Executive Director may not exercise voting rights associated 
        with the ownership of securities by Retirement Investment Fund.

SEC. 5. ENGAGEMENT OF QUALIFIED PUBLIC ACCOUNTANT.

    (a) In General.--The Board shall annually engage an independent 
qualified public accountant who shall conduct an examination of all 
accounts and other books and records maintained in the administration 
of this section as the public accountant considers necessary to enable 
the public accountant to make the determination required by subsection 
(b). The examination shall be conducted in accordance with generally 
accepted auditing standards and shall involve such tests of the 
accounts, books, and records as the public accountant considers 
necessary.
    (b) Examination and Report.--The public accountant conducting an 
examination under subsection (a) shall determine whether the accounts, 
books, and records referred to in such subsection have been maintained 
in conformity with generally accepted accounting principles applied on 
a basis consistent with the manner in which such principles were 
applied during the examination conducted under such paragraph during 
the preceding year. The public accountant shall transmit to the Board 
and the Comptroller General of the United States a report on his 
examination, including his determination under this subsection.
    (c) Reliance on Actuary's Certifications.--In making a 
determination under subsection (b), a public accountant may rely on the 
correctness of any actuarial matter certified by an actuary enrolled 
under subtitle C of title III of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1241 et seq.), if the public accountant 
states his reliance in the report transmitted to the Board under such 
paragraph.
    (d) Definition.--As used in this section, the term `qualified 
public accountant' shall have the same meaning as is provided in 
section 103(a)(3)(D) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1023(a)(3)(D)).

SEC. 6. FIDUCIARY RESPONSIBILITIES.

    (a) In General.--Under regulations of the Secretary of Labor, 
sections 8477 and 8478 of title 5, United States Code, shall apply in 
connection with the amounts maintained in the Common Stock Investment 
Fund of the Retirement Investment Fund in the same manner and to the 
same extent as such provisions apply in connection with the Thrift 
Savings Fund.
    (b) Investigative Authority.--Any authority available to the 
Secretary of Labor under section 504 of the Employee Retirement Income 
Security Act of 1974 is hereby made available to the Secretary of 
Labor, and any officer designated by the Secretary of Labor, to 
determine whether any person has violated, or is about to violate, any 
provision applicable under subsection (a).
    (c) Exculpatory Provisions; Insurance.--
            (1) In general.--Any provision in an agreement or 
        instrument which purports to relieve a fiduciary from 
        responsibility or liability for any responsibility, obligation, 
        or duty under this part shall be void.
            (2) Insurance.--Amounts in the Retirement Investment Fund 
        available for administrative expenses shall be available and 
        may be used at the discretion of the Board to purchase 
        insurance to cover potential liability of persons who serve in 
        a fiduciary capacity with respect to amounts maintained in the 
        Common Stock Investment Fund of Retirement Investment Fund, 
        without regard to whether a policy of insurance permits 
        recourse by the insurer against the fiduciary in the case of a 
        breach of a fiduciary obligation.

SEC. 7. ESTABLISHMENT OF THE RETIREMENT TRUST FUND INVESTMENT BOARD AND 
              EXECUTIVE DIRECTOR.

