|
 Printer-Friendly Version
EBSA News Release: [10/24/2006]
Contact Name: Peter Hong or Gloria Della
Phone Number: (202) 693-4676 or x8666
Release
Number: 06-1856-ATL
U.S. Secretary of Labor Elaine L. Chao Highlights Retirement Security at Convention of Life Insurers
ORLANDO, Fla. — U.S. Secretary of Labor Elaine L. Chao, speaking at the annual convention of the American Council of Life Insurers, discussed the Labor Department's ongoing efforts to implement the Pension Protection Act of 2006 -- the most significant reform of the private pension system in the last 30 years.
"Passing the Pension Protection Act of 2006 was a major accomplishment. But, the effort to ensure retirement security for all Americans is not finished," said Secretary Chao. "Our country must prepare for the upcoming retirement of the baby boom generation by strengthening pension plans, improving the national savings rate and increasing access to quality, affordable health care."
The Labor Department recently proposed the first major regulation under the act to make it easier for fiduciaries of 401(k) plans and other participant-directed defined-contribution plans to adopt automatic enrollment design features. Under the proposal, default contributions would be invested in any of three investment options that are appropriate for long-term savings. Studies show that automatic enrollment in 401(k) plans can increase participation rates from 66 to 93 percent.
Secretary Chao highlighted the correlation between economic prosperity and the Bush Administration's efforts to strengthen retirement security.
"One of the most important things this administration has done to strengthen retirement security is to create the climate for economic growth," Secretary Chao continued. "The president's tax cuts have helped our economy grow despite unprecedented challenges over the past five years — faster than any major developed nation. In the last three years, 6.6 million net new jobs have been created, more than Europe and Japan combined. Today's unemployment rate is a low 4.6 percent — more than a point lower than the average 5.7 percent of the 1990s."
Key provisions of the new pension law, which are modeled on the president's proposals, include:
- Reform of the funding rules to require full funding of pension liabilities to ensure employers keep benefit promises to 44 million Americans who depend on those plans.
- Increased transparency and accountability to workers to enable them to make informed decisions and understand the status of their plans.
- Reform of the premium structure paid to the Pension Benefit Guaranty Corporation to reflect the real risks and costs of the federal insurance program.
- Encouraging greater worker participation in retirement savings plans through automatic enrollment in 401(k)-type plans.
| 
