I

104TH CONGRESS

1ST SESSION H. R. 1683

To establish a Federal cause of action for failure of State and local public

employee pension plans to meet the terms of such plans, subject to

differing burdens of proof depending on whether changes in the plan

relating to employer contributions are subject, under the law of the

principal State involved, to qualified review boards.

IN THE HOUSE OF REPRESENTATIVES

MAY 23, 1995

Mr. ANDREWS introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Economic

and Educational Opportunities, 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 establish a Federal cause of action for failure of State

and local public employee pension plans to meet the

terms of such plans, subject to differing burdens of proof

depending on whether changes in the plan relating to

employer contributions are subject, under the law of the

principal State involved, to qualified review boards.

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

2 This Act may be cited as the ‘‘Public Employee Pen3 sion Plan Liability Act of 1995’’.

4 SEC. 2. CIVIL ENFORCEMENT OF PUBLIC EMPLOYEE PEN5 SION PLAN TERMS.

6 (a) IN GENERAL.—A civil action may be brought, by

7 a participant or beneficiary under a public employee pen8 sion plan, against the plan—

9 (1) to recover benefits due to him or her under

10 the terms of the plan, to enforce his or her rights

11 under the terms of the plan, or to clarify his or her

12 rights to future benefits under the terms of the plan;

13 (2) to enjoin any act or practice which violates

14 the terms of the plan, or

15 (3) to obtain other appropriate equitable relief

16 (A) to redress violations of the terms of the plan or

17 (B) to enforce the terms of the plan.

18 (b) BURDEN OF PROOF.—

19 (1) IN GENERAL.—Except as provided in para20 graph (2), in any action brought under this section,

21 the plaintiff may prevail if the plaintiff proves his or

22 her case by a preponderance of the evidence.

23 (2) SPECIAL RULE FOR PLANS SUBJECT TO RE24 VIEW BY QUALIFIED REVIEW BOARDS.—In the case

25 of a public employee pension plan which meets the

26 requirements of section 3, in any action brought
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1 under this section, the plaintiff may prevail only if

2 the plaintiff proves his or her case by clear and con3 vincing evidence.

4 (c) PLANS TREATED AS PERSONS.—A public em5 ployee pension plan may sue or be sued under this Act

6 as a person. Service of summons, subpoena, or other legal

7 process of a court upon a trustee or an administrator of

8 a public employee pension plan in the trustee’s or adminis9 trator’s capacity as such shall constitute service upon the

10 plan.

11 (d) JURISDICTION AND VENUE.—

12 (1) IN GENERAL.—State courts of competent

13 jurisdiction and district court of the United States

14 shall have concurrent jurisdiction of actions brought

15 under this section. The district courts of the United

16 States shall have jurisdiction without regard to the

17 amount in controversy or the citizenship of the par18 ties, to grant the relief provided for in subsection

19 (a).

20 (2) VENUE.—Notwithstanding section 94 of the

21 National Banking Act (12 U.S.C. 94), in any case

22 in which an action under this Act is brought in a

23 district court of the United States, it may be

24 brought in any district of the State where the plan

25 is administered, where the breach took place, or
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1 where a defendant resides or may be found, and

2 process may be served in any other district where a

3 defendant resides or may be found.

4 (e) ATTORNEY’S FEES.—In any action brought under

5 this section, the court may in its discretion award a rea6 sonable attorney’s fee and costs of action to any party who

7 prevails or substantially prevails in such action.

8 SEC. 3. REVIEW BY QUALIFIED REVIEW BOARDS OF

9 CHANGES IN EMPLOYER CONTRIBUTIONS.

10 (a) IN GENERAL.—A public employee pension plan

11 meets the requirements of this section if, under the plan,

12 changes in employer contributions are subject to review

13 by a qualified review board established for the plan as pro14 vided in this section. For purposes of this section, the term

15 ‘‘qualified review board’’ means a board—

16 (1) whose membership is determined under the

17 law of the principal State in accordance with sub18 section (b), and

19 (2) whose powers are determined under the law

20 of the principal State in accordance with paragraph

21 (3).

22 (b) MEMBERSHIP.—

23 (1) IN GENERAL.—The membership of a quali24 fied review board established for a plan shall consist

25 of 3 members selected from among individuals who,
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1 by means of their education and experience, have

2 demonstrated expertise in the area of pension fund

3 management, as follows:

4 (A) one member is appointed by the Gov5 ernor of the State,

6 (B) one member is selected by the partici7 pants in the plan, by means of an election held

8 in such form and manner as shall be prescribed

9 in regulations of the Secretary of Labor, and

10 (C) one member is selected jointly by the

11 Governor and by a representative of partici12 pants in the plan (from a certified list of pen13 sion experts establsihed in accordance with

14 paragraph (2)).

