President Bush on Thursday put his signature on the pension reform act, a measure he described as the most sweeping overhaul of the nation's pension laws in more than 30 years.
The pension law is intended to strengthen traditional defined-benefit plans, particularly the 30,000 plans that are currently underfunded by an estimated $450 billion. Those plans must reach 100% funding, up from the current 90% requirement, in seven years.
The airline industry in particular has sought pension law reform. Bankrupt carriers such as
Delta Air Lines
, which have frozen their pension plans, get 10 extra years to meet their funding obligations.
Two airlines with active defined-benefit plans, American Airlines parent
, get 10 years after the new funding rules go into effect to meet their obligations, three years longer than other companies.
The most underfunded companies must contribute at a faster rate and face restrictions, including a ban on increasing benefits.
"Americans who spend a lifetime working hard should be confident that their pensions will be there when they retire," Bush said. "Some businesses are not putting away the cash they need to fund the pensions they promised to their workers."
As part of a plan to boost savings, the pension legislation allows workers to contribute more to personal retirement savings accounts, such as IRAs and 401(k)s, in future years. It also allows employers to automatically enroll workers in 401(k) accounts.