The Pension Security Advice Act, (H.R. 3762) authored by Reps. Boehner and Sam Johnson (R-Texas), passed by a vote of 255 – 163. Forty-six Democrats voted for the measure, including Reps. Earl Pomeroy (D-North Dakota), Baron Hill (D-Indiana) and Jane Harman (D-California). Representatives Carolyn McCarthy (D-New York) and David Wu (D-Oregon) also voted for the measure, as they did on the House Education and the Workforce Committee vote last month.
Among those opposed to the bill was Representative Ben Cardin (D-Maryland), who had teamed up with Representative Rob Portman (R-Ohio) earlier this year in authoring another post-Enron version of pension protection, the Employee Retirement Savings Bill of Rights (HR 3669). That bill passed the House Ways & Means Committee last month (see Employee Benefits Bill Passed by House Committee ). Some components of that bill were incorporated in the version passed by the House today (see House Will Take Up Pension Proposal Today ).
Cardin expressed concern that the bill presented in the House “lacked some key protections for employees if we want to avoid future Enrons.”
The approved bill included Representative Boehner’s version of investment advice that would allow investment management firms to offer advice for a fee, subject to certain disclosures. It also incorporates several changes agreed to by Pomeroy and Boehner during a colloquy on the House floor that strengthen disclosure requirements, as well as provisions that deal with participant notice uniformity and the qualification of bank investment advisors.
In addition to the advice provisions, the approved bill would:
- give employers the option of allowing workers to sell their company stock three years after receiving it in their 401(k) plan or after three years of service. The bill gives employers five years to meet the new diversification requirements for existing balances, while new monies must meet the diversification requirement within three years after the contribution is made
- bar companies from forcing employees to invest any of their own retirement savings contributions in company stock
- bar senior corporate executives from selling company stock during “blackout” periods when workers are unable to transfer within their 401(k) accounts
- require companies to give 30 days notice before a blackout period begins, and allow those notifications to be delivered electronically
- clarify that employers have a fiduciary obligation for workers’ savings during blackout periods, but outline situations where they may not be liable if they adhere to certain requirements
- require that employees get quarterly benefit statements, including account information as well as a reminder of their rights to diversify – and the importance of doing so. There is a provision that would allow the DOL to consider an alternative solution for smaller employers
Democrats led by Representative George Miller (D-California), the senior Democrat on the House Education and the Workforce Committee, and Representative Charles Rangel (D-New York) presented an alternative bill, the Employee Pension Freedom Act of 2002. However, that measure was rebuffed by a vote of 232-187, along with provisions that would have required:
- workers to serve on employer pension boards
- corporate executives to notify workers when they sell company stock
- employees to be able to diversify company stock investments after participating in the plan for three years