I
106TH CONGRESS
1ST SESSION
H. R. 633
To provide for investment in broad-based private equities indices of amounts
held in trust for payment of benefits from the Federal Old-Age and
Survivors Insurance Trust Fund, the Federal Disability Insurance Trust
Fund, the Federal Hospital Insurance Trust Fund, the Department
of Defense Military Retirement Fund, the Civil Service Retirement and
Disability Fund, and the Railroad Retirement Account, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 9, 1999
Mr. BARTLETT of Maryland introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committees
on Armed Services, Government Reform, the Budget, Transportation and
Infrastructure, and Commerce, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To provide for investment in broad-based private equities
indices of amounts held in trust for payment of benefits
from the Federal Old-Age and Survivors Insurance Trust
Fund, the Federal Disability Insurance Trust Fund, the
Federal Hospital Insurance Trust Fund, the Department
of Defense Military Retirement Fund, the Civil Service
Retirement and Disability Fund, and the Railroad Re-
tirement Account, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Retirement Trust
Fund Integrity Act of 1999’’.
SEC. 2. INVESTMENT OF SURPLUS IN RETIREMENT TRUST
FUNDS
Notwithstanding any other provision of law, it shall
be the duty of the managing trustee of each participating
trust fund to transfer, from time to time, to the Retire-
ment Trust Fund Investment Board such portion of each
of the trust funds as is not, in his judgment, required to
meet current withdrawals.
SEC. 3. RETIREMENT TRUST FUNDS INVESTMENT PRO-
GRAM.
(a) IN GENERAL.—There is created in the Treasury
of the United States a trust fund to be known as the ‘‘Re-
tirement Investment Fund’’. The Retirement Investment
Fund shall consist of such amounts as may be appro-
priated to, or deposited in, such fund as provided in this
Act. Such Fund shall be available—
(1) for investment in accordance with this Act,
(2) to be transferred to the managing trustees
of the participating trust funds, and
(3) to pay the operational and administrative
expenses of the Board.
(b) TRANSFERS FROM THE RETIREMENT INVEST-
MENT FUND.—Upon receipt by the Executive Director of
a written request from the managing trustee of any par-
ticipating trust fund that a transfer of a designated
amount of funds from the Retirement Investment Fund
to that fund is necessary to meet current withdrawals, the
Executive Director shall transfer such amount to the such
managing trustee, who shall deposit that amount in such
trust fund. In no event may the amount so transferred
to a participating trust fund exceed the current market
value of shares in the Common Stock Index Investment
Fund purchased with funds transferred to the Fund by
the managing trustee of that participating trust fund.
SEC. 4. INVESTMENT OF TRUST FUNDS IN COMMON STOCK.
(a) IN GENERAL.—(1) The Retirement Trust Fund
Investment Board shall establish for the Retirement In-
vestment Fund a Common Stock Index Investment Fund
under which sums shall be invested as provided in sub-
section (b).
(2) It shall be the duty of the Executive Director to
enter into such investments and to liquidate such invest-
ments in accordance with the investment policies which
shall be prescribed by the Board. Any interest earned on
such investments, and the proceeds from any liquidation
of such investments, including any income derived from
such liquidation, shall be credited to and form a part of
the Retirement Investment Fund.
(b) COMMON STOCK INVESTMENT FUND.—
(1) IN GENERAL.—The Common Stock Index
Investment Fund shall consist of amounts held in
the Retirement Investment Fund invested as pro-
vided in this subsection.
(2) SELECTION OF INDEX AND PORTFOLIO DE-
SIGN.—
(A) SELECTION
OF
INDEX.—The Board
shall select for purposes of this subsection an
index which is a commonly recognized index
comprised of common stock the aggregate mar-
ket value of which is a reasonably complete rep-
resentation of the United States equity mar-
kets. Common stock of companies may not be
included or excluded because of political, social,
or religious considerations.
(B) PORTFOLIO
DESIGN.—Amounts held
in the Common Stock Index Investment Fund
shall be invested in a portfolio designed to rep-
licate the performance of the index selected
under subparagraph (A). The portfolio shall be
designed such that, to the extent practicable,
the percentage of the Common Stock Index In-
vestment Fund that is invested in each stock is
the same as the percentage determined by di-
viding the aggregate market value of all shares
of that stock by the aggregate market value of
all shares of all stocks included in such index.
(3) NO VOTING RIGHTS IN SECURITIES.—The
Board and the Executive Director may not exercise
voting rights associated with the ownership of secu-
rities by Retirement Investment Fund.
SEC. 5. ENGAGEMENT OF QUALIFIED PUBLIC ACCOUNT-
ANT.
(a) IN GENERAL.—The Board shall annually engage
an independent qualified public accountant who shall con-
duct an examination of all accounts and other books and
records maintained in the administration of this section
as the public accountant considers necessary to enable the
public accountant to make the determination required by
subsection (b). The examination shall be conducted in ac-
cordance with generally accepted auditing standards and
shall involve such tests of the accounts, books, and records
as the public accountant considers necessary.
