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Pension Protection Act of 2006

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What Is the Pension Protection Act of 2006?

The Pension Protection Act of 2006 (PPA) is perhaps the most sweeping piece of pension legislation to be passed in the last 30 years. Among other things, it affects pension and retirement plans through various tax incentives and requirements. It was signed into law in August of 2006.

In addition, the Pension Protection created a special insurance system for certain business that offer private pension and benefits plans. This insurance system is to be funded through the premiums collected by these employers. 

What Changes Does the Pension Protection Act Accomplish?

Most of the provisions of the Pension Protection Act deal with requirements for companies whose pension plans are under-funded. The Act encourages employers to ensure that 401(k) plans are funded. 

Some highlights of the PPA include:

  • Companies with under-funded pension plans must pay additional premiums
  • Requires companies that terminate pensions to provide additional funding for the newly-created pension insurance system
  • Enforces stricter requirements to ensure that companies monitor pension plans more accurately
  • Closes certain loopholes that had previously allowed under-funded plans to skip pension payments
  • Raises the cap on the amount that employers may invest into pension plans, thus helping prevent pensions from “running dry” in times of economic difficulty
  • Prevents companies with under-funded plans from promising extra benefits without first paying for the promises up front

Thus, the Pension Protection Act of 2006 requires employers to take extra precautions when it comes to employee pension plans. While this potentially serves to benefit employees, it can place additional responsibilities in the hands of employers.

What Types of Retirement Plans Does the PPA Affect?

The PPA affects mostly defined contribution pension plans and defined benefit plans. The act also affects individual retirement accounts (“IRAs”). If you have negotiated an individual pension plan with your employer through a contract, you may need to check and see if your agreement will be affected by PPA provisions.

Finally, the Pension Protection Act also contains various provisions that only affect certain sectors (such as state and local governments, airline industries, and churches). 

What If I Have a Dispute or an Issue Regarding PPA?

Since the Pension Protection Act has only recently been passed, it can be difficult to determine the full extent of its effects. If you have any disputes or questions regarding a pension plan, you may wish to file a complaint with an administrative agency such as the Equal Employment Opportunity Commission (EEOC) or a similar government body. 

Alternatively, you may wish to file a private lawsuit if you feel that your pension benefits have been negatively affected in any way. In some cases it is necessary to file a claim with the EEOC before you can file a private lawsuit.

In any case, be sure to compile all the documents, contracts, and forms that may be related to your retirement pension plans. These may be helpful when trying to prove your claim before the government board or in court.

Should I Hire a Lawyer for Assistance with PPA Issues?

The provisions of the Pension Protection Act of 2006 are very broad and affect a wide range of businesses and employers. If you are an employer, working with a lawyer can help ensure that the pension plans you offer conform to PPA requirements. Or, if you are an employee, a lawyer can help you with any disputes or questions about your particular pension plan.

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 11-19-2013 02:58 PM PST

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