15 Each member of the board shall have 1 vote. Mem16 bers of the board shall serve for such equivalent

17 terms as shall be prescribed under the law of the

18 principal State.

19 (2) CERTIFIED LIST OF EXPERTS.—The Gov20 ernor of the State shall, for purposes of paragraph

21 (1)(C), establish and maintain with respect to each

22 public employee pension plan (for which such State

23 is the principal State) a certified list of pension ex24 perts meeting the requirements for membership on

25 the qualified review board. Individuals may be in-
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1 cluded on such list only by agreement between the

2 Governor of the State and a representative elected

3 by participants in the plan, entered into by means

4 of collective bargaining in such form and manner as

5 shall be prescribed in regulations of the Secretary of

6 Labor.

7 (c) POWERS.—The board shall be treated as a quali8 fied review board for purposes of this section with respect

9 to any public employee pension plan (for which such State

10 is the principal State) only if the powers of such board

11 under the law of the principal State include review by the

12 board, for approval or disapproval by the board, of any

13 change in the terms of such plan, as a necessary pre14 requisite for such change to take effect, if—

15 (1) such change would have the effect of chang16 ing levels of employer contributions to the plan, and

17 (2) such review is requested, in such form and

18 manner as shall be prescribed in regulations of the

19 Secretary of Labor, by—

20 (A) at least one-third of the total number

21 of trustees of any trust fund forming a part of

22 the plan, or

23 (B) the head of any employee organization

24 representing at least 20 percent of the total

25 number of active participants in the plan.
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1 The board may be treated as a qualified review board for

2 purposes of this section only if, under the law of the prin3 cipal State, any such change submitted to such review by

4 the board may take effect only upon approval of the

5 change by the board.

6 SEC. 4. EFFECT ON OTHER LAWS.

7 (a) IN GENERAL.—Nothing in this Act shall be con8 strued to alter, amend, modify, invalidate, impair, or su9 persede any law of a State or any rule or regulation issued

10 under any such law, except to the extent that such law—

11 (1) may now or hereafter relate to the subject

12 matter of the provisions of this Act as they apply to

13 any public employee pension plan described in sec14 tion 4(b)(1) and not exempt under section 4(b)(2),

15 and

16 (2) prevents the application of such provisions.

17 (b) STATE CAUSES OF ACTION PRESERVED.—Noth18 ing in this Act shall be construed to apply with respect

19 to State causes of action available in State courts.

20 SEC. 4. DEFINITIONS AND COVERAGE.

21 (a) DEFINITIONS.—For purposes of this Act—

22 (1) ADMINISTRATOR.—The term ‘‘adminis23 trator’’ means—

24 (A) the board of trustees, retirement

25 board, or similar person with administrative re-
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1 sponsibilities in connection with a plan, or any

2 other person specifically so designated in con3 nection with any requirement of this Act by the

4 terms of the instrument or instruments under

5 which the plan is operated, including but not

6 limited to the law of any State or of any politi7 cal subdivision of any State, or

8 (B) in any case in which there is no person

9 described in subparagraph (A) in connection

10 with the plan, the plan sponsor.

11 (2) BENEFICIARY.—The term ‘‘beneficiary’’

12 means a person designated by a participant, or by

13 the terms of a public employee pension plan, who is

14 or may become entitled to a benefit thereunder.

15 (3) EMPLOYEE.—The term ‘‘employee’’ means

16 any individual employed by an employer, employer

17 representative, or other person required to make em18 ployer contributions under the plan.

19 (4) EMPLOYEE ORGANIZATION.—The term

20 ‘‘employee organization’’ means any labor union or

21 any organization of any kind, or any agency or em22 ployee representation committee, association, group,

23 or plan, in which employees participate and which

24 exists for the purpose, in whole or in part, of dealing

25 with employers or employer representatives concern-
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1 ing a public employee pension plan or other matters

2 incidental to employment relationships; or any em3 ployees’ beneficiary association organized for the

4 purpose, in whole or in part, of establishing such a

5 plan.

6 (5) EMPLOYER.—The term ‘‘employer’’

7 means—

8 (A) the government of any State or of any

9 political subdivision of a State,

10 (B) any agency or instrumentality of a

11 government referred to in subparagraph (A), or

12 (C) any agency or instrumentality of two

13 or more governments referred to in subpara14 graph (A).

15 (6) EMPLOYER CONTRIBUTION.—The term

16 ‘‘employer contribution’’ means any contribution to

17 a public employee pension plan other than a con18 tribution made by a participant in the plan.

19 (7) EMPLOYER REPRESENTATIVE.—The term

20 ‘‘employer representative’’ means—

21 (A) any group or association consisting, in

22 whole or in part, of employers acting, in connec23 tion with a public employee pension plan, for an

24 employer, or
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1 (B) any person acting, in connection with

2 a public employee pension plan, indirectly in the

3 interest of an employer or of a group or asso4 ciation described in subparagraph (A).

