- The Washington Times - Friday, April 12, 2002

The House yesterday voted 255-163 for a pension-reform bill designed to stem abuses that surfaced in the Enron scandal and enable workers to diversify their retirement accounts.

The bill, which affects about 40 million workers with $1.8 trillion in 401(k) retirement plans, represents an initial victory for President Bush as it largely tracks the narrow reforms he recommended last month. The Democrat-led Senate is expected to approve a broader bill to overhaul the pension system later this year.

Mr. Bush hailed passage of the bill and said it adheres to the principle he laid out: "what is right for executives is also right for workers." The bill prohibits executives from selling company stock during temporary blackout periods when employees cannot, as Enron officers did.

The bill would require 30 days' notice to workers before they are locked out of their accounts for administrative changes. It also requires that notice be given to workers before changes are made to their accounts, and lets them sell employer-matched stock in their 401(k) plans after three years.

A few dozen conservative Democrats joined most House Republicans in overcoming Democratic objections that the plan falls short, primarily because it would not impose criminal penalties on employers who, like Enron, mislead workers about the prospects for their company stock.

Democrats complained that the bill would do little about situations such as that presented by Enron Chairman Kenneth L. Lay, who in the fall urged his employees to scoop up the company's stock at what he called "bargain" prices even as he sold many of his own shares.

"This bill is based on the premise of how can little Congress do and still go out with a straight face," said Rep. Lloyd Doggett, Texas Democrat. Comparing the bill to a Marx Brothers comedy, he said, "it does about as much as if we turned the job over to Groucho and Chico."

Democrats mocked Mr. Bush's claim that the bill treats executives and employees equally, noting a provision slipped in by Republicans that eases nondiscrimination rules that currently prevent many small businesses from creating retirement plans for their higher-income employees.

Nancy Pelosi, the House Democratic whip, called the Republican bill a "Trojan horse" because of the small-business provision.

"President Bush was right when he said what's good for the captain is good for the crew. The Republican plan is regressive," the California Democrat said.

"If America got any lesson from Enron," said Rep. George Miller, "they learned there are two systems: a system for the elite, the executive, and a system for everyone else." The California Democrat charged that the bill fails to rectify this injustice.

But Republicans stressed that the bill would prevent the biggest problem uncovered by Enron: the overconcentration of many employees' funds in their companies' stocks. Enron's employees had about 60 percent of their funds invested in the company's now worthless stock.

Many other Fortune 500 companies, including Coca-Cola and Dell Computers, have even higher concentrations, though Dell and a few others, prompted by the Enron scandal, recently have loosened restrictions that keep employees from diversifying.

The Enron overconcentration occurred because the energy giant, like most other companies that provide their 401(k) matching shares in company stock, required employees to hold those shares until they reached 55. On top of that, many employees decided to put all or most of their own contributions in the stock.

Enron also raised hackles by prohibiting employees from selling their shares as it was changing plan administrators during a critical two-week period in October when disclosures about its shaky finances came out and the stock was plummeting.

By the time the company declared bankruptcy on Dec. 2, thousands of employees were left with little or no retirement savings, though most of those workers are covered by the company's still-viable traditional plan.

"This bill would have made a real difference with Enron employees," said Rep. John A. Boehner, chairman of the House Education and the Workforce Committee and an author of the measure, noting that it enables employees to sell company stock within three years after an initial, five-year phase-in period.

"It gives them more freedom to diversify," the Ohio Republican said, while making competent investment advice available either through the employer or through tax-free accounts that workers can set up.

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