(b) EXAMINATION
AND REPORT.—The public ac-
countant conducting an examination under subsection (a)
shall determine whether the accounts, books, and records
referred to in such subsection have been maintained in
conformity with generally accepted accounting principles
applied on a basis consistent with the manner in which
such principles were applied during the examination con-
ducted under such paragraph during the preceding year.
The public accountant shall transmit to the Board and
the Comptroller General of the United States a report on
his examination, including his determination under this
subsection.
(c) RELIANCE ON ACTUARY’S CERTIFICATIONS.—In
making a determination under subsection (b), a public ac-
countant may rely on the correctness of any actuarial mat-
ter certified by an actuary enrolled under subtitle C of
title III of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1241 et seq.), if the public accountant
states his reliance in the report transmitted to the Board
under such paragraph.
(d) DEFINITION.—As used in this section, the term
‘qualified public accountant’ shall have the same meaning
as is provided in section 103(a)(3)(D) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1023(a)(3)(D)).
SEC. 6. FIDUCIARY RESPONSIBILITIES.
(a) IN GENERAL.—Under regulations of the Sec-
retary of Labor, sections 8477 and 8478 of title 5, United
States Code, shall apply in connection with the amounts
maintained in the Common Stock Investment Fund of the
Retirement Investment Fund in the same manner and to
the same extent as such provisions apply in connection
with the Thrift Savings Fund.
(b) INVESTIGATIVE
AUTHORITY.—Any authority
available to the Secretary of Labor under section 504 of
the Employee Retirement Income Security Act of 1974 is
hereby made available to the Secretary of Labor, and any
officer designated by the Secretary of Labor, to determine
whether any person has violated, or is about to violate,
any provision applicable under subsection (a).
(c) EXCULPATORY PROVISIONS; INSURANCE.—
(1) IN GENERAL.—Any provision in an agree-
ment or instrument which purports to relieve a fidu-
ciary from responsibility or liability for any respon-
sibility, obligation, or duty under this part shall be
void.
(2) INSURANCE.—Amounts in the Retirement
Investment Fund available for administrative ex-
penses shall be available and may be used at the dis-
cretion of the Board to purchase insurance to cover
potential liability of persons who serve in a fiduciary
capacity with respect to amounts maintained in the
Common Stock Investment Fund of Retirement In-
vestment Fund, without regard to whether a policy
of insurance permits recourse by the insurer against
the fiduciary in the case of a breach of a fiduciary
obligation.
SEC. 7. ESTABLISHMENT OF THE RETIREMENT TRUST
FUND INVESTMENT BOARD AND EXECUTIVE
DIRECTOR.
(a) 
RETIREMENT
TRUST
FUND
INVESTMENT
BOARD.—(1) There is established in the executive branch
of the Government an independent agency to be known
as the Retirement Trust Fund Investment Board.
(2) The Board shall be composed of—
(A) 3 members appointed by the President, of
whom 1 shall be designated by the President as
Chairman; and
(B) 2 members appointed by the President, of
whom—
(i) 1 shall be appointed by the President
after taking into consideration the recommenda-
tion made by the Speaker of the House of Rep-
resentatives in consultation with the minority
leader of the House of Representatives; and
(ii) 1 shall be appointed by the President
after taking into consideration the recommenda-
tion made by the majority leader of the Senate
in consultation with the minority leader of the
Senate.
(3) Appointments under paragraph (2) shall be made
by and with the advice and consent of the Senate.
(4) Members of the Board shall have substantial ex-
perience, training, and expertise in the management of fi-
nancial investments and the exercise of fiduciary duties.
(5)(A) A member of the Board shall be appointed for
a term of 5 years, except that of the members first
appointed—
(i) the Chairman shall be appointed for a term
of 5 years;
(ii) the members appointed under paragraph
(2)(B) shall be appointed for a term of 4 years; and
(iii) the remaining members shall be appointed
for a term of 3 years.
(B)(i) A vacancy on the Board shall be filled in the
manner in which the original appointment was made and
shall be subject to any conditions which applied with re-
spect to the original appointment.
(ii) An individual chosen to fill a vacancy shall be ap-
pointed for the unexpired term of the member replaced.
(iii) The term of any member shall not expire before
the date on which the member’s successor takes office.
(6) The Board shall—
(A) establish policies for the investment and
management of the Retirement Investment Fund;
(B) review the performance of investments
made for such fund; and
(C) review and approve the budget of the
Board.
(7)(A) The Board may—
(i) adopt, alter, and use a seal;
(ii) except as provided in subparagraph (B), es-
tablish policies with which the Executive Director is
required to comply; and
(iii) take such other actions as may be nec-
essary to carry out the functions of the Board.
(B) The policies of the Board may not require the
Executive Director to invest or to cause to be invested any
sums in the Trust Funds in a specific asset or to dispose
of or cause to be disposed of any specific asset of the Trust
Funds.
