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American workers deserve a strong pension benefit system. Unfortunately, over the past few years we found ourselves facing a situation in which under-funded defined benefit plans were creating disastrous consequences for retirees and workers. Also threatened was the very solvency of the Pension Benefit Guaranty Corporation (PBGC), the federal agency that assumes liability for pension benefits for workers and retirees if a company defaults. Clearly we had a broken pension system that required significant reform. The retirement security of millions of American workers was at stake.
As a member of the House Committee on Education and the Workforce, I am pleased to report that the U.S. Congress has addressed this problem. With decisive bi-partisan support, we have passed H. R. 4, the Pension Protection Act of 2006, and the bill was signed into law by President Bush on August 17, 2006. Incorporating the wide range of provisions contained in a previously debated bill (H.R. 2830, the Pension Protection Act of 2005), this important new legislation reforms outdated worker pension laws and establishes robust protections for the retirement benefits of American workers and retirees. Specifically, the new law will:
• Tighten requirements for employers to make sufficient cash contributions to their worker pension funds;
• Close loopholes through which under-funded plans may avoid making cash pension payments;
• Prohibit employers and union leaders from promising extra benefits if their pension plan is significantly under-funded;
• Strengthen rules for disclosure, to give workers and retirees more information about the status of their pension plan;
• Protect multiemployer pension plans for workers and their employers;
• Restrict “golden parachute” compensation arrangements for executives while the retirement security of rank-and-file workers remains at risk;
• Give workers much-needed personal access to professional investment advice;
• Provide legality for hybrid pension plans; and
• Shield American taxpayers from responsibility for funding a possible multi-billion dollar bailout of the federal Pension Benefit Guaranty Corporation.
It has been my pleasure to cooperate with members of the House of Representatives on both sides of the aisle to enact this vital legislation that will ensure Americans receive the pension benefits they were promised, and for which they have worked so hard.
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