Exculpatory and similar clauses which purport to relieve a fiduciary from any responsibility, obligation, or duty which under the Act are expressly prohibited and made void as against public policy. Whatever the validity such provisions might have with respect to testamentary trust, they are inappropriate in the case of employee benefit plans.

The large numbers of people and enormous amounts of money involved in such plans coupled with the public interest in their financial soundness, as expressed in the Act, require that no such exculpatory provision be permitted.

In this connection, it should be noted that while co-fiduciaries are permitted to allocate responsibilities among themselves and, by so doing, generally limit their liability to the extent of their specified duties, a co-fiduciary who has specific knowledge of a breach of trust committed by a co-fiduciary or who could have reasonably been expected to realize that another co-fiduciary was breaching his trust, can be held personally liable for failure to compel redress of the breach or prevent the breach, unless he has filed in a timely fashion his objections with the Secretary.

Subsection 15(h) prohibits persons convicted of certain listed crime from serving, for a period of five years after conviction or the end of imprisonment for such conviction, in a responsible position in connection with an employee benefit plan. The prohibition is considered necessary because of the large funds involved and the attendant great risk of a loss affecting a large number of persons. Section 15 is modeled after Section 504 of the Labor-Management Reporting and Disclosure Act (LMRDA) which bars persons convicted of certain crimes from serving as union officers. The presence of the LMRDA prohibition is another reason for including a similar provision in the Protection. Act. Without such a provision persons barred from serving as union officers might take positions with employee benefit plans. The danger inherent in such a transfer is especially great where elements of organized crime are involved.

The crimes listed have been chosen with care and have been specifically expanded from those listed in Section 504, LMRDA, to assure adequate protection to participants and beneficiaries.

It is to be noted, however, that the Secretary is empowered by the Act to waive the prohibition during the 5-year period where he determines that a person's services in such capacity would not be contrary to the purposes of the Act. It is intended that in the exercise of this discretionary power, the Secretary may not only inquire into the extent of rehabilitation of the convicted person, but also into the circumstances surrounding or attendant to the commission of the disqualifying offense in order to ascertain mitigating factors which would affect the gravity of such offense. Such mitigating circumstances would include technically disqualifying offenses committed in the context of, and related to, a genuine labor dispute, and should be considered by the Secretary in passing upon a waiver application.

In addition, the Committee has found that a substantial number of plans fail to provide adequate and fair procedures to participants and beneficiaries when their benefit claims or applications are denied. Subsection 15(1) is intended to rectify this inequity by requiring plans to provide adequate notice in writing to participants or benefi

ciaries whose benefits have been denied, setting forth the specific reasons in terms that can be readily grasped by the participant, and to afford a reasonable opportunity for a full and fair review by the plan administrator of any decision denying benefits.

Finally, the Committee has become aware of numerous instances in which the widows of deceased pension plan participants have failed to receive the survivorship or death benefits which they have relied on because the husband while alive had through inadvertance or misunderstanding, failed to exercise the survivorship or death benefit option in his retirement plan. In order to correct the loss of survivorship or death benefits which arise by reason of failure to comply with plan technicalities, the Committee adopted a provision which assures that survivorship or death benefit options cannot be lost by default on the part of the worker. The provision adopted by the Committee specifies that in order for the death benefit option to be waived by the participant, there must be a writing signed by the participant to such effect, after such participant has received a written explanation of the terms and conditions of the option and the effect of such waiver.

TITLE VI.-ENFORCEMENT

The enforcement provisions have been designed specifically to provide both the Secretary and participants and beneficiaries with broad remedies for redressing or preventing violations of the Retirement Income Security for Employees Act as well as the amendments made to the Welfare and Pension Plans Disclosure Act. The intent of the Committee is to provide the full range of legal and equitable remedies available in both state and federal courts and to remove jurisdictional and procedural obstacles which in the past appear to have hampered effective enforcement of fiduciary responsibilities under state law or recovery of benefits due to participants. For actions in federal courts, nationwide service of process is provided in order to remove a possible procedural obstacle to having all proper parties before the court.

Except where plans are not subject to the Retirement Income Security for Employees Act or the Welfare and Pension Plans Disclosure Act, and in certain other enumerated circumstances, state law is preempted. Because of the interstate character of employee benefit plans, the Committee believes it essential to provide for a uniform source of law in the areas of vesting, funding, insurance and portability standards, for evaluating fiduciary conduct, and for creating a single reporting and disclosure system in lieu of burdensome multiple reports. As indicated previously, however, the Act expressly authorizes cooperative arrangements with state agencies as well as other federal agencies, and provides that state laws regulating banking, insurance or securities remain unimpaired.

Section 610 makes it unlawful for any person to discharge, fine, suspend, expel, discipline or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of the plan or the Act or the Welfare and Pension Plans Disclosure Act or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan or the Act or the Welfare and Pension Plans Disclosure Act.

Section 611 makes it a criminal offense for any person to use fraud, force, or violence or threats thereof to restrain, coerce, intimidate or attempt to restrain, coerce, intimidate any participant or beneficiary for the purpose of interfering with or preventing the exercise of any right to which he is or may become entitled under the plan, the Act, or the WPPDA.

