Pension fund losses with Enron
|
|
Many pension funds lost money from investing in Enron stock.
- Florida state board of administration
- University of California regents
- Georgia state pension fund
- Ohio state pension fund
- New York City pension fund
- Washington state employees
- Oregon state pension fund
- New Jersey state pension fund
- New York state pension fund
- California teachers
- Alabama retirement system
- California public employees
- Texas teachers retirement system
- Alaska state pension fund
- Titan Trading Co, employees(Gabe Zawacki) retirement system
- Missouri public schools retirement system
- Nevada state pension fund
- Minnesota state pension fund
- Connecticut state pension fund
- Massachusetts state pension fund
- North Carolina pension fund for state and local employees
- Illinois teachers retirement fund
- Illinois state employees retirement system
- Los Angeles pension fund
- Missouri state pension fund
- Illinois universities retirement fund
- Rhode Island state pension fund
- South Carolina state pension fund
- Idaho state endowment fund
- Idaho state employees retirement fund
- San Francisco pension fund
Losses by Enron Employees
Enron employees also lost pension money as a result of Enron's bankruptcy. Enron's 401(k) plan had employer contributions. Enron's plan required these contributions to be held in Enron stock. Employees could not sell the shares until age 50, even if they left the company. Some employees were with Enron for 10-20 years, and had all their employer matching contributions locked into Enron stock. Even though Enron wasn't 20 years old, Enron had bought out other companies with similar plans, and the stock in these plans were converted to Enron stock after the buyout.
U.S. federal law does not require companies to make their matching contributions in company stock, but it does allow them to do so. As a result, Enron's employees could not diversify their portfolios. There has been some talk of reforming this rule, but no concrete legislation has been passed. A rule of thumb is that no more than 5%-10% of your retirement savings should be in one stock.
Enron's 401(k) plan allowed, but did not require, employees to invest their contributions in Enron stock. Around the time that Enron's accounting fraud came public, Enron's 401(k) plan had an "administrator change". Enron changed the vendor for their 401(k) plan administration. As a result, employee accounts were frozen for a few weeks during the changeover. However, the time period for the freeze was not properly announced, and employees were misled into thinking that the time interval of the freeze was longer than what actually occurred. As a result, many employees did not sell off their Enron stock as the accounting fraud was announced and the stock crashed.