The Pension Plan Brief
A Summary
A. A. Brooks
This is a summary of the Oak Ridge Pension Plan discussions contained elsewhere on this web site and the CORRE Web Site. It is in support of the CORRE and its proposal for equitable pension adjustments.
1) Please: Write your legislators and demand equity: http://www.corre.info/Fed_Govt_Contacts.htm
2) The CORRE proposes an across-the-board adjustment of about 1.3 % per year since retirement and lowering the spousal option reduction to 2% for all past retirees as it is for recent retirees.
3) The Oak Ridge Pension Plan is fully funded even though no new funds have been added since 1984, several contractors ago, and, in fact, DOE on occasions tries to divert these funds to operating funds. All adjustments currently proposed by CORRE would not require any new contributions to the fund, but would merely decrease the surplus in the fund.
4) Many pension plans have an automatic cost of living adjustments based on the BLS CPI or the SSA COLA. These include the following: a) the Social Security System, b) the Federal Government including the retired military and the DOE, c) etc.
5) The equity of a pension plan is expressed by the parameters of its payment model
P = M x A x Y x PPAC/CPIC, where
P = Monthly Pension
M = Multiplier Factor; often in the range of 0.012 to 0.025 (Oak Ridge; 0.012 to 0.015)
A = Monthly Salary Averaged over Last N Years; N is about 5
Y = Years of Service; typically from 10 to 60 years
PPAC is the annual Pension Plan Adjustment Compounded over the retirement period
CPIC is the annual Consumer Price Index Compounded over the retirement period
The compounding is given by the repeated product of (1+PPA) or (1+CPI) for each retirement year.
6) The equity at retirement is determined by the product: M x A x Y. The Oak Ridge Pension Plan has never been generous (compared to other DOE sites Slide 19) and this cannot be cited as a reason for failure to adequately adjust for the cost of living increases. But this is not the current CORRE issue.
7) The long term equity is determined by adjustments in the pension for the increases in the cost of living and is reflected in the ratio: PPAC/CPIC. The Consumer Price Index Compounded (CPIC) is controlled by the market place and the CPI calculated each year by the Bureau of Labor Statistics (BLS). The Pension Plan Adjustments Compounded (PPAC) are of course determined ultimately by DOE. The current CORRE issue is: Why have these cost of living adjustments been kept so low as to reduce the buying power of a 30 year pension to 54.5 % of its original market value? Where is the equity in this? Simply put, is it fair?
8) Why have the
9) This author recommends to new employees that they study the pension plan before making a commitment.
10) Please copy/paste this page into an E-mail to about ten other Oak Ridge contractor retirees requesting that they again forward this message to their friends and write (again) to their legislators. Every letter counts.
11) If you are not a CORRE Member, please visit the CORRE Web Site and consider becoming a member. The one time $20 fee is small for good representation and you already have your money back. We could use another thousand members to demonstrate political clout.
Don't Get Mad, Get Even With Inflation