NU Online News Service, May 15, 2003, 5:32 p.m. EDT – The U.S. House voted 271 to 157 Wednesday to pass H.R. 1000, The Pension Security Act.
The bill, which was introduced by Rep. John Boehner, R-Hamilton, Ohio, would make changes in the laws governing 401(k) plans to protect workers from the kinds of problems that wiped out the retirement savings of many workers at Enron Corp., Houston.
The bill, which attracted 49 votes from Democrats as well as 222 votes from Republicans, would set disclosure requirements and other requirements for 401(k) plan sponsors that want to avoid exposing themselves to lawsuits as a result of participant investment losses occurring during plan blackout periods.
The bill would also give participants that hold publicly traded employer stock the ability to sell the stock, exclude the cost of financial planning obtained through employers from taxable income, and simplify tax filing requirements for some very small retirement plans.
The provision that has been getting the most attention from financial services companies would let 401(k) providers give workers specific investment advice.
The American Council of Life Insurers, Washington, released a statement Wednesday that singles out the investor advice provision for praise.
“The Enron debacle illustrated all too clearly the need for plan participants to diversify their retirement savings investments,” ACLI President Frank Keating says in the statement. “Diversification is a message that must be stressed to all plan participants, and the investment advice legislation would help get that done.”
The Senate Finance Committee has jurisdiction over pension-reform legislation in the Senate.
Sen. Charles Grassley, R-Iowa, the chairman of the committee, introduced a reform bill of his own in February 2002 that made a point of leaving out the pension advice issue.
“Investment advice is controversial,” Grassley said in a statement about the bill. “There’s a lot of disagreement over how to get advice to the workers who need help.”
Critics of efforts to lift current investment advice restrictions argue that they would give unscrupulous companies and advisors a chance to profit at workers’ expense.
Supporters of the efforts say the current restrictions have backfired, by discouraging employers from offering 401(k) participants desperately needed help.
“Plan participants are challenged to make sense of stock and bond markets that puzzle even the most learned economist,” Keating says. “It is only fair that Congress help plan participants by making investment advice more accessible.”
Supporters of the efforts to lift the investment advice restrictions are hoping the climate for passage has changed now that the Republicans have regained control of the Senate.
Links to the text of H.R. 1000 and other information about it are posted at http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.01000