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February 28, 2002 at 07:00 PM
NU Online News Service, Feb. 28, 11:18 p.m. – A lobbyist from the American Society of Pension Actuaries, Arlington, Va., told the Senate Finance Committee Wednesday that some pension reform proposals inspired by the crisis at Enron Corp. could do more harm than good.
Banning or limiting “lockdown periods” when employers change retirement savings plans might sound reasonable, but it could scare employers away from trying to improve plans, R. Bradford Huss, a lawyer who represents ASPA, testified at a committee hearing.
The hearing dealt with ideas for preventing the problems that destroyed the 401(k) plan at Enron Corp., Houston, from destroying other 401(k) plans.
Employers impose lockdowns, or freezes on employee changes in 401(k) plan investment allocations, when they are changing plan sponsors or making other major changes.
“Lockdowns are often instituted when an employer is improving plan services for employees,” Huss testified, according to a written version of his remarks distributed before the hearing. “Right now, because of the public controversy surrounding Enron, employers are reluctant to improve plan services for employees for fear of potential liability if they impose a lockdown.”
But, for many practical reasons, administrators need to impose lockdowns during major plan transformations to make all the necessary changes, Huss said.
