Dubbed the Protecting America’s Pensions Act of 2002, the bill goes further than Republican proposals introduced in the House of Representatives and Senate. Unlike the Republicans, Kennedy would, in principle, not allow companies to offer company stock in their investment choice line-up if the company also matches in company stock.
“The main reason why Enron workers lost more than a billion dollars is that they were pressured by Enron executives to put all their 401(k) money in company stock,” Kennedy said at the introduction of the bill. “The Administration’s pension proposals fail the test. It’s a placebo plan that would not have prevented Enron workers from losing everything. It does nothing to address the core issue of employer pressure.”
Kennedy’s bill would:
- allow companies to contribute corporate stock to 401(k) plans or offer their stock as an investment option to plan participants – but not both, unless the company also offered a “substantive defined benefit” plan
- clarify that it is a violation of ERISA to give misleading information or withhold material information on company stock
- allow the plan and participants to sue executives who mislead workers or “harm workers retirement security”
- force executives to disclose their sales of company stock
- require workers and participants to be represented on the retirement plan board of trustees
- require 401(k) plans to permit participants to vote the company stock held in their accounts
- let employees sell matching stock after three years
- require plans to offer education on the benefits of diversification and the risk of holding company stock
- require quarterly benefit statements, including the percentage held in company stock
- require companies to give workers 30 days notice before a blackout period
- require defined contribution plans to take out insurance to cover participants in case of violations of their rights, and direct the Pension Benefit Guaranty Corporation to study insuring defined contribution plans
- require the Department of Labor to establish an office of the Participant Advocate
The bill also gives workers greater access to investment advice, as outlined in the Bingaman-Collins Independent Investment Advice Act . It thus opposes the Retirement Security Advice Act (HR 2269), introduced by John Boehner (R-Ohio) and passed by the House last November with Democratic support. The Senate has not acted on the bill yet. The White House supports HR 2269.
Kennedy, chairman of the Senate Health, Education, Labor and Pensions Committee, plans to move the bill through his panel March 13, according to the Boston Globe.
Kennedy’s bill is expected to be the one Democrats in the House and Senate will rally around, pitting it against the Republican bills introduced by Boehner in the House and Tim Hutchinson (R-Arkansas) in the Senate. The Republican bills are modeled on Bush’s proposals.
In an early reaction, Boehner’s office expressed satisfaction over the fact that the Democrats have moved in the president’s direction. But Boehner took issue with Kennedy’s support of the Bingaman advice bill.
“While I’m pleased that Senate Democrats are ack