The employer, as plan sponsor, is responsible for  funding the promised benefit, investing and managing the plan assets, and  bearing the investment risk. Enron’s employee stock ownership plan, like other ESOPs, was designed  to encourage employee ownership in their company. Enhanced Disclosure Could Help Employees Understand Investment Risks They Face

Enron’s failure highlights the importance of plan participants receiving  clear information about their pension plan and any changes to it that could  affect plan benefits. Such arrangements  consist of separate, but associated defined benefit and defined  contribution plans. Fiduciaries are required to act solely in the interest of plan  participants and beneficiaries. Fiduciaries  are required to follow their plan’s documents and act in accordance with  the terms of the plan as it is set out. Conclusions

The Enron collapse, although not by itself evidence that private pension  law should be changed, serves to illustrate what can happen to employees’  retirement savings under certain conditions. In particular, Congress may wish  to consider whether further restrictions on floor-offset arrangements are  warranted, whether to provide additional employee flexibility in  connection with matches in the form of employer stocks, and whether to  limit the amount of employer stock that can be held in certain retirement  saving plans.
What GAO Found

The collapse of the Enron Corporation and the resulting loss of employee retirement savings highlighted several key vulnerabilities in the nation's private pension system. Asset diversification was a crucial lesson, especially for defined contribution plans, in which employees bear the investment risk. The Enron case underscores the importance of encouraging employees to diversify. Workers need clear and understandable information about their pension plans to make sound decisions on retirement savings. Although disclosure rules require plan sponsors to provide participants with a summary of their plan benefits and rights and to notify them when benefits are changed, this information is not always clear, particularly in the case of complex plans like floor-offset arrangements. Employees, like other investors, also need reliable and understandable information on a company's financial condition and prospects. Fiduciary standards form the cornerstone of private pension protections. These standards require plan sponsors to act solely in the interest of plan participants and beneficiaries. The Enron investigations should determine whether plan fiduciaries acted in accordance with their responsibilities.