Friday, February 25, 2005
|Feds aiming to break up lab pensions |
U.S. officials say UC's pension plan is too much for the competition
| The gold-plated University of California pension plan that kept the nation's two nuclear-explosives labs full of scientists after the Cold War is headed for a breakup. |
Federal officials are proposing a separate pension plan for Los Alamos National Laboratory as part of the competition for its management contract, and they plan the same for Lawrence Livermore National Laboratory.
The two weapons design labs are run by the university and account for a fifth of the University of California Retirement Plan, one of the nation's largest and healthiest public plans. It has $41.3 billion in assets — about a third as much as its cousin, the California Public Employees Retirement System — but 18 percent more than it needs to pay all benefit claims.
The university and its employees haven't had to make contributions to the plan for almost 15years, and it pays rich benefits.
If new pension plans werecreated for two weapons labs, federal officials propose that retirement benefits for all current and former employees would remain the same. So why break up a healthy plan that employees consider perhaps the best perk of working for the university?
In short, the plan is too good, and potential challengers to the university's operating contract at Los Alamos say it makes the competition lopsided.
"A number of firms have identified this as a barrier to competition," said Tyler Przybylek, acting chief operating officer for the National Nuclear Security Administration and chairman of a panel running the Los Alamos competition. "If you allow UC to keep the UCRP and everyone else has to create a separate pension plan, that seems to be an advantage to the incumbent."
Thegovernment also wants more say in the pension plans for the weapons labs, such as being notified of contributions and changes in benefits. In the past, university officials decided unilaterally on the level of contributions and got full reimbursement from the NNSA's parent organization, the U.S. Department of Energy.
"We think there's a discussion role when you're using taxpayer money as opposed to simply being notified what the bill is," Przybylek said.
Under a proposal last Friday, the university would have to break out the assets for a separate Los Alamos pension plan to be managed by whoever ends up as operating contractor for the lab. Los Alamos accounts for $4.28 billion of the university plan, but the new pension plan would be much smaller.
The UCRP would continue to hold assets for, and pay benefits to lab retirees and their survivorsas well as any employees already vested. Typically, full-time lab employees are vested after five years of service.
The proposal says benefits in that plan must be "substantially equivalent" to existing benefits in the UCRP. If the benefits are more than 105 percent higher than pension benefits at other weapons sites, the lab operating contractor must propose a timeline for bringing the benefits closer to those of the complex without reducing any benefits for any current employee.
"They're going to have to come up with a very creative way to bring pension and benefits in line in a way that doesn't impact current employees," Przybylek said.
Los Alamos employees and retirees are worried that they will lose retirement benefits in the competition. But NNSA officials say they're wary of doing anything that might be construedas a benefit cut and cause a flood of retirements or a brain drain at the lab.
"We don't intend to do that. That's not what's in the works for current employees," Przybylek said. "We want someone to come in who has an eye on recruiting and retaining engineers and scientists of the caliber that we've had for years but still do it with some business sense."
He said the move to a separate lab pension has nothing to do with a long-running dispute between the Energy Department and the university over alleged overpayments that the university made into its plan from Energy Department funds. The university contends the overfunding of its pension plan is overwhelmingly the result of prudent investment and good returns in the 1980s and early 1990s.
But Energy Department audits going back to the 1980s suggest that taxpayersmay have been charged $1 billion or more beyond what was needed to pay pensions at all three of the federal labs managed by the university.
What happens to those alleged overpayments is likely to figure prominently in negotiations between the Energy Department and the university over creation of the new pension plans for the two weapons labs.
Contact Ian Hoffman at email@example.com.