Monday, September 12, 2005

Let's do a brief review

From Anonymous:

Let's do a brief review of recent LANL events, as discussed on this blog.

Recent LANL issues discussed on this blog include claims that former director Nanos perjured himself in front of a Congressional committee last May. Then there is the related issue of Todd Kauppila's family, and the apparently empty promise made by acting Deputy Director Cobb that he was actively investigating how UC could help them out financially.

We finally got the real numbers on staff who have left the lab this past year which substantiate the anecdotal claims that there has been a significant outward migration of talent this year.

Requests for information on the specifics of former director Nanos's current job responsibilities went unanswered.


On the positive side, Acting Director Kuckuck continues to do a stand-up job putting a major "happy face" on our situation. He was spotted logging on to the new Enterprise System.

Behind the scenes the oral presentations were given by the bid contestants last week. Depending on you you talk to you can hear that 1) UC/Bechtel did poorly in their orals, or 2) UC/Bechtel did well in their orals.

The rumor of an upcoming 3 & 3 retirement incentive continues to resurface.

Suspiciously absent was any recent mention of Marquez, Fallin, or McCumber. We did have several reminders of Seestrom's contributions to LANL over the past year.


Roughly 2 1/2 months to go until the bid winner is announced.

Comments:
Just Curious,

Why does the rumor about a 3+3 retirement incentive continue to come up? Perhaps I'm missing something, but it seems to me that any such incentive must satisfy at least one of the following requirements:

- it's good for UC

- it's good for the new LANL operating company

- it's good for DoE

At least on the surface, it appears to me that it is at best a wash for UC, and is strongly negative for either the new LLC or DoE.

If only wishing would make it so.....
 
As I understand it, UC would want to have all the expensive staff retire, because that would lower the cost to the new LLC of provideding a "substantially equivalent" benefints program. Naturally, UC would only be interested in doing the early retirement thing if they thought that the Bechtel/UC consortium was going to win the bid.

As has been mentioned previously on this topic, allowing people into the UC retirement program early via incentives such as a 3+3 effectivly dilutes the value of the overall UC retirement system, because some of the people are geting benefits that they did not pay for.
 
11:43, I must have missed something, what contributions for retirement benefits have UC employees paid into UCRP since 1992?
 
I put in $16,000 last year.
 
Now that I am retired, I am opposed to and 3+3 as it dilutes the UCRS fund.
 
Because a rumor works just as well ...

I think the key here is the word rumor. Just a rumor of a VERIP would stop or at least slow down the talent drain of early retirements before the contract is awarded. Who would leave now if there is going to be a VERIP soon? It also is a mild threat of a scorched earth policy for other bidders.

The only slight hope is that if UC loses, then there will be plenty of high ranking admin types that will be leaving. I am sure they will try anything to induce a VERIP when they go.

Does anyone know how the UCRS funds will be transferred to the "new" retirement system? Will it include the over funding on a per capita basis? Which winner is better for UCRS?
 
12:07, I doubt that $16,000 was a contribution to the Defined Benefit UCRP portion of the UCRS.

Perhaps it was to the 403b or 457?
 
To 9/13 5:05 pm,

"Which winner is better for UCRS?"

Neither winner is good for UCRS. The more UC people that retire before the contract change, the less money is extracted from UCRS to fund the "new" retirement system for former UC employees. Think that might be an incentive for a UC VERIP? (For anyone who doesn't yet know, there will be no UC employees here no matter who wins.)
 
Unfortunately, I don't believe there can be any incentive for UC to offer any VERIP. UCRS would be financially better off to transfer all the expensive LANL staff into the new LLC, forever severing them from access to UCRS funds let alone an early/enhanced access via a VERIP.

Its amazing the number of people that don't get it. There will be no UCRS at Los Alamos after 5/31/2006!

Retirement funding after that date will come from the new LLC and likely include a good contribution out of your own paycheck.

