Thursday, January 26, 2006

Nasty Surprise

I have heard at least one person suggest that the proposed UCRP LANL retiree split would have occurred even had Lockheed won the contract. This statement could not be more wrong.

First, there is no way DOE could have forced UC to split off those UCRP retirees who had retired from LANL, had LM won the contract. Second, there is no way they could have forced LM to except those non-contributing retirees into LM's "substantially equivalent" retirement program.

Finally, as others have observed, it is all about money. UC sees an opportunity to relieve the UCRP program of unattractive members, from an actuarial point of view -- the long-lived, healthy lifestyle LANL members. DOE sees this as an opportunity to relieve themselves of the financial obligation of supporting a now underfunded UCRP. If you look at the current UC/DOE contract, page 29, you will see that DOE agrees to fund shortfalls in the UC pension plan arising from economic conditions beyond UC's control.


(5) In the event that there is no successor plan, a reconciliation of funding obligations shall be done. A separate accounting of assets and liabilities for contract employees shall be maintained by the Contractor. The Contractor shall assure that accrued obligations to contract employees are met and that the fund is being prudently managed. If, pursuant to approval by the Regents of the University of California, all UCRP obligations to contract employees are fulfilled through a plan spin-off and termination under the process outlined in subparagraphs (e)(3) above and (g)(2) below, as applicable, the Contractor shall return any net excess assets attributable to contract employees to DOE, if approved by the Internal Revenue Service. If a funding shortfall arises as a result of economic conditions beyond the Contractor's direct control, the DOE agrees to contribute funds necessary to fully fund liabilities to cover obligations to contract employees, not including active employees who continue to be permanently employed by the Contractor.

This was a nasty surprise that was sprung on us; at least it was a surprise to those of us who were foolish enough to have believed DOE's promise that existing retirees would not be affected by the contract change-over.


Perhaps David is wrong as to the specifics of Doug's argument; perhaps not. The argument is speculative, and if "no way" was truly an expression of irrefutable logic, then one wouldn't ever hear the familiar retort "way." But, IMHO, David is right in observing that, "Reasoned arguments on these subjects would fare better."
The only reason to split off the LANL employees is to figure out the obligation and assets to transfer to the new plan. Please give me a reason why LANS is any different than LM in this regard. The plan is not separating from UC, but simply putting the assets into a different category. There may be reasons the UCRP wants this separate for their own purposes besides the transfer of funds to the new plan, but this has nothing to do with which contractor it is. I don't know what you mean by "forced LM to accept those non-contributing retirees into LM's 'substantially equivalent' retirement plan". I don't see what that has to do with the UCRP-LANL split at all. No one is moving the non-contributing retirees into the LANS retirement plan and there has been no discussion of such a thing and, in fact, Anastasio as specifically said he is not interested in that. It is the best interests of UC and DOE to do the UCRP split (and not the best interest of the retirees). But it really has nothing to do with whether LANS or LM runs the lab.

If "the only reason to split off the LANL employees is to figure out the obligation and assets to transfer to the new plan" why couldn't this be done without an actual establishment of a UCRP-LANL for second class retirees? The actives at LANL could easily perform the requisite computer modeling. I bet you could do it yourself on your home computer.
gedankenexperiment: You are correct, and it says as much on the UC website describing the UCRP-LANL split. It says that it isn't needed to do the transfer. But it says it makes it easier to do so, probably because it clearly demarcates the UCRP-LANL boundary to DOE to reduce the liklihood for a "raid" on the UCRP plan. It also allows the DOE to see what its "obligation" is to retirees to ensure the plan is viable on the long term. So I understand why the UC wants to do it and why the DOE is likely to approve it. It is just not necessarily in the best interest of retirees because it will result in no active members after the transfer.
The demarcation already exists: it is the sum of all the identifiable LANL members of UCRP. Why should the latter be exposed to a greater risk of a DOE raid?
David, Doug, and the rest

I think I see the big difference between what everyone is thinking and saying:

One side (David) sees things as
"No one is moving the non-contributing retirees into the LANS retirement plan and there has been no discussion of such a thing and, in fact, Anastasio as specifically said he is not interested in that."

