AFP Takes a Stand on Pensions, Accounting

April 18, 2002 ( - In the wake of the Enron fiasco, a financial industry services group has adopted a set of positions on pension and accounting reform proposals.

The Association for Financial Professionals (AFP) has largely aligned itself with the Pension Security Advice Act, (H.R. 3762) authored by Representatives John Boehner (R – Ohio) and Sam Johnson (R-Texas), which was passed by the House earlier this month.  Specifically, the AFP has taken a position supporting:

  • allowing retirement plan participants to diversify company stock received as a match after three years – the House version provides some additional employer flexibility
  • requiring a 30 day notice prior to any “blackout” period
  • limiting the ability of senior executives to sell company stock outside the plan during “blackout periods”
  • removing barriers to investment advice to participants

Different ‘Takes’
There is one position supported by the AFP that is not in the House version – prohibiting employer stock as an investment option, if the employer’s matching contributions are required to be made in company stock and the 401(k) plan is the primary retirement savings vehicle. That provision is currently contained in a bill sponsored by Senator Edward Kennedy (D-Massachusetts).

However, the AFP disavowed any interest in either limiting the amount of company stock investment by participants or tax deductions for those contributions. The AFP also said that joint trusteeship of these programs is unnecessary. The latter provision is currently in Senator Kennedy’s bill.

Auditory Noises

The AFP also took positions in favor of:

  • forming a new independent oversight board to regulate the auditing profession,
  • strengthening the independence and reach of corporate audit committees, and
  • precluding external auditors from performing certain non-audit services for audit clients

Although the AFP did not embrace the need to mandate regular auditor ‘rotations’, citing cost concerns and the ability of tightened oversight requirements to diminish the need for such changes.

The AFP in Bethesda, Maryland, supports more than 14,000 individual members from a range of industries throughout all stages of their careers in various aspects of treasury and financial management.