I
105TH CONGRESS
2D SESSION
H. R. 4396
To amend title IV of the Employee Retirement Income Security Act of
1974 to protect the rights of participants and beneficiaries of terminated
pension plans.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 4, 1998
Mr. SCHUMER introduced the following bill; which was referred to the
Committee on Education and the Workforce
A BILL
To amend title IV of the Employee Retirement Income Secu-
rity Act of 1974 to protect the rights of participants
and beneficiaries of terminated pension plans.
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 ‘‘Pension Plan Partici-
pant Protection Act of 1998’’.
SEC. 2. DUTIES OF THE PENSION BENEFIT GUARANTY COR-
PORATION WHILE SERVING AS TRUSTEE OF
TERMINATED PLAN.
(a) IN GENERAL.—Section 4042(d)(3) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1342(d)(3)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(3)’’; and
(2) by adding at the end the following new sub-
paragraphs:
‘‘(B) The corporation is subject to the same require-
ments of reporting and disclosure in connection with a
pension plan for which the corporation is serving as trust-
ee pursuant to this section as those of any plan adminis-
trator of an employee pension benefit plan under part 1
of subtitle B of title I.
‘‘(C) The corporation is subject to the same fiduciary
duties in connection with a pension plan for which the cor-
poration is serving as trustee pursuant to this section, in-
cluding the determination and payment of plan benefits,
as those of any fiduciary of an employee pension benefit
plan under part 1 of subtitle B of title I. The corporation
shall maintain such separate books and records and retain
such separate counsel on its behalf as may be necessary
for carrying out such duties.
‘‘(D) For purposes of applying part 5 of subtitle B
of title I in the enforcement of subparagraphs (B) and
(C)—
‘‘(i) any civil monetary penalty which may be
assessed by the Secretary of Labor against the cor-
poration under any provision of section 502(c) shall
be assessed in the full amount specified in such pro-
vision,
‘‘(ii) a civil action against the corporation as fi-
duciary under section 502(a)(2) for relief under sec-
tion 409 may be brought by any affected party, and,
in any such action by an affected party in which the
corporation is removed as trustee, the replacement
trustee shall be selected by the court from any list
of qualified candidates which may be provided by
such affected party, and
‘‘(iii) any review under section 502 by a district
court of the United States of a benefit determination
by the corporation shall be de novo.
‘‘(E) In any case in which the corporation serves as
trustee for a terminated pension plan pursuant to this sec-
tion, the corporation shall issue its final determination re-
garding any benefit payable under the plan not later than
one year after the date of the corporation’s appointment
as trustee. Any failure by the corporation to comply with
may order the appointment of additional committees
of participants if necessary to assure adequate rep-
resentation of participants. The trustee shall appoint
any such committee.
‘‘(3) SMALL BUSINESSES.—On request of an af-
fected party in a case in which the plan sponsor is
a small business and for cause, the court may order
that a committee of participants not be appointed.
‘‘(b) MEMBERSHIP.—A committee of participants ap-
pointed under subsection (a) shall ordinarily consist of the
persons, willing to serve, that were in pay status under
the plan as of the date of the termination of the plan and
have the seven largest nonforfeitable benefits under the
plan, or of the members of a committee organized by par-
ticipants before such date, if such committee was fairly
chosen and is representative of the participants of the
plan.
‘‘(c) POWERS AND DUTIES OF COMMITTEES.—
‘‘(1) APPOINTMENT OF ATTORNEYS, ACCOUNT-
ANTS, ETC.—At a scheduled meeting of a committee
appointed under subsection (a), at which a majority
of the members of such committee are present, and
with the court’s approval, such committee may select
and authorize the employment by such committee of
one or more attorneys, accountants, or other agents
to represent or perform services for such committee.
‘‘(2) PRECLUSION
OF
CONFLICTS
OF
INTER-
EST.—An attorney or accountant employed to rep-
resent a committee appointed under subsection (a)
may not, while employed by such committee, rep-
resent any other entity having an adverse interest in
connection with the case. Representation of one or
more participants of the same class as represented
by the committee shall not per se constitute the rep-
resentation of an adverse interest.