The other side sees it as exactly as the exact opposite. Part of it comes from the fact that a good many people on this blog trust UC/DOE as far as they can throw the Otowi building.. and part of it is that this has been the first step in multiple corporate changes in pension plans.

I also realize that now that Dug has left this blog.. I am probably the only person under 40 posting. From what I can tell with talking with people at the lab.. the mood seems to be split into two distinct groups:

Under 40. Never expected to get a pension, social security, medicare or any other benefit. There was no way it could be paid for in the long run.

Over 40. What do you mean we arent getting what we were promised. It was paid for.. wasn't it?
I thought I already posted an answer, but it doesn't seem to have made it. The number of people is well known; the amount of money assigned to those people is not so well known. As I understand there have been disputes as to how much money has been contributed to UCRP by DOE. Dividing the pot is an attempt to resolve this. There may be two views here, but I don't understand the other view. Not trusting UC isn't what we are talking about here. The question was whether the split would have occurred regardless of who won the contract. The issue I'm bringing up is unrelated to who won the contract.

Do you understand economies of scale? Do you recognize that by splitting us off, thereby reducing the size of the retirement fund that LANL employees have working for them will put the future retirement income of all LANL retirees at risk?

An idea!!!

Personally I feel that the only way a fair system can be established is to stop UC / DOE dead in their tracks, by allowing the two law firms listed on this site to work in tandem; if they agree. May I suggest that you prepare your questions and find a spokesman and if possible have a lawyer sit in on the questioning even if that means he has to be AE'd onto the facility during the televised presentation, and that he or she be given total access to questioning those who whish to set up a smoke screen. Is there anyone out there that is willing to AE this lawyer on site? If nothing else please have someone tape the entire proceeding and send a copy to both of the lawyer for review. Keep one tape in a safe place off site where no one has access to it. If that means the entire presentation has to become public information available on the web for permanent archiving in order to keep them honest then so be it. I am sure there is some computer tech that knows how to do this at LANL.

Just a thought.

IMHO I can not think of a single reason why the UC Regents had to split off its current and past retirees onto a new but separate plan other then to allow them to sever all current and future liabilities of which they are now legally obligated.

In fairness what should have been done is to allow anyone that is eligible to retired before June 1st 2006 to retire on the primary UCRP. Any old retirees are to remain on it too. For those who are not fortunate enough to retire because they are not fifty years old, they should have been given a choice. They could turn their
lump sum as calculated by the LANL benefits web site over to LANSLLC so they can do as they wish with it, or take the lump sum and invest it however they wish in order for it to be more secure. Then and only then will the employees of LANSLLC have a fair shake at obtaining what is rightfully their. I hope this does not lead into allowing your funds to be accessed by those who make up the other three companies in five years is ludicrous. That would be a total disaster since the pot will dwindle very fast, if anyone even gets to become vested.
Gruntled Guy,
Not only was it promised and paid for, but also we earned it in exactly the same manner as the members of UCRP did at every other UC campus. I may be naïve, but I fail to see the legal or the moral basis for such an ex post facto differentiation as the proposed cloning of a UCRP-LANL.
It is hard to say you have earned it when you havent paid a penny into it for X years. I am saying this as the young guy who has heard all the near-retirees talk about how wonderful the LANL retirement was because they hadn't had to pay a penny in years.
I think the reason for not paying into it was covered in a previous post. I'd say we were fortunate to say the least but I am sure that if we were requested to pay, we would have in hopes to have a future. Thank you for your concern.

