Decade after landmark pension law, changes still needed

Next week marks the 10th anniversary of a landmark federal law with a hopeful name – the Pension Protection Act of 2006. Has the law lived up to its name?

The anniversary is an apt time to consider changes still needed to improve the retirement security of American workers.

The track record of the Pension Protection Act (PPA) is mixed. The law imposed more stringent funding requirements for defined benefit pensions. It also spurred important improvements in workplace 401(k) plans – mostly automation features that led to much higher participation rates among workers and put investment choices on auto pilot through widely used target date funds.

Still, 10 years after PPA, we are left with a looming retirement security crisis. Sponsors of traditional pension plans have been dropping them like hot potatoes – many do not want to carry pension obligations on their books, and some complain about the rising cost of insuring plans through the Pension Benefit Guarantee Corp.

In 2015, just 20 percent of Fortune 500 companies offered a defined benefit plan to new hires, down from 59 percent in 1998, according to Willis Towers Watson.

Meanwhile, most workers are not saving nearly enough. Among workers aged 55 or older, one-third have saved less than $25,000. The numbers are especially appalling among minority workers – savings for nonwhite households near retirement (age 55-64) average $30,000. That is four times less than white households, according to data from the National Institute on Retirement Security.

What more should be done? I offer a checklist in today’s Reuters Money column.


  1. dale coberly says:


    or, you could ask the workers if they would be willing to save an extra dollar a week through social security. this would entirely close the existing actuarial deficit without the political risks of raising the cap or otherwise taxing the rich… which FDR explicitly warned against.

    and you could “expand” social security by raising the payroll tax more. another dollar a week per year would increase benefits about 25%. this would avoid most of the problems with private pension problems that you point out in your article.

    and, if the rate of return from SS is not high enough for you (it was designed to be insurance, not an “investment plan”) you could enroll ALL workers in their state’s PERS and let the professionals manage the investing and annuity concerns, which most people have neither the time nor the expertise to manage for themselves, at a much lower cost per worker.

    and, of course, it would be best of all if you can find ways to raise the pay of workers, and limit the predatory business practices that keep them in poverty.

    but a first step is that dollar a week raise in the payroll “tax” for those under the cap. it would get the “SS is broke” “SS is a huge burden on the young” lie off the table.

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