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KEY WYDEN PROVISIONS INCLUDED
IN PENSION REFORM BILL APPROVED BY SENATE
Legislation helps PGE employees hurt by
Enron collapse,
keeps companies with ailing pension plans from hoarding cash for
CEOs
November 16, 2005
Washington, DC – Pension reform
legislation approved by the full U.S. Senate today includes two
key provisions championed by U.S. Senator Ron Wyden that will
protect Oregon workers in a variety of sectors. Under the first
provision, employees of Portland General Electric (PGE) would
be allowed to increase their Individual Retirement Account (IRA)
contributions, or “catch –up” on their retirement
savings, which were lost in 2001 through Enron’s misconduct
. The second provision would keep companies with significantly
under-funded employee pension plans from locking away retirement
funds for top company executives. Both provisions were approved
by the Senate today; the legislation now must be considered by
the U.S. House of Representatives.
“Today’s pension reform
legislation goes a long way toward protecting the pensions of
Oregon workers, many of whom have been hurt in the past, and ensures
fair treatment of retirement savings for executive and entry-level
employee alike,” said Wyden.
Under the Wyden catch-up provision,
employees affected could increase the maximum allowable contribution
to their IRA to $7,000 for five years. By increasing the maximum
IRA contribution, these workers would more quickly rebuild their
retirement savings. Current law allows only a $4,000 contribution
annually.
“Congress has a responsibility
to help workers who were the victims of Enron’s criminal
activity,” said Wyden. “This step puts us on a course
of righting past wrongs and helping PGE employees, WorldCom employees
and others catch up on the retirement savings they are duly owed.”
Many PGE employees lost all their
retirement savings in Enron’s collapse. In June 1997, Enron
took over PGE and two years later merged the PGE employee 401(k)
retirement plan with its plan. This allowed PGE employees to contribute
as much as 15 percent of their income and receive a company match
in Enron stock. By 2000, Enron stock was trading at $85 per share
and many PGE employees were invited to invest 100 percent of their
401(k) contributions in Enron stock. When the value of Enron stock
began to plummet in 2001, PGE employees were locked out from changing
their 401(k) accounts and selling their Enron shares. By the time
employees regained access to their accounts, an Enron share was
worth less than $10 and many retirement accounts were completely
wiped out. Enron filed for bankruptcy in December 2001.
The second Wyden provision approved
as part of the pension reform legislation today would prohibit
companies from giving executives deferred compensation –
or retirement funds held in accounts outside of the same program
used for all other company employees – if the company’s
pension plan is less than 80 percent funded. The provision seeks
to hold executives accountable for the performance of their company’s
pension plans, and to prevent them from reaping the benefits of
outside retirement programs while company employees are hit with
the burden of significantly under-funded pensions.
“Hardworking Oregonians should
be able to sleep soundly at night without having to worry that
their pensions are languishing in an ailing program while their
employers have their retirement savings safely locked away,”
Wyden said. “This legislation ensures that employees’
pensions are secured the same way as company executives’
pensions, and moves toward more equitable retirement savings for
thousands of Oregon workers.”
On June 7, Wyden questioned airline
industry executives at a hearing of the Senate Finance Committee
about drastic pension cuts that hurt rank-and-file workers while
allowing some industry executives to keep their retirement cash.
Also at the June 7 hearing, Wyden shared the story of a United
Airlines employee from Tigard, Ore. whose cash pension income
was cut to $138 per month when the airline defaulted on its pension
obligation. The taxpayer-funded Pension Benefit Guaranty Corporation
(PBGC) is now paying some United workers’ pensions at much
lower levels, while United’s current CEO retains his company-funded
$4.5 million retirement benefit. Some experts have warned that
other airlines could soon be in bankruptcy and default on their
pension plans as well.
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