Maybe someday you'll be offered the same deal but I think in todays world you should make your own nest egg independent of any promise or firms. As you can see even the UC is not dependable.
Gruntled Guy,
The way you earn a defined benefit pension is by working for your total compensation, which includes your salary and your benefits package, in accordance with the agreement between employer and employee at the time of hiring. As I recall, a period of 5 years establishes vesting and from that point on a pension has been earned, though you may have to wait until you've reached the required minimum age before you can begin to draw your earned pension. And, as far as I know, the same conditions of employment have been in effect at every UC campus, including LANL. My main point is that the manner in which the UCRP pension was earned, the promise that was made, and the process by which it was funded was the same throughout the University of California. So what part of ex post facto differentiation of pensioners is unclear?
I didn't say that the split off was a good idea. I just said I believe it was unrelated to which contractor won. I believe it is a terrible idea for the retirees (and inactive) since once the LANS split occurs, there won't be anyone paying into the plan. It will have to sustain itself just on investments. And we've already been told that starting this year the UCRP plan itself will need active member contributions. As important is the fact that the split-off may not be properly calculated. I certainly don't want to be the last one drawing from the UCRP-LANL retirement. But this is unrelated to the original point that this was a result of LANS getting the contract. I do think the split off will almost certainly underestimate the contribution from LANL and the fact that we didn't pay into it for awhile but now will not be able to benefit from the active payments is another aspect of the unfairness. Although UC says it will be administered the same as the full UCRP plan, there is no way that the full UCRP and UCRP-LANL plans will not diverge.
Although UC says it will be administered the same as the full UCRP plan, there is no way that the full UCRP and UCRP-LANL plans will not diverge. I do not believe that retirees should be put onto the UCRP-LANL plan. That is just plan wrong, period.

In fairness what should have been done is to allow anyone that is eligible to retired before June 1st 2006 to retire on the primary UCRP. Any old retirees are to remain on it too. For those who are not fortunate enough to retire because they are not fifty years old, they should have been given a choice. They could turn their
lump sum as calculated by the LANL benefits web site over to LANSLLC so they can do as they wish with it, or take the lump sum and invest it however they wish in order for it to be more secure.

As far as I am concerned this is how it should be and this is what we should be striving for at the meeting and by legal counsel. Does anyone have a better plan?

We finally found something to agree on: splitting UCRP-LANL from UCRP is a terrible idea.

I go one step further and present this proposed action as yet one more in a string of actions that demonstrates UC's complete diregard for LANL employees. This pattern of neglect regarding their responsibilities to their employees should have been sufficient cause for the LANS LLC to have lost the contract. Since it was not, the message is now clear that LANL employees may continue to expect to be treated as they have been during these past two years.

I agree with you with the exception that LANS is not UC. There is essentially no continuity with the managing of the Lab as illustrated by the radical change in the retirement plan. Lumping LANS as UC is not correct. LANL will have a new manager. How much continuity you want to argue for is up for grabs, but probably the biggest continuity is in the staff.
My apologies.. my comments were rougher sounding on reading them in the morning than they should have been.

My take on it is that UC has not seen LANL or LLNL as a seperate Campus for at least the last 10 years. I think that at least for LANL we have that thousand mile buffer zone and 60 year history that kept a lot of people from realizing that.

I dont think that this is just stuff that has happened since Nanos, but stuff that has been in the works for a long time. I also feel that pension changes are the low hanging fruit that UC sees as grabbing right now.. and that the changes after Jun 1 are going to be a lot more profound.

LANS is not UC, we all recognize that. LANS is comprised, in part, of UC. The continuity, therefore, includes all of those LANL managers who were selected and supported by the UC-led LANL. The UC flavor remains, and it is a bad taste.

