- The Washington Times - Thursday, August 17, 2006

President Bush yesterday signed into law strong new regulations for corporate pension plans, now underfunded by an estimated $450 billion, saying companies “have a duty to set aside enough money now so your workers will get what they’ve been promised when they retire.”

“Americans who spend a lifetime working hard should be confident that their pensions will be there when they retire,” the president said. “Some businesses are not putting away the cash they need to fund the pensions they promised to their workers.”

Before a large crowd of supporters at the Old Executive Office Building, Mr. Bush called the legislation, passed in the House by a vote of 279-131, “the most sweeping reform of America’s pension laws in over 30 years.”

“Today, we’ve taken an important step toward ensuring greater retirement security for millions of American workers,” he said. “Members of both parties came together to pass a good bill that will improve our pension system, while expanding opportunities for Americans to build their own nest eggs for retirement.”

But the president said that the law alone will not solve expected shortfalls, and called on companies to “set aside enough money now.”

“This bill establishes sound standards for pension funding,” he said. “Yet in the end, the primary responsibility rests with employers to fund the pension promises as soon as they can. The message from this administration, from those of us up there today, is this: You should keep the promises you make to your workers. 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 new law seeks to alter the disconnect between what companies once offered employees — fixed payments each month — and the evolving financial-planning environment of today, with individual savings accounts and 401(k) plans.

“In addition to reforming the laws governing traditional private pensions, the bill I signed today also contains provisions to help workers who save for retirement through defined contribution plans like IRAs and 401(k)s. These savings plans are helping Americans build a society of ownership and financial independence,” Mr. Bush said.

Democrats commended Mr. Bush for signing the bill into law, with Massachusetts Sen. Edward M. Kennedy, ranking member of the Senate’s Health, Education, Labor and Pensions Committee, calling the legislation “a bipartisan commitment to strengthening the pension system and improving the way workers and their families prepare for their retirement.”

“This new law means greater peace of mind for more than 100 million Americans by safeguarding their retirement, and it will help millions more in the future. No longer can executives just look out for themselves while their companies’ pensions go bust,” Mr. Kennedy said.

The president also said the new law could save taxpayers from funding a multibillion-dollar bailout of the federal agency that insures pension plans.

“When some businesses fail to fund their pension plans and are unable to meet their obligations to their employees, it puts a strain on the entire system,” he said. “And if there’s not enough money in the system to cover all the extra costs, American taxpayers could be called on to make up the shortfall.”

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