Watson Wyatt: PPA 2006 Comments
http://www.watsonwyatt.com/us/topics/htrender.asp?ID=14948
The Pension Protection Act of 2006 is the most significant overhaul of U.S. pension laws since the Employee Retirement Income Security Act (ERISA) was enacted in 1974.
Passed by Congress and signed by President Bush in August 2006, the Pension Protection Act (PPA) rewrites almost all major aspects of pension law, requiring defined benefit and defined contribution plan sponsors to make a number of changes. The bill’s most significant changes include:
- Establishing new funding targets for single-employer pension plans
- Imposing higher funding targets on at-risk plans
- Replacing the old discount rate with a modified yield curve of corporate bond rates
- Eliminating the full-funding limit for variable rate premiums
- Adding new requirements for multiemployer plans
- Clarifying hybrid pension plan rules
- Establishing new rules for 401(k)s and other defined contribution plans
Federal agencies are expected to issue regulations through 2008 that detail how employers must implement the act.
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