(8)(A) The Board shall meet—
(i) not less than once during each month; and
(ii) at additional times at the call of the Chair-
man.
(10) The members of the Board shall discharge their
responsibilities solely in the interest of the Retirement In-
vestment Fund.
(11) The Board shall prepare and submit to the
President, and, at the same time, to the appropriate com-
mittees of Congress, an annual budget of the expenses and
other items relating to the Board which shall be included
as a separate item in the budget required to be transmit-
ted to the Congress under section 1105 of title 31, United
States Code.
(12) The Board may submit to the President, and,
at the same time, shall submit to each House of Congress,
any legislative recommendations of the Board relating to
any of its functions under this Act.
(b) EXECUTIVE DIRECTOR.—(1) The Board shall ap-
point, without regard to the provisions of law governing
appointments in the competitive service, an Executive Di-
rector by action agreed to by a majority of the members
of the Board.
(2) The Executive Director shall have substantial ex-
perience, training, and expertise in the management of fi-
nancial investments and the exercise of fiduciary duties.
(2) The Executive Director shall—
(A) carry out the policies established by the
Board;
(B) invest and manage the amounts in the Re-
tirement Investment Fund in accordance with the
investment policies and other policies established by
the Board;
(C) prescribe such regulations (other than regu-
lations relating to fiduciary responsibilities) as may
be necessary for the administration of this Act; and
(D) meet from time to time with the board of
trustees of any participating trust funds upon re-
quest of the board of trustees of such fund regard-
ing matters relating to that fund.
(3) The Executive Director may—
(A) prescribe such regulations as may be nec-
essary to carry out the responsibilities of the Execu-
tive Director under this subsection, other than regu-
lations relating to fiduciary responsibilities;
(B) appoint such personnel as may be necessary
to carry out this Act;
(C) in accordance with the policies of the
Board, procure the services of experts and consult-
ants under section 3109 of title 5, United States
Code;
(D) secure directly from any agency or instru-
mentality of the Federal Government any informa-
tion necessary to carry out this Act and policies of
the Board;
(E) make such payments out of sums in the Re-
tirement Investment Fund as the Executive Director
determines are necessary to carry out this Act and
the policies of the Board;
(F) pay the compensation, per diem, and travel
expenses of individuals appointed under subpara-
graphs (B), (C), and (G) of this paragraph from
amounts otherwise available in the Retirement In-
vestment Fund;
(G) accept and use the services of individuals
employed intermittently in the Government service
and reimburse such individuals for travel expenses,
as authorized by section 5703 of title 5, United
States Code, including per diem as authorized by
section 5702 of such title; and
(H) take such other actions as are appropriate
to carry out the functions of the Executive Director
under this Act.
(4) The Executive Director shall discharge his or her
responsibilities solely in the interest of the Retirement In-
vestment Fund.
SEC. 8. REPORTING REQUIREMENTS.
The Executive Director shall transmit a report on the
state of the Retirement Investment Fund—
(1) to each House of Congress within 20 days
after the close of each calendar quarter; and
(2) to the Committee on Ways and Means of
the House of Representatives and the Committee on
Finance of the Senate not later than January 20
and July 20 of each calendar year.
SEC. 9. DEFINITIONS.
As used in this Act:
(1) The term ‘‘Board’’ refers to the Retirement
Trust Fund Investment Board.
(2) The term ‘‘Executive Director’’ refers to the
Executive Director of the Retirement Trust Fund
Investment Board.
(3) The term ‘‘managing trustee’’ refers to the
Secretary of Defense in the case of the Department
of Defense Military Retirement Fund and the Sec-
retary of the Treasury in the case of all other par-
ticipating trust funds.
(4) The term ‘‘participating trust fund’’ refers
to each of the following trust funds, as applicable:
(A) The Civil Service Retirement and Dis-
ability Fund.
(B) The Department of Defense Military
Retirement Fund.
(C) The Federal Disability Insurance
Trust Fund.
(D) The Federal Hospital Insurance Trust
Fund.
(E) The Federal Old-Age and Survivors
Insurance Trust Fund.
(F) The Federal Supplementary Medical
Insurance Trust Fund.
(G) The Railroad Retirement Account.
SEC. 10. CONFORMING AMENDMENTS.
(a) CIVIL SERVICE RETIREMENT AND DISABILITY
FUND.—Section 8348 of title 5 of the United States Code
is amended by adding at the end the following new sub-
section:
‘‘(n) For additional provisions relating to the treat-
ment of funds not required to meet current withdrawals,
see section 2 of the Retirement Trust Fund Integrity Act
of 1999.’’.
(b) DEPARTMENT OF DEFENSE MILITARY RETIRE-
MENT FUND.—Section 1467 of title 10 of the United
States Code is amended by inserting ‘‘(a)’’ before ‘‘The
Secretary’’ and by adding at the end the following new
subsection: