You remember Enron, Americom, Lehman, AIG -- when an employer fails to fully fund their pension plans and can’t meet obligations to their employees, the federal insurance system kicks in to protect employee pensions -- and punish employers!

That federal system is financed by employer-paid premiums. After Enron, Congress enacted the PPA of 2006 to restore the financial stability of the federal insurance program and prevent other Enrons with strict new rules, higher employer premiums and breath-taking penalties!

The Pension Protection Act of 2006 strengthened the federal pension insurance system. Enforcement of this law was expected to end the widespread under-funding and other abuses of retirement plans. The PPA does these things:

• Requires employers that under-fund their pension plans to pay larger additional premiums to the federal pension insurance system;

• Requires employers to track the obligations of their pension plans in greater detail and with more accuracy;

• Closed loopholes that allow under-funded plans to skip pension payments;

• Raised caps on the amounts that employers can put into pension plans -- by making them add more money during good times to build a cushion that can keep pension plans solvent in lean times and;

• Prevents employers with under-funded pension plans from going further in the hole by promising extra benefits to their employees without paying for those promises up front.

The Pension Protection Act also contains provisions to help employees who save for retirement through “Defined Contribution” plans, like IRAs and 401(k)s. This law makes it easier for employees to participate in these plans by:

• Removing barriers that once prevented employers from automatically enrolling their employees in Defined Contribution plans;

• Ensuring that employees have more complete information about the performance of their pension plan accounts;

• Providing employees with greater access to professional advice about investing for retirement;

• Giving employees greater control over how the money in their accounts is invested and;

• Making permanent the higher contribution limits (passed in 2001) for IRAs and 401(k)s, enabling more employees to build larger retirement nest eggs.

Employers should understand and comply with the Pension Protection Act of 2006 -- and adjust plans to deal with the effects that the retirement of “Baby Boomers” are having on  Social Security and Medicare. Entitlement programs are expected to grow faster than the economy, faster than the population, and faster than the rate of inflation. Experts say that Social Security, Medicare, and Medicaid may account for almost 60 percent of the entire Federal budget in the year 2030.