September 22, 2006
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| Letter to Ms. Stephenie
Weakley, DOE-HQ September 22, 2006 |
Coalition of
Oak Ridge Retired Employees (CORRE)
September 22, 2006Working for Fair, Equitable and Competitive Benefits For Former K-25, Y-12, and ORNL Employees P.O. Box 4266 Oak Ridge, Tennessee 37831-4266 Dear Ms. Stephanie Weakley, DOE-HQ At the June 22 DOE Public meeting at Pellissippi State Community College in Tennessee, as President of the Coalition of Oak Ridge Retired Employees, I submitted 2 sets of written materials (copies attached to this e-mail) to Ingrid Kolb, who chaired the meeting for DOE: 1. A list of questions that had
been asked by CORRE and retirees up to that time that had not been
answered by DOE.
Since CORRE has not
received acknowledgment of receipt of these materials by DOE, and since
we now note in DOE N 251.66 that you are the designated point of
contact for comments on DOE N 351.1, I am herewith resubmitting said
materials by record of this e-mail.2. Changes to DOE Notice 351.1 that CORRE desired that would remove the unnecessarily restrictive language in the Notice that would require future increases in liabilities against the DB Pension Plans to require a directive by federal legislation, in addition to DOE Secretarial approval. CORRE would appreciate acknowledgment of the receipt of these materials by DOE. In addition, communications which have emanated from various DOE parties at, and since, the June 22 public meeting pose the following questions to which CORRE requests answers. 1. Retirees from Oak Ridge
contractors are covered by the financial resources of
specific pension trust funds that are amply funded. Why cannot DOE treat the pension issues of retirees from Oak Ridge contractors as separate and distinct from the other pension plans across the country in the DOE contractor system? 2. DOE and contractor representatives have said that they cannot, at present, recommend any pension benefit enhancements (i.e., increases in fund liabilities) for retirees because of concerns about the future health of the Oak Ridge pension funds. What are the underlying assumptions that support this conclusion, when the Oak Ridge MEPP (Multi-Employer Pension Plan) has a current funding surplus over liabilities of nearly one-half billion dollars? 3. In July 2004, DOE approved increases in liabilities of the Oak Ridge MEPP by removing the 30-year cap and reducing the spousal option to a flat rate 2%, both as future retirement benefit improvements for all current employees. If there is indeed a "concern" about the future health of the MEPP, then why was this concern not evident in 2004? And, conversely, what might have changed in assumptions between 2004 and 2006 to now raise such a concern? 4. In 2001 the contractors, with DOE approval, extended the "pop-up" on the spousal option to retirees that had been previously granted to employees. Following this precedent, why was not (and could not) the flat rate 2% on the spousal option also be extended to retirees as was done previously for the "pop-up?" Thank you for your attention to these matters. Please note the attachment to this e-mail. Sincerely,
David E. Reichle, President Coalition of Oak Ridge Retired Employees Proposed
Amendments to DOE N 351.1
Proposed to DOE by Coalition of Oak Ridge Retired Employees Oak Ridge, Tennessee June 22, 2006 Amendment Number 1 On Page 2, Section 4. Background---- add the following paragraph to the existing paragraph: DOE and contractors have historically granted adjustments to pensions for defined benefit plans when the pensions of those plans reached levels that seriously impaired the values of pensions because of inflations. This has given rise to reasonable expectations and planning on the part of retirees that such adjustments would continue, since this had been the practice in the past. Accordingly, DOE must have a policy that manages the total outlay for pensions, but is fair in allocating its resources to not only future employees but also present employees and retirees who are on historical defined benefit plans. Amendment Number 2 On Page 4, Section 5a. (6): Delete in first sentence: “Absent a compelling reason (e.g. required by law and then” and “not approve”. Add the phrase “shall approve” so that the first sentence shall read of this sections reads as follows, as amended: Only with the written approval of the Secretary of Energy, Departmental Elements shall approve costs for reimbursement of any amendments to an Existing DB Pension Plan(s)(as defined in this Notice) that augment or potentially augment in any way the benefit for any plan participant, including any early retirement incentive. Amendment Number 3 Following Page 4- Section 5 a. (9) dated 4-27-06, add the following amendment to the document Section 5 a. (10) The Secretary of Energy shall consider the approval of changes to existing historical defined benefit when a plan is submitted meeting the following criteria: 1. The average value of the
retiree pensions has fallen below 75% of the original average value of
the pensions, as determined by application of the appropriate cost of
living index of the Department of Labor.
2. The plan for which a change is submitted is one which has had historical adjustments in the pension benefits of the plan during its operation. 3. The plan for which a change is submitted is a defined benefit plan for which adjustments have been planned and provisions made for financing such adjustments. Section 5 a. (11). Revisions to plans submitted under the provisions of Section 5a.(10) above shall meet the following requirements: 1. As a minimum, the adjustments
to individual pensions in the plan shall be restored to 75% of their
original purchasing power, as determined by the appropriate multipliers
for cost of living of the Department of Labor.
