SURVEY SAYS – What's Your Take on Pension "Protection?"

August 3, 2006 ( - The big news this week (other than the heat) is the status of pension legislation in the nation's Capitol.

Realizing that the Senate hasn’t yet weighed in (though they’re threatening to), and that when they do, we could be back at ground zero (see  Pension Reform Takes an Unexpected Detour ), this week we asked readers what they thought about the newly minted Pension Protection Act passed by the Senate.

All in all, it was a tough week for a tough question.   Lots of folks out on vacation (based on the “out of office” bouncebacks), others no doubt busy covering for the folks out on vacation, a 900+page pension bill (our succinct analysis notwithstanding), and a pervasive sense that the House bill wouldn’t be the final word anyway, at least based on this week’s responses.   More than 37% of this week’s respondents chose “other” as their response, and nearly all of those were due to not having focused on the bill yet (more on that in a moment).

However, more than a quarter ( 25.93% ) said it was a bill best left unsigned, while roughly 15% said it was a “disappointment.”   Among that group was the reader who said, “I was hoping that they would save DB plans they way they killed them in ’89.   While I agree that PS/401(k) Plans can be a good thing, they were meant to supplement a DB which is how it should be.   At this rate, retirement…….what retirement??????   Oh yes…, I am STILL being very, very nice to my children.”   Several readers went so far as to ‘recalibrate” the “disappointment” response to being a “great” disappointment.  

One reader noted, “It’s yet another example of our “leaders” passing totally shortsighted and politically driven legislation. Yes, the PBGC is in bad shape but so was every other pension plan in the US due to recent experience in the economic environment and the financial markets. As a pension actuary, I can tell you wholeheartedly that the current system needed fixing. But to completely wipe out any long-term view of a plan’s funding is a complete overreaction and will kill the remaining DB pension plans… at a time when Social Security is heading for a train wreck.   He went on to note parenthetically, “I have to laugh at Congress’ sense of humor…… laced throughout the text of the bill are exceptions for pension plans started after the Act….. Are they kidding?)

“…I barely know what’s in the bill,” admitted one.  “For about 10 years, now, I’ve made it a policy not to concern myself with pending legislation.   I’ll take a good look at the bill once it passes.”  Another reader termed the bill a “sieve”, explaining that “anything in it will drain out: the good, the bad, and the ugly, prior to it getting to my desk.”

Among those who thought the bill should be left unsigned was the reader who noted, “In seeking to “protect pensions,” as the name implies, the bill ultimately makes it more onerous to companies who have them, who will in turn abandon the plans in greater numbers.    Realistically, that’s hardly protection at all, but Congress will be able to say they did a good day’s work.”  

Another said, “The baby now has a stick of dynamite in one hand and a lighted match in the other.   More short term thinking by Congress trying to solve problems with a long term commitment.   It will cost us more time and we will spend more dollars for no additional benefit to participants.” 

Just over 11% said it was a “mixed bag.”   As one reader noted, “…that’s what you always get when you have this much stuff in a single bill.   It’s always amazing the twists and turns and horse trading that goes on in this stuff….But don’t count your chickens yet.   It ain’t over til it’s over; and we’ve got a long way to go.   Only the House has voted.   We still need the Senate and then the President.   And then there always the additional guidance and regulations the various agencies must put out for you to actually use the law.   So while it appears the end is near, you might say it’s only the beginning, and dare I say a false start.   Let’s hope not.”  Another observed, “I do not see any real change here just a remix with a couple of twists.”

About 4% said it was as good as could be hoped for, and nearly 8% said it was actually better than expected.   However, no one said the bill was a “monumental improvement on the current system.”

However, this week’s Editor’s Choice goes to the reader who said, ” With auditors in the office for a week going over three retirement plans and having just completed our first retirement planning course for the 100+ staff in our office who are age 55+, I have done (g): completely ignored anything outside of those two tasks and daily participant needs.   However, I have a sneaking suspicion I’ll end up feeling that it’s (f) a mixed bag, as most “improvements” tend to be.”

Thanks to everyone who participated in our survey!