PRESERVING PENSIONS

April 2002
		What should the government do to protect workers' pension and 401(k) savings? What reforms will make the system safer? James Delaplane, of the American Benefits Council, and Mark Machiz, former Associated Solicitor at the Labor Department during the Clinton administration, answer your questions on improving retirement security.

Forum Introduction Why do current government regulations limit tax-deductible retirement investments to $3,000? Should our retirement portfolio be diversified, even if it has only Blue Chip stock? How do corporations use employee 401(k) plans to improve their bottom line? Do the Enron and Global Crossing bankruptcies illustrate a problem endemic in corporations and their misuse of retirement funds? How did Enron employees lose their 401(k) savings and what was the "blackout" period in which they could not sell any of their shares? Is that legal?     Online Special: Enron: After the Collapse Jan. 28, 2002: The repercussions of Enron's collapse in its hometown of Houston, Texas. Dec. 12, 2001: How Enron's bankruptcy is affecting its former employees.

President Bush recently unveiled his retirement security reforms, promising that American workers should feel confident investing in pension funds and 401(k) accounts. Congressional Democrats say the president's reforms are not enough to prevent another Enron or Global Crossing collapse from wiping out the retirement savings of thousands. Instead, many Democrats have favored imposing limits on how much can be invested in any one particular stock, especially its own stock, and enforcing diversification. During the booming stock market of the 1990s, retirement savings soared and more and more Americans began to invest in financial markets. But with the recent volatility in the stock market and the spectacular failures of Enron and Global Crossing, employees are looking to safeguard themselves from sudden, devastating pension losses. Lawmakers are now examining the private and government safety nets that exist to protect workers and their retirement savings. Questions asked in this forum include: Do the current regulations adequately protect retirement savings? If not, what sort of reforms need to be implemented to restore confidence in pension and 401(k) plans? In short, how secure do you feel investing for your retirement and what can the government do to bolster public confidence? Mark Machiz, partner with a Washington law firm and former Associated Solicitor at the Labor Department during the Clinton administration, and James Delaplane, vice president for retirement policy at the American Benefits Council, respond to your questions.