II

103D CONGRESS

2D SESSION S. 2531

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

the pension and welfare benefits of working men and women, and for

other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 6 (legislative day, SEPTEMBER 12), 1994

Mr. METZENBAUM introduced the following bill; which was read twice and

referred to the Committee on Labor and Human Resources

A BILL

To amend the Employee Retirement Income Security Act

of 1974 to improve the pension and welfare benefits

of working men and women, and for other purposes.

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; AMENDMENT OF ERISA.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Pension Bill of Rights Act of 1994’’.

6 (b) ERISA.—Except as otherwise expressly provided,

7 whenever in this Act an amendment or repeal is expressed

8 in terms of an amendment to, or repeal of, a section or

9 other provision, the reference shall be considered to be
2

•S 2531 IS

1 made to a section or other provision of the Employee Re2 tirement Income Security Act of 1974.

3 SEC. 2. FINDINGS AND PURPOSE.

4 (a) FINDINGS.—The Congress finds that—

5 (1) 1994 celebrates the twentieth anniversary of

6 the Employee Retirement Income Security Act of

7 1974, and

8 (2) the pension and welfare benefit rights of

9 workers and retirees established by that Act need to

10 be clearly set forth and strengthened.

11 (b) PURPOSE.—It is the purpose of this Act to set

12 forth and to implement the Pension Bill of Rights.

13 SEC. 3. PENSION BILL OF RIGHTS.

14 The Pension Bill of Rights is as follows:

15 (1) Employees have the right to be included in

16 a pension plan sponsored by their employer.

17 (2) Employees have the right to fair treatment

18 in earning retirement benefits.

19 (3) Employees have the right to timely, accu20 rate, and understandable information about their

21 pension and welfare benefits.

22 (4) Employees have the right to receive infor23 mation and to provide advice on the investment of

24 pension plan assets.
3

•S 2531 IS

1 (5) Employees have the right to have their pen2 sion plans adequately funded and invested to pro3 mote long-term economic security.

4 (6) Employees have the right to Department of

5 Labor assistance in protecting their pension and wel6 fare benefit rights.

7 (7) Employees have the right to effective court

8 enforcement of their legal rights.

9 (8) Spouses of employees have the right to equi10 table treatment.

11 (9) Employees have the right to pension port12 ability.

13 (10) Employees have the right to have their

14 pension money protected against fraud and abuse.

15 TITLE I—PROVISIONS RELATING

16 TO EMPLOYEES’ PENSION

17 RIGHTS

18 Subtitle A—Right of Inclusion in

19 Pension Plan

20 SEC. 101. MINIMUM COVERAGE REQUIREMENTS.

21 (a) IN GENERAL.—Part 2 of subtitle B of title I (29

22 U.S.C. 201 et seq.) is amended by inserting after section

23 201 the following new section:
4

•S 2531 IS

1 ‘‘MINIMUM COVERAGE REQUIREMENTS

2 ‘‘SEC. 201A. (a) GENERAL RULE.—Each pension

3 plan maintained by an employer shall benefit all employees

4 of the employer.

5 ‘‘(b) EXCLUSION OF CERTAIN EMPLOYEES.—For

6 purposes of this section, there shall be excluded from con7 sideration—

8 ‘‘(1) employees who are included in a unit of

9 employees covered by an agreement which, as deter10 mined in accordance with regulations issued by the

11 Secretary, constitutes a collective bargaining agree12 ment between employee representatives and one or

13 more employers, if there is evidence that retirement

14 benefits were the subject of good faith bargaining

15 between such employee representatives and such em16 ployer or employers,

17 ‘‘(2) in the case of a trust established or main18 tained pursuant to an agreement which, as deter19 mined in accordance with regulations issued by the

20 Secretary, constitutes a collective bargaining agree21 ment between airline pilots represented in accord22 ance with title II of the Railway Labor Act and one

23 or more employers, all employees not covered by

24 such agreement, and
5

•S 2531 IS

1 ‘‘(3) employees who are nonresident aliens and

2 who receive no earned income (within the meaning

3 of section 911(d)(2) of the Internal Revenue Code of

4 1986) from the employer which constitutes income

5 from sources within the United States (within the

6 meaning of section 861(a)(3) of such Code).

7 Paragraph (1) shall not apply with respect to coverage of

8 employees under a plan pursuant to an agreement under

9 such paragraph. Paragraph (2) shall not apply in the case

10 of a plan which provides contributions or benefits for em11 ployees whose principal duties are not customarily per12 formed aboard aircraft in flight.

13 ‘‘(c) EXCLUSION OF EMPLOYEES NOT MEETING AGE

14 AND SERVICE REQUIREMENTS.—

15 ‘‘(1) IN GENERAL.—If a plan—

16 ‘‘(A) prescribes, consistent with section

17 202(a), minimum age and service requirements

18 as a condition of participation, and

19 ‘‘(B) excludes all employees not meeting

20 such requirements from participation,

21 then such employees shall be excluded from consider22 ation for purposes of this section.

23 ‘‘(2) REQUIREMENTS MAY BE MET SEPARATELY

24 WITH RESPECT TO EXCLUDED GROUP.—If employees

25 not meeting the minimum age or service require-
6

•S 2531 IS

1 ments of section 202(a)(1) (without regard to sub2 paragraph (B) thereof) are covered under a plan of

3 the employer which meets the requirements of sub4 section (a) separately with respect to such employ5 ees, such employees may be excluded from consider6 ation in determining whether any plan of the em7 ployer meets the requirements of subsection (a).

8 ‘‘(3) REQUIREMENTS NOT TREATED AS BEING

9 MET BEFORE ENTRY DATE.—An employee shall not

10 be treated as meeting the age and service require11 ments described in this subsection until the first

12 date on which, under the plan, any employee with

13 the same age and service would be eligible to com14 mence participation in the plan.

15 ‘‘(d) LINE OF BUSINESS EXCEPTION.—

16 ‘‘(1) IN GENERAL.—If, under section 414(r) of

17 the Internal Revenue Code of 1986, an employer is

18 treated as operating separate lines of business for a

19 year, the employer may apply the requirements of

20 this section for such year separately with respect to

21 employees in each separate line of business.

22 ‘‘(2) PLAN MUST BE NONDISCRIMINATORY.—

23 Paragraph (1) shall not apply with respect to any

24 plan maintained by an employer unless such plan

25 benefits such employees as qualify under a classifica-
7

•S 2531 IS

1 tion set up by the employer and found by the Sec2 retary of the Treasury not to be discriminatory in

3 favor of highly compensated employees.

4 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur5 poses of this section—

6 ‘‘(1) HIGHLY COMPENSATED EMPLOYEE.—The

7 term ‘highly compensated employee’ has the mean8 ing given such term by section 414(q) of the Inter9 nal Revenue Code of 1986.

10 ‘‘(2) AGGREGATION RULES.—An employer may

11 elect to designate—

12 ‘‘(A) 2 or more trusts,

13 ‘‘(B) 1 or more trusts and 1 or more annu14 ity plans, or

15 ‘‘(C) 2 or more annuity plans,

16 as part of 1 plan to determine whether the require17 ments of this section are met with respect to such

18 plan. If an employer elects to treat any trusts or an19 nuity plans as 1 plan under this paragraph, such

20 trusts or annuity plans shall be treated as 1 plan for

21 purposes of section 401(a)(4) of such Code.

22 ‘‘(3) SPECIAL RULES FOR CERTAIN DISPOSI23 TIONS OR ACQUISITIONS.—

24 ‘‘(A) IN GENERAL.—If a person becomes,

25 or ceases to be, a member of a group described
8

•S 2531 IS

1 in subsection (b), (c), (m), or (o) of section 414

2 of such Code, then the requirements of this sec3 tion shall be treated as having been met during

4 the transition period with respect to any plan

5 covering employees of such person or any other

6 member of such group if—

7 ‘‘(i) such requirements were met im8 mediately before each such change, and

9 ‘‘(ii) the coverage under such plan is

10 not significantly changed during the transi11 tion period (other than by reason of the

12 change in members of a group) or such

13 plan meets such other requirements as the

14 Secretary may prescribe by regulation.

15 ‘‘(B) TRANSITION PERIOD.—For purposes

16 of subparagraph (A), the term ‘transition pe17 riod’ means the period—

18 ‘‘(i) beginning on the date of the

19 change in members of a group, and

20 ‘‘(ii) ending on the last day of the 1st

21 plan year beginning after the date of such

22 change.

23 ‘‘(4) REGULATIONS.—The Secretary shall pre24 scribe such regulations as may be necessary or ap25 propriate to carry out the purposes of this section.’’
9

•S 2531 IS

1 (b) CONFORMING AMENDMENT.—The table of sec2 tions for part 2 of subtitle B of title I is amended by in3 serting after the item relating to section 201 the following

4 new item:

‘‘Sec. 201A. Minimum coverage requirements.’’

