A Pension Idea Some Want to Retire
A new round of skirmishing is underway over retirement and health-care programs that are provided to contract employees at the Energy Department.
Watson Wyatt Worldwide, a consulting firm, urged Congress yesterday to stop the department from changing its benefits policy, saying it had learned department officials have been briefing contractors and signaling a new policy would be implemented.
"The Department of Energy isn't the proper place to be setting public policy on pensions," said Gene Wickes, global director of benefits consulting at Watson Wyatt. "When the DOE comes out and says, 'We don't allow these kinds of pensions,' they're getting into the public policy area."
The department pays 100 percent of pension and health-care costs for its contract employees, through reimbursements to the contractors that manage and operate research labs and nuclear weapons sites. Last year, it spent more than $780 million reimbursing contractors.
As of fiscal 2005, the department had incurred $11.6 billion in unfunded liabilities for pensions and medical benefits.
Last year, the department said it wanted to change pension and medical benefits for future contract workers. Under the change, the department would reimburse contractors only for the costs of defined-contribution retirement plans, such as 401(k)s. Future retirement and health-care plans provided by contractors could not exceed industry benchmarks for value and cost by more than 5 percent. Benefits being provided to about 200,000 current contract employees and contract retirees and dependents would not be affected.
After pension experts and members of Congress, including Sens. Edward M. Kennedy (D-Mass.), Barbara A. Mikulski (D-Md.) and Harry M. Reid (D-Nev.), objected to the policy change, it was put on hold last year by Energy Secretary Samuel W. Bodman, who directed department officials to hold talks with interested parties.
Megan Barnett, an Energy Department spokeswoman, said yesterday that the department is "engaging stakeholders to solicit their input and, at this time, has made no decision on a path forward."
Watson Wyatt has contended that the government should avoid telling employers what types of retirement plans they can and cannot offer and that Energy's proposal last year would have prohibited guaranteed pensions for new contract hires.
And now, Wickes said, "we believe they are about ready to announce they are going to enforce that policy."
Barnett said the department is open to different views. "Naturally, benefit consultants, such as Watson Wyatt, have a vested financial interest in this issue because they provide consulting services on traditional pension plans," she said in a statement. "We appreciate their comments and the comments of others as we seek to find ways to ensure the long-term stability of our contractor employees' pension and medical benefits, while managing the long-term financial commitments of the department."
Wickes said Watson Wyatt, which operates in 30 countries and has annual revenue of about $1.3 billion, has "a long history of speaking out" on the importance of pensions.
"If the charge is that Watson Wyatt has a vested interest in a healthy pension system, then I guess we do," Wickes said. "We believe strongly in the value of guaranteed pensions to retirees and sponsoring companies."
Congress recently approved a new pension law designed to help preserve employer-sponsored pension programs, Wickes noted. For one part of the government "to say, 'We won't allow them for anyone who does business with us,' it sounds like they are going too far," he said.
William S. Heffelfinger III, deputy assistant commissioner for field operations at U.S. Customs and Border Protection, will retire June 30 after nearly 38 years of federal service, the agency announced.
Last year, Heffelfinger was honored with the Secretary's Gold Medal, the highest award in the Department of Homeland Security, for his service as commanding officer of the 700-person CBP team deployed in response to Hurricane Katrina. In 2005, he was awarded the meritorious presidential rank award.
Before his current post, Heffelfinger was assistant to the commissioner at the old U.S. Customs Service. He previously worked at the Treasury Department.
Stephen Barr's e-mail address email@example.com.