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
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.