article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Pension Plan Participant Protection Act of 1998''. SEC. 2. DUTIES OF THE PENSION BENEFIT GUARANTY CORPORATION WHILE SERVING AS TRUSTEE OF TERMINATED PLAN. (a) In General.--Section 4042(d)(3) of the Employee 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 subparagraphs: ``(B) The corporation is subject to the same requirements of reporting and disclosure in connection with a pension plan for which the corporation is serving as trustee pursuant to this section as those of any plan administrator 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 corporation is serving as trustee pursuant to this section, including 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 corporation under any provision of section 502(c) shall be assessed in the full amount specified in such provision, ``(ii) a civil action against the corporation as fiduciary under section 502(a)(2) for relief under section 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 section, the corporation shall issue its final determination regarding 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 the requirements of this subparagraph shall be deemed an action of the corporation upon which a cause of action may be brought against the corporation under section 4003(f)(1).''. (b) Conforming Amendment.--Section 4023 of such Act (29 U.S.C. 1323) is amended-- (1) by inserting ``(a)'' after ``Sec. 4023.''; and (2) by adding at the end the following new subsection: ``(b) Subsection (a) shall not apply with respect to the corporation while the corporation is serving in its fiduciary capacity in accordance with section 4042(d)(3)(B).''. SEC. 3. PARTICIPANTS' COMMITTEES. (a) In General.--Subtitle C of title IV of the Employee Retirement Income Security Act of 1974 is amended by inserting after section 4048 (29 U.S.C. 1348) the following new section: ``participants' committees ``Sec. 4049. (a) In General.-- ``(1) Appointment of committee.--Except as provided in paragraph (3), as soon as practicable after the appointment of a trustee under section 4042, the trustee shall appoint a committee of participants under the plan. ``(2) Requests for adequate representation.--On request of an affected party, the court may order the appointment of additional committees of participants if necessary to assure adequate representation of participants. The trustee shall appoint any such committee. ``(3) Small businesses.--On request of an affected 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 appointed 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 participants 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, accountants, 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 interest.--An attorney or accountant employed to represent a committee appointed under subsection (a) may not, while employed by such committee, represent 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 representation of an adverse interest. ``(3) Specific powers.--A committee appointed 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 operations, 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 committee's determinations as to any plan for distribution 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 alternative trustee, and ``(E) perform such other services as are in the interest of plan participants and beneficiaries. ``(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 contents 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 following new paragraph: ``(2) The court may appoint the corporation, a participants' committee, or any other person to serve as trustee under paragraph (1). Upon the application of any two or more of the foregoing to serve as trustee, the determination 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 interest.''. (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 following 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, accountants, actuaries, and other professional service personnel shall be paid, directly or by means of reimbursement, from the assets of the terminated plan.''. SEC. 5. PARTICIPANT'S ADVOCATE. (a) In General.--Subtitle D of title IV of the Employee Retirement Income Security Act of 1974 is amended by adding after section 4071 (29 U.S.C. 1371) the following new section: ``office of participant's advocate ``(a) In General.--The Secretary of Labor shall establish in the Department of Labor an Office of Participant'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 corporation and in court to such participants who have been denied benefits by the corporation. ``(c) Fees.--The Office shall require only such fees for its services as may be prescribed in regulations of the Secretary of Labor. ``(d) Staff.--The Participant's Advocate shall appoint such attorneys, actuaries, and accountants as may be necessary to assist the Participant's Advocate in carrying out the functions of the Office, and may appoint such additional personnel as may be necessary to provide adequate support for the Office. ``(e) Notice.--Each notice of a benefit determination issued by the corporation to a participant or beneficiary under a terminated pension plan shall include a notice (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 contents 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 CORPORATION. (a) In General.--Section 4042 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1342) is amended by adding at the end the following new subsection: ``(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 benefits or reasonable administrative expenses directly attributable to the termination and administration of the plan, excluding any generally applicable overhead expenses of the corporation, and ``(3) the corporation shall obtain the services of independent contractors in connection with the termination or administration of the plan only through a competitive bidding process.''. SEC. 7. EFFECTIVE DATE. The amendments made by this Act shall apply with respect to plan terminations-- (1) the termination date for which occurs on or after January 1, 1990, and (2) for which the final distribution of assets occurs on or after the date of the enactment of this Act.
summary: Pension Plan Participant Protection Act of 1998 - Amends the Employee Retirement Income Security Act of 1974 to set forth certain protections for participants and beneficiaries of terminated pension plans. (Sec. 2) Subjects the Pension Benefit Guaranty Corporation (PBGC) to specified fiduciary duties and to reporting, disclosure, and other requirements while it serves as trustee of a terminated pension plan. Provides for assessment of civil penalties against the PBGC for violation of such requirements and duties. Allows any affected party to bring a civil action for relief against the PBGC as fiduciary. Requires the court, in any such action in which the PBGC is removed as trustee, to select the replacement trustee from a list of qualified candidates provided by the affected party. Requires the PBGC to issue its final determination regarding any benefit payable under a terminated pension plan within one year after the date of its appointment as plan trustee. Requires any review of such a PBGC benefit determination by a Federal district court to be de novo. (Sec. 3) Requires the plan trustee to appoint a committee of participants. Authorizes the court, on request of an affected party, to order: (1) the trustee to appoint additional participants' committees if necessary to assure adequate representation; and (2) that a committee of participants not be appointed in a case in which the plan sponsor is a small business. (Sec. 4) Authorizes the appropriate Federal district court to appoint as the trustee of a terminated pension plan the PBGC, a participants' committee, or any other person. Requires the court, if two or more entities apply to serve as trustee, to base the appointment on its determination of which applicant is most qualified to carry out the fiduciary duties of the trustee without conflicts of interest. Requires payment or reimbursement of reasonable fees or expenses of any trustee other than the PBGC. (Sec. 5) Directs the Secretary of Labor to establish in the Department of Labor an Office of Participant's Advocate, headed by a Participant's Advocate, which shall: (1) counsel participants and beneficiaries in connection with their benefits rights; and (2) provide legal representation before the PBGC and in court to participants denied benefits by the PBGC. (Sec. 6) Requires the PBGC, as a trustee of a terminated plan, to: (1) segregate the plan's assets from those of any other plan or any other assets held by the PBGC; (2) use the plan's assets only for payment of benefits or reasonable administrative expenses directly attributable to the plan's termination and administration (excluding any generally applicable overhead expenses of the PBGC); and (3) obtain the services of independent contractors in connection with the termination or administration of the plan only through a competitive bidding process.