    (a) Retirement Trust Fund Investment Board.--(1) There is 
established in the executive branch of the Government an independent 
agency to be known as the Retirement Trust Fund Investment Board.
    (2) The Board shall be composed of--
            (A) 3 members appointed by the President, of whom 1 shall 
        be designated by the President as Chairman; and
            (B) 2 members appointed by the President, of whom--
                    (i) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the Speaker of the House of Representatives in 
                consultation with the minority leader of the House of 
                Representatives; and
                    (ii) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the majority leader of the Senate in consultation with 
                the minority leader of the Senate.
    (3) Appointments under paragraph (2) shall be made by and with the 
advice and consent of the Senate.
    (4) Members of the Board shall have substantial experience, 
training, and expertise in the management of financial investments and 
the exercise of fiduciary duties.
    (5)(A) A member of the Board shall be appointed for a term of 5 
years, except that of the members first appointed--
            (i) the Chairman shall be appointed for a term of 5 years;
            (ii) the members appointed under paragraph (2)(B) shall be 
        appointed for a term of 4 years; and
            (iii) the remaining members shall be appointed for a term 
        of 3 years.
    (B)(i) A vacancy on the Board shall be filled in the manner in 
which the original appointment was made and shall be subject to any 
conditions which applied with respect to the original appointment.
    (ii) An individual chosen to fill a vacancy shall be appointed for 
the unexpired term of the member replaced.
    (iii) The term of any member shall not expire before the date on 
which the member's successor takes office.
    (6) The Board shall--
            (A) establish policies for the investment and management of 
        the Retirement Investment Fund;
            (B) review the performance of investments made for such 
        fund; and
            (C) review and approve the budget of the Board.
    (7)(A) The Board may--
            (i) adopt, alter, and use a seal;
            (ii) except as provided in subparagraph (B), establish 
        policies with which the Executive Director is required to 
        comply; and
            (iii) take such other actions as may be necessary to carry 
        out the functions of the Board.
    (B) The policies of the Board may not require the Executive 
Director to invest or to cause to be invested any sums in the Trust 
Funds in a specific asset or to dispose of or cause to be disposed of 
any specific asset of the Trust Funds.
    (8)(A) The Board shall meet--
            (i) not less than once during each month; and
            (ii) at additional times at the call of the Chairman.
    (B)(i) The Board shall perform the functions and exercise the 
powers of the Board on a majority vote of a quorum of the Board.
    (ii) A vacancy on the Board shall not impair the authority of a 
quorum of the Board to perform the functions and exercise the powers of 
the Board.
    (C) Three members of the Board shall constitute a quorum for the 
transaction of business.
    (D)(i) Each member of the Board who is not an officer or employee 
of the Federal Government shall be compensated at the daily rate of 
basic pay for level IV of the Executive Schedule for each day during 
which such member is engaged in performing a function of the Board.
    (ii) A member of the Board shall be paid travel, per diem, and 
other necessary expenses under subchapter I of chapter 57 of title 5, 
United States Code, while traveling away from such member's home or 
regular place of business in the performance of the duties of the 
Board.
    (iii) Payments authorized under this paragraph shall be paid from 
the Retirement Investment Fund.
    (E) The accrued annual leave of any officer or employee of the 
Federal Government who is a member of the Board shall not be charged 
for any time used in performing services for the Board.
    (10) The members of the Board shall discharge their 
responsibilities solely in the interest of the Retirement Investment 
Fund.
    (11) The Board shall prepare and submit to the President, and, at 
the same time, to the appropriate committees of Congress, an annual 
budget of the expenses and other items relating to the Board which 
shall be included as a separate item in the budget required to be 
transmitted to the Congress under section 1105 of title 31, United 
States Code.
    (12) The Board may submit to the President, and, at the same time, 
shall submit to each House of Congress, any legislative recommendations 
of the Board relating to any of its functions under this Act.
    (b) Executive Director.--(1) The Board shall appoint, without 
regard to the provisions of law governing appointments in the 
competitive service, an Executive Director by action agreed to by a 
majority of the members of the Board.
    (2) The Executive Director shall have substantial experience, 
training, and expertise in the management of financial investments and 
the exercise of fiduciary duties.
    (2) The Executive Director shall--
            (A) carry out the policies established by the Board;
            (B) invest and manage the amounts in the Retirement 
        Investment Fund in accordance with the investment policies and 
        other policies established by the Board;
            (C) prescribe such regulations (other than regulations 
        relating to fiduciary responsibilities) as may be necessary for 
        the administration of this Act; and
            (D) meet from time to time with the board of trustees of 
        any participating trust funds upon request of the board of 
        trustees of such fund regarding matters relating to that fund.
    (3) The Executive Director may--
            (A) prescribe such regulations as may be necessary to carry 
        out the responsibilities of the Executive Director under this 
        subsection, other than regulations relating to fiduciary 
        responsibilities;
            (B) appoint such personnel as may be necessary to carry out 
        this Act;
            (C) in accordance with the policies of the Board, procure 
        the services of experts and consultants under section 3109 of 
        title 5, United States Code;
            (D) secure directly from any agency or instrumentality of 
        the Federal Government any information necessary to carry out 
        this Act and policies of the Board;
            (E) make such payments out of sums in the Retirement 
        Investment Fund as the Executive Director determines are 
        necessary to carry out this Act and the policies of the Board;
            (F) pay the compensation, per diem, and travel expenses of 
        individuals appointed under subparagraphs (B), (C), and (G) of 
        this paragraph from amounts otherwise available in the 
        Retirement Investment Fund;
            (G) accept and use the services of individuals employed 
        intermittently in the Government service and reimburse such 
        individuals for travel expenses, as authorized by section 5703 
        of title 5, United States Code, including per diem as 
        authorized by section 5702 of such title; and
            (H) take such other actions as are appropriate to carry out 
        the functions of the Executive Director under this Act.
    (4) The Executive Director shall discharge his or her 
responsibilities solely in the interest of the Retirement Investment 
Fund.

SEC. 8. REPORTING REQUIREMENTS.

    The Executive Director shall transmit a report on the state of the 
Retirement Investment Fund--
            (1) to each House of Congress within 20 days after the 
        close of each calendar quarter; and
            (2) to the Committee on Ways and Means of the House of 
        Representatives and the Committee on Finance of the Senate not 
        later than January 20 and July 20 of each calendar year.

SEC. 9. DEFINITIONS.

