Senate Democrats have unveiled a compromise pension bill that would give workers more control over their 401(k) plans, though it does not include a controversial proposal to directly cap the amount of corporate stock they can own, according to the Boston Globe.
The cap had been advocated by Democratic senators Jon Corzine of New Jersey and Barbara Boxer of California. They wanted to limit workers to holding no more than 20 percent of their 401(k) plans in any one stock.
But they ultimately decided to back off their proposal - which was strongly opposed by the White House - and endorse the new bill, pulled together by Democratic Senator Edward M. Kennedy, the Globe reports.
The legislation, a direct response to the collapse of energy trading giant Enron, would:
- place indirect limits on stock ownership.
- let workers take corporate officials and outside accounting firms to court for giving misleading information or withholding information about company stock.
- require disclosure of sales of company stock by executives.
"The main reason why Enron workers lost more than a billion dollars is that they were pressured by Enron executives to put all their 401(k) money in company stock. To truly protect workers' retirement savings, we must end this unfair employer pressure," Kennedy said.
Kennedy, chairman of the Health, Education, Labor and Pensions Committee, plans to move the bill through his panel March 13.
The legislation is likely to be hotly debated, according to the Globe. The White House plan that has many similarities but does not go as far as the Kennedy proposal.
The Democratic plan, like President Bush's proposal, would let employees sell matching stock after three years. It also would, like Bush's, require companies to give workers 30-day notice before a blackout period, in which they cannot sell stock in their 401(k) plans. But it goes farther in a number of areas.
Kennedy's bill would let companies contribute corporate stock to 401(k) plans or offer their stock as an investment option to plan participants - but no longer do both. Those limits would not apply if a company also offered a substantive, traditional pension plan.
The White House and many Republicans strongly oppose limits on stock, saying that workers should have the freedom to manage their own money.
The bill will require companies to take out insurance to cover major losses in pension plans. It includes a section to give workers greater access to investment advice. But it does not include a House-passed bill, endorsed by the White House, to let companies offer advice even if it posed a conflict of interest - so long as any conflict was disclosed.