5 (8) PUBLIC EMPLOYEE PENSION PLAN.—The

6 term ‘‘public employee pension plan’’ and ‘‘plan’’

7 mean any plan, fund, or program which was here8 tofore or is hereafter established or maintained, in

9 whole or in part, by an employer, an employer rep10 resentative, or an employee organization, or by a

11 combination thereof, to the extent that by its express

12 terms or as a result of surrounding circumstances

13 such plan, fund, or program—

14 (A) provides retirement income to employ15 ees, or

16 (B) results in a deferral of income by em17 ployees for periods extending to the termination

18 of covered employment or beyond,

19 regardless of the method of calculating the contribu20 tions made to the plan, the method of calculating

21 the benefits under the plan, or the method of distrib22 uting benefits from the plan.

23 (9) PRINCIPAL STATE.—The term ‘‘principal

24 State’’ means, for any plan year with respect to a

25 public employee pension plan, the State in which, as
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1 of the beginning of such plan year, the largest per2 centage of the participants of the plan employed in

3 any single State is employed.

4 (10) GOVERNOR.—The term ‘‘Governor’’

5 means, in connection with a public employee pension

6 plan, the Governor (or equivalent official) of the

7 principal State.

8 (11) PARTICIPANT.—The term ‘‘participant’’

9 means any individual who is or may become eligible

10 to receive a benefit of any type from a public em11 ployee pension plan or whose beneficiaries may be el12 igible to receive any such benefit.

13 (12) PERSON.—The term ‘‘person’’ means a

14 State, a political subdivision of a State, any agency

15 or instrumentality of a State or a political subdivi16 sion of a State, an individual, a partnership, a joint

17 venture, a corporation, a mutual company, a joint18 stock company, a trust, an estate, an unincorporated

19 organization, an association, or an employee organi20 zation.

21 (13) PLAN SPONSOR.—The term ‘‘plan spon22 sor’’ means—

23 (A) in the case of a plan established or

24 maintained solely for employees of a single em25 ployer, such employer,
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1 (B) in the case of a plan established or

2 maintained by an employee organization, the

3 employee organization, or

4 (C) in the case of a plan established or

5 maintained by two or more employers or jointly

6 by one or more employers and one or more em7 ployee organizations, the association, commit8 tee, board of trustees, or other similar group of

9 representatives of the parties who establish or

10 maintain the plan.

11 (14) PLAN YEAR.—The term ‘‘plan year’’

12 means, with respect to a plan, the calendar, policy,

13 or fiscal year on which the records of the plan are

14 kept.

15 (15) STATE.—The term ‘‘State’’ means any

16 State of the United States, the District of Columbia,

17 the Commonwealth of Puerto Rico, the Virgin Is18 lands, American Samoa, and Guam.

19 (b) COVERAGE.—

20 (1) IN GENERAL.—Except as provided in para21 graph (2), this Act shall apply to any public em22 ployee pension plan.

23 (2) EXCEPTIONS FROM COVERAGE.—The provi24 sions of this Act shall not apply to—
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1 (A) any employee benefit plan described in

2 section 4(a) of the Employee Retirement In3 come Security Act of 1974 (29 U.S.C.

4 1003(a)), which is not exempt under section

5 4(b)(1) of such Act (29 U.S.C. 1003(b)(1));

6 (B) any plan which is unfunded and is

7 maintained by an employer or employer rep8 resentative primarily for the purpose of provid9 ing deferred compensation for a select group of

10 management or highly compensated employees;

11 (C) any arrangement which would be a

12 severance pay arrangement, as defined in regu13 lations of the Secretary of Labor under section

14 3(2)(B)(i) of the Employee Retirement Income

15 Security Act of 1974 (29 U.S.C.

16 1002(2)(B)(i)), if the employer were an em17 ployer within the meaning of section 3(5) of

18 such Act (29 U.S.C. 1002(5));

19 (D) any agreement to the extent it is a

20 coverage agreement entered into pursuant to

21 section 218 of the Social Security Act (42

22 U.S.C. 418);

23 (E) any individual retirement account or

24 any individual retirement annuity within the

25 meaning of section 408 of the Internal Revenue
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1 Code of 1986, or a retirement bond within the

2 meaning of section 409 of such Code;

3 (F) any plan described in section 401(d) of

4 such Code;

5 (G) any individual account plan consisting

6 of an annuity contract described in section

7 403(b) of such Code;

8 (H) any eligible State deferred compensa9 tion plan, as defined in section 457(b) of such

10 Code; or

11 (I) any plan maintained solely for the pur12 pose of complying with applicable workers’ com13 pensation laws or disability insurance laws.

14 SEC. 5. EFFECTIVE DATE.

15 The preceding provisions of this Act shall apply with

16 respect to plan years beginning on or after January 1,

17 1996.

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