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Following is the 2002 CORRE position paper for 2003 adjustments and policy on the Oak Ridge operating contractors pension system.

2002 Position Paper

A STATEMENT OF GOALS AND PROPOSED CHANGES IN PENSION BENEFITS FOR 2003

The Coalition of Oak Ridge Retired Employees (CORRE) was formed in 2000 to represent the interests of the approximately 13,000 employees who have retired from Department of Energy contractor-managed facilities at Oak Ridge, Tennessee – Oak Ridge National Laboratory (ORNL), K-25 Gaseous Diffusion Plant (K-25), and the Y-12 Plant (Y-12). The primary objectives of CORRE as stated in its Bylaws are: (1) to obtain and maintain pension and other benefits that are fair and equitable and competitive compared with other industries in the region and with other major DOE federal and private contractors in the technical field; and (2) to safeguard the Pension Fund from which these benefits are derived.

Officers                                                Board Members

Charlie Kuykendall, President                Ben Johnson

Dave Reichle, 1^st Vice President             Tom Lemons

Jackie Holloway, 2^nd Vice President         A. L. (Pete) Lotts

Mary Helen Rose, Secretary                     John Sergent

Mary Helen Rose, Treasurer                     Joe Setaro

Bob Wesley, Communications                    Harwell Smith

                                                               Troy Trotter

                                                               Don Wood

                                                               Bob Worrell

Board Members Serving as Organizational Contacts         Advisors

Jackie Holloway, ATLC                                                     Dale Bewley

Ben Gaylor, PACE                                                            Julia Hoppe

Joe Dykstra, K-25                                                             Ed Kreig

Ken Bernander, Y-12                                                         Chuck Landguth

John E. Jones Jr., ORNL                                                    Gary Riser

Marigrace Kirstowsky, Central Staff                                    Chris Travaglini

                                                                                        Bill Wilcox

2002 POSITION PAPER

BACKGROUND

The present pension benefit system is an outgrowth of the retirement-pension program established over 50 years ago by the Union Carbide Nuclear Division, managing contractor for the DOE predecessor Atomic Energy Commission, as a means of attracting/enticing the nation’s brightest and best engineers, scientists, and craftsmen to Oak Ridge.

Beginning with the Manhattan Project and continuing until today, the Oak Ridge contributions to nuclear deterrence, nuclear medicine, science, and energy have had a profound effect on the lives of every American. Our freedoms are secure, we live longer and healthier lives, and we enjoy greater prosperity today than ever before. Every Oak Ridge retiree can be proud of having made a contribution to these achievements.

While the Oak Ridge pension benefit program was competitive when it was established many years ago, it has not kept up with the times and currently lags behind the pension benefits provided by DOE contractors at DOE Weapons Labs.

The Pension Trust Fund has received no new contributions for current employees since 1984, and the Pension Trust Fund surplus (assets minus liabilities) has been the target of numerous attempts to divert funds to other purposes.

Oak Ridge retirees have not been treated as well as other large groups of DOE contractor employees. Lawrence Berkeley, Los Alamos, and Livermore retirement benefits are dramatically superior. Sandia retirees received another 15-percent ad hoc increase in their pensions effective January 1, 2002. This followed on the heels of

a 3-percent to 18 percent graduated increase in October 2000 to a pension program already superior to that of Oak Ridge.

A recent Oak Ridge pension adjustment in April 2001 resulted in the recovery of approximately half of the loss of purchasing power due to inflation for some retirees, and much less or nothing for others. Excluded from this benefit were recent retirees since 1998, vested retirees, and others whose pension benefits were arbitrarily capped by the current managing contractor.

Oak Ridge retirees have seen the purchasing power from their pensions dwindle year after year, while costs for medical health insurance, prescription drugs, and dental care have increased far faster than inflation.

This position paper focuses on specific actions proposed by CORRE for 2003 to partially address this loss of purchasing power, to address a grievous injustice in the pensions of a very few long-term retirees, and to seek reasonable representation for retirees on the BWXT Y-12/UT-Battelle Pension Fund Advisory Boards. The increase in benefits recommended can be funded entirely from the Pension Trust Fund surplus.

In addition we have tried to set forth the long-term goals of CORRE consistent with our statement of Principles for Administration of the Oak Ridge Pension Fund posted on the CORRE web site, http://www.corre.info.

