Radio Address by the President to the Nation, 10-19-02

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.

Fact Sheet

For Immediate Release
Office of the Press Secretary
October 19, 2002

President Takes Action to Protect Pensions and Retirement Security for All Americans

Presidential Action

President Bush believes that economic freedom is essential to individual success and prosperity. The President's economic agenda invests in individuals by creating jobs, expanding opportunities to save and invest, providing a good education, and helping each American own part of the American dream.
An important component of the President's economic security agenda is providing American workers and retirees new tools to protect their pensions, investments, and retirement security.
In his radio address, the President will announce the implementation of rules that require workers to receive a 30-day notification before any "blackout" restrictions are placed on their 401(k) plans.
On October 21, 2002, the Department of Labor will issue regulations implementing the new notice provisions, providing important protections to workers and retirees with investments in 401(k) plans. The regulations provide both interim-final rules and a model notice to assist plans in carrying out their responsibilities. Under the new rules:
Workers will receive notice 30 days before any restrictions are placed on their ability to direct investments, take loans, or obtain distributions from their 401(k) plans.
Companies with employer stock in their 401(k) plan will receive the same notice so corporate insiders will know they cannot sell stock in the company or exercise stock options when the workers in the 401(k) plan are restricted from doing so.
The notice to employees must include the reasons for the blackout period; its beginning and ending date; and, if the ability to direct investments is suspended, a statement that participants should evaluate their current investments in light of their inability to direct or diversify assets during the blackout period.
Failure or refusal to provide the required notice will result in a civil penalty.
The rule will be effective on the earliest possible date under the statute, January 26, 2003 (180 days after enactment of the Sarbanes-Oxley legislation).

The Securities and Exchange Commission is also working on a new rule scheduled to take effect early next year that will bar corporate executives from trading their stock when their rank and file workers are prevented from selling theirs.

Unfinished Business

The President has proposed other important, commonsense proposals to help protect the retirement savings of American workers:

Allowing workers to diversify their investments in employer stock after three years.
Providing workers quarterly benefit statements that explain the value of diversified investments.
Giving workers better access to much-needed investment advice from professional advisers acting in the workers' best interest.

These remaining provisions passed the House of Representatives on April 11, 2002. Unfortunately, the Senate has failed to act on these important initiatives.

To learn more about the President's comprehensive economic security and corporate accountability agenda please visit www.whitehouse.gov

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