On August 18th, President Bush signed into law The Pension Protection Act of 2006. This bi-partisan bill brings sweeping reform to America’s pension laws in an attempt to ensure millions of Americans a more secure retirement. With more Americans reaching retirement age and the millions of Baby Boomers approaching retirement age, this legislation is aimed at relieving the foreseeable strain on publicly funded programs such as Social Security.

The Pension Protection Act contains measures that will strengthen the federal pension insurance system in several ways. The new legislation:

* Requires additional premiums from companies that under-fund their pension plans;
* Extends the requirement that companies that terminate their pensions provide extra funding for the pension insurance system;
* Requires companies to measure the obligations of their pension plans more accurately;
* Closes loopholes that allow under-funded plans to skip pension payments;
* Raises caps on the amount that employers can put into their pension plans;
* Prevents companies with under-funded pension plans from promising extra benefits to their workers without paying for those promises up front.

The new Pension Protection Act also gives some new benefits to workers, and makes it easier for them to build their nest egg for retirement. Some points of the legislation regarding 401K plans and IRAs are these:

* Previously, companies were prevented from automatically enrolling employees in contribution plans, this legislation removes those barriers. Studies show more employees participate in 401K plans when they are enrolled automatically than will if they have to sign up;
* Gives workers more information about the performance of their accounts;
* Provides greater access to professional advice about investing for retirement;
* Gives workers greater control over how their accounts are invested;
* Makes permanent the higher contribution limits for IRAs and 401(k)s that were passed in 2001.