II

104TH CONGRESS

2D SESSION S. 1922

To amend the Employee Retirement Income Security Act of 1974 to establish

a Pension ProSave system which improves the retirement income security

of millions of American workers by encouraging employers to make

pension contributions on behalf of employees, by facilitating pension

portability, by preserving and increasing retirement savings, and by simplifying pension law.

IN THE SENATE OF THE UNITED STATES

JUNE 28, 1996

Mr. BINGAMAN (for himself and Mr. JEFFORDS) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To amend the Employee Retirement Income Security Act

of 1974 to establish a Pension ProSave system which

improves the retirement income security of millions of

American workers by encouraging employers to make

pension contributions on behalf of employees, by facilitating pension portability, by preserving and increasing retirement savings, and by simplifying pension law.

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 ‘‘Pension ProSave Act’’.
2

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1 SEC. 2. ESTABLISHMENT OF PENSION PROSAVE PLANS AND

2 SYSTEM.

3 (a) IN GENERAL.—The Employee Retirement Income

4 Security Act of 1974 (29 U.S.C. 1 et seq.) is amended

5 by adding at the end the following new title:

6 ‘‘TITLE V—PENSION PROSAVE

7 SYSTEM

8 ‘‘Subtitle A—Pension ProSave

9 Plans

10 ‘‘SEC. 5001. EASY ACCESS FOR ALL EMPLOYERS.

11 ‘‘(a) UNIVERSAL ELIGIBILITY.—Any employer may

12 establish a Pension ProSave Plan for the benefit of its

13 employees.

14 ‘‘(b) SIMPLIFIED ENROLLMENT AND ADMINISTRA15 TION.—

16 ‘‘(1) ESTABLISHMENT.—An employer may es17 tablish a Pension ProSave Plan simply by—

18 ‘‘(A) completing an enrollment form de19 scribed in subsection (c), and

20 ‘‘(B) submitting such form to the Pension

21 Portability Clearinghouse in the manner pro22 vided under subtitle B.

23 ‘‘(2) EASE OF ADMINISTRATION.—An employer

24 establishing a Pension ProSave Plan may make em25 ployer and employee contributions, changes in em26 ployees participating under the plan, and changes in
3

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1 elections made under section 5002 in the same man2 ner as under paragraph (1).

3 ‘‘(c) SIMPLIFIED FORMS.—

4 ‘‘(1) PLAN DOCUMENT.—The Pension Port5 ability Clearinghouse shall establish a model form

6 for purposes of paragraph (1)(A)—

7 ‘‘(A) which is written in a clear and easily

8 understandable manner,

9 ‘‘(B) the completion of which by an em10 ployer will constitute the establishment of a

11 Pension ProSave Plan, and

12 ‘‘(C) which contains only such requests for

13 information as are necessary for the establish14 ment of the plan.

15 ‘‘(2) OTHER FORMS.—The Pension Portability

16 Clearinghouse shall develop such model forms for

17 purposes of subsection (b)(2) as are necessary to en18 able an employer to easily administer a Pension

19 ProSave Plan.

20 ‘‘(3) AVAILABILITY.—The Pension Portability

21 Clearinghouse shall make available to all employers

22 the forms developed under this section, and shall in23 clude with such forms easy to understand explana24 tory materials.
4

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1 ‘‘SEC. 5002. PENSION PROSAVE PLANS.

2 ‘‘(a) TREATMENT OF PLAN.—Except as otherwise

3 provided in this part, a Pension ProSave Plan shall be

4 treated in the same manner as an employee pension bene5 fit plan.

6 ‘‘(b) PENSION PROSAVE PLAN DEFINED.—For pur7 poses of this title, the term ‘Pension ProSave Plan’ means

8 a plan—

9 ‘‘(1) which is established by an employer for the

10 exclusive benefit of its employees and their bene11 ficiaries,

12 ‘‘(2) under which the only contributions which

13 may be made are contributions to Pension ProSave

14 Accounts established on behalf of such employees,

15 and

16 ‘‘(3) which meets—

17 ‘‘(A) the contribution requirements of sub18 section (c),

19 ‘‘(B) the vesting requirements of sub20 section (d),

21 ‘‘(C) the distribution and loan require22 ments of subsection (e), and

23 ‘‘(D) the reporting requirements of sub24 section (f).

25 ‘‘(c) CONTRIBUTION REQUIREMENTS.—
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1 ‘‘(1) IN GENERAL.—The requirements of this

2 subsection are met if the only contributions under

3 the plan on behalf of any employee are—

4 ‘‘(A) nonelective contributions described in

5 paragraph (2), and

6 ‘‘(B) elective employee contributions de7 scribed in paragraph (3).

8 ‘‘(2) NONELECTIVE CONTRIBUTIONS.—

9 ‘‘(A) IN GENERAL.—A Pension ProSave

10 Plan shall require an employer to make nonelec11 tive contributions equal to 1 percent of com12 pensation for each eligible employee.

13 ‘‘(B) ELECTION TO INCREASE CONTRIBU14 TIONS.—

15 ‘‘(i) IN GENERAL.—A plan shall not

16 fail to meet the requirements of subpara17 graph (A) merely because, pursuant to the

18 terms of the plan, an employer may elect

19 a uniform rate of nonelective contributions

20 in excess of 1 percent.

