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Monday, January 14, 2002

One big item from Enron worth looking into is putting employee pension money in company stock. If the company craters, you're not only out of a job but your pension just got nuked. Companies will encourage employee ownership to give employees a bigger emotional stake in the company and, in theory, work a bit harder. However, if the company stock makes up nearly the entire pension, the pension manager is not living up the the "prudent man" investing rule required by ERISA. Most of us learned "Don't put all your eggs in one basket" as kids. One lawsuit is already been filed on exactly this issue. This is one area the Democrats will crow about. Dubya should get in front of this and look to limit the percentage of pension investments that can be put in company stock. Otherwise, the Dems will look good and actually be right at the same time.

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