The retirement fund transfer to the LLC will likely be based at that time on what the actuarial tables say UCRS needs to fork over to the LLC. I believe as well that the actuarial tables are being "watered down" to account for longer lifespans. Forget the vast surpluses presently in the UCRS system. If you don't retire under UCRS you will only see, at best, the actuarial value specifically individually tailored to you plus whatever you will be contributing to the new 401k plan.

If you don't retire under UCRS, you also likely will never again see a COLA.
 
So this is the last VERIP rumor for LANL ... no UCRS ... no VERIP,

The "vast" surplus in UCRS will only become more "vast" should LANL (and LLNL?) not transfer their portion of the surplus to the LLC. IF that is the case, remaing UCRS participants will be better off with either winner. That new level of over funding would be fertile grounds for a VERIP, just not for LANL employees.

So the question remains ... who gets the surplus?
 
Don't forget, all the funds for those electing "inactive" status remain with UCRS, as well as funds for those retiring.

Going inactive of course means no health insurance from UC, so lump sum cashouts mighr become more likely. What kind of impact would that have on the UC $ pool?

Suppose all those over 50 at LANL, say about 3000 employees, cashed out? Suppose the average lump sum cashout was $500k. That's about $1.5B. Last year the plan had revenue of about $5B and expenses of about $1.1B. Cashing out the over 50 at LANL would be a blip for a year and the plan would be rid of 3000 people.
 
"9/14/2005 11:19:20 PM - So the question remains ... who gets the surplus?"

...Schwartzenegger...
 
There is an amazing amount of misunderstanding and financial ignorance evidenced on this thread. For a bunch of highly-paid scientists, engineers and technicians. it is sad. How can you effectively plan your retirement if you have only the most rudimentary understanding of finances?

So. what does UC gain in offering a VERIP? It gains the ability to keep in its retirement system all the money actuarily earmarked for those retirees who take advantage of the deal, and use it to generate more income, as opposed to it being syphoned off by the new contractor (whichever one wins, it won't be UC) as required by the RFP.

A VERIP is in UC's best interest, and certainly in the best interest of those current UC employees that could take advantage of it.

Also think of the 7-year new contract. If you retire in the interim, your retirement checks will be signed by "Los Alamos National Security, LLC," or by "Los Alamos Alliance, LLC." In the next contract competition, whichever of those two corporations wins now might be gone, evaporated permanently, since the only reason for their creation or existence was to win the current contract. Who wants to be in that boat?
 
"as opposed to it being syphoned off by the new contractor..."

Only the actuarial value would be syphoned from UCRS to the LLC...not any part of the surpluses held by UCRS.

How well the LLC earns on its investments of those syphoned slush funds compared to UC's astounding success is worrisome, let alone what might be left after seven years.

DOE is wrecking the retirement security of a great number of professionals who served their country in cutting edge defense technologies. Some thanks!
 
"A VERIP is in UC's best interest ..."

Why would UCRS want to retain liabilities (employees) when they could retain just the associated assets (surplus)? It seems that UCRS will soon be better off but at the expense of LANL.

It also seems a little far fetched that UCRS could organize and implement a VERIP before the contract award.
 
For a benchmark...Los Alamos represents 5% of future UCRS benficiaries. Do you think 5% of $44B will be transferred to the LLC? Actuarial numbers indicate that about $1B (or less) would be entitled for transfer to the LLC pension fund. By sending Los Alamos off as a bad sheep, UCRS stands to gain at least $1B for the remaining UCRS members. NO VERIP!
 
One formula would be for UC to simply use the current lump-sum amount
each employee is currently entitled to (if they retired) for transfer
to the new LLC. For those who are under 50 and can't yet retire, a
linear trend line could be produced to construct a hypothethical
lump-sum amount. Any way you cut it, however, the new LLC pension
will start out on a very shaky financial ground. Plan on seeing
large chunks of your future pay-checks sliced off to help pay for
the new pension system. And if the lab ever down-sizes at some
future date, the payments into the pension account will decrease and
the pension will become even more unreliable. There is great safety
in numbers with the current UCRS pension. Nothing that the new
LLC pulls out of a hat will even come close to matching what we
once had at LANL.
 
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