Bush signs pension reform bill into law

WASHINGTON, Aug. 18, 2006 — President Bush has signed into law a bill that calls for extensive reform of pension and savings rules.

Called the Pension Protection Act of 2006, the law "gives companies seven years to shore up funding of their traditional pensions, also known as defined benefit plans. Special rules for seriously underfunded companies require them to catch up faster," according to the Associated Press.

"The message from this administration ... is this: You should keep the promises you make to your workers," Bush said. "If you offer a private pension plan to your employees, you have a duty to set aside enough money now so your workers will get what they've been promised when they retire."

The law also makes it easier for workers to participate in defined contribution plans like IRAs and 401(k)s. Employers can now automatically enroll workers in their companies' 401(k) plans. The law provides for gradual increases in how much money employees save and encourages employers to match some of the workers' savings.

According to the Associated Press, one non-profit research organization estimates that up to $15 billion more will be saved in 401(k) accounts each year once the law takes full effect.

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