Who benefits from Pension Protection Act?

• Position: Retirement

The U.S. faces a pension crisis of epic proportions. Some 30,000 "defined benefit plans" are underfunded to the tune of $450,000,000,000, and a number of financial specialists believe the law Congress passed recently-the Pension Protection Act of 2006--is, at best, a bandage on the problem.

Indeed, many feel strongly that the new law, which requires most pension plans to become fully funded over a seven-year period, is the legislative equivalent of "destroying the village in order to save it." When cash-strapped companies are forced to comply, they almost certainly will abandon or freeze their existing plans, maintains attorney and CPA Jim Lange, author of the book, Retire Secure! Pay Taxes Later: The Key to Making Your Money Last as Long as You Do.

"You, and only you, are now responsible for funding your retirement," he entreats. "You can no longer depend on your employer and it's hardly worth mentioning that Social Security isn't going to get you very far. As corporate icons like GM, Verizon, IBM, Sears, Lockheed Martin, Motorola, Circuit City, and Hewlett Packard declare pension freezes, Americans will need to reevaluate their retirement plans."

The new law is designed to protect not only workers, but the Pension Benefit Guarantee Corporation, the pension provider of last resort that has to step in when companies renege on their promises. The PBGC ultimately is financed by taxpayers. If enough companies fail to fund their pensions, the potential bailout could make the savings and loan debacle look like pocket change, Lange maintains.

The Pension Protection Act is almost 1,000 pages that cover 100 tax revisions. "Not only does this new law force the issue of saving...