Witnesses To House Group
March 4, 2002
Witnesses testifying before a House subcommittee that is working to reform 401(k) rules dismissed the idea of limiting the amount of company stock that employees can own in their pension funds, according to a statement released last week by the Committee on Education and the Workforce.
Two such bills have been proposed. Representatives Peter Deutsch (D-Fla.) and Gene Green (D-Texas) have introduced a bill in the House that would limit the amount of employer-issued stock that workers can hold in their retirement plans to no more than 10%. And Senators Barbara Boxer (D-Calif.) and Jon Corzine (D-N.J.) propose a measure that would cap such retirement plan holdings at 20%.
The proposals have been put forward in the wake of Enron's bankruptcy filing, which deflated the retirement plans of many of the company's employees.
Six witnesses who work in the 401(k) business testified before the Education and the Workforce Subcommittee on Employer-Employee Relations last week. Many said such limitations would do more harm than good, the statement said.
"Imposing limits on the amount of employer stock in an employee's account is a major government intervention into private financial decisions by workers," said John Warner, a spokesman for the Profit Sharing/401(k) Council of America. "Government should not inject itself in this process. A cap could result in forcing an employee to sell company stock merely because it has risen in value, forcing a worker to invest in less-attractive options."
Other testimony came from the massive union AFL-CIO and the American Federation of State, County and Municipal Employees, which also didn't support such limits on portfolios.
Boxer's Los Angeles office had no comment on the criticism and officials in her Washington D.C. office couldn't be reached.