Home > Library > Stable Times > Volume 7, Issue 2  

House Debates Advice Legislation, Bill Passes & Waits for Senate Action

The U.S. House of Representatives once again passed advice legislation, The Pension Security Act (H.R. 1000) on May 14. Unlike its previous passage, the debate was a little more contentious and the margin of victory was greater. The bill passed by a vote of 271 to 157 compared to the previous year's vote of 255 to 163.

Congressman John Boehner (R-OH), a co-author of the bill explains, "Despite all the sound and fury orchestrated on the floor today by the House Democratic leadership, the President's pension reform proposal was again approved with significant bipartisan support. The bill has bipartisan support because it is about the pension security of American workers…Expanding worker access to quality investment advice is the most important pension protection of all."

"I want to help Americans who are working hard and saving for their retirement. They deserve more information about what is happening to their retirement plans. They deserve help in making financial decisions that can often be overwhelming. They deserve the right to diversify their money in their retirement accounts," says Congressman Sam Johnson (R-TX) who co-authored the bill with Boehner. "The Pension Security Act lets hard working Americans do all of this," explains Johnson.

However, Congressman George Miller (D-CA), the Senior Democrat on the Committee on Education and Workforce that has jurisdiction over the bill and organizer of the Democratic protest, characterized the Republican-sponsored bill as no more than, "See no evil, hear no evil and do no good."

Miller charged that, "Once again, in the shadow of the failures of Enron and Global Crossing, with the recent disclosures about Delta and American Airlines, the Republicans bring forward a pension bill that does nothing to help employees, but includes lucrative benefits for corporate interests. In every respect, their bill fails to provide a solution to the serious pension equities and risks faced by American employees."

Even New York Democrat Attorney General Eliot Spitzer entered the fray on the Pension Security Act by releasing a statement that said, "This legislation opens a loophole that will sharply erode, rather than enhance, safeguards for employees seeking independent and untainted advice about how to invest their retirement savings. Clearly, this bill puts the interests of Wall Street firms far ahead of the interests of millions of working Americans who simply want a fair shake in making sound decisions about their retirement investments."

Briefly, the Pension Security Act as passed by the House:

• Gives employees the opportunity to diversify matches made in company stock within three years after receiving the match.
• Permits investment management firms to also provide investment advice as long as certain fiduciary safeguards and disclosures are met to ensure that the advice provided to an employee is solely in his or her best interest. Additionally, the bill creates a tax incentive to help employees pay for the cost of retirement planning services.
• Clarifies that employers have a fiduciary responsibility for workers' savings during blackout periods.
• Requires companies to give quarterly benefit statements that include account information such as the value of the assets, rights to diversify, and the importance of maintaining a diversified portfolio.
• Simplifies defined benefit pension plan sponsorship for small businesses.

Two provisions of the original Pension Security Act were enacted as part of the Sarbanes-Oxley corporate accountability law. These provisions bar company insiders from selling their stock during a blackout period where workers cannot make changes to their 401(k) accounts, and require that all workers receive 30 days advance notice of any blackout period.

The House-passed legislation has been referred to the Senate for consideration. Despite the support of the Bush Administration, Senate action is unsure. To date, the Senate has yet to introduce companion legislation.

Read Next: 529 Plans and Stable Value