Pensions may not be what they once were, but they're still important.
President Bush.....signed new rules to prod companies into shoring up their pension plans and offered strong words for corporate America: “Set aside enough money now.”
Some companies may not like this ruling, but hopefully it will "prod" them to be a little more prudent with the resources they've promised to others.
Things have gotten a little "loosey-goosey" lately.
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.
It could also save taxpayers from funding a multibillion-dollar bailout of the federal agency that insures pension plans.
In the President's words:
“Every American has an interest in seeing this system fixed, whether you’re a worker at a company with an underfunded pension or a taxpayer who might get stuck with the bill,” the president said.
Amen to that. But still it's only a piece of paper, and creating legislation with loopholes is something that politicians seem to excel at.
“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.”
Isn't that what an employee expects when they agree to start working for a company?
It aims to boost the 30,000 defined-benefit plans run by employers that are now underfunded by an estimated $450 billion. Those plans must reach 100 percent funding, up from the current 90 percent requirement, in seven years.
90 percent funded sounds like an ok number, until you realize what that number comes to. That's a lot of retirement income for a lot of people and families.
To the benefit of all taxpayers, lawmakers hope the bill puts the Pension Benefit Guaranty Corp. on more stable financial footing. The federal agency, which insures pension plans, has deficits of $22.8 billion, stemming mainly from taking over defunct steel and airline plans.
So, hopefully getting on more solid financial footing is in our future. One can only hope.
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