5 SEC. 102. MINIMUM PARTICIPATION REQUIREMENTS.

6 (a) HOURS REQUIRED FOR YEAR OF SERVICE.—

7 (1) IN GENERAL.—Sections 202(a)(3),

8 203(b)(2), and 204(b)(4) (29 U.S.C. 1052(a)(3),

9 1053(b)(2), and 1054(b)(4)) are each amended by

10 striking ‘‘1,000 hours’’ each place it appears and in11 serting ‘‘750 hours’’.

12 (2) CONFORMING AMENDMENTS.—

13 (A) Sections 202(a)(3)(D), 203(b)(2)(D),

14 and 204(b)(4)(E) (29 U.S.C. 1052(a)(3)(D),

15 1053(b)(2)(D), and 1054(b)(4)(E)) are each

16 amended by striking ‘‘125 days’’ and inserting

17 ‘‘94 days’’.

18 (B) Sections 202(b)(5)(B) and

19 203(b)(3)(E)(ii) (29 U.S.C. 1052(b)(5)(B) and

20 1053(b)(3)(E)(ii)) are each amended by strik21 ing ‘‘501 hours’’ and inserting ‘‘376 hours’’.

22 (C) Section 203(b)(3)(A) (29 U.S.C.

23 1053(b)(3)(A)) is amended by striking ‘‘500

24 hours’’ and inserting ‘‘375 hours’’.
10

•S 2531 IS

1 (b) CREDIT FOR PART-TIME, SEASONAL, AND TEM2 PORARY EMPLOYEES.—

3 (1) MINIMUM PARTICIPATION.—Section

4 202(a)(3) (29 U.S.C. 1052(a)(3)) is amended by

5 adding at the end the following new subparagraph:

6 ‘‘(E) For purposes of this section, if an

7 employee has 500 or more but less than 750

8 hours of service during each of 2 consecutive

9 12-month periods described in subparagraph

10 (A), the employee shall be treated as having 1

11 year of service with respect to those hours of

12 service. No 12-month period shall be taken into

13 account if previously taken into account under

14 this subparagraph.’’

15 (2) VESTING REQUIREMENTS.—Section

16 203(b)(2) (29 U.S.C. 1053(b)(2)) is amended by

17 adding at the end the following new subparagraph:

18 ‘‘(E) For purposes of this section, if an

19 employee has 500 or more but less than 750

20 hours of service during each of 2 consecutive

21 12-month periods described in subparagraph

22 (A), the employee shall be treated as having 1

23 year of service with respect to those hours of

24 service. No 12-month period shall be taken into
11

•S 2531 IS

1 account if previously taken into account under

2 this subparagraph.’’

3 (3) ACCRUAL.—

4 (A) IN GENERAL.—Section 204(b)(4) (29

5 U.S.C. 1054(b)(4)) is amended by inserting at

6 the end the following new subparagraph:

7 ‘‘(F) For purposes of this section, if an

8 employee has 500 or more but less than 750

9 hours of service during each of 2 consecutive

10 12-month periods described in subparagraph

11 (A), the employee shall be treated as having 1

12 year of participation with respect to those hours

13 of service. No 12-month period shall be taken

14 into account if previously taken into account

15 under this subparagraph.’’

16 (B) CONFORMING AMENDMENTS.—Section

17 204(b)(4) (29 U.S.C. 1054(b)(4)), as amended

18 by subparagraph (A), is amended—

19 (i) by striking ‘‘, except as provided in

20 subparagraph (C),’’ in subparagraph (B),

21 and

22 (ii) by striking subparagraph (C) and

23 by redesignating subparagraphs (D), (E),

24 and (F) as subparagraphs (C), (D), and

25 (E), respectively.
12

•S 2531 IS

1 (c) TREATMENT OF LEASED EMPLOYEES.—Para2 graph (6) of section 3 (29 U.S.C. 3(6)) is amended to

3 read as follows:

4 ‘‘(6)(A) The term ‘employee’ means any individ5 ual employed by an employer.

6 ‘‘(B)(i) Except as provided by regulations, in

7 the case of any recipient of services performed by a

8 leased employee—

9 ‘‘(I) the leased employee shall be treated as

10 an employee of the recipient, except that

11 ‘‘(II) contributions and benefits provided

12 under a plan sponsored by the leasing organiza13 tion which are attributable to services per14 formed by the leased employee for the recipient

15 shall be treated as provided by the recipient.

16 ‘‘(ii) For purposes of this subparagraph, the

17 term ‘leased employee’ means any person who is not

18 an employee of the recipient and who provides serv19 ices to the recipient if—

20 ‘‘(I) such services are provided pursuant to

21 an agreement between the recipient and the

22 leasing organization, and

23 ‘‘(II) such person has performed services

24 for the recipient (and any related persons) for

25 at least 750 hours during any consecutive 12-
13

•S 2531 IS

1 month period described in section 202(a)(3)

2 (without regard to employment status).

3 ‘‘(iii) For purposes of this subparagraph, a

4 leased employee shall be treated as an employee for

5 periods after the close of the first 12-month period

6 the person is described in clause (ii)(II).’’

7 (d) EMPLOYER MAY NOT REQUEST EMPLOYEE TO

8 WAIVE RIGHTS.—Section 203 (29 U.S.C. 1053) is amend9 ed by adding at the end the following new subsection:

10 ‘‘(f) An employer may not request an employee to

11 waive any right of coverage under, or participation in, any

12 pension plan which is granted by this title.’’

13 SEC. 103. MODEL SIMPLIFIED PENSION PLANS.

14 (a) ESTABLISHMENT OF MODEL PLAN.—The Sec15 retary of Labor, in consultation with the Secretary of the

16 Treasury, shall prescribe by regulations one or more model

17 simplified pension plans which would—

18 (1) provide simplicity to employers and provide

19 adequate retirement benefits to employees upon

20 adoption by an employer, and

21 (2) constitute a plan meeting the requirements

22 of the Employee Retirement Income Security Act of

23 1974, the Internal Revenue Code of 1986, and this

24 Act, in devising a model pension plan, the Secretary

25 shall consider the adequacy of existing simplified
14

•S 2531 IS

1 employee pension plan alternatives and may make

2 recommendations to adopt such plans as model sim3 plified plans.

4 (b) TIME FOR ESTABLISHMENT.—Regulations under

5 subsection (a) for the first of such plans shall be issued

6 within 12 months of the date of the enactment of this Act.

7 SEC. 104. PENSION COVERAGE AND ADEQUACY TASK

8 FORCE.

9 (a) ESTABLISHMENT.—As soon as possible after the

10 date of the enactment of this Act, the Secretary of Labor

11 shall establish a task force to study the problems relating

12 to coverage and adequacy of benefits of employees under

13 pension plans and the needs of employees under pension

14 plans. The task force shall include balanced representation

15 of employers, employees, experts in retirement policy, and

16 such other individuals as the Secretary of Labor deems

17 appropriate.

18 (b) REPORT.—The Secretary of Labor shall, no later

19 than 18 months after the date of the enactment of this

20 Act, report the results of the study to Congress under sub21 section (a), including recommendations for enhancing cov22 erage and adequacy of benefits of employees under pension

23 plans.
15

•S 2531 IS

1 Subtitle B—Right to Fair

2 Treatment in Earning Benefits

3 SEC. 111. RIGHT TO VESTING.

4 (a) ELIMINATION OF SPECIAL VESTING RULE FOR

5 MULTIEMPLOYER PLANS.—Paragraph (2) of section

6 203(a) (29 U.S.C. 1053(a)(2)) is amended—

7 (1) by striking ‘‘subparagraph (A), (B), or (C)’’

8 and inserting ‘‘subparagraph (A) or (B)’’, and

9 (2) by striking subparagraph (C).

10 (b) IMMEDIATE VESTING OF EMPLOYER CONTRIBU11 TIONS TO DEFINED CONTRIBUTION PLAN.—Paragraph

12 (1) of section 203(a) (29 U.S.C. 1053(a)(1)) is amended

13 to read as follows:

14 ‘‘(1) A plan satisfies the requirements of this

15 paragraph if—

16 ‘‘(A) an employee’s rights in the employ17 ee’s accrued benefit derived from the employee’s

18 own contributions are nonforfeitable, and

19 ‘‘(B) in the case of an individual account

20 plan, an employee’s rights in the employee’s ac21 crued benefit derived from employer contribu22 tions are nonforfeitable.

23 SEC. 112. ACCRUAL OF BENEFITS.

24 (a) INTEGRATION WITH SOCIAL SECURITY AND SIMI25 LAR BENEFITS.—Section 204 (29 U.S.C. 1054) is amend-
16

•S 2531 IS

1 ed by redesignating subsection (i) as subsection (j) and

2 by inserting after subsection (h) the following new sub3 section:

4 ‘‘(i) INTEGRATION WITH SOCIAL SECURITY AND

5 SIMILAR BENEFITS.—

6 ‘‘(1) IN GENERAL.—Notwithstanding any other

7 provision of law, a pension plan shall not be treated

8 as meeting the requirements of this section or sec9 tion 203, for contributions made after January 1,

10 1995, unless the plan meets such requirements with11 out taking into account contributions or benefits

12 under chapter 2 or 21 of the Internal Revenue Code

13 of 1986, title II of the Social Security Act, or any

14 other Federal or State law.

