As a result of this careful review, Klein urged that resulting legislation address "information and advice — rather than restricted choice and over-regulation. The strategies Congress implements should protect the 56 million American who have amassed $2.5 trillion of retirement savings in 401k, profit-sharing and employee stock ownership plans (ESOPs) while fostering the continued growth of the private, employer-sponsored retirement system."

"These employer-sponsored plans not only prepare workers for retirement and democratize corporate ownership," he noted, "but they also provide one of our nation's most significant sources of investment capital. Congress is to be complimented for how it has, over many decades — and on a bipartisan basis — promoted these retirement savings and employee ownership plans."

Klein then commented that as disturbing as the consequences of Enron's collapse have been for many workers and retirees, "one cannot examine the realities of the 401k system without concluding that hasty and ill-advised legislative changes could unintentionally harm the very people who Congress hopes to protect. In this respect, the American Benefits Council believes that before any legislation is enacted, Congress should ask, and satisfactorily answer, several important questions to ensure that Congress' good intentions do not inadvertently undermine the successful employer-sponsored retirement system. We will do our utmost to help you determine the answers to those important questions in the weeks ahead."

In looking to the future, Klein said the Council sees three positive developments that could emerge from the current Congressional review of federal pension law:

• Recent events should be a message to business, labor and government that more must be done to educate people about the importance of investment diversification. To this end, we support proposals by the Bush Administration and some in Congress to provide advance notice to employees of "blackout" periods, as well as more regular retirement plan benefit statements.
• The Council hopes Congress will give positive consideration to proposals aimed at helping workers and retirees receive professional investment advice, which is needed to wisely exercise their investment responsibility. We support proposals to help employers offer professional investment advice to 401k participants and that help employees save for the cost of retirement planning services on a tax-favored basis.
• We hope Congress will renew interest in traditional defined benefit pension plans. These plans, which are funded by the employer and insured by the federal government, are an effective complement to a 401k program. Yet the number of these plans has declined dramatically from a high of 175,000 nationwide in 1983 to fewer than 50,000 today. The decline is partly attributable to over-regulation and its attendant costs and complexities.

Concluded Klein, "These sobering numbers offer two important lessons. First, Congress must approach any new regulation of 401k plans with extreme caution in order to avoid the same disastrous decline in employer sponsorship of 401k plans that we have seen in the traditional pension arena. Second, Congress should address some of the real challenges faced by defined benefit pensions so that more companies can provide these valuable plans to their workers."

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