"Bush to Sign Massive Pension Overhaul" That Is Good Right? [View All]

[leftchick]

wrong....

http://www.washingtonpost.com/wp-dyn/content/article/2006/08/17/AR2006081700139.html

WASHINGTON -- Sweeping new rules aimed at prodding companies into shoring up their pension plans and ensuring that workers get the retirement benefits they've been promised are about to become law.

President Bush planned to sign the bill Thursday and has already praised it as "the most comprehensive reforms to America's pension system in over 30 years."

Michelle Jones is trying to find a spot for son Jonathan Rood, 15, who finished ninth grade at the now-closed Sasha Bruce Public Charter School. Another D.C. public charter school accepted him but then said that its curriculum did not mesh with that of his former school. (Melina Mara -- The Washington Post)

The massive legislation reflects the evolution of workers' retirement benefits _ the decline in traditional pensions that give retired employees a fixed payment each month and the rise of defined-contribution savings plans that rely on workers to build retirement assets.



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But some pension experts say that even at 900-plus pages, the law isn’t a panacea for what ails the system. In fact, it could exacerbate some problems.

James A. Klein, president of the American Benefits Council, a trade association representing private companies that provide employee benefits, thinks the law will be responsible for “an unprecedented number of companies closing their well-funded defined-benefit plans to new employees.”

The trend already is clear. Even nonbankrupt companies (IBM, Hewlett-Packard, and Motorola among them) have shut down their defined-benefits pension plans and offer defined-contribution plans to employees instead.

The new law provides no incentives for companies to keep their defined-benefit plans. The requirement that they fully fund them is likely to cause more companies to drop them.

Then the perceived protections for the Pension Benefit Guaranty Corp. will fail if well-funded pension plans leave the system, thus shrinking the PBGC’s premium base, Klein warned.

http://www.kansascity.com/mld/kansascity/business/15290858.htm