15 ‘‘(2) EXCEPTION FOR DEFINED BENEFIT

16 PLANS.—

17 ‘‘(A) IN GENERAL.—A defined benefit plan

18 shall not be treated as failing to meet the re19 quirement of paragraph (1) merely because the

20 plan provides that the employer-derived accrued

21 retirement benefit for any participant under the

22 plan may not exceed the excess (if any) of—

23 ‘‘(i) the participant’s final pay with

24 the employer, over
17

•S 2531 IS

1 ‘‘(ii) the employer-derived retirement

2 benefit created under Federal or State law

3 attributable to service by the participant

4 with the employer.

5 For purposes of this clause, the employer-de6 rived retirement benefit created under Federal

7 or State law shall be treated as accruing ratably

8 over 35 years.

9 ‘‘(B) FINAL PAY.—For purposes of this

10 paragraph, the participant’s final pay is the

11 compensation (as defined in section 414(q)(7)

12 of the Internal Revenue Code of 1986) paid to

13 the participant by the employer for any year—

14 ‘‘(i) which ends during the 5-year pe15 riod ending with the year in which the par16 ticipant separated from service for the em17 ployer, and

18 ‘‘(ii) for which the participant’s total

19 compensation from the employer was high20 est.’’

21 (b) LIMITATION ON CONDITIONING OF EMPLOYER

22 CONTRIBUTIONS ON EMPLOYEE CONTRIBUTIONS.—Sec23 tion 204 (29 U.S.C. 1054), as amended by subsection (a),

24 is amended by redesignating subsection (j) as subsection
18

•S 2531 IS

1 (k) and by inserting after subsection (i) the following new

2 subsection:

3 ‘‘(j) NO MANDATORY CONTRIBUTIONS FOR EMPLOY4 EES BELOW SOCIAL SECURITY WAGE BASE.—Notwith5 standing any other provision of law, a pension plan shall

6 not be treated as meeting the requirements of this Act

7 if the plan requires an employee whose compensation for

8 a plan year does not exceed the contribution and benefit

9 base under section 230 of the Social Security Act for the

10 calendar year in which the plan year begins to make a

11 contribution for purposes of employer contributions. Noth12 ing in this subsection shall be construed as preventing an

13 employer from permitting an employee to match the

14 amount of employer contributions.’’

15 (c) YEARS OF SERVICE FOR SUBSIDIZED EARLY RE16 TIREMENT BENEFITS.—Section 204(b)(4) (29 U.S.C.

17 1054(b)(4)), as amended by section 102(b)(3)(B), is

18 amended by adding at the end the following new subpara19 graph:

20 ‘‘(F)(i) For purposes of this subparagraph,

21 in computing the amount of the nonforfeitable

22 accrued benefit of an employee with respect to

23 a subsidized early retirement benefit provided

24 by a plan, there shall be taken into account all

25 years of service with the employer maintaining
19

•S 2531 IS

1 the plan if the participant subsequently satisfies

2 the conditions for the subsidized early retire3 ment benefit while working for a successor em4 ployer.’’

5 (d) UNIFORM RATE OF ACCRUAL.—Section 204 (29

6 U.S.C. 1054), as amended by subsections (a) and (b), is

7 amended by redesignating subsection (k) as subsection (l)

8 and by inserting after subsection (j) the following new sub9 section:

10 ‘‘(k) UNIFORM RATE OF ACCRUAL.—Except as pro11 vided in subsection (b)(1)(H), all employees shall, regard12 less of age or length of service, accrue benefits, and receive

13 allocations including employer contributions, at the same

14 rate for each year of service subject to existing permitted

15 limits for maximum benefits or years of service.’’

16 (e) GUIDELINES FOR RATES OF ACCRUAL.—The Sec17 retary of Labor shall issue guidelines which recommend

18 rates of accrual under pension plans which will result in

19 the accrual of a level of benefits at normal retirement age

20 which is sufficient to maintain the average participant’s

21 preretirement standard of living. Such guidelines shall also

22 recommend methods by which such benefits should be ad23 justed to protect the participant from increases in the

24 cost-of-living upon retirement.
20

•S 2531 IS

1 Subtitle C—Right to Adequate

2 Funding

3 SEC. 121. FUNDING REQUIREMENTS.

4 (a) 15-YEAR AMORTIZATION OF BENEFIT IN5 CREASES.—Clause (iii) of section 302(b)(2)(B) (29 U.S.C.

6 1082(b)(2)(B)(iii)) is amended by striking ‘‘30 plan years

7 (20 plan years in the case of a multiemployer plan)’’ and

8 inserting ‘‘15 plan years’’.

9 (b) ACTUARIAL ASSUMPTIONS.—

10 (1) IN GENERAL.—Subparagraph (A) of section

11 302(c)(3) (29 U.S.C. 1082(c)(3)(A)) is amended to

12 read as follows:

13 ‘‘(A) each of which is reasonable (taking

14 into account the experience of the plan and rea15 sonable expectations), and’’.

16 (2) SECRETARY MAY ESTABLISH RANGES.—Sec17 tion 302(c)(3) (29 U.S.C. 1092(c)(3)) is amended by

18 adding at the end the following new sentence: ‘‘Not19 withstanding any other provision of law, the Sec20 retary, in consultation with the Secretary of the

21 Treasury, shall establish for each calendar quarter a

22 range of recommended actuarial assumptions for

23 plans for the quarter. An actuary of a plan may de24 viate from the range if the actuary is able to dem-
21

•S 2531 IS

1 onstrate that such deviation is reasonable for the

2 plan.’’

3 SEC. 122. SAFEGUARDS FOR ANNUITIES PURCHASED UPON

4 PLAN TERMINATIONS.

5 (a) FIDUCIARY RESPONSIBILITY.—Section 404 is

6 amended by adding at the end the following new sub7 section:

8 ‘‘(d) A fiduciary shall ensure that the benefits of par9 ticipants and beneficiaries are fully protected under Fed10 eral or State law upon the purchase of any irrevocable in11 surance annuity contract.’’

12 (b) CERTIFICATION OF INSURERS.—

13 (1) IN GENERAL.—Section 4041(b)(3) of such

14 Act (29 U.S.C. 1341(b)(3)) is amended—

15 (A) in subparagraph (A)(i), by inserting ‘‘,

16 with respect to which all required insurance cer17 tificates have been received by the corporation

18 in accordance with subparagraph (B),’’ after

19 ‘‘insurer’’,

20 (B) by redesignating subparagraph (B) as

21 subparagraph (C), and

22 (C) by inserting after subparagraph (A)

23 the following new subparagraph:

24 ‘‘(B) PRIOR INSURANCE CERTIFICATION.—
22

•S 2531 IS

1 ‘‘(i) IN GENERAL.—For purposes of

2 subparagraph (A), the assets of the plan

3 which are distributed by means of the pur4 chase of irrevocable commitments from an

5 insurer shall not be treated as distributed

6 in accordance with section 4044 unless,

7 prior to the distribution date, the corpora8 tion receives from the plan an insurance

9 certificate as described in clause (ii).

10 ‘‘(ii) INSURANCE CERTIFICATE.—An

11 insurance certificate referred to in clause

12 (i) shall consist of a written document, cer13 tified by the Insurance Commissioner (or

14 similar official) of the State in which the

15 insurer is domiciled not earlier than 30

16 days before the commencement of the final

17 distribution of assets, certifying that—

18 ‘‘(I) the insurer is licensed by the

19 State involved to do business in such

20 State,

21 ‘‘(II) the law of the State in22 volved provides for the maintenance

23 by the State of a fund which is re24 sponsible, on the failure of an insurer

25 licensed to do business within the
23

•S 2531 IS

1 State on the termination date, to pay,

2 as the second payor, all promised ben3 efits described in clause (i) to partici4 pants or beneficiaries who, on the ter5 mination date, were residents of the

6 State and maintains reciprocity agree7 ments providing equivalent guarantees

8 with States covering participants and

9 beneficiaries who are residents of

10 other States, and

11 ‘‘(III) such fund has reserves suf12 ficient to meet (or legal authority to

13 collect sufficient funds to meet on a

14 timely basis) all reasonably foresee15 able obligations of such fund.’’

16 (2) CONFORMING AMENDMENT.—Section

17 4041(b)(4) of such Act (29 U.S.C. 1341(b)(4)) is

18 amended by striking ‘‘paragraph (3)(B)’’ and insert19 ing ‘‘paragraph (3)(C)’’.

