Pension Protection Act Of 2006 - PPA

You’ve been working 30 years at Joe Schmo’s. Joe pinkie-promised you a pretty pension plan. Now it’s time to retire, but Joe explains to you that they’ve had to make cutbacks, including into your pension.

But you promised, Joe. Pinkie-promised.

The Pension Protection Act of 2006 was signed into law by George W. Bush to hold firms who promised pensions accountable. Either make your pension promise and stick to it, or don’t make it at all. Fool me once, shame on...shame on you? Is that how that goes?

Anyway, the PPA requires firms who underpay on their pension promises to overpay (well, pay higher premiums) into their Pension Benefit Guaranty Corporation. That’s the Department of Labor nonprofit that’s supposed to make sure private sector employees keep getting their pension benefits that they were promised. Kind of like federal pension insurance for firms.

Besides making sure workers are getting the pension plan pinkie-promise, the PPA did other retirement-related things too. For one, it required automatic 401(k) enrollment when it was offered to employees. It also increased the amount you could contribute to your IRA and 401(k). Leave it to George Dubbya to bring the sexy back to pensions...or at least safety.