These provisions were added by the Committee in the face of evidence that in some plans a worker's pension rights or the expectations of those rights were interfered with by the use of economic sanctions or violent reprisals. Although the instances of these occurrences are relatively small in number, the Committee has concluded that safeguards are required to preclude this type of abuse from being carried out and in order to completely secure the rights and expectations brought into being by this landmark reform legislation.

TITLE VII.-EFFECTIVE DATES

In order to provide sufficient time for pension and profit-sharing retirement plans to adjust to the new vesting and funding standards, to make provision for additional costs which may be experienced, and to permit negotiated agreements to transpire, the Committee has provided a three-year delayed effective date for compliance with the vesting and funding standards. Since the portability program is voluntary, it is believed that a one-year delayed effective date is sufficient to permit the Secretary to set in motion the administrative apparatus appropriate for this program. In order to assure as expeditiously as possible, termination insurance coverage for unfunded vested liabilities incurred prior to enactment, a one-year delayed effective date is provided for plans to obtain termination insurance pursuant to the provisions of Title IV. All other provisions are to become effective upon enactment.

VII. Section-by-Section Analysis

TITLE 1.-ORGANIZATION, POWERS, AND DUTIES OF THE SECRETARY OF LABOR

Section 101.-This section requires the Secretary of Labor to promote programs and plans for the administration and operation of employee benefit plans in furtherance of the findings and policies set forth in the Act. He shall determine the eligibility for registration of such plans upon compliance with the requirements specified in the Act. Where plans are unqualified, he is authorized to cancel the registration. The Secretary is directed to administer and enforce the provisions of this Act and the Welfare and Pension Plans Disclosure Act. The Secretary is empowered to conduct inquiries reasonably necessary to ascertain violations of the Act or its regulations. He may not conduct an examination of books and records more than once annually unless he has reasonable cause to believe there has been a violation. He may exercise subpoena powers, if necessary, in the enforcement of the Act. The Secretary is authorized to institute civil actions to enforce the provisions of the Act with attorneys appointed by him except for proceedings in the Supreme Court.

The Secretary is authorized to prescribe rules and regulations to govern standards and qualifications and actuaries performing services under the Act, and to certify actuaries as qualified for purposes of the Act. He is authorized to establish and maintain reasonable limitations on actuarial assumptions. The Secretary is directed to conduct studies on the effects of and the subjects covered in the Act, including the sufficiency of vesting provisions for high-mobility employees.

Before promulgating regulations, the Secretary is directed to consult with appropriate government agencies to avoid duplication or conflicts. He may also make arrangements with federal or state agency facilities for the purposes of enforcing the Act on a reimbursable basis.

OFFICE OF ADMINISTRATION

Section 108.-This section establishes within the Department of Labor an Office of Pension and Welfare Plan Administration headed by an Assistant Secretary of Labor appointed by the President with Senate advice and consent. Under supervision of the Secretary of Labor, he shall exercise that power and authority delegated to him by the Secretary for the purpose of administration and enforcement of the Act.

The functions, records and personnel of the Office of Labor Management Services Administration necessary for the administration of the Welfare and Pension Plans Disclosure Act, are transferred to the new Office of Pension and Welfare Plan Administration.

COVERAGE AND EXEMPTIONS

Section 104.-This section requires that, unless exempt, the provisions of the Act apply to any pension or profit-sharing-retirement plan established or maintained by an employer, a union, or both together in any industry or activity affecting interstate commerce. The fiduciary and disclosure provisions of the Act apply to all employee benefit plans unless exempt.

The Act does not apply to plans established by federal or state governments, plans, established by religious organizations, plans for the self-employed, plans covering not more than 25 participants, plans established outside the territorial jurisdiction of the United States for citizens of other countries unless they maintain funds in the United States, certain plans for key executives, and plans for members of labor organizations which are financed exclusively from the members' dues.

The funding and plan termination insurance requirements are not applicable to profit-sharing or money purchase plans, because of the nature of these plans.

REGISTRATION OF PLANS

Section 105.-This section requires administrators of pension and profit-sharing retirement plans to file applications with the Secretary of Labor for registration of such plans. The filing by the administrator shall be within six months after a plan has been established, or, if a plan was in effect at the time of enactment of this Act, such filing shall be within six months after the effective date of regulations promulgated by the Secretary of Labor, but in no event later than 12 months.

Upon finding by the Secretary that a plan is qualified, it shall be issued a certificate of registration by the Secretary. The criterion for the grant of such certificate shall be compliance with the requirements of the Act.

Where a plan is deficient, the administrator or other appropriate person shall be given an opportunity to remove the deficiency, and in the event that such deficiency is not removed, the Secretary may order cancellation or denial of such certificate.

REPORTS ON REGISTERED PLANS

Section 106.-This section provides that the Secretary may, by regulation, provide for the filing of one single report which will satisfy the reporting requirements of this Act and the WPPDA.

AMENDMENTS OF REGISTERED PLANS

Section 107.-This section provides that amendments to pension or profit-sharing-retirement plans shall be registered with the Secretary; that copies of such amendments shall be filed with the Secretary; and that the Secretary may require additional information in order that he may determine the initial unfunded liability which has been created by the amendment and to further determine special payments which may be required to remove such liability.