The Pension Security Act (H.R. 3762):
Helping Workers Preserve and Enhance Their Retirement Savings

October 10, 2002

Thousands of workers lost their retirement savings in recent collapses at Enron and WorldCom, and President Bush immediately called for congressional action to shield American workers against losing their life’s savings in similar corporate meltdowns. The House passed a comprehensive pension reform bill with significant bipartisan support six months ago, but the measure has been languishing in the Democrat-controlled Senate ever since, despite a pledge by Senate Majority Leader Tom Daschle in February that the Senate would move "as soon as possible" on pension reform.

Outdated federal pension laws – and Democrat inaction in the Senate – have cost U.S. families billions of dollars in their retirement accounts. Arcane pension laws have left workers vulnerable to corporate meltdowns, limiting their freedom to diversify 401(k) investments and denying them access to badly-needed financial advice. Working families have collectively lost billions of dollars in their 401(k) and pension accounts, hampered by outdated laws that President Bush has demanded Congress reform. The GOP-led House has passed bipartisan pension reform legislation. The Democrat-controlled Senate has not acted on it, or any other comprehensive pension reform bill.

House Acted Quickly and Decisively to Protect Worker Pensions

House Republicans took action IMMEDIATELY following the Enron collapse to reform pension laws and protect working families. On April 11, 2002, the House passed the Pension Security Act (H.R. 3762, authored by Rep. John Boehner, R-OH) with significant bipartisan support. President Bush supports the legislation. Even after the collapse of WorldCom this summer, the Democrat-controlled Senate REFUSED TO ACT on comprehensive pension reform.

A host of protections in the House-passed Pension Security Act are stalled in the Senate. These provisions would:

· Give workers the freedom to diversify their 401(k) accounts and retirement savings.
· Bar employers from forcing workers to invest any of their own retirement savings contributions in company stock.
· Allow workers to receive professional investment advice about their 401(k)s and retirement investments – at employer expense, not the worker’s.
· Allow workers who purchase professional investment advice to qualify for a payroll tax deduction, under a provision authored by Rep. Rob Portman (R-OH).
· Allow workers to hold senior company insiders accountable when their pension savings are abused.
· Give workers better information about their pension plans and rights to diversify.

President Bush recently signed two Pension Security Act provisions into law as part of the Sarbanes-Oxley corporate accountability law. Under these reforms, workers can no longer be barred from changing investments in their 401(k) plans at the same time senior corporate insiders are allowed to sell their own company stock. In addition, workers must be given fair and adequate notice (30 days in advance) of upcoming "blackout" or "lockdown" periods involving their 401(k) savings, during which they are barred from changing investments. Workers at Enron were notified just 10 days in advance, witnesses told Congress.

Workers Continue to Wait on Senate Democrats to Act on Worker Pension Protections

Unfortunately, despite repeated promises, Senate Democrats have not made pension reform a priority. It has been six months since the House acted on employee pension protections but the Senate has yet to consider any bill to enhance pension security.

Since April, House Republican pension reform leaders have twice sent letters to Senator Daschle asking that he schedule a vote on comprehensive pension protection legislation, but the Senate Democrat leader has not responded to either request -- despite a pledge he made back in February that the Senate would consider pension reforms "as soon as possible." Press reports indicate that Senate Democrats continue to back away from their promises to pass a pension reform bill this year.

How much longer will Senate Democrats make American workers wait for pension protections? How many more business scandals have to happen before Democrats act? Senate Democrat inaction on bipartisan pension protections is leaving the retirement security of American workers vulnerable.

Six months ago, with the support of 46 House Democrats, the Republican-led House passed legislation to protect worker pensions from future Enron-style corporate meltdowns. But instead of gathering President Bush’s signature, the legislation has been gathering dust. Senate Democrat inaction has denied President Bush the chance to sign comprehensive, bipartisan pension reforms into law.

For further information about House GOP efforts to assist American workers and their families, please visit the House Education and the Workforce Committee website at http://edworkforce.house.gov/.