News from the
Committee on Education and the Workforce
John Boehner, Chairman
FOR IMMEDIATE RELEASE
September 5, 2002		 CONTACTS: Dave Schnittger or
Kevin Smith
Telephone: (202) 225-4527

New Report Warns Senate Democrat Pension Reform Plan Too Weak to Protect American Workers

     WASHINGTON, D.C. -- House Education & the Workforce Committee Chairman John Boehner (R-OH) released a new report (attached) today highlighting how Senate Democrats have seriously weakened prospects for enacting real pension protections by stripping a bipartisan investment advice provision out of their pension reform bill. The House-passed Pension Security Act, in contrast, would fix outdated federal pension law and allow employers to provide their workers with high-quality, professional investment advice.

     “This report clearly shows that the bipartisan House approach will help solve the widening advice gap that leaves so many American workers without quality investment advice,” said Boehner. “While the House addressed this problem in a bipartisan fashion, the proposed Senate Democrat proposal would leave millions of rank-and-file workers in the same condition they’re in now: with no advice at all.”

     “Inadequate worker access to investment advice contributed significantly to retirement security losses by employees at Enron and WorldCom,” Boehner continued. “This report shows why the flawed Senate approach will not encourage employers to offer advice benefits, and as a result workers will be left to fend for themselves with no advice at all.”

     Some of the report’s key findings include:
  • Outdated federal pension laws - enacted before the advent of the 401(k) - deny U.S. employees access to quality investment advice. A chronic “advice gap” has emerged between senior corporate insiders and rank-and-file workers. Senior company executives can afford to pay for quality investment advice, while few working families can afford such a luxury.
  • The bipartisan House-passed pension reform bill, supported by President Bush, would help to close the investment advice gap for millions of U.S. workers by providing new access to quality investment advice, along with strict and comprehensive protections for workers.
  • The Boehner advice bill would encourage employers to offer high quality, professional investment advice. The proposed Senate Democrat plan would not encourage employers to offer advice benefits because it would significantly increase the cost and administrative burden required of employers to provide these services.
  • As a result, the proposed Senate Democrat pension reform bill would leave most American workers in virtually the same condition they’re in now - with no access to high quality, professional investment advice about their pensions and 401(k) accounts.

     A pension reform package sketched out by Senate Democrat leaders shortly before the August break would mirror bipartisan pension protection legislation passed by the House in most respects - but with at least one potentially fatal flaw. The proposed Senate Democrat bill would gut a provision, passed twice by the House this year with significant bipartisan support and endorsed by President Bush, that would enable millions of rank-and-file workers to gain access to professional investment advice that could have helped workers at Enron and WorldCom protect their 401(k) accounts. The bipartisan provision would be dropped by Senate Democrats and replaced with a far weaker provision that will not improve worker access to investment advice.

     The House passed the advice bill with significant bipartisan support on April 11 as part of the Pension Security Act (H.R. 3762) with the support of 46 Democrats. The House also passed it as a stand-alone measure (H.R. 2269 - the Retirement Security Advice Act) by a vote of 280-144, with the support of 64 Democrats, on November 15, 2001. The Retirement Security Advice Act encourages employers to provide their workers with access to professional investment advice as long as advisers meet strict disclosure requirements and adhere to new fiduciary safeguards that ensure workers receive advice solely in their best interests.

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