In her testimony Reynolds stressed the prominence and popularity of employer-sponsored retirement and equity ownership programs, noting that 56 million Americans currently participate in 401k, profit-sharing and employee stock ownership plans. These workers have accumulated more than $2.5 trillion in retirement savings and have built a substantial ownership stake in their company. "These employer-sponsored plans not only prepare workers for retirement," Reynolds said, "but also democratize corporate ownership. Despite the truly unfortunate developments at Enron, now is not the time for Congress to abandon its long-standing, bipartisan support of these programs."

"The Council believes that retirement policy responses to Enron should focus on ensuring that 401k participants have the information, education and professional advice they need to wisely exercise their investment responsibility." Reynolds said. "Chairman Johnson, this is the course that you and Chairman Boehner have charted. The proposals in your Pension Security Act to provide employees with advance notice of transaction suspension periods as well as more regular benefit statements will help achieve this goal. The Council also supports the provisions of H.R. 3762 drawn from Chairman Boehner's prior legislation that will help employers facilitate professional investment advice for 401k participants."

Turning to the recent surge in Enron-inspired 401k reform legislation, Reynolds praised the subcommittee members of both parties who have rejected proposals to cap the percentage of an employee's 401k account that can be invested in company stock. However, Reynolds criticized several aspects of more onerous legislation, such as H.R. 3657, sponsored by Ranking Full Committee Member George Miller (D-CA).

H.R. 3657, for example, imposes a 10-day limit on transaction suspension periods, which are a normal and necessary part of 401k plan administration. "The plan changes that require such suspensions are often undertaken to improve the services offered to employees," Reynolds said. "I can assure you that employers seek to minimize the length of suspension periods, and such periods are declining due to market competition among 401k providers. But a fixed time limit is simply not practical and will lead to mistakes."

Also, H.R. 3657 seeks to make overly broad, fundamental changes to our nation's 401k system rather than address the specific issues relating to Enron. "The bill would fundamentally alter the retirement plan governance system, radically change ERISA's enforcement mechanism, and substantially revise the rules on vesting of employer contributions," Reynolds said. "The results would be increased workplace conflict, hampered plan administration, more litigation, fewer employer contributions and, for many employees, no retirement plan at all."

"The Council urges a cautious retirement policy response to Enron so as not to undermine our successful retirement savings and employee ownership system," Reynolds said. "Information and advice - rather than restricted choice and over-regulation - are the strategies that will protect workers and retirees while fostering the continued growth of private, employer-sponsored retirement plans."

Angela Reynolds' full written testimony is available on the Council Web site: http://www.americanbenefitscouncil.org/issues/retirement/eer_writ.pdf.

James Klein, Council president, and James Delaplane, Council vice president, retirement policy, are available at any time to comment further on these issues. You may arrange interviews by contacting Deanna Johnson Keim, Council director, communications, or Jason Hammersla, Council communications associate, by phone at 202-289-6700.