Pension Questions and Answers
from the Benefits Office
Question ( NMS13075 - Submitted
multiplier at Y-12 only 1.4 when the multiplier at LBNL, LLNL, and LANL is
2.5 and the multiplier at SNL is 2.0?
Answer (Posted 3/9/2006): While we recognize the desire on the part
of our
BWXT Y-12 employees to compare our pension plan with that of the labs, the
DOE/NNSA permits us to use only the University of California for Los Alamos
in our BenVal study. As discussed previously, the BenVal study is conducted
every two years and compares all benefits offered with those of 15 other
companies selected by the Department of Energy. In the most recent study, our
evaluation, including the
107. DOE permits us to have a range of values between 95-105.
Therefore, we
are currently exceeding the maximum values permitted by the DOE. We cannot
explain the variations in the multipliers for the other plans referenced in
the question. We believe our plan to be competitive and value added. If you
would like to discuss this further, please contact Susan Alexander at
574-9110.
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Question ( NMS12719 - Submitted
something, that there has been a higher than average early retirement from
Y-12. My question - how does our early retirement (age less than 59 1/2)
metrics compare with other companies? Can you offer a reason why so many
people are choosing early retirement? Many are not retiring but actually doing
other things, working at other places, even coming back here as
subcontractors (which is what I would like to do). Is there data on early
retirement trends at Y-12? No whole numbers need be given for business
sensitive reasons; however a metric in the form of a percentage of retirees
should be available. Was the early retire rate significantly more than 20% of
all retirees any or all the last 5 years?
Answer (Posted
data which tracks how those employees who retire "early" compare with
that of
other companies. We do know from our BenVal study
that we continue to be
among a shrinking number of companies which permit employees to retire with
full benefits at ages earlier than 62. Based upon what retirees have
indicated in the exit interviews, there are many reasons for leaving. Most of
the reasons are personal in nature. In the past we have monitored the average
ages of people leaving. Typically, people leave between the ages of 59 and
65. We have currently asked our actuaries, Towers Perrin to run reports to
see if those numbers are still accurate. We do not have that data as yet.
When we receive that information, we will be more than happy to share the
data with our employees.
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Question ( NMS12643 - Submitted
should have 50% of present salary (including for yearly inflation) to live
on. I am to understand that savings makes up for inflation since the pension
benefit and social security will not cover COLA. Fair enough. However it
seems quite distressing that 50% is enough to sustain successful retirement,
even with a house paid off. Either an increase in the multiplier or the
increase in savings is required to obtain the recommended 70% pre-retirement
income as noted by AARP. Since the multiplier is not up for discussion at
this time (and thank you for placing us in the top 1/3 which means we are at
the 1/3 mark, no more no less) should some consideration be made to increase
company match or require mandatory participation in the savings program at a
minimum level? What about increasing the company contribution
to greater than
4% for those beyond a certain level (better incentive to save more). My
previous employer, a DOE National Laboratory, made mandatory participation at
a minimum level a requirement of employment and additional contribution on a
graded basis up to 8%. I think they are in the top 1/3 since I saved more
money for the same time period and rate of return. In that respect, if a
person was at 12% pre-tax contribution, the contractor would match 6%. If a
person were at 16% the contractor would match 8%. Personally, I think the mix
and burden for retirement should be an equal 1/3 SSI, 1/3 defined benefit and
1/3 savings as noted in the literature. This means the government, the
company, and the individual put up a fair stake. The current formula possibly
skews the total fraction to favor personal savings, placing the onus on the
individual that does not have a lot of years of service (less than 20) to
manage personal savings possibly beyond their ability to get the required
return to offset the lower defined benefit. People put their lives and
sometimes health into this place. They should not have to self-manage their
investments beyond that which a professional manager should do inorder to
make up for a system that 1/3 of the complex outperforms or provides more
superior. People at some DOE sites get better treatment and they are at risk
for a hangnail. Some receive up to 50, even 60% of their salaray
as a defined
benefit on top of a 6-8% company matched 401k plan. That is a sweet deal.
