The Senate Health, Education, Labor and Pensions Committee was scheduled to vote on chairman Ted Kennedy’s version of a pension protection bill. But the shutdown came before a vote could be taken on a bill that would limit employer stock in 401(k) plans.
House Committee OKs Boehner Bills
Separately, the House Education and Workforce Committee passed its own pension legislation, which is similar to, but not exactly like, a proposal put forth by the White House in February.
The Pension Security Act (H.R. 3762) passed the House committee by a vote of 28 to 19, as Democratic Representatives David Wu (D-Oregon) and Carolyn McCarthy (D-New York) joined with 26 Republican congressmen in supporting the measure.
The Pension Security Act includes the Retirement Security Advice Act (H.R. 2269), which encourages employers to make investment advice available to employees. In addition, the Pension Security Act would:
- bar senior company insiders from selling their own stock during ‘blackout’ periods
- clarify that employers have a fiduciary responsibility for the security of workers’ investments during blackouts
- offer a rolling 3-year diversification requirement for employer stock
- expand access to investment advice
- provide for a 30-day advance notice before blackout periods
- provide more information for participants on the importance of diversification
The three-year option would give employers the option of:
- allowing workers to sell their company stock three years after receiving it in their 401(k) plan
- or allowing workers to sell their company stock three years after commencing participation in the plan
- or three years of service
The Chairman’s Mark of the bill also contains additional clarifications regarding investment advice, including:
- A requirement that fiduciary advisers disclose the availability of third-party advice providers
- A requirement that the Labor Secretary draft model disclosure forms to help service providers comply with the disclosure requirements
- A requirement that investment advisers affiliated with banks must work in a trust department that is regularly examined by a state or federal agency.
Republicans tried to halt three Democrat-controlled committees: Judiciary; Governmental Affairs; and Health, Education, Labor and Pensions. Ironically, the Judiciary Committee, which last week voted down US Appeals Court nominee Charles Pickering, had just concluded Wednesday morning before the order to close down the committees was issued.
Kennedy’s bill would let employers contribute to their employees’ plans with matching company stock or let workers buy the stock as an investment option, but not both. Opponents say the measure would unfairly restrict employers, who would then stop making matching contributions, if not close down the plans altogether. Ranking Republican Judd Gregg (R-New Hampshire) said ‘What you essentially are going to see is the death of the 401(k),’ according to Reuters.