Pension Reform
Bill Summaries

H.R. 3463 | S. 1838 | H.R. 3640 | H.R. 3692 | H.R. 3509 | H.R. 3622 | H.R. 3623 | H.R. 3634 | H.R. 3657 | H.R. 3642 | Bush proposal | H.R. 3669 | H.R. 3677 | S. 1921 | S. 1919 | H.R. 3762 | H.R. 3763 | S.1969 | S. 1971 | H.R. 3818 | S.1978 | S. 1992| S.2032 | S.2087 | S. 2185 | S. 2190 | H.R. 4482| H.R. 4778 | Senate Finance | H.R. 5110| H.R.5221

Dec. 12, 2001: Rep. Peter Deutsch (D-FL) introduces H.R. 3463, Pension Protection Act.

"To amend the Internal Revenue Code of 1986 to provide protections for participants in cash or deferred arrangements under section 401(k) with respect to the acquisition and holding of employer securities."

• Caps the percentage of company stock in an employee's 401(K) plan at 10 percent.
• Limits to three years the time an employee would have to hold company stock received as an employer's matching contribution before selling it.

Dec. 18, 2001: Sens. Barbara Boxer (D-CA) and Jon Corzine (D-NJ) ) introduce S. 1838, Pension Protection and Diversification Act of 2001.

"To amend the Employer Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to ensure that individual account plans protect workers by limiting the amount of employer stock each worker may hold and encouraging diversification of investment of plan assets, and for other purposes."

• Caps the percentage of company stock in an employee's 401(K) plan at 20 percent.
• Limits to 90 days the time an employee would have to hold company stock received as an employer's matching contribution before selling it.
• Reduces the employer tax-deduction on stock contributions to employee retirement plans from 100 percent to 50 percent of the stock value.
• Lowers to 35 years of age and five years of service the triggers that allow an employee to diversify investments in an Employee Stock Ownership plan. The tax code current requires 55 years of age and 10 years of service.

Also introduced in the House as H.R. 3640 by Rep. Bill Pascrell (D-NJ) on Jan. 29, 2002 and as H.R. 3692 by Rep. Sheila Jackson-Lee (D-TX)on Feb. 7, 2002.

Dec. 18, 2001: Rep. Ken Bensten (D-TX) introduces H.R. 3509, Retirement Account Protection Act of 2001.

"To amend title I of the Employee Retirement Income Security Act of 1974 to provide additional fiduciary protections for participants and beneficiaries under employee stock ownership plans with respect to lockdowns placed on plan assets."

• Requires pension plan managers to obtain permission from the Labor secretary before implementing any transaction suspensions or lockdowns.
• Requires pension plan managers to give members 90 days' notice before lockdowns.
• Calls for a study by the Secretary of Labor, the Secretary of the Treasury, and members of the Securities and Exchange Commission to determine the feasibility of statutory limits on how much of employees' retirement plans can be invested in company stock.

Jan. 24, 2002: Rep. Charles Rangel (D-NY) introduces H.R. 3622, Emergency Worker and Investor Protection Act of 2002.

"To amend the Internal Revenue Code of 1986 to extend the golden parachute excise tax to sales of company stock by corporate insiders occurring when the company prevents rank-and-file employees from selling company stock held in their 401(k) plan, and to ensure more accurate reporting of liabilities to workers and shareholders."

• Imposes a 20 percent tax on company stock traded by executives when employees are prevented from trading stock.
• Prevents companies from receiving a tax deduction for interest on debt instruments (e.g. loans) when those same debt instruments are counted as equity on the company's books.

Jan. 24, 2002: Rep. Ken Bensten (D-TX) introduces H.R. 3623, Employee Savings Protection Act of 2002.

"To amend title I of the Employee Retirement Income Security Act of 1974 to prohibit knowing misrepresentations by fiduciaries of 401(k) plans which may induce participants and beneficiaries to act contrary to their own best interest in controlling the assets in their own accounts, and to amend title 11 of the United States Code to protect claims based on such misrepresentations."

• Ensures that employees whose retirement plans suffered as a result of false information can have a legal claim that survives bankruptcy.
• Treats employee claims as a "priority" to be fully reimbursed in bankruptcy proceeds.
• Holds officers and directors who communicate false information personally responsible for employee losses.

Jan. 24, 2002: Rep Maxine Waters (D-CA) introduces H.R. 3634, Enron Employee Pension Recovery Act of 2002.

"To permit certain funds for securities laws violations to be used to compensate employees who are victims of excessive pension fund investments in the securities of their employers, and for other purposes."