    As used in this Act:
            (1) The term ``Board'' refers to the Retirement Trust Fund 
        Investment Board.
            (2) The term ``Executive Director'' refers to the Executive 
        Director of the Retirement Trust Fund Investment Board.
            (3) The term ``managing trustee'' refers to the Secretary 
        of Defense in the case of the Department of Defense Military 
        Retirement Fund and the Secretary of the Treasury in the case 
        of all other participating trust funds.
            (4) The term ``participating trust fund'' refers to each of 
        the following trust funds, as applicable:
                    (A) The Civil Service Retirement and Disability 
                Fund.
                    (B) The Department of Defense Military Retirement 
                Fund.
                    (C) The Federal Disability Insurance Trust Fund.
                    (D) The Federal Hospital Insurance Trust Fund.
                    (E) The Federal Old-Age and Survivors Insurance 
                Trust Fund.
                    (F) The Federal Supplementary Medical Insurance 
                Trust Fund.
                    (G) The Railroad Retirement Account.

SEC. 10. CONFORMING AMENDMENTS.

    (a) Civil Service Retirement and Disability Fund.--Section 8348 of 
title 5 of the United States Code is amended by adding at the end the 
following new subsection:
    ``(n) For additional provisions relating to the treatment of funds 
not required to meet current withdrawals, see section 2 of the 
Retirement Trust Fund Integrity Act of 1999.''.
    (b) Department of Defense Military Retirement Fund.--Section 1467 
of title 10 of the United States Code is amended by inserting ``(a)'' 
before ``The Secretary'' and by adding at the end the following new 
subsection:
    ``(b) For additional provisions relating to the treatment of funds 
not required to meet current withdrawals, see section 2 of the 
Retirement Trust Fund Integrity Act of 1999.''.
    (c) Federal Old-Age and Survivors Insurance Trust Fund and Federal 
Disability Insurance Trust Fund.--Section 201(d) of the Social Security 
Act is amended by adding at the end the following new sentence: ``For 
additional provisions relating to the treatment of funds not required 
to meet current withdrawals, see section 2 of the Retirement Trust Fund 
Integrity Act of 1999.''.
    (d) Federal Hospital Insurance Trust Fund and Federal Supplementary 
Medical Insurance Trust Fund.--Sections 1817(c) and 1842(c) of the 
Social Security Act (42 U.S.C. 1395i(c), 1395t(c)) are each amended--
            (1) by striking ``(1)'' and ``(2)'' and inserting ``(A)'' 
        and ``(B)'', respectively;
            (2) by inserting ``(1)'' after ``(c)''; and
            (3) by adding at the end the following:
    ``(2) For additional provisions relating to the treatment of funds 
not required to meet current withdrawals, see section 2 of the 
Retirement Trust Fund Integrity Act of 1999.''.
    (e) Railroad Retirement Account.--Section 15(e) of the Railroad 
Retirement Act (45 U.S.C. 231n(e)) is amended by adding at the end the 
following new sentence: ``For additional provisions relating to the 
treatment of funds not required to meet current withdrawals, see 
section 2 of the Retirement Trust Fund Integrity Act of 1999.''.

SEC. 11. OFF-BUDGET STATUS OF RETIREMENT INVESTMENT FUND.

    Notwithstanding any other provision of law, the receipts and 
disbursements of the Retirement Investment Fund shall not be counted as 
new budget authority, outlays, receipts, or deficit or surplus for 
purposes of--
            (1) the budget of the United States Government as submitted 
        by the President,
            (2) the congressional budget, or
            (3) the Balanced Budget and Emergency Deficit Control Act 
        of 1985.

SEC. 12. CBO AND OMB REPORTING REQUIREMENTS.

    (a) CBO.--Section 202 of the Congressional Budget Act of 1974 is 
amended by adding at the end the following new subsection:
    ``(h) Reporting Requirements.--(1) Except as provided by paragraph 
(2), the Director shall not include the assets of the Retirement 
Investment Fund in budgetary aggregates for the Government.
    ``(2) Whenever the Director prepares any report of the financial 
status of the Retirement Investment Fund, if he includes the assets of 
that fund in budgetary aggregates for the Government, then that report 
shall also clearly set forth the budgetary aggregates for the 
Government excluding the assets of that fund.''.
    (b) OMB.--Section 1105 of title 31, United States Code, is amended 
by adding at the end the following new subsection:
    ``(h)(1) Except as provided by paragraph (2), the Director of the 
Office of Management and Budget shall not include the assets of the 
Retirement Investment Fund in budgetary aggregates for the Government.
    ``(2) Whenever the Director of the Office of Management and Budget 
prepares any report of the financial status of the Retirement 
Investment Fund, if he includes the assets of that fund in budgetary 
aggregates for the Government, then that report shall also clearly set 
forth the budgetary aggregates for the Government excluding the assets 
of that fund.''.

SEC. 13. EFFECTIVE DATE.

    This Act and the amendments made by it shall apply with respect to 
fiscal years beginning on or after October 1, 2000.
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