To: Members of the Senate Committee on Energy and Natural Resources - 9/27/06

To: Members of the Senate Committee on Health, Education, Labor and Pensions – 9/27/06

To: Members of the House Committee on Appropriations – 9/27/06 (Via surface mail)

To: Members of the House Committee on Energy and Commerce - 9/27/06

To: Members of the House Committee on Science – 9/27/06

Inequitable Pension Practices by the Department of Energy and Its Contractors

We share a common problem even though we are not constituents of yours. The mutual interest arises because you serve on a congressional committee or subcommittee that has some responsibility for the Department of Energy (DOE) budget and other DOE legislation or you have a DOE facility in your district while we are retirees living on DOE-controlled pensions. We wish to be certain you have ample notice of the nature of the current pension problem before it progresses to the point where it causes irreparable damage to those of low retirement income.

The problem is the impact of the recent actions of the Secretary of Energy Samuel Bodman in regard to pension benefits of Contractor employees at all DOE sites that have "defined benefit" (DB) pension plans. Secretary Bodman, in DOE Notice 351.1 (dated 4/27/06) clearly stated:

a) the intent of the Department of Energy to convert the pension plans for all new employees and some vested employees to "defined contribution" (DC) plans and thus enable the DOE to better predict, better control and to better limit pension expenses as well as to bring the DOE operations in line with the administration's objectives, and

b) the intent of DOE to NOT reimburse contractors for expenses which constituted an improvement or potential improvement of any remaining "defined benefit" pension plan(s) even though some of these pension plans do not have any provisions for cost of living adjustments thus leaving some ten-year vested employees with a possible sixty five year future without any hope of reasonable adjustments. For the long-lived retiree at today's inflation rates, this will result in an 80 % loss of pension buying power. This is truly draconian. In our mind, it does not seem reasonable to call a pension increase which is intended to restore losses in buying power as an "improvement". It is more in the nature of "maintenance".

Action 1 is a part of a very much bigger problem which we are sure will be appropriately debated. However, action 2 is a result of the recent announcement DOE Notice 351.1) AND the wording and practices of the current pension plans at each of the DOE sites and its impact may get lost in the big struggle. These actions ignore the precedent of cost of living adjustments in Social Security and many other federal pension plans.

Recently, Senator Domenici was able to affect a one year hold by DOE to enable the problems to be studied and stakeholders consulted. However, at the subsequent DOE informational meeting in Oak Ridge, TN, DOE/DC made it very clear they had no interest in the retiree's concerns and there would be NO improvements in Oak Ridge defined-benefit pension plans unless said improvements were a legal requirement or were a part of wage negotiation agreements. Many employees do not have these protections. DOE again re-presented their past claims for the "generous" nature of the Oak Ridge pension benefits but would not respond in any way to many of the retiree's questions and criticisms of the assumptions and parameters used in the computations used to reach this conclusion.

The magnitude of the problem is large by DOE's own estimates: 26 DB plans (23 supplemented by DS plans); 103,000 retirees, beneficiaries and dependents; 100,000 employees/future retirees. These data make it clear that the problem extends well beyond Oak Ridge to other DOE installations.

The Oak Ridge retirees, through the Coalition of Oak Ridge Retired Employees, have been pursuing this problem for about five years without much success. I shall not burden you with the sordid details. There is more about this effort at: www.CORRE.info and http://home.comcast.net/~brooks50/PensionPlanInformer.htm

We hope this alerts you to the pension problems and that you will join other concerned legislators in preventing this injustice to those workers who have diligently supported the many nuclear programs of our nation and now face a seriously decreasing buying power of their pensions.

Again, we stress that this injustice can exist and be promulgated in spite of the resolution of the defined contribution/defined benefit debate because it depends only on DOE's desire to drastically reduce their expenditures for defined benefit pension plans.

Sincerely,

Alfred A. Brooks

Robert Henderson

DOE Contractor Retirees