Tuesday, October 11, 2005

More discussion on Lockheed pension plan

FYI, there are some interesting excerpts that could be taken from the GAO report (see below) that concern LANL (and SNL and LLNL).

Of course, this is directly relevant to the post on Monday:

Monday, October 10, 2005

Lockheed to drop pension plan for new employees

The reason it's relevant is that LockMart is almost certainly to be one of the companies that is used in the 'benchmark' mandated by the DOE order mentioned in the GAO report.

Given that LockMart is one of the 800 lb. gorillas in the defense industry, this can't help but eventually pull our benefits package down in the long run, irrespective of the comments from Jan Moncallo (post of 10/07/2005 03:23:00 PM, Response to recent announcement by Lockheed Martin regarding reduction in benefits), to wit: "... Lockheed Martin benefit programs have no relationship to the benefit program designs for Los Alamos employees".)

From: someone at Sandia

Tuesday, October 11, 2005 2:23 PM

To: someone at Sandia

RE: GAO report

Nope, guess again.

Among other things, our pension and benefit package is way too high, according to the GAO.

Wonder what DOE will do about this, or to us, as a result? Just guess.

"To ensure that the value of each contractor’s employee benefits are

comparable with its competitors and that costs are reasonable, DOE Order

350.1 requires its management and operating contractors to periodically

benchmark the value of their employee benefit packages

retirement pensions, health care, death, and disability
—with those of

organizations with whom the contractors compete in hiring employees.

The DOE order requires that if the value of a contractor’s benefits exceeds

the average benchmarked value by more than 5 percent, the contractor will

provide DOE with a plan to adjust the benefits so that they fall within 5

percent of the benchmarked value."

"The benefit value studies conducted for Lawrence Livermore, Los Alamos,

and Sandia in 2004 show that the value of employee benefits for these

laboratories exceeded the benchmark by more than 5 percent in several of

the four primary categories of benefits. More importantly, the studies

showed that the overall benefits for those three laboratories exceeded the

allowable 5 percent variance for the overall benefits (see table 2).

Lawrence Livermore and Los Alamos both had benefit values that far

exceeded the benchmark and, in many categories, both laboratories

exceeded all comparators. For example, pension benefits for both

laboratories exceeded those of all 15 comparators and were nearly twice

those of the benchmarked value. Lawrence Livermore, Los Alamos, and

Sandia were highest or second highest in most benefit categories.

defined benefit pension was second highest of all 15 comparators and

exceeded the benchmarked value by 68 percent.
In contrast, the value of

benefits for Idaho and Oak Ridge did not exceed the 5 percent allowable



From: someone at Sandia

Tuesday, October 11, 2005 1:31 PM

To: someone at Sandia

RE: GAO report

Such as 2.5% raises??


From: someone at Sandia

Tuesday, October 11, 2005 1:25 PM

To: someone at Sandia

GAO report

2. Department of Energy: Additional Opportunities Exist for Reducing Laboratory Contractors' Support Costs. GAO-05-897, September 9.


Highlights -


Does anyone really believe that DOE won't attempt to substantially reduce
pension benefits at LANL in future years? Whatever they promise us
today will be null and void once the new contract has allowed DOE to
"capture" the pensions of the existing LANL staff. Everyone needs to think
long and hard before handing their valuable UC pension benefits over to
the the new contractors, whomever they may be. In the end, it will be
the bureaucrats over at DOE who really call the shots with our new LLC
pension, and their sweet words promising us parity mean nothing.
20+ years with UCRP, 55 years old, no brainer here. Going to leave my $$$$ with UCRP and go inactive. At 62 with no added service credit is only ~ a $600 per month difference. I do not trust any new LLC or DOE, NNSA or any other politicians.
DOE/NNSA is forcing all contractors to pay consultants
to conduct Benefit Value Studies. If these studies
show that the contractor's plan(s) exceed the norm by
5% the contractor has to come up with plans to reduce
them to make it so

(These things are expensive. What a windfall for the
consulting companies!)

Please note that Benefit Value Studies analyze and
price plans being offered to new hires ONLY. They do
not measure the value of the plan(s) being offered to
existing employees.

Consequently, the ONLY way to reduce the value of the
plan to the target norm is to reduce the value of the
plan(s) being offered to new hires.

Thus the contractor has a choice:

1. Establish a two-tiered system with new hire plans
being worth substantially less than those being
offered to existing employees and run the risk not
being able to attract new blood.

2. Reduce the value of plans for BOTH new hires AND
existing staff (to keep things equitable???), thus
risking not being able to attract new blood or keep
existing staff.

I'd bet on the contractor choosing the first option.

But who knows?

BTW I don't know what the track record is at SNL. I
suspect that the SNL plan's value is above the 105%
norm, but I don't know how, or if, SNL and DOEALAO
have come up with or implemented anything to change
this. Perhaps someone from SNL can enlighten us.
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