Friday, May 20, 2005

Pension changes could spur rash of retirements at LANL

Pension changes could spur rash of retirements at LANL
By DIANA HEIL The New Mexican

A generous benefits package at Los Alamos National Laboratory has kept employees loyal under the University of California’s management. Now, a first-ever competition that could unseat UC has thrown those perks into question, and some employees, including top scientists, are tempted to retire early to preserve their benefits.

The U.S. Department of Energy is requiring all bidders to create a new pension plan.

The lab has projected a 50 percent increase in retirements this year, which would amount to 379 employees leaving, spokesman James Rickman has said. Under the UC plan, employees who are at least 50 years old with more than five years of service are eligible for retirement.


Full Story

Please help me out here. Contract transition Option #2. Does this mean you lose your UC medical, dental, vision and life ins? Then you may start drawing UC retirement pensions when you are 59 - 60? If you become "vested" with the new contractor, you may "double dip" on retirement pensions? Thanks in advance.

"Freeze their accumulated interests in the University of California pension plan."

“They’re guaranteed a job with the new contract, and they would be able to move their leave balances over, just as if they were transferring, but since they vested their rights in the university plan, they would become new employees for retirement plan purposes under the new contract,” Przbylek said.
I need help too: does the following, in the RFP, mean that the contractor CAN terminate the pension plan?

(10) Pension Plan Terminations

(i) The Contractor shall not terminate any pension plan covering any site employee without at least 60 days notice to and the approval of the Contracting Officer prior to the scheduled date of plan termination.
"Inactive Vested Transferring Employee" means effectively you quit under the UCRP plan. Today, if you quit before 50 and you have 5 years in UCRP, you become an "inactive vested participant" of the UCRP. Anytime after 50, you can apply to UCRP and ask to be converted to a retiree. When going from inactive to retiree status, you do not get certain benefits that an "active" (employed) participant of UCRP gets at retirement, such as medical benefits.

The RFP is providing three avenues for today's active UC-LANL employees. Under "Transferring Employee" you just show up at the LLC on June 1, 2006 with all of your years of service, your vacation balance, and your sick leave balance. You go into Pension Plan I, which is supposed to have the same comparable benefits and the same age factors as UCRP. Unspecified is how the LLC will get the cash out of the existing UCRP in order to initially fund Pension Plan I, so this pension plan could be severely underfunded for several years until they get it all sorted out.

"Inactive Vested Transferring Employee" makes it simpler for the new LLC. On May 31, 2006, you tell UCRP you are quitting LANL and going inactive. The next day, you show up at the new LLC, with no break in service. They will honor your vacation balance, sick leave balance, and previous years of service EXCEPT that (1) you have to go into Pension Plan II, and (2) your previous years of service will NOT count in the calculation of pension benefits, but can count in the eligibility rights.

This last point may be confusing to LANL employees who have not compared other retirement plans. The new LLC can establish a brand new pension plan, but it must be within 5% of a comparator group. One common requirement elsewhere is that you cannot retire unless you are over the age of 65, or you are over the age of 50, but your combined age and years of service equal 75. So a 50 year old with 25 years of service can retire under such a plan. If the new LLC invokes such a plan for Pension Plan II, then your previous years of service at UCRP can be used in order to calculate your retirement eligibility. But if you have only put in 10 years at the LLC, they calculate your pension benefit on those 10 years. Since you went inactive with UCRP, you are expected to apply back to UCRP for the rest of your inactive retirement rights.

"Inactive Vested" makes it much simpler for the LLC, because your accumulated pension interest in the UCRP remains forever with the UCRP, and the LLC need only worry about getting funds in the future for their much more limited liability in Pension Plan II. For the employee who is worried about the viability of Pension Plan I in the new LLC, this transfer status may be appealing. But since Plan II is projected to be substantially less generous than Plan I (so that all of our benefits toe the line of no greater than 5% better than "average"), then each employee will have to make the individual trade-offs of security vs. risk, based on their current age, current years of service, and anticipated retirement age.

Option 3 is available only to UC-LANL employees who are already eligible for retirement today, i.e. over the age of 50 and with 5 years of service. You simply retire now under UCRP, and show up at the new LLC asking for a new job. You are virtually identical to a new employee, everything is reset to zero, except for one important point discussed below.

Retiree medical benefits for LANL are unique (is LLNL under the same plan as us?) in that when you go from active to retired status, you are offered retiree medical and dental, but the funds for the medical are paid out of the LANL contract, and only the dental is paid by the UCRS. I don't know when this change was made at LANL, but elsewhere in the UCRS retirees' medical is paid by the UCRP. Thus the new contract with the LLC will have to continue to pay all LANL retirees' medical (and apparently the dental now too) out of the annual contract. So EVERYBODY past, present, and future is switched to the new LLC medical plan, and the RFP calls for the present retirees' medical plan to stay substantially equivalent.

So any retiree showing up at the gates of the LLC looking for a job will already have a retiree medical plan with the LLC. What remains to be specified is the new medical plans for the other classes of employees.

Not specified by the RFP is how our present two-tiered vacation RATE plans (~5 weeks vs. 3 weeks+ ) will be transferred into the new LLC and how it will be applied to the four classes of employees (Transfer, Inactive Vested, Retiree, New). Presumably each bidder will create their own rules, and we'll have to wait until after Dec 1, 2005 to find out.