20 (c) PREMIUM REQUIREMENTS ON INSURERS.—

21 (1) IN GENERAL.—Subtitle A of title IV is

22 amended by adding at the end the following new

23 part:
24

•S 2531 IS

1 ‘‘Part 2—Annuity Insurance

2 ‘‘PAYMENT OF PREMIUMS

3 ‘‘SEC. 4011. (a) IN GENERAL.—The corporation may

4 establish a separate premium system to fund the guaran5 teed payment of retirement benefits to participants and

6 beneficiaries covered by annuity contracts. Such system

7 may include—

8 ‘‘(1) a premium for participants or beneficiaries

9 who had been annuitized before the effective date of

10 this section, and

11 ‘‘(2) may provide for a one-time premium rath12 er than annual premiums.

13 ‘‘(b) USE OF FUNDS.—The corporation may allocate

14 premiums received under this section to any of the funds

15 established under section 4005 or may establish a separate

16 fund which is used only to pay amounts guaranteed by

17 reason of section 4011.’’

18 (2) CONFORMING AMENDMENTS.—

19 (A) Section 4001(a)(5) is amended by in20 serting ‘‘or 4011(c)’’ after ‘‘4005’’.

21 (B) Subtitle B of title IV is amended by

22 inserting immediately after the heading:

23 ‘‘Part 1—General Provisions’’.

24 (C) The table of contents for subtitle B of

25 title IV is amended—
25

•S 2531 IS

1 (i) by inserting after the item relating

2 to subtitle B the following new item:

‘‘Part 1—General Provisions’’,

3 and

4 (ii) by inserting at the end the follow5 ing new items:

‘‘Part 2—Annuity Insurance

‘‘Sec. 4011. Payment of premiums.’’

6 SEC. 123. PROHIBITION ON RETROACTIVE TERMINATION

7 OF PLANS.

8 Paragraph (1) of section 4041(a) (29 U.S.C.

9 1341(a)(1)) is amended by adding at the end the following

10 new sentence: ‘‘Any such termination may occur only after

11 approval by the corporation.’’

12 SEC. 124. INVESTMENT OF PLAN ASSETS.

13 Subparagraph (B) of section 404(a)(1) (29 U.S.C.

14 1104(a)(1)(B)) is amended to read as follows:

15 ‘‘(i) with the care, skill, prudence, and

16 diligence under the circumstances then

17 prevailing that a prudent person acting in

18 a like capacity and familiar with such mat19 ters would use in the conduct of an enter20 prise of a like character and with like

21 aims; and
26

•S 2531 IS

1 ‘‘(ii) by investing the assets of the

2 plan so as to ensure the economic security

3 and long-term interests of the participants

4 and beneficiaries;’’.

5 Subtitle D—Pension Portability

6 SEC. 131. REQUIREMENT OF PORTABLE PENSION AC7 COUNTS.

8 (a) IN GENERAL.—Part 2 of subtitle B of title I (29

9 U.S.C. 1051 et seq.) is amended by inserting after section

10 205 the following new section:

11 ‘‘PORTABILITY REQUIREMENTS FOR DEFINED

12 CONTRIBUTION PLANS

13 ‘‘SEC. 205A. (a) DIRECT TRANSFERS.—

14 ‘‘(1) IN GENERAL.—Each defined contribution

15 plan shall, at the election of an employee upon sepa16 ration from service, make a direct trustee-to-trustee

17 transfer of the portion of the employee’s eligible

18 amount specified in the election to a portable pen19 sion account specified in the election which—

20 ‘‘(A) is maintained by a qualified pension

21 plan which voluntarily agrees to accept the

22 transfer, or

23 ‘‘(B) is established by the individual on the

24 individual’s own behalf.

25 ‘‘(2) TIME FOR TRANSFER.—The transfer

26 under paragraph (1) shall be made no later than 60
27

•S 2531 IS

1 days after the date of the employee’s separation

2 from service unless the parties agree to a transfer at

3 a later date.

4 ‘‘(b) PORTABLE PENSION ACCOUNTS.—For purposes

5 of this section—

6 ‘‘(1) IN GENERAL.—The term ‘portable pension

7 account’ means—

8 ‘‘(A) in the case of a qualified pension

9 plan, an individual account plan, an individual

10 account within the plan, or simplified employee

11 pension under section 408(k) of the Internal

12 Revenue Code of 1986 meeting the require13 ments of the following paragraphs of this sub14 section, and

15 ‘‘(B) in the case of an individual, an indi16 vidual retirement plan meeting such require17 ments.

18 ‘‘(2) DISTRIBUTION REQUIREMENTS.—

19 ‘‘(A) IN GENERAL.—The requirements of

20 this paragraph are met if distributions from the

21 account—

22 ‘‘(i) may only be made in a permitted

23 retirement income form, and

24 ‘‘(ii) may only be made with the con25 sent of the participant.
28

•S 2531 IS

1 ‘‘(B) PERMITTED RETIREMENT INCOME

2 FORM.—For purposes of subparagraph (A), a

3 permitted retirement income form is as follows:

4 ‘‘(i) A qualified joint and survivor an5 nuity (within the meaning of section

6 205(d)).

7 ‘‘(ii) Any other joint life annuity (in8 cluding a cash refund annuity).

9 ‘‘(iii) A single life annuity (including a

10 cash refund annuity).

11 ‘‘(iv) Any series of substantially equal

12 periodic payments described in section

13 72(t)(2)(A)(iv) of the Internal Revenue

14 Code of 1986 which are not part of an an15 nuity described in the preceding clauses.

16 ‘‘(3) SPOUSAL CONSENT.—The requirements of

17 this paragraph shall not be met unless the account

18 provides that any election as to form of benefit must

19 meet spousal consent requirements which are iden20 tical to the requirements of section 205(c)(2).

21 ‘‘(c) ELIGIBLE AMOUNT.—For purposes of this sec22 tion the term ‘eligible amount’ means, with respect to any

23 participant, the balance to the credit of the participant

24 as of the date of the distribution, including interest on

25 such balance through the date of the distribution.
29

•S 2531 IS

1 ‘‘(d) OTHER DEFINITIONS AND RULES.—For pur2 poses of this section—

3 ‘‘(1) QUALIFIED PLAN.—The term ‘qualified

4 plan’ means—

5 ‘‘(A) a plan described in section 401(a) of

6 the Internal Revenue Code of 1986 which in7 cludes a trust which is exempt from tax under

8 section 501(a) of such Code,

9 ‘‘(B) an annuity plan described in section

10 403(a) of such Code, and

11 ‘‘(C) an annuity contract described in sec12 tion 403(b) of such Code.

13 ‘‘(2) INDIVIDUAL RETIREMENT PLAN.—The

14 term ‘individual retirement plan’ means—

15 ‘‘(A) an individual retirement account de16 scribed in section 408(a) of such Code, and

17 ‘‘(B) an individual retirement annuity de18 scribed in section 408(b) of such Code.

19 ‘‘(3) BENEFICIARIES OR ALTERNATE PAYEES.—

20 In the case of an individual who is a beneficiary of

21 the participant or an alternate payee (within the

22 meaning of section 206(d)(3)(K)) under a plan, such

23 individual shall be treated in the same manner as if

24 a participant in the plan.’’

25 (b) CONFORMING AMENDMENTS.—
30

•S 2531 IS

1 (1) Section 204(g)(2) of such Act (29 U.S.C.

2 1054(g)(2)) is amended by adding at the end the

3 following new sentence: ‘‘Except as otherwise pro4 vided in regulations of the Secretary of Labor and

5 the Secretary of the Treasury, the requirements of

6 subparagraph (B) shall not be treated as violated in

7 the case of a direct trustee-to-trustee transfer de8 scribed in section 205A.’’

9 (2) Section 204(d) of such Act (29 U.S.C.

10 1054(d)) is amended—

11 (A) in paragraph (1), by striking ‘‘or’’,

12 (B) in paragraph (2), by striking the pe13 riod and inserting ‘‘, or’’, and

14 (C) by inserting after paragraph (2) the

15 following new paragraph:

16 ‘‘(3) a direct trustee-to-trustee transfer de17 scribed in section 205A.’’

18 (3) The table of contents for part 2 of subtitle

19 B of title I of such Act is amended by inserting after

20 the item relating to section 205 the following new

21 item:

‘‘Sec. 205A. Portability requirements for defined contribution plans.’’

22 SEC. 132. RECIPROCITY AGREEMENTS BETWEEN INDUSTRY

23 AND LABOR FUNDS.

24 (a) ESTABLISHMENT.—The Secretary of Labor shall

25 establish guidelines for plans maintained pursuant to col-
31

•S 2531 IS

1 lective bargaining agreements between employers and em2 ployee representatives in order to assist and encourage 2

3 or more plans to enter into agreements under which—

4 (1) the plans would maintain portable pension

5 accounts described in section 205A of the Employee

6 Retirement Income Security Act of 1974 (as added

7 by section 121) for employees who terminate em8 ployment covered by 1 plan and begin employment

9 covered by another, or

10 (2) the plans would make arrangements for em11 ployees to transfer accrued benefits and vesting

12 rights from one plan to another.

