WASHINGTON – The House voted Thursday to add more worker protections to the nation's pension laws in response to the Enron collapse that caused thousands of employees to lose their retirement savings.
The bill, passed on a 255-163 vote, is modeled after President Bush's pension overhaul plan.
It would let workers get investment advice from the companies managing their retirement plans, allow workers to sell employer-matched stock in their 401(k) plans after three years and require that notice be given to workers before changes are made to their accounts.
Enron workers "are the victims of outdated federal pension laws," said Rep. John Boehner, R-Ohio, one of the bill's authors.
His bill won White House support. "Employees need more information about their pension plans and more control over them," Bush said in a statement. "The reforms will give employees better access to investment advice, additional notice of blackouts, and increased ability to diversify."
About 42 million Americans hold 401(k) accounts, with $2 trillion in assets.
Democrats have a more sweeping proposal making its way through the Senate that would limit company stock in 401(k) plans. The Bush administration is not supporting that plan.
"The administration will oppose legislation that discourages employers from sponsoring and making contributions to retirement plans for American workers and their families," the White House said in a statement Thursday.
Democrats objected to the House bill because they said it did not provide enough protections for workers caught in another Enron-type bankruptcy.
The top Democrat on the tax-writing Ways and Means Committee, Rep. Charles Rangel of New York, said the reason for Republican support was clear: "It's corporate contributions, stupid."
Democrats knew they could not defeat the measure in the Republican-controlled House. With an eye toward November elections, they attempted to tie the debate to corporate greed and Enron.
"This is a very simple issue. The question is, `Which side are you on?"' asked Democratic Rep. Martin Frost of Texas. "They're with the top executives. We're with the employees."
House Speaker Dennis Hastert took issue with the Democrats' strategy. "What you see is, from my point of view, a party that is desperate for a message," said Hastert, R-Ill. "They will try to take Enron and ... politicize this whole process."
The bill would ban company executives from selling their employer stock during blackout periods when workers cannot make changes to their 401(k) accounts. Enron executives sold their company stock while workers were locked out of their 401(k) accounts as the stock price plummeted.
It also would require 30 days notice to workers before they are locked out of their accounts for administrative changes.
The bill would let employers decide if workers can sell their employer-matched company stock after holding it for three years or after three years of service. Enron barred workers from selling employer-matched company stock in their 401(k) plans until age 50.
The legislation makes "modest but appropriate changes" without discouraging employers from offering 401(k)s and other voluntary retirement plans in which thousands of workers have earned wealth, said Ways and Means Committee Chairman Bill Thomas, R-Calif.
Democrats failed to get included measures to allow workers to serve on employer pension boards and to require corporate executives to notify workers when they sell company stock.
They also strongly opposed a provision allowing workers to receive investment advice from the same companies that manage their 401(k) retirement accounts, saying that advice would be tainted by financial conflicts of interest.
"It's not the silver bullet that's going to solve every problem," said Rep. Rob Portman, R-Ohio, a sponsor of one of the bills combined in the final legislation. "But it's a substantial change in current law and it does address the Enron issue."
But Portman lost his Democratic co-sponsor, Rep. Benjamin Cardin, D-Md., when Republican leaders included in the final plan the advice provision from investment firms.
The Portman-Cardin plan would have let workers pay for their own investment advice with pretax dollars deducted from their paychecks. That measure also was included in the final bill.
Democrats cited Merrill Lynch & Co. Inc. as an example of problems that could occur if investment firms were allowed to advise workers. The firm was ordered Monday to reform its business practices after being accused of giving advice that hurt clients but enriched the company.
Republicans said the legislation provides much-needed investment advice to workers and requires disclosure of any potential conflicts.