• Creates a "disgorgement" fund composed of Enron and Andersen proceeds to compensate Enron employees.

Jan 29, 2002: Rep George Miller (D-CA) introduces H.R. 3657, Employee Pension Freedom Act of 2002.

"To amend the Employee Retirement Income Security Act of 1974 to provide for improved disclosure, diversification, account access, and accountability under individual account plans."

• Companies would be prohibited from requiring employees to have 10 percent of their 401(k) contributions invested in company stock.
• Requires plan administrators to give participants 30 days notice before restricting participants' access to their accounts and limits lockdown periods to 10 business days.
• Would vest employees in the employer matching contributions after one year of participation in a plan and require that employees could immediately transfer contributions to other investment options.
• Requires employers to provide plan participants with all investment information required under securities law and prohibits employers from making any misleading statements about the value of company stock.
• Requires Labor Department to establish an office to monitor pension plans and assist participants resolving disputes.
• Requires defined contributions plans to maintain insurance to cover losses that the Labor secretary determined were the result of a breach of fiduciary responsibility.
• Prohibits employers from requiring plan participants to waive legal pension rights as part of any termination or severance agreement.
• Calls on the Pension Benefit Guarantee Corporation to study the feasibility of developing an insurance guarantee system for defined contribution plans.

Jan 29, 2002: Rep David Bonior (D-MI) introduces H.R. 3642, 401(k) Pension Right to Know Act of 2002.

"To amend title I of the Employee Retirement Income Security Act of 1974 to require plan administrators of 401(k) plans to provide semiannual reports to participants and beneficiaries fully and accurately disclosing the financial health of the plan sponsor and promoting diversification of investment of their plan assets."

• Requires retirement plan sponsors to provide a semiannual report on the company's financial health.
• Requires retirement plan sponsors to advise participants on the importance of diversification.

Feb. 1, 2002: In a press release, President Bush "calls on Congress to enact important new safeguards to protect the pensions of millions of American workers." The Bush proposal:

• Ensures that workers can sell company stock and diversify into other investment options after they have participated in the 401(k) plan for three (3) years.
• Calls on the Task Force on Retirement Security (Treasury Secretary Paul O'Neill, Labor Secretary Elaine Chao, and Commerce Secretary Don Evans) to develop appropriate policies that would preclude senior executives from selling company stock during times when workers are unable to trade in their 401 (k) plans and to clarify that employers have a fiduciary responsibility for workers' investments during a blackout period.
• Requires a 30-day notice before any blackout period occurs.
• Requires employers to give workers quarterly benefit statements that include information about their individual accounts, including the value of their assets, their rights to diversify, and the importance of maintaining a diversified proposal.
• Calls on the Senate to pass the House-approved Retirement Security Advice Act H.R. 2269, which encourages employers to make investment advice available to workers and allows qualified financial advisors to offer investment advice only if they agree to act solely in the interests of the works they advise.

Feb. 4, 2002: Rep. Rob Portman (R-OH) and Rep. Ben Cardin (D-MD) introduce H.R. 3669, Employee Retirement Savings Bill of Rights.

"Bill to amend the Internal Revenue Code of 1986 to empower employees to control their retirement savings accounts through new diversification rights, new disclosure requirements, and new tax incentives for retirement education."

• Allows employees to diversify company matching contributions in their 401(k) plans after three years of service if those contributions were made in the form of company stock.
• After five years, employees could diversify non-matching employer contributions to their 401(k) or employee stock ownership plans.
• Prohibits employers from requiring employees to invest any of their 401(k).
• Requires companies to notify employees 21 days in advance of any significant "blackout" period, during which employees will be unable to trade options in their retirement plans.
• Allows employees to pay for retirement investment advice through a pre-tax payroll deduction.

Feb. 4, 2002: Rep. Phil English (R-PA) introduces H.R. 3677, Safeguarding America's Retirement Act of 2002.

"To amend title I of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to provide new protections under applicable fiduciary rules for participants and beneficiaries under 401(k) plans and to provide for 3-year vesting of elective deferrals under such plans."

• Limits to three years the time an employee would have to hold company stock received as an employer's matching contribution before selling it.
• Places a 20 percent limit on how much of an employee's 401(k) plan can be invested in any single security, including company stock.
• Ensures that employees are given at least a quarterly opportunity to diversify their 401(k) plans.

