Blogging Employee Benefits

May 1, 2006

Energy Department Switches Off DB Pensions

Filed under: Contract Accounting, Pensions — Fuguerre @ 10:07 am

The U.S. Department of Energy has unilaterally decided to cease reimbusing its federal government contractors for costs associated with defined benefit pension plans for new contractor employees. Instead, the DOE will only reimburse costs for market-based defined contribution plans. Similarly, for new contractor employees the DOE will not reimburse costs for employees' medical plans unless the plans are market-based. The DOE anticipates full implementation of the new policy no later than March 1, 2007. [Notice DOE N 351.1; Press Release]


  1. I could have posted this brief blurb last Friday, but delayed so as to give myself the weekend to decide how much further to post on the topic. Yet after going through all the detail of the DOE notice itself, much discussion with several friends in the business, and countless ideas on how to do this one any justice, I’m still left with little yet beyond a very dropped jaw.

    This iceberg makes all the corporate actions of pension freezing look like tiny ice chips. And what message does it send to congressional conferees still striving toward compromise legislation designed to support the defined benefit pension system about what the Administration’s real game plan might have always been?

    I was thinking of maybe launching a pool to field guesses on exactly how many days into a Hillary Administration one thinks we might go before a new DOE would rescind this action. Except I doubt it will take even that long before we get some pushback against this move, if not from the current Congress, then from the one that the Administration seems to be guaranteeing we will see replace it this fall.

    Sorry, but it’s really difficult to swallow this one without a very strong aftertaste.

    Comment by Fuguerre — May 1, 2006 @ 10:34 am

  2. “None of the funds made available in Title III of this Act shall be used for implementation of the Department of Energy Order N 351.1 or any similar Department of Energy Order modifying contractor employee pension and medical benefits policy.” – Pertinent text of an amendment to legislation on the DOE’s fiscal 2007 appropriations, passed on voice vote yesterday by the House Appropriations Subcommittee on Energy and Water Development and Related Issues, reflecting strong sentiment from both Republicans and Democrats against the agency’s new policy.

    Comment by Fuguerre — May 12, 2006 @ 5:37 am

  3. Democratic letter to the President opposing the DOE policy.

    Comment by Fuguerre — May 12, 2006 @ 5:40 am

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