PENSION PROTECTION
The recent financial collapse of Texas-based Enron has unleashed a flood of concerns over pension and retirement plans. Many Americans have invested their hard-earned dollars in their own 401(k) year after year, slowly building a nest egg for the future. That is exactly what thousands of Enron employees did, and now their futures are uncertain at best.
One former Enron employee wrote to me, "I have been left in financial ruin by the fall of Enron. My life's savings is gone and I have been laid off with a paltry severance worth less than my unused vacation time." We must ensure that this does not happen again. Hard-working people across our state and nation should not have to watch helplessly as their life's savings disappear.
Texas has suffered greatly from the collapse of Enron. Not only did many of our fellow Texans lose their jobs and retirement funds, but state pension funds were affected as well. There were $36 million in losses to the Teacher Retirement System of Texas and $24 million in losses to the Employee Retirement System of Texas. Hundreds of other plans across the state and nation also lost millions of dollars.
Enron employees were left vulnerable because they lacked access to important information about their pension investments. Congress should act to protect American workers. I introduced the Pension Plan Protection Act in the Senate in early February. My legislation addresses some key concerns regarding our nation's pension systems and incorporates most of President Bush's recommendations regarding reform. It focuses on empowering employees with alternatives and information, improving accounting standards, and insisting on corporate accountability.
The bill will require employers to provide detailed, quarterly statements about the employee's account, as well as notification to plan participants when any one investment totals more than 25 percent of the employee's portfolio. This will empower workers by giving them the information they need to make decisions about their investment diversification. Another provision will encourage employers to provide third-party investment advice to employees regarding their portfolios. The bill will also prohibit accounting firms from providing consulting services to their audit clients, and it will preclude company executives from selling stock during periods when workers are unable to do the same.
Although Enron investigations are ongoing, we clearly need to move forward now to help prevent this kind of catastrophe from happening to other American workers. But as we move swiftly to ensure that these safeguards are enacted, we must also act with thoughtfulness and precision to avoid unintended consequences. Our actions must not discourage companies from offering participant-directed retirement plans. More than 42 million Americans, representing $1.8 trillion in assets, currently participate in employer-provided plans and we do not want to erode the system that has successfully provided a secure future for so many.
These issues have become a high priority for Congress this year. The Pension Plan Protection Act endeavors to protect the retirement savings of hard-working Americans by reforming and strengthening our pension system.
February 13, 2002