The Principal Financial Group Applauds Passage of Historic Pension Reform - Bipartisan Measure to Boost Retirement Security
August 4, 2006 (Des Moines, Iowa) — The Principal Financial Group®, the nation’s 401(k) leader and total retirement solutions innovator, applauds Congress for passage of historic retirement savings legislation, the Pension Protection Act of 2006 (H.R. 4), calling it a critically important step toward helping millions of American workers achieve a more secure retirement.
"We applaud Senate Finance Committee Chairman Charles Grassley (R-IA) for his vision and leadership in guiding the legislation. We also praise members of the bipartisan Pension Reform Conference for their work in crafting a properly considered compromise that at last brings certainty to a number of key issues facing the nation’s retirement savings system," said Larry Zimpleman, president and chief operating officer, The Principal®. "We believe this legislation makes retirement savings plans stronger and more accessible for employers and American workers. Now we look forward to the President signing the bill into law."
The Principal has long supported the following key provisions of the bipartisan pension legislation that would:
- Bring more certainty to defined benefit plan funding rules.
- Provide legal certainty to hybrid plans and clarification of the age discrimination rules.
- Approve creation of the DB(k), a hybrid combination of a traditional defined benefit plan and a 401(k) defined contribution plan. Developed over the past six years by The Principal and the American Society of Pension Professionals & Actuaries (ASPPA), the DB(k) concept, allows employers to provide guaranteed defined benefits and 401(k) employee savings in a single plan, eliminating the complexity of administering two separate plans.
- Provides employers an automatic safe harbor that simplifies the rules on auto enrollment and auto deferral increases to help workers increase their retirement savings each year.
- Give clear direction to plan sponsors who want to make investment advice accessible to participants.
- Make permanent the retirement savings tax incentives included in the Economic Growth and Tax Relief and Reconciliation Act (EGTRRA).
"The reforms in this legislation are vital steps in the right direction toward stabilizing defined benefit pension plans, which are a critical source of dependable retirement income for U.S. workers," said Zimpleman."The DB(k) is a fresh, innovative approach which can make it easier for employers, especially small and medium-sized companies, to offer comprehensive retirement programs to help their employees achieve long term financial security."
About The Principal Financial Group
The Principal Financial Group® (The Principal®)2 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and banking through its diverse family of financial services companies and national network of financial professionals. A member of the Fortune 500, the Principal Financial Group has $206 billion in assets under management3 and serves some 16.3 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
1) The May 2005 "Bundled 401(k) Buyer's Guide" published by Treasury & Risk Management lists The Principal as the 401(k) leader based on the total number of plans administered.
2) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
3) As of June 30, 2006.
