WASHINGTON, D.C. -- The Employer-Employee Relations Subcommittee today continued the full committee’s examination of the Enron collapse and its implications for worker retirement security. Chaired by Subcommittee Chairman Sam Johnson (R-TX), the hearing focused on the use and availability of defined contribution plans, such as 401(k)s and employee stock ownership plans (ESOPs), as tools for providing retirement benefits to American workers.

     “Our ultimate goal should be to encourage, not discourage, retirement savings,” said Johnson. “I hope that this Committee and this Congress keeps that in mind as we move ahead to ensure American employees and employers may enjoy a secure retirement.” He also called for a greater understanding of the “role retirement plans like 401(k)s play in ensuring retirement security for workers as well as providing a sense of worker ownership and pride in corporate America.”

     Rutgers University professor Dr. Douglas Kruse emphasized the importance of employee ownership of companies, saying that, “25 years of research shows that employee ownership often leads to higher-performing workplaces and better compensation” for employees. He also said that given that “economic and social benefits of employee ownership,” workers should have access to “good information to enhance workplace and financial decision-making, but should not substantially restrict employees’ ability to own company stock.”

     Some have suggested that Congress should place arbitrary caps on the amount of company stock that may be held in an employee’s 401(k). Temple University professor Dr. Jack VanDerhei, testifying on behalf of Employee Benefits Research Institute, said that proposals must “strike a balance between protecting employees and not deterring employers from offering employer matches to 401(k) plans.” Many Democrats have declined to support placing arbitrary caps on the amount of company stock that can be held in 401(k) accounts. Boehner, Johnson, and the White House oppose such caps because they would deprive millions of Americans of the freedom to decide for themselves how best to save for a secure retirement.

     Finally, Rebecca Miller, a certified public accountant from Rochester, Minnesota, testified on how employee stock ownership plans (ESOPs) can contribute to worker retirement security, saying that, “ESOP companies outperformed their non-ESOP peers in a number of ways -- sales growth, employee growth, and survival.” She went on to say that in recognition of the role that employer stock can play in a diversified retirement portfolio, employers “need a better understanding of risk management and diversification,” and that Congress should focus on “investment education and assistance.”

     The hearing came as Education & the Workforce Committee Chairman John Boehner (R-OH) and Employer-Employee Relations Subcommittee Chairman Sam Johnson (R-TX) were gearing up to introduce the Pension Security Act, the House version of President Bush’s 401(k) reform plan. The bill includes new safeguards and options to help workers preserve and enhance their retirement security, and insists on greater accountability from companies and senior corporate executives during “blackout” periods when rank-and-file workers are unable to make changes to their retirement accounts.

     The bill includes a measure already approved by the House with strong bipartisan support -- the Retirement Security Advice Act, which encourages employers to make investment advice available to employees as a benefit. Senior executives typically have access to professional investment advice regarding their retirement savings, but rank-and-file employees do not.

     “This committee will continue to take a lead role in enhancing retirement security, which has taken on new urgency this year in the wake of the Enron collapse. This bill sends a clear message that Congress is committed to restoring worker confidence in America’s pension system in the wake of the Enron collapse,” said Boehner.

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