KWAME HOLMAN: President Bush chose an audience of Congressional Republicans on their winter retreat to propose a set of reforms for private retirement accounts.
PRESIDENT GEORGE W. BUSH: If you're corporate America, you're responsible for making sure you reveal all your assets and liabilities to your shareholders and your employees. (Applause) So part of the ushering in the "responsibility era," not only from the individual basis but on the corporate basis, I have proposed some pension reform plan...
Pension reforms I would like to outline briefly for you today, and ask you to take them up as quickly as possible. Employers should be encouraged to make generous contributions to workers' 401(k) plans. It's a positive development when employers give stock to people who work for them. About 42 million workers own 401(k) accounts with a total of $2 trillion in assets. And that's a critical part of retirement security for workers all across America. But workers should also have the freedom to choose how to invest their retirement savings.
KWAME HOLMAN: The President never used the word Enron, but his reform plan widely is seen as being prompted by the giant energy trading firm's collapse last year. As the company headed for bankruptcy, the retirement savings of some 12,000 Enron employees were wiped out because their savings plans, known as 401(k)s, were heavily invested in Enron stock.
In all, Enron workers lost nearly $2 billion. The President's plan would require companies to provide employees with more frequent updates on their 401(k) plans; require 30 days notice prior to "blackout periods" during which workers are prevented from selling stock in their retirement funds; increase employer liability if the company's stock price falls during a blackout period. It also would forbid company executives from selling their stock during "blackout periods" if other workers are not allowed to do so, and give workers greater flexibility to diversify their 401(k)s after holding them for three years.
In Washington, the office of Senate Majority Leader Tom Daschle issued a statement criticizing the President's plan. It said: "Regrettably, the Administration's plan would do little, if anything, to restore public confidence in the private pension system. The Administration's proposal actually addresses only a small part of the problem - and does that inadequately."
Meanwhile, a spate of pension reform bills already is being worked on in Congress, even as hearings continue on what happened to the retirement savings of workers at Enron.