2. Benefits for retirees from defined benefit plans should not yield benefits that have decreased purchasing power values significantly lower than what would be imputed to them for their period of service if they had been working under the market based defined contribution plans for the duration of their service. Significantly lower is any value exceeding 10% of the monthly pension. 3. The above adjustments shall be determined based on actuarial analysis by a qualified actuary using the best available data and statistics for the market-based plans and the defined benefit plans still in operation. Amendment Number 4 Page 2, Section 7. Definitions---- add the following definition to the existing section: Historical Defined Benefit Plan- a defined benefit plan operated for employees and retirees prior to the change date (March 1, 2007) for implementation of the market-based plans. Amendments
for Attachment 2
Amendment Number 5 In Attachment 2, page 3, Section 3, add a new paragraph to section b: A Contractor will not be prohibited from proposing and implementing an amendment to an Existing DB Pension Plan, with DOE approval, which may augment or potentially augment the benefit for any plan participant. Any costs resulting from such implementation will be considered allowable costs. Amendment Number 6 In Attachment 2, Page 3, following Section 3 b., add the following amendment as a new section: Section 3 c. Benefits and costs of Historic Defined Benefit plans shall be evaluated in accordance with the provisions of Sections 5 paragraphs 10 and 11. Cost will be reimbursed by DOE for changes in plans that meet those requirements. Questions
About DOE N 351
Asked of DOE by Coalition of Oak Ridge Retired Employees Oak Ridge, Tennessee June 22, 2006 General Questions 1. CORRE has had a basic position of: (a) Granting retirees the flat rate 2% Surviving Spouse Reduction Factor that was given to active employees in 2004; (b) Restoring 75% of the lost purchasing power to retirees. How does this notice affect this request? 2. Why is the DOE putting all sites in one basket? You are treating those with a surplus the same as those who are in trouble. Why not fix those in trouble? 3. DOE always had approval authority for any adjustment to pensions. Is this notice merely a message to contractors “Do Not Recommend Any Adjustments”? 4. Medical benefits to retirees are not part of the Pension Plan. This notice treats them as if they were. Why? 5. Historically, adjustments have been made periodically (though not annually as is the case with Federal Employee Pensions), consistent with both need and availability of funds in the Plan. The Oak Ridge plan has been managed very well as evidenced by the fact that no funds have been contributed to it since 1984. Why are we being punished for being so successful? 6. DOE attempted to raid our pension fund through 420 transfers in the past. Is this another attempt to take our surplus for other uses? 7. What is the unfunded liability of the DB Pension Plans across the DOE Complex? 8. What is the “DOE Financial Statement” and does it show the split between the Defined Benefit Pension Plans and the Health Care Plans that are not a part of the Pension Plans? Questions
Specific to the Notice
1. Section 5. Requirements – Reporting by DOE Under the sections about
reporting, what is meant by the statement that DOE will no longer
report in its annual financial statement Incremental pension liability
or costs? See Subsection 5.a.(3) on page 3.
2. Meaning of “compelling” and “required by law” Section 5.
Requirements—Page 4 and in numerous other places in the document,
including attachments, such as under the section Subsection 5.a. (6),
what is meant by “compelling” and “required by law”? Does this
mean that for defined benefit plans, there will need to be an act of
legislation by Congress to get adjustments considered and granted by
the Department of Energy? If such legislation is required, tell
us what should be the provisions of the authorizing language.
3. Meaning and intent of Notice relative to adjustments for DB plans Does the Notice mean that DOE
will not under any circumstance approve an adjustment in benefits under
an Existing DB Pension Plan unless required by law? If DOE will
approve adjustments under existing DB Pension Plan, what will be the
criteria for such adjustments?
4. Use of Existing DB Plan assetsDoes DOE intend to use Existing
DB Plan assets to, in any way, subsidize the added costs of the newly
required Market Based DC Plans? If so, how will the funds be used?
5. Lack of recognition of planning for periodic adjustments of DB plans Where in the document is there
any recognition of the fact that some contractors planned and operated
their defined benefit plan investments to provide for periodic
adjustments?
6. Differences in pension payouts Why has the DOE not taken into
account the fact that there are serious differences in the pension
payouts of plans in terms of benefits giving rise to some that are not
sufficiently funded and some with significant surplus? Why does
it not take into account that some of those surpluses morally and
ethically belong to retirees of those plans? For example, the Oak
Ridge plan.
7. Low benefit ratios Why does DOE not take into
account the fact that some plans have very low benefit ratios, thus a
greater need to make adjustments, such as the Oak Ridge Plan?
8. Minimal or no adjustments for DB plan Apparently DOE thinking is that
DB plans should never be adjusted. How can DOE justify minimal
adjustments and now no adjustments for a plan that has so much surplus
that it has not made a contribution to it since 1984?
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Working for Fair, Equitable, and Competitive Benefitsfor13,000 Former K-25, Y-12, and ORNL EmployeesCoalition of Oak Ridge Retired Employees P.O. Box 4266, Oak Ridge, Tennessee 37831-4366
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| Date Modified: 17 March 2007 |