 Lockdown
Issues
The Enron bankruptcy and its tragic impact on Enron plan participants
and beneficiaries has certainly created a political firestorm. No
less than the President of the United States has called for a review
of relevant pension rules and regulations. Such a review by the
Bush Administration as well as Congress is certainly appropriate
and reasonable under the circumstances. However, whenever a pension
issue gets this much attention, particlularly political attention,
the potential for overreaction is a very real possibility. ASPPA's
Government Affairs Committee has already had several meetings with
senior staffers within the Bush Administration and on Capitol Hill
to stress that they need to carefully consider any changes that
they make so that they do not end up doing more harm than good.
Both the Bush Administration and Congress are exploring a variety
of issues including limitations on the amount participant accounts
can be invested in employer stock and increasing participants' rights
to diversify employer stock in their accounts. Although ASPPA believes
it is reasonable to reexamine the rules regarding the ability of
participants to diversify the investments in their individual accounts,
we are concerned about proposals that would artificially limit the
amount that any individual participant can choose to invest in employer
stock. For example, if an employee is covered by both a defined
benefit plan and a defined contribution plan, investing a higher
percentage of defined contribution assets into employer stock may
be an entirely rational investment decision due to the existence
of the valuable and guaranteed defined benefit.
Most significantly, ASPPA is seriously concerned about proposals
that have been introduced to regulate the ability of a plan sponsor
to lockdown (or more commonly known as "blackout") a plan
for various reasonable administrative reasons, including changing
service providers. In fact, a bill has been introduced in the House
of Representatives that would prohibit any lockdown unless the plan
sponsor first obtains an exemption permitting the lockdown from
the Department of Labor. Even if the exemption is granted, the lockdown
could not occur until 90 days after the plan sponsor first notifies
employees of the impending lockdown.
Thank you in advance for your participation in this effort. Your
input will make a difference. It is important that we get the real
facts out there in order to counteract the rhetoric.
Brian Graff
ASPPA Executive Director
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