A major overhaul of US pension legislation passed the Senate last week and has been sent to the President for final approval.

The bill was approved in a 93-5 vote last Thursday in the Senate. It addresses the estimated $630 billion in underfunding in pension plans, which affects approximately 45 million American workers and retirees.

The bill is the first major change to pension law in 30 years.

The bill requires companies to fund 100% of their projected pension obligations, an increase fom the current requirement of 90%. Companies that do not meet the obligation will be prohibeted from increasing employee benefits and must make accelerated payments to catch-up.

The bill will add more information to disclosures given to workers and retirees, which give the status of their pension plan. It will also restrict golden parachute executive compensation arrangements.

The bill includes $60 billion in tax breaks that permanently extend pension and savings tax incentives that were included in the 2001 tax bill. The package includes increased contribution limits to IRAs, 401(k)s and a permanent saver's credit for lower income workers.

Most lawmakers have welcomed the bill as an acceptable compromise.

"This bill, that passed in both the houseand the Senate, includes about 95% of the compromise language we developed in the Conference Committee," said Senator Mike Enzi (R- Wyo.), chairman of the Senate Health, Education Labor and Pensions Committee. "It's a package that will significantly strengthen pension funding rules, help curb record pension failures and better protect the retirement dreams of 45 million Americans."

"Although we didn't get everything we wanted in this bill, I am pleased the Congress will not leave this critical job unfinished as we adjourn for the August recess," he stated. "The 45 million Americans directly affected by this bill deserve a greater sense of security about their retirements as we head ito the end of summer."

Senate Majority Leader Bill Frist (R-Tenn.) said that the legislation will shield taxpayers from a possible multi-billion dollar taxpayer bailout of the federal Pension Benefit Guaranty Corporation, the instituation that guarantees pension benefits for workers and retirees.

"Promisess made to the American worker will be promises kept with the passage of this pension bill," said Frist. "We have protected the interests of retirees by strengthening pensions funding rules and making permanent the retirement security provisions from the 2001 tax bill, which is a major step towards making the president's tax cuts permanent."

The bill, if approved by the President, will come into effect on January 1, 2008.