A Publication of WTVP

The fiasco with Enron has put a national focus on protecting the retirement savings of rank-and-file workers.

Locally, Peorians have seen this happen on a smaller yet just as devastating scale with the disintegration of Foster & Gallagher last Summer.

Only months before Enron’s bankruptcy filing in December the company was widely viewed as an innovative, well-managed business. It was one of the hottest stocks in the country. In just a few months last Fall, the collapse of what seemed like a sure bet shed light on serious problems with securities regulation in the United States. Full and accurate disclosure of all financial information is the basis of securities in this country. What is so obvious now is full disclosure was not taking place with Enron.

Since the new session of Congress began in January, the main focus of our legislative chambers is the war on terrorism. Enron and retirement security, though, has been the issue second with all members. President Bush made a forceful call in his State of the Union address for Congress to act quickly to protect the pensions of American workers. Ten Congressional committees looked at the Enron failure in one form or another.

The House acted quickly through passage of the Pension Security Act last month. This bipartisan legislation creates new safeguards and options to help workers preserve their hard-earned retirement savings.

The Pension Security Act gives employees new freedom to sell company stock and diversify into other investment options. The bill gives employers the option of allowing workers to sell their company stock three years after receiving it in their 401(k) plan or allowing workers to sell their company stock after three years of service with the employer. In addition, it prohibits companies from forcing employees to invest any of their own retirement savings contributions in the stock of the employer.

The bill prohibits company insiders from selling company stock during blackout periods when workers are unable to change investments in their plans and require companies to give 30 days’ notice before a blackout period begins. The legislation also prohibits companies from forcing employees to invest any of their retirement savings in the stock of the company.

Also contained in this legislation is the Retirement Security Advice Act. This bill previously passed the House November 15, 2001, and encourages employers to provide their workers with access to high quality investment advice. This language provides comprehensive disclosure requirements and new fiduciary protections to ensure workers receive advice solely in their best interest and make informed investment decisions.

Workers will also be able to use pre-tax dollars deducted from their salaries to purchase retirement planning services, including investment advice, from a third party. No legislation we pass can right the wrongs committed against the employees of Foster & Gallagher or Enron, but it’s my hope this legislation will go a long way toward preventing a similar debacle in the future. IBI