21 ‘‘(ii) TIME FOR ELECTION.—A plan

22 may provide that an election under clause

23 (i) may be made—

24 ‘‘(I) for a year only if notice is

25 given to all eligible employees within a
6

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1 reasonable period before the 60-day

2 period referred to in paragraph

3 (5)(B),

4 ‘‘(II) at any time during a year

5 only if such notice is given at least 30

6 days before the first day of the first

7 month for which the election is to

8 take effect, or

9 ‘‘(III) within 45 days of the close

10 of the year only if such notice is given

11 before such 45th day.

12 ‘‘(C) ELECTION TO DECREASE CONTRIBU13 TIONS.—

14 ‘‘(i) IN GENERAL.—A plan shall not

15 fail to meet the requirements of subpara16 graph (A) merely because, pursuant to the

17 terms of the plan, an employer may elect

18 for any year to suspend nonelective con19 tributions or to elect a uniform rate of con20 tributions of less than 1 percent. Such

21 election may be made only if notice is

22 given to all eligible employees within a rea23 sonable period of time before the 60-day

24 period referred to in paragraph (5)(B).
7

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1 ‘‘(ii) LIMITATION.—An employer may

2 not elect a lower percentage under clause

3 (i), or to suspend nonelective contributions,

4 for any year if that election would result in

5 nonelective contributions being lower than

6 1 percent in more than 2 of the years in

7 the 5-year period ending with such year.

8 For purposes of the preceding sentence,

9 nonelective contributions for any year prior

10 to the establishment of the Pension

11 ProSave Plan shall be treated as 1 percent.

12 ‘‘(D) MAXIMUM AMOUNT.—The plan shall

13 provide that an employer may not make non14 elective contributions on behalf of an eligible

15 employee for any year in excess of $5,000.

16 ‘‘(3) ELECTIVE CONTRIBUTIONS.—

17 ‘‘(A) IN GENERAL.—A Pension ProSave

18 Plan shall allow each eligible employee to make

19 elective contributions for any year in an amount

20 equal to the greater of—

21 ‘‘(i) an amount equal to twice the

22 nonelective contributions of the employer

23 for such year on behalf of the employee, or

24 ‘‘(ii) $2,000.

25 ‘‘(B) TIMING OF CONTRIBUTIONS.—
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1 ‘‘(i) IN GENERAL.—Except as pro2 vided in clause (ii), contributions under

3 subparagraph (A) shall be expressed as a

4 percentage of compensation and shall be

5 made by an employer as provided in para6 graph (5)(A)(i).

7 ‘‘(ii) CATCH UP CONTRIBUTIONS.—If

8 the maximum amount which may be con9 tributed under subparagraph (A) exceeds

10 the elective contributions made under

11 clause (i) for any plan year, an employee

12 may make elective contributions in an

13 amount equal to such excess (or any por14 tion thereof) not later than the due date

15 (including extensions) for the return of tax

16 for the taxable year within which the plan

17 year ends. Such contributions shall be

18 made in such manner as the Pension Port19 ability Clearinghouse may provide.

20 ‘‘(C) MAXIMUM AMOUNT.—The plan shall

21 provide that an employee may not make elective

22 contributions for any year in excess of $5,000.

23 ‘‘(D) NO CONSTRUCTIVE RECEIPT.—For

24 purposes of section 402(e)(3) of the Internal

25 Revenue Code of 1986, contributions under this
9

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1 paragraph shall be treated in the same manner

2 as contributions under a qualified cash or de3 ferred arrangement under section 401(k) of

4 such Code.

5 ‘‘(4) INFLATION ADJUSTMENT.—In the case of

6 plan years beginning in a calendar year after 1996,

7 each of the $5,000 amounts contained in this sub8 section shall be increased by the product of such

9 amount and the percentage (if any) by which the

10 CPI for the preceding calendar year exceeds the CPI

11 for 1995. For purposes of this paragraph, the CPI

12 for any calendar year shall be determined under sec13 tion 1(f)(4) of the Internal Revenue Code of 1986.

14 ‘‘(5) ADMINISTRATIVE REQUIREMENTS.—

15 ‘‘(A) TIME CONTRIBUTIONS REQUIRED TO

16 BE MADE.—

17 ‘‘(i) ELECTIVE CONTRIBUTIONS.—The

18 terms of a Pension ProSave Plan shall re19 quire an employer to make all elective con20 tributions under paragraph (3) (other than

21 subparagraph (B)(ii) thereof) not later

22 than the date on which such contributions

23 would otherwise be required to be made

24 under title I if such contributions were

25 elective contributions under a qualified
10

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1 cash or deferred arrangement under sec2 tion 401(k) of the Internal Revenue Code

3 of 1986.

4 ‘‘(ii) NONELECTIVE CONTRIBU5 TIONS.—

6 ‘‘(I) IN GENERAL.—The terms of

7 a Pension ProSave Plan shall require

8 an employer to make all nonelective

9 contributions under paragraph (2) not

10 later than the close of the 45-day pe11 riod following the last day of the cal12 endar quarter for which the contribu13 tions are to be made.

14 ‘‘(II) CONTRIBUTIONS AFTER

15 YEAR-END.—For purposes of this sub16 section, a contribution on account of a

17 year which is made within 45 days (or

18 within a period prescribed by the Sec19 retary) after the close of the year

20 shall be deemed to have been made on

21 the last day of such year.

22 ‘‘(B) EMPLOYEE ELECTIONS.—The terms

23 of a Pension ProSave Plan shall provide that—

24 ‘‘(i) an employee may elect to termi25 nate elective contributions described in
11

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1 paragraph (3) at any time during the year,

2 except that, if the employer so elects, the

3 employee may not resume participation

4 until the first day of the next year (or such

5 earlier time as provided by the plan), and

6 ‘‘(ii) each employee eligible to partici7 pate—

8 ‘‘(I) may elect, during the 60-day

9 period before the beginning of any

10 year, to make elective contributions,

11 or to modify the amount of elective

12 contributions, for such year,

13 ‘‘(II) may elect, within 30 days

14 of becoming eligible to participate in

15 the plan, to make elective contribu16 tions for the year,

17 ‘‘(III) may elect, within 30 days

18 of receiving notice under paragraph

19 (2)(B) of an increase in nonelective

20 contributions, to modify the amount

21 of elective contributions, and

22 ‘‘(IV) may elect, not later than

23 the due date described in paragraph

24 (3)(B)(ii), to make the elective con-
12

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1 tributions described in such para2 graph.

3 ‘‘(d) VESTING REQUIREMENTS.—A Pension ProSave

4 Plan meets the requirements of this subsection only if the

5 employee’s rights to nonelective and elective contributions

6 under subsection (c) are nonforfeitable. The rules of sec7 tion 401(k)(4) of the Internal Revenue Code of 1986 shall

8 apply for purposes of this subsection.

9 ‘‘(e) SPECIAL DISTRIBUTION AND LOAN RULES.—A

10 Pension ProSave Plan meets the requirements of this sub11 section only if, under the terms of the plan, distributions

12 and loans may be made only in accordance with the provi13 sions of sections 5022 and 5023 of this title.

14 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur15 poses of this subsection—

16 ‘‘(1) COMPENSATION.—

17 ‘‘(A) IN GENERAL.—The term ‘compensa18 tion’ has the meaning given such term by sec19 tion 414(q)(3) of the Internal Revenue Code of

20 1986.

21 ‘‘(B) SELF-EMPLOYED INDIVIDUALS.—

22 Notwithstanding subparagraph (A), in the case

23 of an employee within the meaning of section

24 401(c)(1) of such Code, compensation under

25 section 414(q)(3) of such Code shall be deter-
13

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1 mined without regard to paragraph (2)(A) (v)

2 and (vi) of section 401(c) of such Code.

3 ‘‘(2) EMPLOYEE.—The term ‘employee’ includes

4 an employee as defined in section 401(c)(1) of such

5 Code.

6 ‘‘(3) ELIGIBLE EMPLOYEE.—

7 ‘‘(A) IN GENERAL.—The term ‘eligible em8 ployee’ means, with respect to any year, any

9 employee who—

10 ‘‘(i) completed 6 months of service

11 with the employer at any time during such

12 year, and

13 ‘‘(ii) attained 21 years of age during

14 such year.

15 A plan may provide a uniform shorter period of

16 service or lower age to apply in lieu of those

17 under the preceding sentence.

18 ‘‘(B) EXCLUDABLE EMPLOYEES.—An em19 ployer may elect not to treat employees de20 scribed in section 410(b)(3) of such Code as eli21 gible employees.

22 ‘‘(4) PLAN YEAR.—The term ‘plan year’ means

23 the calendar year.
14

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1 ‘‘Subtitle B—Establishment of

2 Pension ProSave System

3 ‘‘PART 1—DEFINITIONS

4 ‘‘SEC. 5010. DEFINITIONS.

5 ‘‘For purposes of this subtitle and subtitle C:

6 ‘‘(1) ADVISORY COUNCIL.—The term ‘Advisory

7 Council’ means the Pension Portability Clearing8 house Advisory Council established under section

9 5053.

10 ‘‘(2) BOARD.—The term ‘Board’ means the

11 board of directors of the Pension Portability Clear12 inghouse.

13 ‘‘(3) CHAIRMAN.—The term ‘Chairman’ means

14 the chairman of the board of directors of the Pen15 sion Portability Clearinghouse.

16 ‘‘(4) CLEARINGHOUSE.—The term ‘Clearing17 house’ means the Pension Portability Clearinghouse

18 established under section 5051.

19 ‘‘(5) PENSION PROSAVE PLAN.—The term ‘Pen20 sion ProSave Plan’ has the meaning given such term

21 by section 5002.
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1 ‘‘PART 2—ESTABLISHMENT OF PENSION

2 PROSAVE SYSTEM

3 ‘‘Subpart A—In General

4 ‘‘SEC. 5011. ESTABLISHMENT OF PENSION PROSAVE SYS5 TEM.

6 ‘‘The Board shall by regulation establish a system of

7 Pension ProSave Accounts under which—

8 ‘‘(1) employers and employees may make con9 tributions on behalf of employees under a Pension

10 ProSave Plan,

11 ‘‘(2) individuals may make qualified rollover

12 contributions to Pension ProSave Accounts,

13 ‘‘(3) amounts in the Pension ProSave Accounts

14 are invested as provided in this title, and

15 ‘‘(4) loans and distributions of amounts in the

16 Pension ProSave Accounts are made as provided in

17 this title.

18 ‘‘Subpart B—Contributions and Distributions

19 ‘‘SEC. 5021. CONTRIBUTIONS TO PENSION PROSAVE AC20 COUNTS.

21 ‘‘(a) IN GENERAL.—The system established under

22 section 5011 shall provide that the only contributions

23 made to a Pension ProSave Account are—

24 ‘‘(1) contributions under a Pension ProSave

25 Plan, or

26 ‘‘(2) qualified rollover contributions.
16

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1 ‘‘(b) PLAN CONTRIBUTIONS.—The system estab2 lished under section 5011 shall provide to the maximum

3 extent feasible that contributions under a Pension

4 ProSave Plan are made in such a manner as provides all

5 employers with a simple, cost-effective way of making such

6 contributions.

7 ‘‘(c) QUALIFIED ROLLOVER CONTRIBUTIONS.—For

8 purposes of this title—

9 ‘‘(1) IN GENERAL.—The term ‘qualified rollover

10 contribution’ means—

11 ‘‘(A) the transfer to a Pension ProSave

12 Account, within 60 days of receipt, of any eligi13 ble rollover distribution described in section

14 402(c) or 403(a)(4) of the Internal Revenue

15 Code of 1986, or

16 ‘‘(B) any direct trustee-to-trustee transfer

17 described in section 401(a)(31) of such Code

18 from a qualified trust to a Pension ProSave Ac19 count.

20 ‘‘(2) COORDINATION WITH TAX CODE.—For

21 purposes of the Internal Revenue Code of 1986, a

22 Pension ProSave Account shall be treated as an eli23 gible retirement plan under section 402(c)(8)(B) of

24 such Code.
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1 ‘‘SEC. 5022. REQUIREMENTS RELATING TO DISTRIBUTIONS.

2 ‘‘(a) TIME FOR DISTRIBUTIONS.—

3 ‘‘(1) IN GENERAL.—The system established

4 under section 5011 shall provide that amounts in a

5 Pension ProSave Account may not be distributed to

6 participants or beneficiaries earlier than—

7 ‘‘(A) the death or disability of the partici8 pant, or

‘‘(B) the attainment of age 591 9 ⁄2.

10 ‘‘(2) MANDATORY DISTRIBUTIONS.—Notwith11 standing paragraph (1), the provisions of section

12 401(a)(9) of the Internal Revenue Code of 1986

13 shall apply to a Pension ProSave Account.

14 ‘‘(b) FORMS OF DISTRIBUTIONS.—

15 ‘‘(1) IN GENERAL.—The system established

16 under section 5011 shall provide for distributions in

17 such forms as the Board may provide, except that

18 the Board shall provide for—

19 ‘‘(A) a life annuity,

20 ‘‘(B) a joint and survivor annuity,

21 ‘‘(C) an annuity for a term certain, and

22 ‘‘(D) a lump-sum distribution.

23 ‘‘(2) SURVIVOR ANNUITIES; SPOUSAL CON24 SENT.—The provisions of section 205 shall apply to

25 distributions from a Pension ProSave Account.
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1 ‘‘(3) ISSUERS.—Annuities under this subsection

2 shall be provided through persons authorized under

3 applicable State laws to provide such annuities. The

4 Board may limit the maximum amount of annuities

5 issued by any 1 person.

6 ‘‘SEC. 5023. LOAN REQUIREMENTS.

7 ‘‘(a) IN GENERAL.—The system established under

8 section 5011 shall provide that a participant may obtain

9 a loan of amounts in a Pension ProSave Account.

10 ‘‘(b) LIMITATIONS.—Loans under subsection (a)—

11 ‘‘(1) may be made only for the purposes de12 scribed in subsection (c),

13 ‘‘(2) may not in the aggregate exceed the por14 tion of the balance to the credit of the account at15 tributable to elective employee contributions (and

16 earnings allocable thereto), and

17 ‘‘(3) shall be subject to the same terms and

18 conditions as similar loans provided by private lend19 ers.

20 ‘‘(c) LOAN PURPOSES.—Loans may be made under

21 subsection (a)—

22 ‘‘(1) for the payment of acquisition costs of a

23 principal residence of the participant or the partici24 pant’s spouse, child, or grandchild, but only if the
19

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1 individual had no present ownership interest in a

2 principal residence during the prior 2 years,

3 ‘‘(2) for tuition, fees, books, supplies, and

4 equipment, and reasonable living expenses while

5 away from home, required for the enrollment or at6 tendance of the participant or the participant’s

7 spouse, child, or grandchild at an eligible educational

8 institution (as defined in section 135(c)(3) of the In9 ternal Revenue Code of 1986),

10 ‘‘(3) if the participant during the calendar year

11 or the preceding calendar year received unemploy12 ment compensation for 12 consecutive weeks under

13 any Federal or State law, and

14 ‘‘(4) for medical expenses of the participant, the

15 participant’s spouse, child, or grandchild, or any an16 cestor of the participant or spouse, but only if a de17 duction is allowed with respect to such expenses

18 under section 213 of such Code.

19 ‘‘Subpart C—Clearinghouse Investments

20 ‘‘SEC. 5031. INVESTMENT OPTIONS.

21 ‘‘(a) IN GENERAL.—The Board shall, pursuant to the

22 system established under section 5011, enter into arrange23 ments, on a competitive basis, with qualified professional

24 asset managers to provide individuals with the opportunity
20

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1 to invest sums in a Pension ProSave Account in each of

2 the funds described in subsection (b).

3 ‘‘(b) TYPE OF FUNDS.—

4 ‘‘(1) IN GENERAL.—The funds described in the

5 subsection are the following:

6 ‘‘(A) A fixed income investment fund.

7 ‘‘(B) An equity fund.

8 ‘‘(C) A government securities investment

9 fund.

10 ‘‘(D) A small business capitalization fund.

