Weekly Column

It’s hard to imagine being stuck with 1970s technology in the workplace, on the road, or in the skies when those of us living and working in the year 2006 have grown accustomed to high-speed Internet connections, hybrid and other increasingly fuel-efficient cars, and passenger jets that are bigger and better than ever.  However, when it comes to our nation’s traditional pension system, we’ve been stuck in the 1970s for more than a generation, and millions of American workers and retirees have suffered the consequences. 

Terminated pension plans.  Broken promises.  Widespread uncertainty.  Sadly, these increasingly have become the hallmarks of a private retirement security system that has been governed by laws that are – to put it bluntly – outdated and broken.  The need for reform has been apparent for years, and recently, Congress and President Bush acted to restore some common sense to our nation’s pension system.  We’ve worked in a bipartisan way to ensure our retirement security laws match the realities of a 21st Century economy, and as a result, for the first time in a long time, more U.S. workers will be able to count on their retirement savings being there for them when they need it.

     The Pension Protection Act (H.R. 4) which passed in the House in July and was recently signed into law by the President addresses the problem of under-funded pension plans and takes a balanced approach to comprehensively reforming outdated pension laws. People work very hard for years to earn a pension and they deserve for it to be protected. This legislation makes much needed reforms to ensure workers will receive the pensions they were promised.

      H.R. 4, the Pension Protection Act of 2006, takes a balanced approach to comprehensive pension reform.  Specifically, the act does the following:

• Tightens funding requirements so that companies are making more cash contributions to their worker pension funds;
• Requires employers to make up current funding shortfalls within seven years;
• Identifies underfunded plans and establishes benchmarks for measuring funding improvements;
• Enhances disclosure requirements so that workers and retirees can get more information about the status of their pension plan;
• Restricts “golden parachute” executive compensation arrangements in which executives of companies in financial difficulty are given generous compensation arrangements while the retirement security of rank-and-file workers remains at risk;
• Encourages employers to automatically enroll employees in defined contribution pension plans, while giving employees the option of declining the plans; and
• Gives workers new access to face-to-face, personally tailored professional investment advice.
             

      While the laws on the books may have served a 1970s workforce well, the fact is, they have endangered the retirement security of millions in recent years.  By ensuring that pension plans are fully-funded, encouraging companies and unions to keep their pension promises to workers and retirees, and modernizing laws to reflect the realities of a 21st Century economy, we’ve taken major steps to reverse course.  Indeed, the Pension Protection Act represents the first comprehensive retirement security fix in more than a generation, and it’s long overdue.

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