What is the continuity? Four senior managers. That doesn't make it UC and certainly doesn't make it a continuity. It is even possible that 4 senior managers might have survived under LM just for continuity sake. Anastasio is from LLNL and from everything I hear, it is a big loss for LLNL and a big gain for LANL. The way LANS will work is clearly quite different from a UC managed lab. Since can't do the control experiment we don't know how ] different it would be under the LM group.
Gruntled (first name basis OK?),
Apology accepted (no offense taken). I'm wary of late night comments myself (you'll eventually find out about senior moments). But I want to re-emphasize my point, which I sense might be eluding you still: It doesn't matter how "UC" (presumably UC management) "sees" LANL or LLNL and it matters even less how you and I or anyone else think "UC" sees us. What matters is how we were perceived by the official terms of our employment. When I was an active employee at the Lab my employer was the University of California and my campus location was LANL (regardless of anyone's personal inclination to think otherwise) and my retirement system was UCRS, and now my legally and honestly earned retirement benefits are being provided by UCRP. And I am entitled to keep it that way until UCRP as a whole or I go belly up, whichever comes first.
David: I am not so sure that sending Anastasio to LANL is "a big loss for LLNL." Remember that he presided over the NIF fiasco!

NIF started under Tarter, and became unwound under Tarter. Losing Mike is a big hit to LLNL.


I guess if you want to quibble about what level constitutes a "senior manager", you can, but I would rather not. My point is that there will not be the house cleaning with LANS that there would have been with Lockheed. As a result, many of the UC-inspired managers will remain.

I don't know the detailed plan from LM as to what managers would be replaced and how quickly. I also don't yet know the full plan of LANS, but the senior managers have been designated. I suspect there will be other significant changes too, but these will take time. I don't know if there is a good way to compare the two bidders in this regard. We can only suppose.

Issues like this:

highlight the types of behaviors that will not be rooted out under LANS. I refer to the LANL Public Affairs Office's response, as much as to the event being reported. No "senior" managers are involved in this continued little bit of PA dishonesty, unless McCumber wrote Falin's response for him. Remember, these LANL PA folks are the same ones who brought us that fine lie, "The blog is populated by just a few highly vocal malcontents.", and who kept the facts from our community for three days after they knew about the Americium contamination episode last year. If anything, I expect the dishonesty and secrecy from the Public Affairs office to increase under LANS.

I guess you know a lot more than I do about LANS will manage the Lab. You say you expect dishonesty and secrecy to increase, but I don't see the basis for this in fact. But then maybe you know the minds of the new managers coming in. These kinds of statements don't help make LANL a better place. Calling individuals and managers to account for their specific actions might help. Vague unprovable statements about new managers does not. Statements like yours reinforces the view that you quote about the blog. It is consistent with what I hear from those I know who have given up on the blog.
Don't throw the baby out with the bathwater (trite but à propos). We have spawned several sub-threads within this thread. Perhaps your continuing dispute with Doug deserves a separate thread, or maybe you guys should just agree to disagree. BTW, I agree with the tenor of the first comment, above. Nevertheless, I urge you and your colleagues not to give up on the blog. The diversity of views expressed here (alas, not always adhering to the posting guidelines) is a good thing.

Now you are being purposefully obtuse. The LANL PA office has a far-spread reputation for being secretive and dishonest. If you do not believe me, ask any of the reporters who have had to deal with it. If you do not know any reporters, ask me and will give you some names and contact information.

UC continues to run the LANL PA office. They have suffered no penalty for the disgraceful way in which they have chosen to run that office. The same people who ran the PA office in recent years continue to run it. The behavior will continue, as there has been no disincentive for it. It is that simple.

At this point, I really do not see any benefit for continuing this discussion, as there is very little that seems to be coming out of it.


Arcs_n_Sparks is correct. NIF development mismanagement happened on Bruce Tarter's watch - and he paid for it.

Mike will missed at LLNL (he has demonstrated vision and leadership) - on the day the LANL contract was announced, when Mike entered the overflowing B123 auditorium to address the lab, he received a spontaneous standing ovation from the 400+ LLNL employees in attendance.

Unfortunately for LLNL (as we will no longer be part of UC or UCRP), I expect Mike to be over us again someday - not as lab director, but as the President of LANS LLC as it runs both LANL and LLNL.
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