Even as the White House and the U.S. Congress offer competing proposals to overhaul the regulation of corporate retirement plans following the Enron Corp. bankruptcy, business groups are sounding an alarm that some of the proposals go too far.

"We are fearful we're heading down a road where you put your money in and three months later you can take it out," said J. Michael Keeling, president of the ESOP Association, an advocate for employee ownership.

An ESOP (employee stock ownership plan) is a defined contribution retirement plan in which assets are invested primarily or exclusively in the securities of the sponsoring employer. Examples of better-known ESOPs are the airline UAL Corp. and consumer products giant Procter & Gamble Co. .

But there are also hundreds of small companies that do not have publicly traded shares, but do use the ESOP structure to provide for employee ownership.

David Wray, president of the Profit Sharing/401(k) Council of America, worries that some of the changes being discussed could place small companies in dire straits. If required to allow employees to diversify, these small ESOPs would need bank loans or financing from venture capitalists to fill the void.

"Some of these little companies will go out of business if you do this," he said in an interview Friday.

Wray also frets about one of the proposals that President Bush aired Friday, a requirement for quarterly information. For some small companies this too would be a burden, he said.

Bush also proposed that workers be allowed to sell company- contributed stock and diversify into other investment options after three years.

There are many other proposals originating with lawmakers, Wray noted. Some would require changes to the entire approach to defined contribution (DC) retirement plans even if there is no company stock involved.

There were about 327,000 retirement plans known as 401(k) plans at the end of 2000, covering 42.1 million participants at the end of 2000, according to consultants Cerulli Associates. Assets in the plans amounted to some $1.77 trillion.

Wray estimates there are about 14,000 plans that use company stock and that these cover some 10 million individuals. Companies using their own stock in retirement plans in various ways include telecommunications group Verizon Communications , media company Gannett Co. Inc. and pharmaceuticals maker Abbott Laboratories Inc.

"I think it (company stock) has a lot of intuitive appeal," says Kenneth Winslow, president of consultants Benefit Capital SouthWest Inc. "When people have a 'piece of the action' it influences their behavior."

Winslow's company specializes in ESOP formation and advice.

The underlying idea of company stock is to align the interests of workers and shareholders. Advocates such as Winslow say that where there is significant employee ownership, there is superior corporate performance. Winslow said you can see the results in increased productivity and higher sales.

Although no one is apologizing for what happened at Enron, Wray argues that a thorough investigation must be made before changes are made.

"Employee ownership did not cause that company to fail or to collapse," Keeling said. "We would be willing to discuss changes in the law that might be helpful in avoiding the extreme situation that you saw with Enron."

Wray is even concerned about proposals for eliminating "blackout" periods, widely criticized in the Enron case. Employees have said they were prohibited from selling their stock as it rapidly lost value. Executives, they said, were free to unload shares.

But Wray argued that companies must be free to change investment managers when plans produce poor returns. He said it is impossible to change the record-keeping without a short interval where transactions are prohibited.