‘‘(3) SPECIFIC
POWERS.—A committee ap-
pointed under subsection (a) may—
‘‘(A) consult with the trustee concerning
the administration of the case,
‘‘(B) investigate the acts, conduct, assets,
liabilities, and financial condition of the plan,
the operation of the plan sponsor’s financial op-
erations, and the desirability of the continuance
of the plan, and any other matter relevant to
the case,
‘‘(C) participate in the formulation of the
plan for distribution of plan assets, advise those
represented by such committee of such commit-
tee’s determinations as to any plan for distribu-
tion of the plan’s assets, and collect and file
with the court acceptances or rejections of the
plan for distribution of plan assets,
‘‘(D) request the court for the appointment
of the committee or any other person as an al-
ternative trustee, and
‘‘(E) perform such other services as are in
the interest of plan participants and bene-
ficiaries.
‘‘(4) MEETING
WITH
TRUSTEE.—As soon as
practicable after the appointment of a committee
under subsection (a), the trustee shall meet with
such committee to transact such business as may be
necessary and proper.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act is amended by inserting
after the item relating to section 4048 the following new
item:
‘‘Sec. 4049. Participants’ committees.’’.
SEC. 4. TRUSTEESHIP OF TERMINATED PLANS.
(a) IN GENERAL.—Section 4042(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1342(c)) is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(c)’’; and
(2) by inserting before paragraph (3) the fol-
lowing new paragraph:
‘‘(2) The court may appoint the corporation, a par-
ticipants’ committee, or any other person to serve as trust-
ee under paragraph (1). Upon the application of any two
or more of the foregoing to serve as trustee, the deter-
mination of the court of which to appoint shall be based
on its determination of which applicant is most qualified
to carry out the fiduciary duties of the trustee with respect
to participants and beneficiaries without conflicts of inter-
est.’’.
(b) PAYMENT OR REIMBURSEMENT OF REASONABLE
FEES AND EXPENSES.—Section 4042(h) of such Act (29
U.S.C. 1342(h)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(3) The reasonable fees and expenses of a trustee
appointed under this section (other than the corporation),
of any participants’ committee, and of any counsel, ac-
countants, actuaries, and other professional service per-
sonnel shall be paid, directly or by means of reimburse-
ment, from the assets of the terminated plan.’’.
SEC. 5. PARTICIPANT’S ADVOCATE.
(a) IN GENERAL.—Subtitle D of title IV of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding after section 4071 (29 U.S.C. 1371) the fol-
lowing new section:
‘‘OFFICE OF PARTICIPANT’S ADVOCATE
‘‘(a) IN GENERAL.—The Secretary of Labor shall es-
tablish in the Department of Labor an Office of Partici-
pant’s Advocate, to be headed by a Participant’s Advocate.
‘‘(b) FUNCTIONS.—The Participant’s Advocate shall,
upon request of participants of terminated pension
plans—
‘‘(1) counsel participants and beneficiaries of
such plans in connection with their rights to benefits
thereunder, and
‘‘(2) provide legal representation before the cor-
poration and in court to such participants who have
been denied benefits by the corporation.
‘‘(b) FEES.—The Office shall require only such fees
for its services as may be prescribed in regulations of the
Secretary of Labor.
‘‘(c) STAFF.—The Participant’s Advocate shall ap-
point such attorneys, actuaries, and accountants as may
be necessary to assist the Participant’s Advocate in carry-
ing out the functions of the Office, and may appoint such
additional personnel as may be necessary to provide ade-
quate support for the Office.
‘‘(d) NOTICE.—Each notice of a benefit determina-
tion issued by the corporation to a participant or bene-
ficiary under a terminated pension plan shall include a no-
tice (in such form as shall be prescribed in regulations
of the Secretary of Labor) describing the services of the
Participant’s Advocate’s Office.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act is amended by inserting
after the item relating to section 4071 the following new
item:
‘‘Sec. 4071. Office of Participant’s Advocate.’’.
(c) EFFECTIVE DATE.—The Secretary of Labor shall
establish the Office of Participant’s Advocate pursuant to
the amendments made by this section not later than one
year after the date of the enactment of this Act.
SEC. 6. RULES GOVERNING TRUSTEESHIP BY THE COR-
PORATION.
(a) IN GENERAL.—Section 4042 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1342)
is amended by adding at the end the following new sub-
section:
‘‘(i) In any case in which the corporation serves as
trustee of a terminated pension plan under this section—
‘‘(1) the corporation shall segregate assets of
the terminated plan from the assets of any other
plan or any other assets held by the corporation,
‘‘(2) the corporation may not use any assets of
the plan for any purpose other than payment of ben-
efits or reasonable administrative expenses directly