13 SEC. 133. INFLATION ADJUSTMENT FOR DEFERRED VEST14 ED BENEFITS.

15 (a) IN GENERAL.—Section 203 (29 U.S.C. 1053) is

16 amended by adding at the end the following new sub17 section:

18 ‘‘(f) DEFERRED NONFORFEITABLE BENEFITS.—If

19 an employee’s participation in a defined benefit plan is ter20 minated before the date the employee is eligible for pay21 ment of an immediate annuity under the plan—

22 ‘‘(1) subsection (e) shall not apply, and

23 ‘‘(2) the plan shall provide that the employee

24 may elect—
32

•S 2531 IS

1 ‘‘(A) to have the plan immediately distrib2 ute, subject to section 205 of this Act, the

3 present value (using the interest rate specified

4 by the Secretary) of the employee’s nonforfeit5 able benefit, or

6 ‘‘(B) to have the plan provide inflation ad7 justments (at the rates specified by the Sec8 retary) to such benefit during the period begin9 ning with the date of separation and ending

10 with the date the earliest benefit is received

11 under the plan.’’

12 (b) ACCRUED BENEFIT.—Section 204(d) (29 U.S.C.

13 1054(d)) is amended by adding at the end the following

14 new sentence: ‘‘An employee’s accrued benefit under a

15 plan shall be increased by any inflation adjustment under

16 section 203(f)(2)(B).’’

17 Subtitle E—Spousal Rights

18 SEC. 141. DIVISION OF PENSION BENEFITS UPON DIVORCE.

19 (a) IN GENERAL.—Section 206 (29 U.S.C. 1056) is

20 amended by adding at the end the following new sub21 section:

22 ‘‘(e)(1) In the case of a divorce of a participant in

23 a pension plan from a spouse who is, immediately before

24 the divorce, a beneficiary under the plan, the plan shall

25 provide that at least 50 percent of the marital share of
33

•S 2531 IS

1 the accrued benefit (as of the date of the divorce) of the

2 participant under the plan ceases to be an accrued benefit

3 of such participant and becomes an accrued benefit of

4 such divorced spouse. Such accrued benefit shall be deter5 mined and payable upon the earliest of the retirement of

6 the participant, the participant’s normal retirement age

7 under the plan, the participant’s death, or the termination

8 of the plan. This paragraph shall not apply to the extent

9 that a qualified domestic relations order in connection

10 with such divorce provides otherwise.

11 ‘‘(2) Paragraph (1) shall not be construed—

12 ‘‘(A) to require a plan to provide any type or

13 form of benefit, or any option, not otherwise pro14 vided under the plan,

15 ‘‘(B) to require the plan to provide increased

16 benefits (determined on the basis of actuarial value),

17 ‘‘(C) to require the payment of benefits to the

18 divorced spouse which are required to be paid to an19 other individual in accordance with this subsection

20 or pursuant to a domestic relations order previously

21 determined to be a qualified domestic relations

22 order, or

23 ‘‘(D) to require payment of benefits to the di24 vorced spouse in the form of a joint and survivor an-
34

•S 2531 IS

1 nuity with respect to the divorced spouse and the di2 vorced spouse’s subsequent spouse.

3 ‘‘(3) For purposes of this subsection—

4 ‘‘(A) The terms ‘domestic relations order’ and

5 ‘qualified domestic relations order’ have the mean6 ings given such terms by subsection (d)(3)(B).

7 ‘‘(B) The term ‘marital share’ means, in con8 nection with an accrued benefit under a pension

9 plan, the product derived by multiplying—

10 ‘‘(i) the actuarial present value of the ac11 crued benefit, by

12 ‘‘(ii) a fraction—

13 ‘‘(I) the numerator of which is the pe14 riod of time, starting with the date of mar15 riage and ending with the date of divorce

16 between the spouse and the participant in

17 the plan, which constitutes creditable serv18 ice by the participant under the plan, and

19 ‘‘(II) the denominator of which is the

20 total period of time which constitutes the

21 years of participation by the participant

22 under the plan.

23 ‘‘(C) The term ‘qualified joint and survivor an24 nuity’ has the meaning given such term by section

25 205(d).
35

•S 2531 IS

1 ‘‘(4) In prescribing regulations under this subsection,

2 the Secretary shall consult with the Secretary of the

3 Treasury.’’

4 (b) CONFORMING AMENDMENTS.—Section 206(d)

5 (29 U.S.C. 1056(d)) is amended—

6 (1) in the first sentence of paragraph (3), by

7 inserting ‘‘or if such creation, assignment, or rec8 ognition pursuant to such order is necessary for

9 compliance with the requirements of subsection (e)’’

10 before the period,

11 (2) in paragraph (3)(D)(iii), by inserting ‘‘or to

12 a divorced spouse of the participant in connection

13 with a previously occurring divorce as required

14 under subsection (e)’’ before the period, and

15 (3) in paragraph (3)(H)(iii), by striking ‘‘if

16 there had been no order’’ and inserting ‘‘in accord17 ance with subsection (e) as if there had been no

18 qualified domestic relations order’’.

19 SEC. 142. EXTENSION OF APPLICATION OF JOINT AND SUR20 VIVOR ANNUITY RULES.

21 (a) IN GENERAL.—Section 205(a) (29 U.S.C.

22 1055(a)) is amended by inserting ‘‘and each plan de23 scribed in subsection (l)’’ after ‘‘applies’’.

24 (b) PLANS AFFECTED.—Section 205 (29 U.S.C.

25 1055) is amended by redesignating subsection (l) as sub-
36

•S 2531 IS

1 section (m) and by inserting after subsection (k) the fol2 lowing new subsection:

3 ‘‘(l)(1) A plan is described in this subsection if it is—

4 ‘‘(A) a qualified cash or deferred arrangement

5 described in section 401(k) of the Internal Revenue

6 Code of 1986,

7 ‘‘(B) an annuity contract described in section

8 403(b) of such Code,

9 ‘‘(C) a simplified employee pension described in

10 section 408(k) of such Code, or

11 ‘‘(D) an individual retirement plan (as defined

12 in section 7701(a)(37)) of such Code.

13 ‘‘(2) For purposes of this section, an individual for

14 whom an arrangement, contract, pension, or plan was pur15 chased or established shall be treated as the participant.

16 ‘‘(3) If a plan described in this subsection is adminis17 tered by a person which is not authorized by law to make

18 payments in a form required by this section, such person

19 shall make such payments as a stream of payments deter20 mined on the basis of the joint life expectancies of the

21 participant and the participant’s spouse or may purchase

22 an annuity contract providing benefits in a joint and survi23 vor form.’’
37

•S 2531 IS

1 SEC. 143. MODIFICATIONS OF JOINT AND SURVIVOR AND

2 PRERETIREMENT SURVIVOR ANNUITY RE3 QUIREMENTS.

4 (a) CONSENT FORM.—Section 205(c) (29 U.S.C.

5 1055(c)) is amended by adding at the end the following

6 new paragraph:

7 ‘‘(8) The Secretary, in consultation with the

8 Secretary of Treasury, shall develop a form for the

9 spousal consent required under paragraph (2)

10 which—

11 ‘‘(A) is written in a manner calculated to

12 be understood by the average person, and

13 ‘‘(B) discloses in plain form whether—

14 ‘‘(i) the waiver is irrevocable, and

15 ‘‘(ii) the waiver may be changed by a

16 qualified domestic relations order in the

17 event of a legal separation or divorce.’’

18 (b) PRERETIREMENT ANNUITY AVAILABLE TO

19 FORMER SPOUSES.—

20 (1) IN GENERAL.—Paragraph (2) of section

21 205(a) (29 U.S.C. 1055(a)(2)) is amended—

22 (A) by inserting ‘‘or an eligible surviving

23 former spouse’’ after ‘‘a surviving spouse’’, and

24 (B) by inserting ‘‘or to the eligible surviv25 ing former spouse’’ after ‘‘the surviving

26 spouse’’.
38

•S 2531 IS

1 (2) ELIGIBLE SURVIVING FORMER SPOUSE.—

2 Section 205(h) (29 U.S.C. 1055(h)) is amended by

3 adding at the end the following new paragraph:

4 ‘‘(4) The term ‘eligible surviving former spouse’

5 means, with respect to any participant in a pension

6 plan, a former spouse of the participant who sur7 vives the participant but only if—

8 ‘‘(A) there is no qualified domestic rela9 tions order providing for a payment other than

10 a qualified preretirement survivor annuity to

11 the former spouse,

12 ‘‘(B) the participant did not choose any

13 other beneficiary under the plan after the di14 vorce, and

15 ‘‘(C) under the plan there is no surviving

16 spouse eligible for a qualified preretirement sur17 vivor annuity.’’

18 (c) AMOUNT OF ANNUITY.—

19 (1) JOINT AND SURVIVOR ANNUITY.—Para20 graph (1) of section 205(d) (29 U.S.C. 1055(d)(1))

21 is amended by striking ‘‘50 percent’’ and inserting

22 ‘‘66 2/3 percent’’.

23 (2) PRERETIREMENT ANNUITY.—Paragraph (2)

24 of section 205(e) (29 U.S.C. (e)(2)) is amended by
39

•S 2531 IS

1 striking ‘‘50 percent’’ and inserting ‘‘66 2/3 per2 cent’’.

3 TITLE II—PROTECTION OF

4 EMPLOYEES’ PENSION RIGHTS

5 Subtitle A—Benefit Information

6 SEC. 201. PLAN OR EMPLOYER REPRESENTATIONS.

7 (a) IN GENERAL.—Part 5 of subtitle B of title I (29

8 U.S.C. 1131 et seq.) is amended by adding at the end

9 the following new section:

10 ‘‘RELIANCE ON EMPLOYER OR PLAN REPRESENTATIONS

11 ‘‘SEC. 516. (a) PROHIBITION ON MISREPRESENTA12 TION.—No employer, plan administrator, or fiduciary

13 shall misrepresent to employees, participants, or bene14 ficiaries their rights under an employee benefit plan.

15 ‘‘(b) RELIANCE.—In any action brought under this

16 title to enforce any right of a participant or beneficiary

17 under an employee benefit plan, the participant or bene18 ficiary shall have a right to reasonably rely on all written

19 documents provided by the plan administrator or employer

20 maintaining the plan.

21 ‘‘(c) CORRECTIONS.—Nothing in the section shall

22 preclude a plan administrator, fiduciary, or employer from

23 correcting any mistake within a reasonable period of time.

24 The Secretary may issue regulations to define a reasonable

25 period of time.’’
40

•S 2531 IS

1 (b) CONFORMING AMENDMENT.—The table of con2 tents for part 5 of subtitle B of title I is amended by in3 serting at the end the following new item:

‘‘Sec. 516. Reliance on employer or plan representations.’’

4 SEC. 202. NOTICE OF RIGHTS.

5 (a) TIME FOR FILING ANNUAL REPORT.—Section

6 104(a)(1)(A) (29 U.S.C. 1024(a)(1)(A)) is amended by

7 striking ‘‘210 days’’ and inserting ‘‘105 days’’.

8 (b) ADVANCE NOTICE OF MATERIAL CHANGES.—

9 Section 104(b) (29 U.S.C. 1024(b)) is amended by adding

10 at the end the following new paragraph:

11 ‘‘(5) The administrator shall furnish to each

12 participant, and to each beneficiary receiving bene13 fits under the plan, notice of any material modifica14 tion to the plan referred to in section 102(a)(2) at

15 least 60 days before the modification is to take ef16 fect.’’

17 (c) NOTICE OF RETIREMENT BENEFIT EARNINGS.—

18 (1) APPLICATION TO MULTIEMPLOYER

19 PLANS.—Section 105 (29 U.S.C. 1025) is amended

20 by striking subsection (d).

21 (2) MODEL STATEMENTS.—The Secretary of

22 Labor shall develop a model benefit statement to be

23 used by plan administrators in complying with the

24 requirements of section 105 of the Employee Retire-
41

•S 2531 IS

1 ment Income Security Act of 1974. Such statement

2 shall include—

3 (A) the amount of nonforfeitable accrued

4 benefits as of the statement date which is pay5 able at normal retirement age under the plan,

6 (B) the amount of accrued benefits which

7 are forfeitable but which may become non8 forfeitable under the terms of the plan,

9 (C) the amount or percentage of any re10 duction due to integration of the benefit with

11 the participant’s Social Security benefits or

12 similar governmental benefits,

13 (D) information on how to contact the So14 cial Security Administration to obtain a partici15 pant’s personal earnings and benefit estimate

16 statement, and

17 (E) information on early retirement benefit

18 and joint and survivor annuity reductions.

19 (d) DEPARTMENT OF LABOR ASSISTANCE.—Section

20 104 (29 U.S.C. 1024) is amended by redesignating sub21 section (d) as subsection (e) and by inserting after sub22 section (c) the following new subsection:

23 ‘‘(d) The Secretary of Labor shall establish a pro24 gram to assist participants and beneficiaries in receiving
42

•S 2531 IS

1 in a timely manner any information they are entitled to

2 receive under this Act.’’

3 (e) PENALTIES.—Section 502(c) (29 U.S.C. 1132(c))

4 is amended by adding at the end the following new para5 graph:

6 ‘‘(5) The Secretary may assess a civil penalty

7 against any person failing to file any report, or to

8 make any disclosure, required by this title of up to

9 $1,000 per day from the initial date of the failure.

10 The Secretary may waive or reduce any penalty if

11 the Secretary determines that the plan administrator

12 or fiduciary acted reasonably and in good faith or

13 the responsible party will not be able to comply with14 out severe financial hardship. This paragraph shall

15 not apply to any failure covered by any other para16 graph of this subsection.’’

17 Subtitle B—Investment

18 Information and Advice

19 SEC. 211. AUDITS.

20 (a) FULL SCOPE AUDITS.—Subparagraph (C) of sec21 tion 103(a)(3) (29 U.S.C. 1023(a)(3)(C)) is amended by

22 adding at the end the following new sentence: ‘‘This sub23 paragraph shall not apply to any plan with 100 or more

24 participants and in the case of a plan with fewer than 100
43

•S 2531 IS

1 participants, shall only apply to the first 2 years of each

2 successive 3-fiscal year period.’’

3 (b) MATERIAL IRREGULARITIES.—Section 103(a)(3)

4 (29 U.S.C. 1023(a)(3)) is amended by adding at the end

5 the following new subparagraph:

6 ‘‘(E)(i) If an independent qualified public

7 accountant discovers any material irregularities

8 in the examination conducted under this para9 graph for any year, the accountant shall report

10 such errors to the plan administrator.

11 ‘‘(ii) If the errors described in clause (i)

12 are not corrected within 60 days, the independ13 ent qualified public accountant shall report the

14 uncorrected errors to the Secretary in such

15 form and manner as the Secretary prescribes.’’

16 SEC. 212. SPECIFIC INFORMATION ON PLAN ASSETS AND

17 TRANSACTIONS.

18 (a) ADMINISTRATIVE EXPENSES; RETURNS.—

19 (1) IN GENERAL.—Subparagraph (B) of section

20 103(b)(3) (29 U.S.C. 1023(b)(3)(B)) is amended by

21 inserting ‘‘, including a separate, specific listing of

22 the administrative costs of the plan, such as broker

23 fees and other transaction fees’’ after ‘‘applica24 tions’’.
44

•S 2531 IS

1 (2) RATES OF RETURN.—Subparagraph (C) of

2 section 103(b)(3) (29 U.S.C. 1023(b)(3)(C)) is

3 amended by inserting ‘‘, including the rate of return

4 on the assets for the year’’ after ‘‘value’’.

5 (b) PROXY VOTES.—Section 104(b) (29 U.S.C.

6 1024(b)), as amended by section 202(b), is amended by

7 adding at the end the following new paragraph:

8 ‘‘(6)(A) Participants shall have the right to

9 confidentially vote any pension assets within their

10 discretionary control.

11 ‘‘(B) The administrator shall provide partici12 pants and beneficiaries with copies of plan invest13 ment and proxy voting policies and, within 60 days

14 of a written request of any participant or beneficiary

15 regarding a proxy vote, notify the participant or

16 beneficiary of the status and plan action on the re17 quested proxy votes.

18 ‘‘(C) A plan administrator may request the Sec19 retary to waive the requirements of subparagraph

20 (B) if the administrator believes the request was

21 made for the purpose of harassment. The Secretary

22 shall make a determination under this subparagraph

23 within 45 days of the administrator’s request.’’
45

•S 2531 IS

1 (c) TRANSACTIONS INVOLVING PARTIES IN INTER2 EST.—Subparagraph (D) of section 103(b)(3) (29 U.S.C.

3 1023(b)(3)(D)) is amended—

4 (1) by inserting ‘‘(including transactions involv5 ing assets disposed of before the end of the year and

6 transactions exempt under section 408)’’ after

7 ‘‘party in interest’’ the first place it appears, and

8 (2) by inserting ‘‘in the case of an exempt

9 transaction, the reasons why the transaction is ex10 empt under section 408’’ before ‘‘the cost of’’.

11 SEC. 213. PENSION ADVISORY COMMITTEES.

12 (a) ESTABLISHMENT.—Participants and beneficiaries

13 covered by a pension plan may request that the plan estab14 lish a pension advisory committee to provide participant

15 advice and involvement in plan investment decisions. The

16 committee shall be open to all interested participants and

17 beneficiaries.

18 (b) RIGHTS.—

19 (1) INFORMATION.—Each pension advisory

20 committee under subsection (a) shall have the right

21 to receive, upon written request, information with re22 spect to plan investment and proxy voting decisions.

23 (2) MEETINGS.—Each pension advisory com24 mittee under subsection (a) may select a board of di25 rectors and may conduct such meetings as deemed
46

•S 2531 IS

1 necessary to provide advice on plan decisions. The

2 plan administrator or the board of trustees of a pen3 sion plan shall meet annually with the board of di4 rectors to hear its views on pension plan investment

5 decisions.

