Publications

PPA Overhauls Funding Requirements for Defined Benefit Pension Plans

Fall 2006
Susan E. Bernstein | Mark E. Brossman | David M. Cohen | Laurence M. Moss | Ronald E. Richman | Holly H. Weiss
Employment & Employee Benefits Developments - Fall 2006

The Pension Protection Act of 2006 (the “PPA”) overhauls the funding rules governing single-employer defined benefit pension plans. The changes increase annual funding costs for employers because they will have to fund plans more rapidly. Among other things, the new law also introduces new actuarial assumptions, tighter smoothing methods, shorter amortization periods, expanded notice and disclosure requirements, and increased deduction limits. Here are the key provisions of the new rules, most of which will take effect for the 2008 plan year.