U.S. Senator Trent Lott of Mississippi today praised the Pension Protection Act, which he helped write, as “a victory for all workers and retirees and an overdue act of Congress to address the growing problem of employers underfunding their pension plans.”
“Current pension funding laws are badly outdated and have allowed companies to legally underfund their pension plans,” Senator Lott, a senior member of the Senate Finance Committee and a pension conferee, explained. “As a result, many companies, small and large, have been inching closer to freezing or even terminating their pension plans, and turning them over to the Pension Benefit Guaranty Corporation. The result has been retirement insecurity for millions of Americans. The Pension Protection Act generally requires plan sponsors to fully fund their plans using more realistic assumptions than had been mandated by long standing law.”
Senator Lott specifically praised the Pension Protection Act for:
• Preventing employers from using bankruptcy to walk away from their pension obligations;
• Extending critical relief to airline pension plans to ensure airlines can maintain the pensions of hundreds of thousands of employees;
• Making permanent tax incentives included in President Bush 2001 tax cuts that substantially increase pension and IRA contribution limits which Senator Lott said will increase savings opportunities for all Americans;
• Making permanent the “Saver’s Credit” up to $2,000. Senator Lott said that without this extension, the credit would not have been available after 2006. The provision also indexes the Saver’s Credit income limits to prevent this benefit from being eroded by inflation; Proving for the Public Safety Officer Early Withdrawals for Health and Long Term Care Insurance. Public safety officers who retire or become disabled will be able to make tax-free distributions of up to $3,000 annually from their government pension plans if the distribution is used to purchase health or long-term care insurance, Senator Lott said.
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