The Retirement Security Protection Act of 2002 seeks to protect employees’ retirement security with respect to their 401(k) retirement plans through improved disclosure requirements, new rules to promote plan diversification, and tougher accountability rules, according to the Senator.
The bill would require a 30-day notice of any blackout period – which could extend for just 10 business days.
Wellstone’s bill would require that participants in plans of publicly traded companies would be allowed to transfer from that stock after one year of participation. Wellstone’s bill acknowledges the unique challenges of plans with stock that is not publicly traded, leaving the holding period in those cases to a future recommendation of the Department of Labor, according to BNA.
Wellstone’s proposal would require that no more than 20% of an employee’s retirement balances be invested in company stock – by December 31, 2008. However, some exceptions would apply, such as employee stock ownership plans (ESOPs) of privately held companies or those that own more than 50% of the employer.
Wellstone’s proposal also aims to reward employers who have maintained traditional defined benefit plans – by including the assets in those accounts toward the overall 20% target. The bill would also expand fiduciary insurance requirements, as well as liability for breach of fiduciary duty
“The Enron debacle has exposed serious threats to the retirement security of millions of Americans,” Wellstone said. “Enron employees across the country saw their life savings vanish while some top executives locked in fortunes for retirement. But while Ken Lay strategically planned for his future, employees were encouraged to risk their own retirement security by loading up on soon-to-be worthless stock. Unfortunately, elements of the Enron circumstances are by no means unique. Similar disparities between rank-and-file employee and executive retirement security have become increasingly common in corporate America, and we must take steps now to address these fundamental inequities.”