Straight Talk With Sam (Pension Reform)
Straight Talk With Sam
Pension Reform
For many of us, our financial stability during retirement is a concern. I've had an opportunity to talk with many Missourians about retirement and pensions. I've come to the conclusion that we all want the same thing; we want a fair and secure system. That's why I voted in favor of the Pension Security Act, which the president signed into law just last week.
The Pension Security Act made several important changes to the rules and regulations governing defined benefit pension plans, and is the first substantive change to pension laws since the original Employee Retirement Income Security Act (ERISA) established 30 years ago.
For too long, companies were allowed to under-fund their pension plans and use accounting gimmicks to avoid making needed contributions to cover the benefits they promised their workers. The Pension Security Act requires company's fully-fund their pension promises and provide accurate disclosure of a plan's financial condition to their workers. To ensure that these contributions are made, the bill severely restricts the ability of companies to use so-called credit balances when plans are less than 80 percent funded and requires all plans to be 100 percent funded within 7 years.
It also allows companies to make additional contributions in good years to help provide a cushion in bad years. Previously, employers were limited in how much they could contribute to a plan. When a company's fortunes reversed, they were often required to make contributions to their plans when they were in the least position to do so. This catch-22 meant that employers who wanted to act responsibly and put extra money away in their pension plans were prohibited from doing so. Now, companies can build-up adequate reserves for such eventualities.
This reform legislation will go along way in ensuring that workers receive the benefits promised to them and will help protect both beneficiaries and taxpayers from a possible bailout of the Pension Benefit Guarantee Corporation. I am please the president signed it into law, and that we are on our way to a better system.
http://www.house.gov/graves/straighttalk/2006issue34.htm