Increased Flexibility for 401(k) Plan Sponsors

In the first half of this decade, a series of events wreaked havoc on pension plans. Enron and other major corporations collapsed with the result that employees and other investors lost billions of dollars in savings, including in many cases significant pension investments. Sept. 11 accelerated and deepened the fall of the financial markets. Lower securities prices, coupled with low interest rates, resulted in modest investment returns and increased funding obligations for sponsors of traditional defined benefit plans. In turn, major legacy air carriers and other historical industry leaders struggled (sometimes without success) to avoid bankruptcy. In response to these and other upheavals, Congress enacted the Pension Protection Act ('PPA') on Aug. 17, 2006, only three weeks after its introduction in the House of Representatives, in an effort to reform outdated aspects of federal pension laws and to provide greater stability and overall protection to pension plan members.