I am a staff member deep in the trenches at LANL, and the above is just my own interpretation and insight into the RFP. Please point out my mistakes and flaws.
Replying to 5/20/2005 08:27:25 AM

I believe any employer can cancel any pension plan at any time, with a lot of IRS regulations attached. Many companies have indeed cancelled their DBP and converted everyone to DCP, in order to reduce their future liabilities.

In the event the LLC wants to go down this path, then this section says that (1) NNSA has to approve such a move, and (2) after everyone has been paid off for their accumulated portions, and there is extra left over, then NNSA wants it back, with interest. No mention is made on how to handle the event that the plan is underfunded. If we extrapolate to the outside world, then in such an event all participants get a reduced benefit.

I can't help but believe that NNSA put in the "give back the excess with interest" because of their frustration with present overfunded UCRP. UC's point of view is that they have been saving DOE money for the last 15 years by not requiring any pension contributions. DOE has the opposite opinion that they gave UCRS too much money in the 1980s and they want a refund of the excess.

So in the new LLC, it's much simpler. The new LANL pension plan is only for LANL employees and not comingled with other employees. One could imagine that if the new LLC pension plan became too overfunded again, then DOE could order the termination and conversion in order to get the money back into their hands.

The standard demotivation for any employer, including DOE, to terminate their pension plans is the loss of key employees who go to other employers with better benefits. But if the pension plan gets too big, then money talks. UCRS and CalPers are enormous and way over-funded, but as state employees' accounts requires a lot more political finesse and legal savvy in order to effectively raid. But California is trying . . .

I am a staff member deep in the trenches at LANL, and the above is just my own interpretation and insight into the RFP. Please point out my mistakes and flaws.
So INACTIVE VESTED (I am 50 with 25 years) employees
choosing option #2 can defer
their UCRP until age 60 or so.
But they will NOT be eligible
for UC medical, dental, vision
and life. Right?
Sounds like an INACTIVE VESTED employee who is guaranteed a job with the new contractor. Sounds like your "accumulated interests in the UC pension plan" will be frozen and protected. Sounds like you will not be eligible for UC group insurance but RETIRED employees will be eligible. WOW!
a lot to think about.
People are assuming that retiree medical benefits are part of the current contract. They are not, UC continues to pay retireee medical "out of the kindness of their heart" there is nothing in the contract to my understanding that requires UC to provide medical benefits to retirees.
Under Option #2 what happens to the Sick that is transferred?
Does it count towards years of service (it does under UC) when you retire?
What is the accumulation of S and V ?
Screw it.

I'm 40 so I will not be retiring before the contract change..... but I WILL be leaving LANL. It is barely worth it to work here now WITH UCRP. Without UCRP it just simply is not worth it. The remote location. The housing. The crap with the lab. I'm sure the lab will continue on without me - I'm not a big-shot, I'm "just" an engineer with about $200M in "education" in weapons development. Too bad NNSA and congress. You lose.
Screw it
Where in the world does one get an education that costs $200 million?
You must have one hellava student loan to pay off!
The current LANL retirees' medical insurance does not come from UCRS but rather from the LANL contract. When the contract changes, ALL retirees will get their medical from the new contractor.
I for one hope the new contractor gets with the program on medical insurance.

It is my understandig the LANL is self-insured, which seems to me to be incredibly stupid. Compare a risk-pool of 8,000 people with a risk-pool of hundreds-of-thousands in the regular UC employee pool.

I don't buy the reasoning that LANL is out in the sticks, so it can't be in the same pool. With information technology, it doesn't matter where one lives: money, claims and records move instantly world-wide.

With some luck, a different contractor might bring in an insurance company that doesn't deny claims made more than 10 miles from one's home, or local claims made because they don't have agreements with the only providers within 100 miles.

LANL health care coverage now is a deteriorating competitive disadvantage to attracting and retaining employees, and needs to be in a risk pool large enough to make financial sense.

UC's operation-management record is such a collosal failure that I still can't see how it can win the new contract. Bechtel's NTS record, with Fred Tarantino I'm told demolishing nearly-new buildings to save money, hardly serves to me as a shining beacon to save UC's near total operations incompetence.
Ok I have a retirement question for the people already retired and in the UC system that read this. Say you are 58 and retire in the UC system, you are not yet eligible for SS, but when you get to 62 you can then get an SS benefit. Now here is the question, is that benefit reduced because you get a pension of more than 35K? The second question is, is that benefit taxed because your aggregate pensions are more than 35K? I’ve been looking on the SS page but it’s pretty short on details.
Los Alamos people are expensive to insure because they are older and use a lot of medical services. Also the newer drugs for blood pressure, cholesterol, depression, and stomach disorders are expensive and used by many here.

Self insured - you cost, as a LANL group, what you cost. What you are asking for is a lower cost 'group' somewhere to take on part of your expenses and thereby lower your personal cost.
Can someone out there give me some clarity with the pension? Will the age 50+ with 5 years retirement no longer exist with the new contract? I am over age 50 and have 2 years with LANL. How long will it be before I am eligible for retirement with the new plan? Thanks
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