Feb. 7, 2002: Sen. Kay Bailey Hutchison (R-TX) Sen. Trent Lott (R-MS), and Sen. Larry Craig (R-ID) introduce S. 1921, The Pension Plan Protection Act.

"To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to provide greater protection of workers' retirement plans, to prohibit certain activities by persons providing auditing services to issuers of public securities, and for other purposes."

• Allows participants to sell shares from employer contributions after they have been vested for 90 days... An employer's plan must offer at least four investment options, including three that are not company stock... A plan cannot require an employee to purchase company stock with the employee's own contributions.
• Plans must notify workers 30 days prior to initiating a blackout period...During a blackout period, the employer has fiduciary responsibility for workers' investments in company securities...Corporate executives will be prohibited from selling any of their company stock during a blackout period.
• Pension plans must provide participants with quarterly statements that give detailed information about their account...Along with these statements, a plan must notify a participant if any one security accounts for more than 25 percent of their total portfolio...This notification must also recommend that the employee seek professional investment advice to reassess their portfolio's diversification.
• Encourages employers to make investment advice available to plan participants from professional financial advisors.
• Instructs the Secretary of Labor to conduct a study on other issues relating to pension plans, such as the feasibility of allowing participants to trade assets on a daily basis and to be able to sell employer securities during a time of high market volatility, even in a blackout period.
• Prohibits accounting firms from providing consulting services to their audit clients.

Feb. 7, 2002: Sen. Paul Wellstone (D-MN) introduces S. 1919, The Retirement Security Protection Act of 2002.

"To Amend the Employee Retirement Act of 1974 to provide for improved disclosure, diversification, account access, and accountability under individual account plans."

• Requires defined contribution plans to provide annual statements highlighting the percentage of assets in company stock…Plan administrators must provide investment materials…The Secretary of Labor can fine employers and/or plan administrators up to $1,000 a day for misleading information about employer stock.
• Requires employees to make sure than no more than 20% of the all employees' combined retirement portfolio is invested in company stock…Prohibits employers from forcing employees to invest employee contributions in the company…Allows participants to transfer employer stock contributions to other funds after one year…Requires 30 days advance notice of "lockdowns" and limits "lockdowns" to 10 days.
• Expands the liability for breach of fiduciary duty to knowing participants in the breach…Prohibits employers from requiring employees to waive statutory pension rights as part of any employment-related agreement…Bars company auditors from also auditing the pension plans. Expands whistleblower protections…Directs the Department of Labor to establish an office of the Participant Advocate to monitor potential abuses of employee pension plan rights and assist plan participants in preventing and resolving abuses.

Feb. 14, 2002: Rep. John Boehner (R-OH)introduces H.R. 3762, Pension Security Act of 2002. (Boehner has called this the House version of President Bush's 401(k) reform plan.)

"A bill to amend title I of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to provide additional protections to participants and beneficiaries in individual account plans from excessive investment in employer securities and to promote the provision of retirement investment advice to workers managing their retirement income assets, and to amend the Securities Exchange Act of 1934 to prohibit insider trades during any suspension of the ability of plan participants or beneficiaries to direct investment away from equity securities of the plan sponsor."

• Encourages employers to make independent investment advice on diversification and long-term planning available to employees as a benefit…Provides specific guidelines for providing investment advice.
• Requires employers to notify workers 30 days prior to initiating a blackout period…During a blackout period, the employer has fiduciary responsibility for workers' investments in company securities…Corporate executives will be prohibited from selling any of their company stock during a blackout period.
• Limits to three years the time an employee would have to hold company stock received as an employer's matching contribution before selling it.

*Passed by full House (4-15-02) (255-165 vote)

Feb. 14, 2002: Rep. Michael Oxley (R-OH) introduces H.R. 3763, Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002.

"To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws, and for other purposes."

Feb. 26, 2002: Sen. Tim Hutchinson (R-AR) introduces S. 1969 "Pension Security Act of 2002"

"To amend title I of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to provide additional protections to participants and beneficiaries in individual account plans from excessive investment in employer securities and to promote the provision of retirement investment advice to workers managing their retirement income assets, and to amend the Securities Exchange Act of 1934 to prohibit insider trades during any suspension of the ability of plan participants or beneficiaries to direct investment away from equity securities of the plan sponsor."

Feb. 27, 2002: Sen. Charles Grassley (R-IA) introduces S. 1971 "National Employee Savings and Trust Equity Guarantee Act"

"To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to protect the retirement security of American workers by ensuring that pension assets are adequately diversified and by providing workers with adequate access to, and information about, their pension plans, and for other purposes."

