NU Online News Service, Dec. 19, 2:13 p.m. ? Members of 401(k) plans sponsored by Enron Corp., Houston, pleaded for help Tuesday at a hearing of the U.S. Senate Commerce Subcommittee.
Enron, a large natural gas and energy trading company, recently filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
The company had contributed its stock to employee 401(k) accounts, and critics say it did little to discourage employees from buying more Enron stock with their own cash.
Charles Prestwood, an Enron retiree from Texas, told the senators he has lost $1.3 million in 401(k) plan assets.
Robert Vigil, a retiree from an Enron subsidiary in Oregon, said he and seven other employees and retirees have lost a total of $2 million in plan assets.
“To the best of my knowledge, no one ever suggested we diversify,” Vigil testified.
C-SPAN, Washington, aired the hearing on its C-SPAN 2 channel.
Damon Silvers, associate general counsel with the AFL-CIO, Washington, used the hearing to attack proposals to privatize part or all of the Social Security program.
The AFL-CIO says workers ought to be use a “three-legged” retirement planning strategy that includes Social Security, traditional defined benefit pension plans and private retirement savings.
“Only one of these legs should be directly at risk in the market,” Silvers testified.
Sen. Barbara Boxer, D-Calif., said she and Sen. Jon Corzine, D-N.J., are writing a bill that would discourage employers from making retirement plans too dependent on employer stock.
Employers can now deduct 100% of the value of stock contributions to retirement plans. The Boxer-Corzine bill would cut the deductibility of employer stock contributions to 50% of their value, Boxer said.