6 SEC. 214. STUDY OF EMPLOYEE REPRESENTATION ON PEN7 SION BOARDS.

8 The Secretary of Labor shall, within 18 months after

9 the date of the enactment of this Act, conduct a study

10 and report to the Congress on the feasibility of requiring

11 representation of employees, independent trustees, or

12 both, on the board of trustees of pension plans.

13 Subtitle C—Assistance of Depart14 ment of Labor in Enforcing

15 Rights

16 SEC. 221. DEPARTMENT OF LABOR REQUIRED TO PROVIDE

17 ASSISTANCE.

18 (a) IN GENERAL.—The Secretary of Labor shall—

19 (1) establish a program to assist participants

20 and beneficiaries in understanding their rights to

21 benefits under employee benefit plans, and

22 (2) to the extent feasible, assist participants in

23 obtaining such benefits, including through civil ac24 tions under section 502 of the Employee Retirement

25 Income Security Act of 1974.
47

•S 2531 IS

1 (b) INTERAGENCY PROGRAM.—The Secretary of

2 Labor shall establish a program with the Secretary of the

3 Treasury and the heads of other appropriate Federal

4 agencies which shall—

5 (1) coordinate assistance to participants and

6 beneficiaries in obtaining documents and pursuing

7 benefit claims,

8 (2) provide for the issuance of opinions and ad9 vice on applicable Federal law and regulations, and

10 (3) provide for the referral of benefit claims to

11 the appropriate Internal Revenue Service district of12 fice to determine compliance with applicable Federal

13 law and regulations and to the regional office of the

14 Department of Labor to protect individual benefit

15 rights.

16 The secretary of labor shall designate an employee to serve

17 as the ombuds officer to coordinate and supervise the pro18 gram.

19 (c) VOLUNTARY ASSISTANCE FUND.—

20 (1) IN GENERAL.—The Secretary of Labor may

21 establish a voluntary assistance fund which shall

22 consist of voluntary contributions from employers,

23 employee benefit plans, and other individuals to sup24 plement departmental assistance to participants,

25 beneficiaries, and plans.
48

•S 2531 IS

1 (2) USE OF FUNDS.—Amounts received shall be

2 held in a separate trust fund and are appropriated

3 to supplement assistance in the programs described

4 in subsections (a) and (b).

5 (3) REPORT.—The Secretary of Labor shall re6 port to the Congress each year on the receipts and

7 disbursements of the fund for the preceding year.

8 The report shall include the Secretary’s rec9 ommendations on requiring mandatory contributions

10 to the fund.

11 SEC. 222. IMPROVEMENTS IN CLAIMS PROCEDURE.

12 (a) CLAIMS REVIEW REQUIREMENTS.—Section 503

13 (29 U.S.C. 1133) is amended—

14 (1) by inserting ‘‘(a) IN GENERAL.—’’ after

15 ‘‘SEC. 503.’’; and

16 (2) by adding at the end the following new sub17 section:

18 ‘‘(b) CLAIMS REVIEW REQUIREMENTS FOR EM19 PLOYEE BENEFIT PLANS.—

20 ‘‘(1) IN GENERAL.—An employee benefit plan

21 shall be treated as complying with the requirements

22 of subsection (a) only if such plan complies with the

23 following requirements:

24 ‘‘(A) TIME LIMIT FOR CONSIDERATION OF

25 COMPLETED CLAIMS.—An employee benefit
49

•S 2531 IS

1 plan shall provide to any participant or bene2 ficiary claiming benefits under the plan a writ3 ten notice of the plan’s approval or denial of

4 the claim within 60 days after submission of

5 the claim under reasonable procedures estab6 lished by the plan. In any case in which the

7 claim is denied, the plan shall, within 5 days

8 after the date of the determination to deny the

9 claim, provide the claimant with a written no10 tice setting forth the reasons for the denial, to11 gether with notice of the right to and proce12 dures to appeal the denial under subparagraph

13 (B).

14 ‘‘(B) PLAN’S DUTY TO REVIEW DENIALS

15 UPON TIMELY REQUEST.—The plan shall review

16 its denial of the claim if the claimant submits

17 to the plan a written request for reconsideration

18 of the claim before 60 days after receipt of

19 written notice from the plan of the denial. The

20 plan shall waive the 60-day limit if the partici21 pant or beneficiary demonstrates a reasonable

22 basis for not being able to comply with such re23 quirement.

24 ‘‘(C) TIME LIMIT FOR REVIEW.—The plan

25 shall complete any review required under sub-
50

•S 2531 IS

1 paragraph (B), and shall provide written notice

2 of the plan’s decision pursuant to such review,

3 before 60 days after receipt of the request for

4 reconsideration.

5 ‘‘(D) DE NOVO REVIEWS.—Any review re6 quired under subparagraph (B)—

7 ‘‘(i) shall be de novo,

8 ‘‘(ii) shall be conducted by an individ9 ual who did not make the initial decision

10 denying the claim and who is authorized to

11 approve payment of the claim, and

12 ‘‘(iii) shall include review by a quali13 fied physician if the resolution of any is14 sues involved requires medical expertise.

15 ‘‘(2) EMERGENCY REQUEST FOR

16 PREAUTHORIZATION.—

17 ‘‘(A) IN GENERAL.—This paragraph ap18 plies in the case of any request by or on behalf

19 of a participant or beneficiary for

20 preauthorization of services which is submitted

21 to a group health plan prior to receipt of such

22 services and which involves urgent treatment

23 for a life-threatening illness.

24 ‘‘(B) SHORTENED TIME LIMIT FOR CON25 SIDERATION OF REQUESTS FOR
51

•S 2531 IS

1 PREAUTHORIZATION.—Notwithstanding para2 graph (1)(A), a group health plan shall approve

3 or deny any request described in subparagraph

4 (A) before 24 hours after submission of the re5 quest to the plan.

6 ‘‘(C) EXPEDITED REVIEW.—The plan shall

7 review, upon request of a participant or bene8 ficiary, any determination to deny a request for

9 preauthorization described in subparagraph (A)

10 before 5 days after the date of the request. Any

11 such review shall be conducted in accordance

12 with the requirements of paragraph (1)(D) as if

13 the request were a claim to which such para14 graph applies.

15 ‘‘(D) EXPEDITED EXHAUSTION OF PLAN

16 REMEDIES.—Upon completion of the review re17 quired under subparagraph (C), the request for

18 preauthorization shall be treated as a claim

19 with respect to which all remedies under the

20 plan provided pursuant to this section are ex21 hausted for purposes of further action under

22 this part.

23 ‘‘(E) DENIAL OF PREVIOUSLY AUTHOR24 IZED CLAIMS NOT PERMITTED.—In any case in

25 which a group health plan approves the request
52

•S 2531 IS

1 of any person for preauthorization described in

2 subparagraph (A)—

3 ‘‘(i) the plan may not subsequently

4 deny any claim by such person for such

5 services, unless the plan makes a showing

6 of intentional misrepresentation of a mate7 rial fact by such person, and

8 ‘‘(ii) if the claim is denied by the plan

9 in violation of clause (i), all remedies

10 under the plan provided pursuant to this

11 section with respect to such claim shall be

12 treated as exhausted for purposes of fur13 ther action on the claim under this part.

14 ‘‘(F) GROUP HEALTH PLAN.—For pur15 poses of this paragraph, the term ‘group health

16 plan’ means any employee welfare benefit plan

17 that provides health care benefits to partici18 pants or beneficiaries directly or through insur19 ance, reimbursement, or otherwise.’’

20 (b) ALTERNATIVE DISPUTE RESOLUTION PROCE21 DURE.—Section 503 (29 U.S.C. 1133), as amended by

22 subsection (a), is amended by adding at the end the follow23 ing new subsection:

24 ‘‘(c) ALTERNATIVE DISPUTE RESOLUTION PROCE25 DURES.—
53

•S 2531 IS

1 ‘‘(1) IN GENERAL.—The Secretary shall estab2 lish an alternative dispute resolution procedure for

3 appeals of plan benefits claims denials to which sub4 section (a) applies. Such procedure shall be

5 nonbinding.

6 ‘‘(2) EXPERTS AND FEES.—The Secretary

7 shall—

8 ‘‘(A) maintain a roster of employee benefit

9 experts to serve as neutral experts in the proce10 dure under paragraph (1), and

11 ‘‘(B) assess fees as necessary from each

12 party to cover the costs of the procedure.

