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September 10, 2002
Congress Turning Away From Retirement Protection
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According to the Washington Post, the legislation that is taking shape would do the following:
- Allow workers with company stock in their retirement accounts to sell it after three years of employment.
- Encourage companies to provide more investment advice.
- Prevent corporate executives from selling company stock in secret or in periods when employees are forbidden to do so.
Those steps fall far short of original calls to have 401(k) plans regulated like traditional pension plans, by requiring diversification of investments.
Consumer-rights groups, unions, and retiree advocates were confident that the human wreckage of this year's huge corporate bankruptcies would force real change to the rules. Now they're outraged, the Post reports.
"It is appalling, and I think the American people would be appalled if they knew," said Karen Friedman, director of policy strategies at the Pension Rights Center, an advocacy group that supports such mandates. "It's time for Congress to have some backbone."
Congress and President Bush vowed this year to secure private retirement accounts, with Bush offering three broad principles: give employees the right to sell company-issued stock, provide more investor education, and make sure employees have the same rights as corporate executives.
But Sens. Jon S. Corzine, D-N.J., and Barbara Boxer, D-Calif., went further, moving to cap retirement-fund holdings of an employee's company stock at 20 percent. That brought strenuous objections from corporate lobbyists, Republican leaders, and some Democrats.
Sen. Edward M. Kennedy, D-Mass., responded with a considerably weaker proposal: A company could either match 401(k) contributions with company stock, or it could allow employees to invest in company stock on their own, but not both. The Post says Kennedy's proposal would have effectively capped company stock at 50 to 60 percent of a retirement account.
Yet even that idea brought heavy opposition, including from Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. Business lobbyists said it would raise costs enough to convince some employers to reduce company contributions or withdraw their 401(k) plans altogether.
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