President Bush Signs Pension Bill

September 2006

President George Bush signed the Pension Protection Act of 2006 into law on Aug. 17, after more than five months of negotiations by House and Senate leaders.

The new law, PL 109-280, contains a number of reform provisions that will help keep defined contribution and deferred compensation plans’ options from reverting back to those established prior to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).

For ICMA-RC, one of the most important provisions in the bill is permanency for the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This provision was approved by the conferees and included in HR 4. Instead of expiring in 2010, the provisions in EGTRRA, such as portability, increased contributions limits, catch-up contributions and greater flexibility in plan designs, are all made permanent.

“This legislation will make it easier for workers to participate in these plans,” the president said. “It will remove barriers that prevent companies from automatically enrolling their employees in these savings plans, ensure that workers have more information about the performance of their accounts, provide greater access to professional advice about investing safely for retirement, and give workers greater control over how their accounts are invested.”

While the President gave credit to all the conferees present, he particularly noted House Majority Leader John Boehner’s (R-OH) leadership on the defined benefit provisions and investment advice. He also pointed to Rob Portman, his current Office of Management & Budget director, as the principal author of some of the important defined contribution provisions of the bill.

The key defined contribution/deferred compensation provisions are generally effective after Dec. 31, 2006.