President Signs Measure to Reform

Outdated Worker Pension Laws

Legislation Strengthens Pension Funding Rules, Modernizes Retirement Security Laws

WASHINGTON, D.C. – U.S. House Workforce Committee Chairman Howard P. “Buck” McKeon (R-CA) today hailed the enactment of key legislation to reform worker pension laws for the first time in a generation.  The Pension Protection Act (H.R. 4) was signed into law by President Bush after the measure was passed overwhelmingly by both the House and Senate in recent weeks.

“Yesterday’s outdated pension rules don’t reflect the new realities of today’s economy, and I applaud President Bush for signing these reforms into law so we can begin charting a different course,” said McKeon, who served as Vice-Chairman of the House-Senate pension reform conference.  “The Pension Protection Act ensures that worker pension plans are fully-funded, encourages companies and unions to keep their pension promises to workers and retirees, and provides workers the peace of mind that their retirement savings will be there for them when they need it.  I’m pleased that Congress and President Bush were able to work in such a bipartisan way to ensure these critical reforms became law.”

The Pension Protection Act – which was passed with strong bipartisan votes in both the House and Senate and with remarkable support from both employer and labor groups – includes tough new funding requirements to ensure employers adequately and consistently fund their pension plans, provide workers with meaningful disclosure about the financial status of their benefits, and protect taxpayers from a possible multi-billion dollar bailout of the federal Pension Benefit Guaranty Corporation (PBGC).  Specifically, the reform package:

·                     Tightens funding requirements so employers make more cash contributions to their worker pension funds;

·                     Closes loopholes that allow underfunded plans to skip pension payments;

·                     Prohibits employers and union leaders from digging a hole even deeper by promising extra benefits if their pension plan is significantly underfunded;

·                     Enhances disclosure to give workers and retirees more information about the status of their pension plans;

·                     Protects multiemployer pension plans for workers and their employers;

·                     Restricts “golden parachute” executive compensation arrangements in which executives of companies in financial difficulty often are given generous deferred compensation arrangements while the retirement security of rank-and-file workers remains at risk; and

·                     Gives workers new access to personally-tailored, face-to-face professional investment advice.

“This reform package will reassure workers and retirees who rely on pension benefits, provide certainty for employers who offer them, and protect taxpayers who could be called upon to fund a bailout of the Pension Benefit Guaranty Corporation,” McKeon concluded.  “This overhaul has been a long time coming, and with the President’s signature today, workers, retirees, and taxpayers alike have seen a major victory.”

For a summary of H.R. 4, the Pension Protection Act, visit the Education & the Workforce Committee website at http://edworkforce.house.gov/issues/109th/workforce/pension/pensionbillsum72806.htm.