Eventually, each citizen will reach retirement age. According to the National Center for Health Statistics, the life expectancy for a child born in 2005 is approximately 78 years of age. The Social Security Administration's Office of the Chief Actuary projects that the number of Social Security Old-Age and Survivors Insurance beneficiaries per 100 workers will increase from 25 beneficiaries in 2000 to 26 in 2010, 32 in 2020, and 39 in 2030. With people living longer and less entering the workforce, how will one plan for their retirement? This paper will look at the Pension Protection Act of 2006 from the date it was enacted to the current date.
On August 17, 2006, President George W. Bush signed into effect the Pension Protection Act of 2006 (H.R. 4). According to The White House website, the Pension Protection Act is “the most sweeping reform of America’s pension laws in over 30 years.” The Pension Protection Act amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986. The Act deals with five major issues—defined benefit plan funding, hybrid qualified plans, defined contribution plans, executive compensation, and plan distributions. The Act strengthens the Federal Pension Insurance System because it 1) requires companies that under-fund their pension plans to pay additional premiums; 2) extends a requirement that companies that terminate their pensions provide extra funding for the pension insurance system; 3) requires that companies measure obligations of their pension plans more accurately; 4) closes loopholes that allow under-funded plans to skip pension payments; 5) raises caps on the amount that employers can put into their pension plans, so they can add more money during good times and build a cushion that can keep their pensions solvent in leans times; and 6) prevents companies with under-funded pension plans from digging the hole deeper by promising... [continues]
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