Bush promotes proposed 401(k) changes in radio address
Saturday, February 2nd 2002, 12:00 am
By: News On 6
WASHINGTON (AP) _ The changes the White House is proposing in 401(k) retirement plans would help prevent Enron-style disasters by giving workers more flexibility in deciding whether and when to sell company stock, President Bush said Saturday.
``Employees who have worked hard and saved all their lives should not have to risk losing everything if their company fails,'' Bush said in his weekly radio address. ``So my administration is proposing important safeguards to our pension laws to protect the retirement savings of workers.''
The president announced the plan Friday in a speech to Republican House and Senate members at the Greenbriar Resort in White Sulphur Springs, W.Va. He urged the lawmakers to take up the proposal immediately saying, ``This is a matter of fairness.''
At the core of the plan is a proposal to give workers 30 days' notice before their accounts could be frozen, thus allowing them to more easily sell stock in their company.
When Enron went bankrupt many employees said their retirement plans took a beating as Enron stock plummeted. They could not sell because their 401(k) accounts were frozen for parts of October and November while the energy company changed plan administrators.
In the radio address, Bush said his proposal would give workers greater freedom to diversify their retirement holdings.
``Many companies require their workers to hold shares long after their workers wish to sell, even when the company's shares are dramatically dropping in value,'' he said. He proposed workers be permitted to sell shares of stock contributed by the company when they have been a member of a 401(k) plan for at least three years.
Bush also said Congress needs to set a single standard for company executives and their employees.
``It is unfair for workers to be denied the ability to sell their stock when executives are free to sell their stock,'' he said.
Under current arrangements, companies can create ``blackout'' periods while they switch the management of their retirement funds from one investment firm to another, barring employees from selling stock during the switch.
``These blackouts usually happen because the company is looking for better service for its employees,'' Bush said. ``But when employees can't sell, executives shouldn't be able to sell, either,'' he said.
``So I am proposing that company executives be prohibited from selling any and all of their stock during these blackout periods.''
Bush also said employees should be given at least 10 days' notice that a blackout period is coming and 30 days' notice before any changes are made that prevent employees from selling their stock.
''... Company executives with power over 401(k)s will be held accountable for treating their workers' assets as carefully as they treat their own,'' the president said.
Traditional pension plans by law are prohibited from investing more than 10 percent of assets in employer stock. But Congress freed 401(k)-style plans from that regulation to encourage companies to offer them.