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October 2002
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For Immediate Release
Office of the Press Secretary
October 19, 2002
President Acts to Protect Pensions and Retirement Security
Radio Address by the President to the Nation
THE PRESIDENT: Good morning. I want to discuss with you steps we are taking to help strengthen the retirement security of America's workers. More than 40 million Americans save for retirement through 401(k) accounts, making regular contributions and building economic security over a lifetime. A 401(k) provides a chance to invest in the long-term growth of the American economy and an opportunity to build wealth and independence.
Today's workers own more then $1.5 trillion in assets through their 401(k)s. Younger workers have an average of about $10,000 in their accounts, while workers near retirement hold closer to $100,000 in their 401(k)s. This is real money for real workers and we must do all we can to help make sure it's there for them when they retire.
Turbulence in the financial markets reminds us that every investment carries some risk. Yet American workers also have rights which must be respected and enforced. I've made five common-sense proposals to help protect the retirement savings of American workers.
First, every worker should get 30 days advance notice before any blackout period -- the time when they cannot sell, buy or borrow from their 401(k)s.
Second, corporate executives should have to follow the same rules that every other employee must follow during blackout periods. If you can't sell on the shop floor, you should not be able to sell on the top floor.
Third, workers should be able to sell their company stock after holding it for three years so that no one's nest egg is tied up in the stock of a single company.
Fourth, investors should receive better information, including quarterly -- not just yearly -- reports on how their 401(k)s are performing.
And, fifth, workers should have access to professional investment advice so they can make more informed decisions about their savings.
The United States Congress has passed only two of these proposals -- giving workers advance notice of blackout periods and holding executives to the same rules as their employees. I signed these reforms into law.
On Monday my administration is implementing that law with tough new rules to require that companies give their workers 30 days notice before any blackout period. Under the new rule, employees will have time to buy or sell stock or borrow from their accounts before the accounts are temporarily frozen. This important protection will help ensure that workers don't get stuck in a bad investment simply because their employers block them from accessing their own accounts.
The Securities and Exchange Commission is also working on a new rule to prevent corporate executives from selling off their own holdings of company stock when employees are kept from doing so. Corporate executives will no longer be able to sell off their company's declining stock while employees are left holding the bag. Both of these rules will take effect early next year and give workers greater protections against corporate fraud or abuse.
These rules are a step forward in protecting the rights of investors. More steps are needed. My three additional proposals -- allowing more diversity in 401(k) accounts, and more frequent account updates, and advice for workers -- have already passed in the House. But after six months, the Senate has not acted. For the sake of American workers who are concerned about their retirement security I urge the Senate to pass the rest of my proposals into law. People who work hard and save for the future deserve every protection we can give them.
Thank you for listening.
END
