Thank you Mr. Chairman for conducting this timely hearing on a matter of great importance. I thank the witnesses on the three panels and I look forward to your testimony.

I believe it is critical that we, as the elected representatives of the people, examine the issues raised by Enron's failure. Although we are looking at 401(k) plans today, I should point out that it wasn't just employees who were victims. In Hawaii, the state Employees Retirement System lost $11.3 million as a result of the failure of Enron. While this represented only a small percentage of the total portfolio of the system, it is still a lot of money. Luckily, the state pension system was diversified so they were able to more easily absorb the loss, unlike the Enron employees.

More and more companies are abandoning defined pension benefit plans for 401 (k) plans. 401(k) plans have permitted millions of Americans to save large sums of tax-deferred money to ensure they can retire comfortably. 401 (k) plans offer the potential for greater returns and more money during retirement, but they do come with additional risk that needs to be managed properly.

In many 401 (k) plans employers match the employees contribution with company stock. We must investigate this incentive. Encouraging employees to save for retirement is extremely important but we must examine this issue to see if providing matches in other forms would be more prudent. For example, the federal government Thrift Savings Plan provides cash matches to be used for investing in index funds. These funds attempt to reap the benefits of appreciating stock while attempting to manage the risk by owning the stock of 500 or even 4500 companies. Or for those who want to reduce their risk even more, bond funds can be purchased.

The Enron example shows what can happen when employees lose both their jobs and their retirement savings. However, it is not uncommon for employees to have primarily employer stock in their retirement funds. For example at Procter and Gamble 94.7 percent of 401 (k) plan assets are in company stock. Sherwin Williams and Abbot Laboratories also have greater than 90 percent of 401 (k) plan assets in company stock.

Many financial advisors would question having so much invested in one company. 401(k) plans must be part of a diversified portfolio. I place a special importance on financial literacy and education so that all Americans have the necessary skills and information to prepare for a secure financial future.

In examining this issue, it will be important to see what information 401 (k) plan participants are provided as they make asset allocating decisions that have tremendous consequences on their future financial condition.

Thank you again, Mr. Chairman for calling this important hearing.