11 ‘‘(E) A public infrastructure fund.

12 ‘‘(F) An international equity fund.

13 ‘‘(2) OTHER FUNDS.—The Board may provide

14 for other funds which the Board determines appro15 priate, including a common stock index investment

16 fund.

17 ‘‘(c) ASSET MANAGERS.—

18 ‘‘(1) IN GENERAL.—The Board may select more

19 than one qualified professional asset manager for

20 each type of fund described in subsection (b).

21 ‘‘(2) ASSET ALLOCATION.—The Board may

22 place limits on the amount which may be allocated

23 to any qualified professional asset manager to the

24 extent the Board determines necessary to prevent
21

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1 undue impact on any financial market or undue risk

2 to participants.

3 ‘‘(3) DEFINITION.—For purposes of this title,

4 the term ‘‘qualified professional asset manager’’ has

5 the meaning given such term by section 8438(a)(7)

6 of title 5, United States Code.

7 ‘‘(d) PARTICIPANT ELECTIONS.—

8 ‘‘(1) IN GENERAL.—The system established

9 under section 5011 shall provide that an individual

10 on whose behalf a Pension ProSave Account is es11 tablished may—

12 ‘‘(A) elect the investment funds into which

13 contributions to the account are to be invested,

14 and

15 ‘‘(B) elect to transfer contributions (and

16 earnings) from one fund to another.

17 ‘‘(2) TIME AND METHOD.—

18 ‘‘(A) TIME.—Such system shall provide

19 that—

20 ‘‘(i) any election under paragraph

21 (1)(A) shall be effective on the first day of

22 the month following the month in which

23 the election was made, and
22

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1 ‘‘(ii) any election under paragraph

2 (1)(B) shall be effective on the first busi3 ness day following the election.

4 ‘‘(B) METHOD.—Any election shall be

5 made in the manner provided by the system, ex6 cept that the Board shall seek to ensure elec7 tions may be made in a simple, timely manner.

8 ‘‘(3) LIMITATION.—Any election under this sub9 section shall be subject to the asset allocation limita10 tion under subsection (c)(2).

11 ‘‘Subpart D—Administrative Provisions; Fiduciary

12 Responsibilities

13 ‘‘SEC. 5041. ACCOUNTING AND INFORMATION.

14 ‘‘(a) ESTABLISHMENT OF ACCOUNTS.—

15 ‘‘(1) IN GENERAL.—The system established

16 under section 5011 shall provide for the establish17 ment and maintenance of a Pension ProSave Ac18 count for each individual—

19 ‘‘(A) for whom contributions are made to

20 the Clearinghouse under a Pension ProSave

21 Plan, or

22 ‘‘(B) who transfers amounts, or on whose

23 behalf amounts are transferred, to the Clearing24 house in a qualified rollover contribution.
23

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1 ‘‘(2) ALLOCATIONS AND REDUCTIONS TO AC2 COUNT.—Such system shall provide for—

3 ‘‘(A) the allocation to each account of an

4 amount equal to a pro rata share of the net

5 earnings and net losses from each investment of

6 sums in such account, and

7 ‘‘(B) a reduction in each such account for

8 the account’s appropriate share of the adminis9 trative expenses to be paid out.

10 ‘‘(3) EXAMINATION OF ACCOUNTS.—

11 ‘‘(A) IN GENERAL.—The Clearinghouse

12 shall annually engage, on behalf of all individ13 uals for whom an account is maintained, an

14 independent qualified public accountant (within

15 the meaning of section 103(a)(3)(D) who shall

16 conduct an examination of all accounts and

17 other books and records maintained in the ad18 ministration of this title as the accountant con19 siders necessary to make the determination

20 under subparagraph (B). The examination shall

21 be conducted in accordance with generally ac22 cepted auditing standards and shall involve

23 such tests of the accounts, books, and records

24 as the public accountant considers necessary.
24

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1 ‘‘(B) DETERMINATION OF COMPLIANCE.—

2 The public accountant conducting an examina3 tion under subparagraph (A) shall determine

4 whether the accounts, books, and records re5 ferred to in such paragraph have been main6 tained in conformity with generally accepted ac7 counting principles applied on a basis consistent

8 with the manner in which such principles were

9 applied during the examination conducted dur10 ing the preceding year. The public accountant

11 shall transmit to the Board and the Comptrol12 ler General of the United States a report on

13 such examination and determination.

14 ‘‘(C) RELIANCE.—In making a determina15 tion under subparagraph (B), a public account16 ant may rely on the correctness of any actuarial

17 matter certified by an enrolled actuary if the

18 public accountant states his reliance in the re19 port to the Board.

20 ‘‘(b) ADDITIONAL INFORMATION.—

21 ‘‘(1) IN GENERAL.—The system established

22 under section 5011 shall provide for the furnishing

23 of information to employers and employees of the

24 opportunity of establishing Pension ProSave Plans
25

•S 1922 IS

1 and of transferring amounts to Pension ProSave Ac2 counts.

3 ‘‘(2) ACCOUNT PARTICIPANTS.—

4 ‘‘(A) IN GENERAL.—Such system shall

5 provide that each individual for whom an ac6 count is maintained shall be periodically fur7 nished with—

8 ‘‘(i) a statement relating to the indi9 vidual’s account, and

10 ‘‘(ii) a summary description of the in11 vestment options under the account and an

12 evaluation of such option during the 5-year

13 period preceding the evaluation.

14 ‘‘(B) ACCOUNT VALUATION.—Such system

15 shall also provide that each individual for whom

16 an account is established shall be entitled, upon

17 request, to a daily valuation of amounts in each

18 fund described in section 5031(b) in order to

19 enable the individual to make an election to

20 transfer such amounts between funds.

21 ‘‘(3) INVESTMENT INFORMATION.—The Clear22 inghouse shall also make available to employees in23 formation on how to make informed investment deci24 sions and how to achieve retirement objectives.
26

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1 ‘‘(4) INFORMATION NOT INVESTMENT AD2 VICE.—Information provided under this subsection

3 shall not be treated as investment advice for pur4 poses of any Federal or State law.

5 ‘‘SEC. 5042. ADMINISTRATIVE COSTS.

6 ‘‘(a) IN GENERAL.—Any expense incurred by the

7 Clearinghouse, the Board, or the Advisory Council in car8 rying out their functions under this title shall be paid first

9 from the earnings of the funds in Pension ProSave Ac10 counts and then from balances in such accounts.

11 ‘‘(b) ALLOCATION.—Expenses under subsection (a)

12 shall be allocated to each Pension ProSave Account in the

13 manner provided under section 5041.

14 ‘‘SEC. 5043. FIDUCIARY RESPONSIBILITIES; LIABILITY AND

15 PENALTIES; BONDING; INVESTIGATIVE AU16 THORITY.

17 ‘‘Except as provided by the Secretary of Labor in reg18 ulations, the provisions of sections 8477, 8478, 8478a,

19 and 8479(a) of title 5, United States Code, shall apply

20 to the Clearinghouse in the same manner as such provi21 sions apply to the Thrift Savings Fund.
27

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1 ‘‘Subtitle C—Pension Portability

2 Clearinghouse

3 ‘‘SEC. 5051. ESTABLISHMENT OF PENSION PORTABILITY

4 CLEARINGHOUSE.

5 ‘‘(a) ESTABLISHMENT.—There is established within

6 the executive branch of the Government a body corporate

7 to be known as the Pension Portability Clearinghouse.

8 ‘‘(b) ADMINISTRATION.—In carrying out its duties

9 under this title, the Clearinghouse shall be administered

10 by the Chairman in accordance with policies established

11 by the Board.

12 ‘‘(c) POWERS.—In carrying out its duties under this

13 title—

14 ‘‘(1) IN GENERAL.—The Clearinghouse shall

15 have the powers conferred on a nonprofit corpora16 tion under the District of Columbia Nonprofit Cor17 poration Act (chapter 5 of title 29 of the District of

18 Columbia Code (section 29–501 et seq.)).

19 ‘‘(2) SPECIFIC POWERS.—The Clearinghouse

20 shall have—

21 ‘‘(A) the specific powers granted to it by

22 this title, and

23 ‘‘(B) powers identical to the powers con24 ferred on the Pension Benefit Guaranty Cor-
28

•S 1922 IS

1 poration under paragraphs (1) through (8) of

2 section 4002(b).

3 ‘‘(d) TREATMENT AS QUALIFIED TRUST.—For pur4 poses of the Internal Revenue Code of 1986—

5 ‘‘(1) the Clearinghouse shall be treated in the

6 same manner as a trust described in section 401(a)

7 of such Code which is exempt from taxation under

8 section 501(a) of such Code, and

9 ‘‘(2) any contribution to, or distribution from,

10 the Clearinghouse shall be treated in the same man11 ner as contributions to, or distributions from, such

12 a trust.

13 ‘‘SEC. 5052. BOARD OF DIRECTORS.

14 ‘‘(a) APPOINTMENT.—The board of directors of the

15 Pension Portability Clearinghouse shall be composed of 5

16 members appointed by the President, of whom 1 shall be

17 designated by the President as Chairman.

18 ‘‘(b) ADVICE AND CONSENT.—Appointments under

19 subsection (a) shall be made by and with the advice and

20 consent of the Senate.

21 ‘‘(c) EXPERTISE.—Members of the Board shall have

22 substantial experience, training, and expertise in the man23 agement of financial investments and pension benefit

24 plans.

25 ‘‘(d) TERMS.—
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•S 1922 IS

1 ‘‘(1) IN GENERAL.—A member of the Board

2 shall be appointed for a term of 3 years, except that

3 of the members first appointed—

4 ‘‘(A) the Chairman shall be appointed for

5 a term of 3 years,

6 ‘‘(B) 2 members shall be appointed for a

7 term of 2 years, and

8 ‘‘(C) 2 members shall be appointed for a

9 term of 1 year.

10 ‘‘(2) VACANCIES.—A vacancy on the Board

11 shall be filled in the same manner in which the origi12 nal appointment was made. Any individual so ap13 pointed shall serve for the unexpired term of the

14 member replaced.

15 ‘‘(3) SUCCESSORS REQUIRED.—The term of any

16 member shall not expire before the date on which

17 the member’s successor takes office.

18 ‘‘(e) GENERAL DUTIES AND POWERS.—

19 ‘‘(1) GENERAL RULE.—The Board shall—

20 ‘‘(A) establish policies for the establish21 ment and management of the system described

22 in section 5011,

23 ‘‘(B) establish policies for the investment

24 and management of the amounts in Pension

25 ProSave Accounts,
30

•S 1922 IS

1 ‘‘(C) review the performance of invest2 ments made for the Clearinghouse, and

3 ‘‘(D) review and approve the budgets of

4 the Clearinghouse and the Board.

5 ‘‘(2) OVERSIGHT OF CLEARINGHOUSE.—The

6 Board may—

7 ‘‘(A) provide for the hiring of employees of

8 the Clearinghouse, including the appointment of

9 the Executive Director,

10 ‘‘(B) direct the Executive Director to take

11 such actions as the Board considers necessary

12 to carry out the provisions of this title,

13 ‘‘(C) upon the concurring votes of 4 mem14 bers of the Board, remove the Executive Direc15 tor for cause, and

16 ‘‘(D) take such other actions as may be

17 necessary to carry out the functions of the

18 Board.

19 ‘‘(3) RESPONSIBILITIES.—

20 ‘‘(A) IN GENERAL.—The members of the

21 Board shall discharge their responsibilities sole22 ly in the interests of participants and bene23 ficiaries under Pension ProSave Accounts.

24 ‘‘(B) INVESTMENTS.—The Board may not

25 direct the Clearinghouse to invest or cause to be
31

•S 1922 IS

1 invested any sums in a specific asset or to dis2 pose or cause to be disposed of any specific

3 asset.

4 ‘‘(4) INVESTMENT POLICIES.—Any investment

5 policies adopted under paragraph (1)(B) shall pro6 vide for—

7 ‘‘(A) prudent investments suitable for ac8 cumulating funds for payment of retirement in9 come, and

10 ‘‘(B) low administrative costs.

11 ‘‘(5) BUDGETS.—The Board shall prepare and

12 submit to the President, and, at the same time, to

13 the appropriate committees of Congress, an annual

14 budget of the expenses and other items relating to

15 the Board which shall be included as a separate item

16 in the budget required to be transmitted to the Con17 gress under section 1105 of title 31, United States

18 Code.

19 ‘‘(6) LEGISLATIVE RECOMMENDATIONS.—The

20 Board may submit to the President, and, at the

21 same time, shall submit to each House of Congress,

22 any legislative recommendations of the Board relat23 ing to any of its functions under this title or any

24 other provision of law.

25 ‘‘(f) ADMINISTRATIVE PROVISIONS.—
32

•S 1922 IS

1 ‘‘(1) MEETINGS.—The Board shall meet not

2 less than once during each month and at additional

3 times at the call of the Chairman.

4 ‘‘(2) QUORUMS.—

5 ‘‘(A) IN GENERAL.—The Board shall per6 form its duties and exercise its powers on a ma7 jority vote of a quorum of the Board.

8 ‘‘(B) VACANCY.—A vacancy on the Board

9 shall not impair the authority of a quorum of

10 the Board to perform its duties and exercise its

11 powers.

12 ‘‘(C) QUORUM.—3 members of the Board

13 shall constitute a quorum for the transaction of

14 business.

15 ‘‘(3) COMPENSATION.—

16 ‘‘(A) IN GENERAL.—Each member of the

17 Board who is not an officer or employee of the

18 Federal Government shall be compensated at

19 the daily rate of basic pay for level IV of the

20 Executive Schedule under title 5, United States

21 Code, for each day such member is performing

22 the duties of the Board.

23 ‘‘(B) TRAVEL AND PER DIEM.—A member

24 of the Board shall be paid travel, per diem, and

25 other necessary expenses under subchapter I of
33

•S 1922 IS

1 chapter 57 of title 5, United States Code, while

2 traveling away from such member’s home or

3 regular place of business in the performance of

4 the duties of the Board.

5 ‘‘(4) EXECUTIVE DIRECTOR.—

6 ‘‘(A) APPOINTMENT.—The chief executive

7 officer of the Clearinghouse shall be the Execu8 tive Director appointed under subsection (e).

9 ‘‘(B) DUTIES.—The Executive Director

10 shall—

11 ‘‘(i) carry out policies established by

12 the Board, and

13 ‘‘(ii) administer the Clearinghouse, in14 cluding—

15 ‘‘(I) appointing such personnel as

16 may be necessary to carry out the du17 ties of the Clearinghouse,

18 ‘‘(II) subject to approval by the

19 Board, procure the services of experts

20 and consultants, and

21 ‘‘(III) pay compensation and

22 other expenses of the Clearinghouse

23 from funds in the Clearinghouse.
34

•S 1922 IS

1 ‘‘SEC. 5053. PENSION PORTABILITY CLEARINGHOUSE ADVI2 SORY COUNCIL.

3 ‘‘(a) APPOINTMENT.—There is hereby established the

4 Pension Portability Clearinghouse Advisory Council which

5 shall consist of 15 members appointed by the President,

6 from among individuals who have substantial experience,

7 training, and expertise in the management of financial in8 vestments and pension benefit plans, including representa9 tives of—

10 ‘‘(1) the insurance industry,

11 ‘‘(2) the fields of accounting, actuarial science,

12 and investment counseling and management,

13 ‘‘(3) mutual funds,

14 ‘‘(4) organized labor, small plan sponsors, pen15 sion advocacy organizations, and retiree groups, and

16 ‘‘(5) the general public.

17 ‘‘(b) TERMS.—

18 ‘‘(1) IN GENERAL.—A member of the Advisory

19 Council shall be appointed for a term of 3 years, ex20 cept that of the members first appointed—

21 ‘‘(A) 5 shall be appointed for a term of 3

22 years,

23 ‘‘(B) 5 shall be appointed for a term of 2

24 years, and

25 ‘‘(C) 5 shall be appointed for a term of 1

26 year.
35

•S 1922 IS

1 ‘‘(2) VACANCIES.—A vacancy on the Advisory

2 Council shall be filled in the same manner in which

3 the original appointment was made. Any individual

4 so appointed shall serve for the unexpired term of

5 the member replaced.

