In 2005, with Social Security reform having gone nowhere early in the year, pension plan reform quickly took center stage on Capital Hill. It might have seemed that defined benefit plan issues dominated the legislative agenda, but defined contribution issues started gaining traction as pension reform moved through the House and the Senate. The result of this focus produced both the Pension Security and Transparency Act (PSTA, S.1783), approved by the Senate on November 16th and the Pension Protection Act (PPA, H.R.2830), approved by the House on December 15th. As you might expect, the House and Senate bills differ significantly and further negotiations are required.
But, before we move on, it is important to know that these Acts are considered "bills" at this time. A bill is a legislative proposal before Congress. A bill must be passed by both the House and Senate and then be signed by the President before it becomes law.
As posted on the Senate's Democratic Policy Committee website, PSTA S.1783 was summarized as follows: "The Pension Security and Transparency Act of 2005, would strengthen the funding requirements for single-employer defined benefit pension plans, create new rules for multiemployer plans, provide the airline industry and financially troubled plans special provisions to avoid plan terminations, enhance financial disclosure requirements for pension sponsors, expand retirement savings options for employees working for firms facing bankruptcy or corporate scandals, provide workers access to investment education tools and independent investment advice, and address concerns relating to women, spouses, survivors, and older workers."
And Rep. John Boehner (R-OH) posted on AssetBuilding.org, a project of the New America Foundation, the following about PPA H.R. 2830: "This comprehensive pension reform bill from the Republican leadership is based on some of the Bush Administration's proposals. The bill would provide real-time information for workers on the health of their pensions; a structure for identifying troubled multi-employer pension plan with a system of benchmarks to move them towards better health; and would allow employers to provide all workers with access to investment advice as employee benefit. In addition, the bill will raise employer's premiums who participate in PBGC to cover rising costs. With regards to the new structure the bill proposes to gauge pension health based on how well funded it is, pension plans funded at 65 to 80 percent receive a "yellow" or warning status and must adopt a program to improve within ten years. If they fall below 65 percent funded, they would be at "red" status and face additional benchmarks."