February 28, 2002: Rep. John LaFalce (D-NY) introduces H.R. 3818, Comprehensive Investor Protection Act of 2002.

"To protect investors by enhancing regulation of public auditors, improving corporate governance, overhauling corporate disclosure made pursuant to the securities laws, and for other purposes."

• Prohibits insider trading during "blackout" periods. For a complete summary, see Securities reform.

March 1, 2002: Sen. Tim Hutchinson (R-AR) introduces S. 1978, Retirement Security Advice Act of 2002

"To amend title I of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to promote the provision of retirement investment advice to workers managing their retirement income assets."

* Calls for employers to provide investment advice to employees and sets out standards for the advice to "be written in a manner calculated to be understood by the average plan participant."

March 6, 2002: Sen. Edward Kennedy (D-MA) introduces S. 1992, Protecting America's Pensions Act of 2002.

"To amend the Employee Retirement Income Security Act of 1974 to improve diversification of plan assets for participants in individual account plans, to improve disclosure, account access, and accountability under individual account plans, and for other purposes."

• Prohibits employers from requiring employees to invest in company stock
  
• Requires employees to receive quarterly statements on their retirement accounts and calls for the statements to include information on the importance of diversified investments. · Requires companies to provide 30 days notice before a "blackout" period.
  
• Limits to three years the time an employee would have to hold company stock received as an employer's matching contribution before selling it.
  
• so that both the public and company employees are informed on the day of the trade.
  
• Requires employers to take out insurance to protect the retirement interests of plan participants and their beneficiaries · Creates a liability for participating in or concealing a breach of fiduciary duty.
  
• Establishes an Office of Pension Participant Advocacy through the Labor Department to evaluate pension plans
  
• Calls for studies on developing an insurance system for individual account plans and the fees charged by individual account plans

* Approved by HELP committee 3-21-02 (11-10 vote) (also appears on securities list)

March 19, 2002: Sen. Richard Durbin (D-IL) introduces S. 2032, the Investor-Employees Need Financial Facts and Options for Responsible Retirement Plan Management Act of 2002 (INFORM) Act of 2002.

"A bill to amend the Employee Retirement Income Security Act of 1974 to provide for improved disclosure, diversification, account access, and accountability under individual account plans."

April 10, 2002: Sens. Jeff Bingaman (D-NM) and Susan Collins (R-ME) introduce S. 2087.

"A bill to amend the Internal Revenue Code of 1986 to allow employers a credit against income tax for the provision of independent investment advice to employees."

April 17, 2002: Sen. Max Cleland (D-GA) introduces S. 2185.

"To amend the Employee Retirement Income Security Act of 1974 to provide workers with individual account plans with information on how the assets in their accounts are invested and of the need to diversify the investment of the assets."

April 17, 2002: Sen. John Kerry (D-MA) introduces S. 2190, Worker Investment and Retirement Education Act of 2002.

"To amend the Internal Revenue Code of 1986 to provide for Universal Retirement Savings Accounts in lieu of the various individual retirement plans."

"To amend title I of the Employee Retirement Income Security Act of 1974 to provide for more effective enforcement by the Department of Labor of the requirements of such title relating to participation, vesting, benefit accrual, and funding."

• Requires the government to enforce pension laws with respect to cash balance and other defined benefit plans. Requires the Department of Labor to act in response to 13 company plans that have violated the law.

"To protect employees and retirees from corporate practices that deprive them of their earnings and retirement savings when a business files for bankruptcy under title 11, United States Code."

• Enhances the ability of courts to scrutinize and set aside transactions that strip the company of its assets.
• Affirms the authority of courts to "lift the veil" on transactions that move corporate assets "off book."
• Restores to bankruptcy trustees the authority to challenge and set aside pre-bankruptcy transactions that take assets out of the company.
• Limits retention bonuses and other excessive payments to corporate insiders and "turnaround" consultants.
• Closes a loophole that prevents trustees from avoiding certain pre-bankruptcy transfers.
• Gives employees a fourth priority unsecured claim in bankruptcy for company stock held in employee pension plans.
• Raises from $4,650 to $13,500 the cap on wage priority and employee benefit claims.
• Enhances the treatment of claims arising from the failure of the company to meet its fiduciary obligations toward employees and retirees.
• Strengthens review of pre-bankruptcy terminations of retiree benefits
• Reduces the ability of companies to file in jurisdictions with few links to the affected communities.

Also introduced by Sen. Dick Durbin (D-IL) as S. 2798 on July 25, 2002