6 ‘‘(3) SUCCESSOR REQUIRED.—The term of any

7 member shall not expire before the date on which

8 the member’s successor takes office.

9 ‘‘(c) ACTIONS.—The Advisory Council shall act by

10 resolution of a majority of its members.

11 ‘‘(d) DUTIES.—The Advisory Council shall—

12 ‘‘(1) advise the Board on the establishment of

13 the Pension ProSave system under subtitle B,

14 ‘‘(2) advise the Board on matters relating to—

15 ‘‘(A) investment policies for the Clearing16 house, including standards for limiting amounts

17 administered by any asset manager, and

18 ‘‘(B) the administration of this title, and

19 ‘‘(3) perform such other duties as the Board

20 may request.’’

21 (b) CLERICAL AMENDMENT.—Section 1 of the Em22 ployee Retirement Income Security Act of 1974 (29

23 U.S.C. 1001 note) is amended by adding at the end the

24 following new items:

‘‘TITLE V—PENSION PROSAVE SYSTEM
36

•S 1922 IS

‘‘Subtitle A—Pension ProSave Plans

‘‘Sec. 5001. Easy access for all employers.

‘‘Sec. 5002. Pension Prosave Plans.

‘‘Subtitle B—Establishment of Pension ProSave System

‘‘Part 1—Definitions

‘‘Sec. 5010. Definitions.

‘‘Part 2—Establishment of Pension Prosave System

‘‘SUBPART A—IN GENERAL

‘‘Sec. 5011. Establishment of Pension Prosave system.

‘‘SUBPART B—CONTRIBUTIONS AND DISTRIBUTIONS

‘‘Sec. 5021. Contributions to Pension Prosave Accounts.

‘‘Sec. 5022. Requirements relating to distributions.

‘‘Sec. 5023. Loan requirements.

‘‘SUBPART C—CLEARINGHOUSE INVESTMENTS

‘‘Sec. 5031. Investment options.

‘‘SUBPART D—ADMINISTRATIVE PROVISIONS; FIDUCIARY RESPONSIBILITIES

‘‘Sec. 5041. Accounting and information.

‘‘Sec. 5042. Administrative costs.

‘‘Sec. 5043. Fiduciary responsibilities; liability and penalties; bonding; investigative authority.

‘‘Subtitle C—Pension Portability Clearinghouse

‘‘Sec. 5051. Establishment of Pension Portability Clearinghouse.

‘‘Sec. 5052. Board of directors.

‘‘Sec. 5053. Pension Portability Clearinghouse Advisory Council.’’

1 SEC. 3. OTHER MODIFICATIONS TO ERISA.

2 (a) REPORTING REQUIREMENTS.—Section 101 of the

3 Employee Retirement Income Security Act of 1974 (29

4 U.S.C. 1021) is amended by redesignating subsection (g)

5 as subsection (h) and by inserting after subsection (f) the

6 following new subsection:

7 ‘‘(g) NOTIFICATION AND DISCLOSURE.—

8 ‘‘(1) IN GENERAL.—Except as provided in this

9 subsection, the reporting and disclosure require-
37

•S 1922 IS

1 ments of title I with respect to any Pension ProSave

2 Plan shall apply to the Pension Portability Clearing3 house and not to the plan sponsor.

4 ‘‘(2) EMPLOYEE NOTIFICATION.—The plan

5 sponsor shall notify each participant immediately be6 fore the period for which an election may be made

7 of the participant’s opportunity to make such elec8 tion. Such notice shall include a copy of the sum9 mary plan description required under section 102

10 and shall indicate the level of employer nonelective

11 contributions which will be made for the year (or

12 portion thereof) for which the election may be made.

13 This paragraph shall not apply to an election under

14 section 5002(c)(3)(B)(ii).’’

15 (b) FIDUCIARY DUTIES.—Section 404 of the Em16 ployee Retirement Income Security Act of 1974 (29

17 U.S.C. 1104) is amended by redesignating subsection (d)

18 as subsection (e) and by adding after subsection (c) the

19 following new subsection:

20 ‘‘(d) In the case of a Pension ProSave Plan under

21 title V—

22 ‘‘(1) no plan sponsor who is otherwise a fidu23 ciary shall be liable under this part for any loss, or

24 by reason of any breach, which results from the
38

•S 1922 IS

1 manner in which the assets in a Pension ProSave

2 Account are invested, and

3 ‘‘(2) if—

4 ‘‘(A) a participant ceases to be an eligible

5 employee (within the meaning of section

6 5002(f)(3)) with respect to such plan, and

7 ‘‘(B) the plan sponsor has made all re8 quired contributions with respect to such partic9 ipant under such plan,

10 the trustee of the Pension ProSave Account estab11 lished for such participant and his beneficiaries shall

12 be the sole fiduciary with respect to such participant

13 and beneficiaries in connection with such plan.’’

14 SEC. 4. EFFECTIVE DATE.

15 The Pension ProSave system established under this

16 Act shall take effect on the first day of the sixth month

17 following the month in which final regulations described

18 in section 5011 of the Employee Retirement Income Secu19 rity Act of 1974 are published in the Federal Register.

Æ