Could not the managers here take some of the surplus and increase the
contribution rate back to employees provided they save more? Thats basic
macro-economics. Shouldn't we be better than top 1/3? Is Y-12 satisfied with
mediocre? Is it because we are a production facility that is an M&O the
reason we are treated differently in the eyes of the government?
Answer (Posted
believe that we have a mediocre benefits program. As has been discussed
previously, the BenVal study required by the DOE
compares us with other DOE
sites and private sector companies on a variety of benefit programs. The DOE
approves the comparison companies list. The last BenVal
study earned us a
score of 107 in comparison to other companies and sites. The DOE requires
that no BenVal score exceed 105. If a score exceeds
105, we are required to
put a corrective action plan in place to bring the score into that range.
We have evaluated mandatory participation and a recommendation to make
participation mandatory is under discussion. We are constantly evaluating
options and looking for more creative ways for our employees to save such as
the Roth 401(k).
There are no provisions to use the surplus in the pension fund to increase
the savings rate. The 401(k) savings plan and the pension plan are to
distinct plans which do not permit co-mingling the assets in the plan.
If you would like to discuss further, please call Susan Alexander at
574-9110.
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Question ( NMS11746 - Submitted
lobbied DOE and NNSA for a change to their pension plan in 2001. In a period
of just over a year of justification and proposals, they were rewarded for
their efforts when DOE increased their multiplier from 1.5 to 2.0., enabling
most people at Sandia to retire with 80% of their
salaries as a pension at
age 60 and points. That, in my opinion, is getting things done! How did they
do it in a year when we've been told it's not doable for the past several
years? In fact, we're told even to date that we're competetive
with the other
facilities. Well, tell me how then does a multiplier of 1.4 here compete with
a multiplier of 2.0 at Sandia? Or,
2.5 at
travel to these other facilities it's natural that benefits come up at some
point when talking about work, facilities, contractors, etc. People there
want to stay for the benefits programs in place there. You don't see new
hires there walk in one year and out the next. You mentioned that Lockheed
recently dropped their pension plan.... they didn't drop it at Sandia.
Answer (Posted
eliminated the pension plan program for future new hires, except Lockheed
Martin Sandia because the contract is in place with
Lockheed and the DOE.
Sandia has been advised that it must demonstrate how
it is going to bring its
benefits in line with other companies because their BenVal
numbers exceed the
DOE limits.
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Question ( NMS11251 - Submitted 10/25/2005 ): Many NMS answers
regarding
benefits give the false sense of security that Y-12ers should be lucky to be
getting a defined benefit. For example the phrase "Most companies are
eliminating their defined benefit (pension plans) for new hires and
increasing medical costs for employees" is replete in many answers.
Seriously, how many of these companies are NNSA prime contractors? The answer
- none. So please do not answer any NMS questions regarding retirement
with
the standard phrase that makes us feel lucky we have this benefit. The NNSA
will never allow a prime contractor to give up an NNSA specified defined
benefit program without some major justification. Yes we do not work at
Motorola. They are a for profit company with a commercial
competitor and are
not under our strict regulations, security requirements. Their market forces
and dynamics are different. Motorola gives its employees much more freedom
and other perks. Now that being said, if the "defined
benefit" were off the
table, that is not even considered, how do we stack up? The defined
benefit
of tomorrow will not be worth much. That is why we are interested in Roth
IRAs and other savings means.
Answer (Posted
defined benefits within the DOE is not accurate in 2002. Pantex eliminated
the pension plan for new hires in the guard force and replaced it with an
enhanced 401K. Other NNSA contractors are considering the elimination of this
benefit and post retirement medical for new hires as well because of the
long-term liability costs. For example, Lockheed Martin is the latest in a
long line of companies to replace the pension plan with a self-managed 401k
savings plan. Given the comparisons in the BenVal
study we are still near the
top in the value of our benefits. The fact that employees can retire with
full benefits with 85 points, some as early as age 55 is clearly a part of
the benefit which moves us ahead of the comparison group. I will be more than
happy to discuss this issue with you, if you would like to call me. Susan
Alexander (574-9110).