13 The Secretary may reduce or waive a fee under sub14 paragraph (B) on the basis of inability to pay.

15 ‘‘(3) NOTICE.—The Secretary shall—

16 ‘‘(A) notify individuals of the procedure es17 tablished under paragraph (1) or other sources

18 of assistance in resolving benefits claim dis19 putes, and

20 ‘‘(B) provide model information with re21 spect to the procedure to be included in all

22 summary plan descriptions and benefit deter23 minations.’’
54

•S 2531 IS

1 Subtitle D—Court Enforcement

2 SEC. 231. EFFECTIVE COURT ENFORCEMENT OF EMPLOYEE

3 RIGHTS.

4 (a) ATTORNEYS’ FEES AND COURT COSTS.—Section

5 502(g) (29 U.S.C. 1132(g)) is amended by adding at the

6 end the following new paragraph:

7 ‘‘(3) For purposes of paragraph (1)—

8 ‘‘(A) the court may allow a reasonable at9 torney’s fee and costs of action, including pre10 judgment interest and expert witness fees, to a

11 participant or beneficiary who substantially pre12 vails in an action described in such paragraph

13 (without a showing of bad faith, involvement of

14 a substantial issue of law, or involvement of a

15 large number of participants), unless the court

16 determines that the interests of justice would

17 not be served by allowing such a fee and costs;

18 and

19 ‘‘(B) the court may allow a reasonable at20 torney’s fee and costs of action to an employer,

21 plan, or fiduciary who substantially prevails in

22 an action described in such paragraph, only if

23 the court determines that the action was frivo24 lous.’’
55

•S 2531 IS

1 (b) AWARDS OF DAMAGES.—Section 502 (29 U.S.C.

2 1132) is amended by adding at the end the following new

3 subsection:

4 ‘‘(m) In any action brought under this title by a par5 ticipant or beneficiary, a court may award reasonably fore6 seeable economic damages and noneconomic damages (not

7 exceeding the amount of economic damages awarded).’’

8 (c) REVIEW OF BENEFIT CLAIM DENIALS.—Section

9 502(k) (29 U.S.C. 1132(k)) is amended by adding at the

10 end the following new sentence: ‘‘Any action brought

11 under subsection (a)(1)(b), (a)(3), or after any final deci12 sion by the plan, shall be subject to de novo review by

13 the court and the court may review all evidence pre14 sented.’’

15 (d) STANDING.—Section 502 (29 U.S.C. 1132), as

16 amended by subsection (b), is amended by adding at the

17 end the following new subsection:

18 ‘‘(n) Any former participant or beneficiary, and any

19 individual with a colorable claim to be a participant or

20 beneficiary, shall be treated in the same manner as a par21 ticipant or beneficiary for purposes of standing to bring

22 a civil action under subsection (a).’’

23 (e) EXHAUSTION OF ADMINISTRATIVE REMEDIES

24 WITH RESPECT TO BENEFIT CLAIM DENIALS.—Section

25 502 (29 U.S.C. 1132), as amended by subsections (b) and
56

•S 2531 IS

1 (d), is amended by adding at the end the following new

2 subsection:

3 ‘‘(o)(1) exhaustion of plan claims procedure shall only

4 be required for benefit claims denials. Failure to exhaust

5 shall be grounds for remand by a court.’’

6 (f) AMBIGUOUS TERMS IN PLAN.—Section 516, as

7 added by section 201, is amended by redesignating sub8 section (c) as subsection (d) and by inserting after sub9 section (b) the following new subsection:

10 ‘‘(c) CONSTRUCTION OF AMBIGUOUS TERMS.—For

11 purposes of applying any provision of this title in an action

12 brought under this title, the Secretary and any court shall

13 construe any ambiguous term or provision of the docu14 ments and instruments governing the plan in favor of par15 ticipants and beneficiaries of the plan.’’

16 (g) ACTIONS UNDER STATE LAW.—Section 514 (29

17 U.S.C. 1144) is amended by adding at the end the follow18 ing new subsection:

19 ‘‘(e) Nothing in this section shall preclude an action

20 from being brought under State law against individuals

21 not treated as fiduciaries under this Act, including State

22 malpractice actions.’’
57

•S 2531 IS

1 Subtitle E—Protection Against

2 Fraud and Abuse

3 SEC. 241. CRIMINAL PENALTIES.

4 (a) IN GENERAL.—Section 501 (29 U.S.C. 1131) is

5 amended by adding at the end the following new sub6 section:

7 ‘‘(b) EMBEZZLEMENT, THEFT, OR MAIL FRAUD.—

8 In the case of any violation described in subsection (a)

9 which involves embezzlement, theft, or mail fraud, a per10 son shall, upon conviction—

11 ‘‘(1) be fined not more than the greater of

12 $10,000, or the amount involved, or

13 ‘‘(2) be imprisoned for not more than 10 years,

14 or

15 ‘‘(3) both.’’

16 (b) CONFORMING AMENDMENT.—Section 501 is

17 amended by striking ‘‘Any person’’ and inserting ‘‘(a) IN

18 GENERAL.—Any person’’.

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to violations occurring on and after

21 the date of the enactment of this Act.

22 SEC. 242. FIDUCIARY REQUIREMENTS.

23 (a) MINIMUM BOND REQUIREMENT.—Section 412(a)

24 (29 U.S.C. 1112(a)) is amended by inserting ‘‘($100,000

25 in the case of a fiduciary)’’ after ‘‘$1,000’’.
58

•S 2531 IS

1 (b) INSURANCE.—Section 410 (29 U.S.C. 1110) is

2 amended by adding at the end the following new sub3 section:

4 ‘‘(c) In addition to any bond required under section

5 412, the Secretary may by regulation require fiduciaries

6 to purchase insurance to cover liability under this part

7 from and for their own account up to the limits specified

8 in the regulations.’’

9 (c) WAIVER PROHIBITION.—Section 410(a) (29

10 U.S.C. 1110(a)) is amended by adding at the end the fol11 lowing new sentence: ‘‘A plan may not waive any recourse

12 the plan has against a fiduciary for any responsibility, ob13 ligation, or duty of the fiduciary under this part.’’

14 (d) EFFECTIVE DATE.—

15 (1) BONDING AND INSURANCE.—The amend16 ments made by subsections (a) and (b) shall apply

17 to plan years beginning after December 31, 1994.

18 (2) WAIVER.—The amendment made by sub19 section (c) shall apply on and after the date of the

20 enactment of this Act.
59

•S 2531 IS

1 SEC. 243. DISCRETIONARY AWARD FOR PERSONS PROVID2 ING SECRETARY WITH INFORMATION LEAD3 ING TO COLLECTION.

4 (a) IN GENERAL.—Section 502 (29 U.S.C. 1132), as

5 amended by section 231, is amended by adding at the end

6 the following new subsection:

7 ‘‘(p)(1) Notwithstanding any other provision of law,

8 the Secretary may pay, from amounts collected under this

9 section, an award to the person or persons who provide

10 information leading the Secretary to initiate an investiga11 tion, or to bring an action, which resulted in the collection

12 of the amount under this section. Such award shall be de13 termined by the Secretary but may not exceed 10 percent

14 of the amount collected.

15 ‘‘(2) Any determinations under this subsection, in16 cluding whether, to whom, or in what amount to make

17 payments, shall be in the sole discretion of the Secretary,

18 except that no such payment shall be made to any person

19 for information gained in the course of their duties as an

20 officer or employee of any Federal, State, or local govern21 ment agency, nor shall any relative of such person receive

22 any payment for such information. Any such determina23 tion shall be final and not subject to judicial review.’’

24 (b) TOLL-FREE NUMBER.—The Secretary of Labor

25 shall establish a toll-free number for persons to provide

26 information described in section 502(p) of the Employee
60

•S 2531 IS

1 Retirement Income Security Act of 1974 (as added by

2 subsection (a)).

3 SEC. 244. AUDIT REQUIREMENT.

4 Section 504 (29 U.S.C. 1134) is amended by adding

5 at the end the following new subsection:

6 ‘‘(d) The Secretary shall audit each year a represent7 ative sample of plans with fewer than 100 participants.’’

8 TITLE III—EFFECTIVE DATES

9 SEC. 301. EFFECTIVE DATES.

10 (a) IN GENERAL.—Except as otherwise provided in

11 this Act, the amendments made by this Act shall apply

12 to plan years beginning after December 31, 1994.

13 (b) SPECIAL RULE FOR COLLECTIVELY BARGAINED

14 PLANS.—In the case of a plan maintained pursuant to 1

15 or more collective bargaining agreements between em16 ployee representatives and 1 or more employers ratified

17 on or before the date of the enactment of this Act, the

18 amendments made by this Act shall apply to the first plan

19 year beginning on or after the earlier of—

20 (1) the later of—

21 (A) January 1, 1995, or

22 (B) the date on which the last of such col23 lective bargaining agreements terminates (de24 termined without regard to any extension there-
61

•S 2531 IS

1 of after the date of the enactment of this Act),

2 or

3 (2) January 1, 1997.

4 (c) PLAN AMENDMENTS.—If any amendment made

5 by this Act requires an amendment to any plan, such plan

6 amendment shall not be required to be made before the

7 first plan year beginning on or after January 1, 1995, if—

8 (1) during the period after such amendment

9 made by this Act takes effect and before such first

10 plan year, the plan is operated in accordance with

11 the requirements of such amendment made by this

12 Act, and

13 (2) such plan amendment applies retroactively

14 to the period after such amendment made by this

15 Act takes effect and such first plan year.

Æ

S 2531 IS—2

S 2531 IS—3

S 2531 IS—4

S 2531 IS—5