With the stroke of his pen, President Bush signed into law last week the most comprehensive retirement security measure in more than a generation. The Pension Protection Act strengthens laws to better reflect the realities of a 21st century economy, ensuring that employers properly and adequately fund their pension plans.

It’s hard to imagine being stuck with 1970s technology in the workplace. Yet, until last week, that’s exactly what had happened with our nation’s traditional pension system and millions of American workers and retirees were suffering the consequences. Comprehensive reform has been necessary for years to correct a private retirement security system too often plagued by broken promises and widespread uncertainty. Men and women who have worked hard their whole lives should not have their retirements jeopardized by mismanagement.

With the Pension Protection Act passed and signed into law, Congress and President Bush have successfully acted to restore some common sense to our nation's pension system. In this effort, we have worked in a bipartisan way to ensure that retirement security laws match the realities of our modern economy and that U.S. workers can count on their retirement savings being there for them when they need it.

To begin, the Pension Reform Act defines a "fully-funded" pension plan as one that is funded at a level of 100 percent. While most people may have assumed this was already case, under the 1970s-era pension rules, "fully-funded" was defined at a level of 90 percent.  It certainly wouldn’t be acceptable for a worker to pay only nine out of every ten bills or just 90 percent of their annual taxes. It shouldn't be acceptable when it comes to retirement security either. 

The new pension law also provides guidelines to businesses facing serious financial problems; closing loopholes that have allowed employers with under-funded plans to skip pension contributions. This unfair practice has led to the downfall of far too many pension plans over the past several years. In several instances, cash contributions have ceased altogether, without employee knowledge, when plans were terminated and taken over by the federal Pension Benefit Guaranty Corporation.

The Pension Protection Act addresses the growing problem of businesses under-funding pension plans by requiring all employers to fully fund their pension obligations, allowing seven years to fund shortfalls. Under new disclosure provisions, employees will be able to find out the exact status of their plans. The bill also prevents employers from using bankruptcy as a way to be released from their pension obligations.

The Pension Protection Act also levels the playing field by restricting the funding of "golden parachute" arrangements that give deferred compensation to corporate executives while workers and retirees are left vulnerable. This outrageous practice, highly- publicized during recent corporate scandals, is now prohibited by law. 

Congress and the President recognize that options within the retirement security system have drastically changed since the 1970s.  Unlike earlier generations, most people in today’s workforce do not spend their entire career at one company. As people change jobs, they often change retirement plans, often moving into 401(k)-type plans. The Pension Protection Act permanently expands annual 401(k) and IRA contribution limits, encouraging Americans to save more for their retirement. New pensions laws also provide employees with access to qualified investment advisors who can help them choose and actively manage their investments.

Comprehensive pension reform was a true bipartisan goal. Our success passing this bill demonstrates the serious importance Congress continues to place on securing the financial stability of American workers and retirees. In this spirit, I hope we can continue to work together in the months ahead to propose long term solutions to other outdated entitlement programs, further strengthening retirement security for all Americans.