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Pension Security Act Passes House Committee

The Education & the Workforce Committee of the House passed the Pension Security Act (HR 1000) that strengthens and protects employer-provided defined contribution plans in a 29 to 19 vote. The bill:

• Grants defined contribution investors' new freedoms to diversify their retirement savings within three years;
• Expands access to investment advice;
• Holds company insiders accountable for abuses during blackout periods; and
• Requires quarterly benefit statements from defined contribution plans.

The comprehensive pension protection bill was supported by President Bush. It was authored by Education & the Workforce Committee Chairman John Boehner (R-OH) and Employer-Employee Relations Subcommittee Chairman Sam Johnson (R-TX) and co-sponsored by Reps. Baron Hill (D-IN) and Eleanor Holmes Norton (D-DC).

The Committee fought off several Democratic amendments to approve the bill. The defeated amendments included:

• Requiring companies to give employees a choice between the benefits of a cash balance plan or the previous pension plan.
• Requiring joint trusteeship of defined contribution plans.
• Requiring employees to be able to diversify employer stock holdings after one year rather than HR1000's three years.
• Giving employers an exemption from the Employee Retirement Income Security Act's (ERISA) fiduciary liability if they offered independent advice to 401(k) participants.
• Notifying employees of executive stock sales.
• Bringing nonqualified deferred compensation plans under ERISA, which would make them vulnerable to the claims of creditors.

"American workers deserve the security of knowing their savings will be there for them when they retire," explains Chairman Boehner. "This bill could have made a real difference for the workers at Enron and WorldCom. Current pension laws are simply outdated, and we have a responsibility to change that," concludes Boehner.

"Expanding worker access to quality investment advice is the most important pension protection of all," stresses Boehner. "This bill is a common sense way to encourage employers to provide investment advice as a benefit to their workers, and it includes strong protections to ensure that they receive advice solely in their best interests."

"Too many Americans have watched their retirement savings plummet. Today's action sends a strong signal that Congress wants to do all we can to help Americans reach their golden years financially secure," adds Employer-Employee Relations Subcommittee Sam Johnson.

The legislation is likely to pass in the House. Last April similar legislation passed in the House by a 255 to 163 vote. A companion bill is likely to be introduced this spring in the Senate.

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