If the DOE operating contractors in Oak Ridge expect to remain competitive in the marketplace for world-class scientific, technical, and manufacturing talent, they have a lot of catching up to do relative to benefits for employees, particularly pension benefits. Since the Pension Trust Fund was established to benefit both current employees when they become retirees and current retirees, fairness would dictate a reasonable balance between enhanced pension benefits for employees and pension adjustments for retirees. Sandia and others have seen the equity in doing just that. Among those credited with championing the pension benefit improvements at Sandia⁽¹⁾ were Sandia Laboratories Director C. Paul Robinson, the Albuquerque Operations Office Manager Rick Glass, NNSA Administrator General John Gordon, and the New Mexico and California congressional delegations, particularly Senators Pete Domenici and Jeff Bingaman and Representatives Heather Wilson and Ellen Tauscher.

We expect equity for retired employees in Oak Ridge as well. We certainly hope to see equally strong support from BWXT Y-12 President Dennis Ruddy, ORNL Director William Madia, NNSA Y-12 Site Manager Bill Brumley, NNSA Administrator Linton Brooks, Oak Ridge Operations Office Manager Gerald Boyd, DOE Office of Science Director Ray Orbach; and, certainly not least, Senators Lamar Alexander and Bill Frist and Representatives Zach Wamp, John Duncan, and Lincoln Davis, who represent the 13,000 Oak Ridge retirees in this region. BWXT Y-12 has verbally committed to CORRE to support a pension increase review in 2003, and we look forward to working with them and others to make it a reality.

________________

⁽¹⁾Sandia Lab News, Vol. 54, No. 4, February 22, 2002.

2003 PROPOSAL

CORRE proposes three specific actions related to pension benefits and the Pension Trust Fund in 2003:

I. An Ad Hoc Increase in pension benefits for all early and normal retirees, that will restore to them some of the loss in value of their pensions that occurred due to the increased cost of living since their retirement. (The increases should be based on year of retirement, ranging from about 3 percent for 2002 retirees to 38 percent for 1969 retirees, and averaging about 15 percent overall).

This action is in line with the pension adjustment approved at Sandia in January 2002. It is consistent with the CORRE long-term goal of increasing pensions to compensate for loss of buying power due to inflation and provides an incremental adjustment toward partially correcting past deficiencies and achieving that goal. CORRE recommends that this increase be distributed in a way that takes into account the cost-of-living increase since date of retirement.

Civil service, social security, military, railroad, and many other retirees receive annual cost-of-living increases in pension benefits. Within the DOE complex, LBNL, LANL, and LLNL retirees receive annual cost-of-living increases. Whether or not a formal commitment to an annual cost-of-living adjustment is achievable in Oak Ridge, a standard procedure needs to be implemented to adjust pension benefits at least biannually to compensate for the effects of inflation.

This increase is proposed for all early and normal retirees, regardless of retirement date (no exclusion for recent retirees) or pension income (no exclusion for higher-salaried retirees). Retirees who had retired within the most recent three-year time period were excluded from the April 2001 pension adjustment. Likewise, the pension benefit eligible for adjustment was capped at $15,000 per year in the 1991 adjustment and $40,000 per year in the 2001 adjustment for higher salaried employees including Distinguished Engineers, Distinguished Scientists, Senior Technical Specialists, and mid- and senior-level managers. If the current DOE and DOE contractors still want the brightest and the best employees, a cap on the pension benefit after they retire is hardly the kind of testimony one would want for recruitment and retention of such employees. These arbitrary and discriminatory practices of excluding or capping specific subgroups within the retirees seem to be peculiar to Oak Ridge. They are not practiced among other DOE contractor sites or other pension programs such as civil service, social security, military, etc. Because they are arbitrary and discriminatory, we believe they should end.

II. A minimum monthly pension benefit of $600 per month ($400 for surviving spouses) for early and normal retirees who have at least 20 years of company service credit. The minimum benefit for covered retirees (and surviving spouses) with less than 20 years service would be prorated based on their actual whole years of service.

A few long-time or lower-salary retirees (or their surviving spouses) have a retirement income so small that they are eligible for food stamps. Those who retired in the 1960s, 1970s, or 1980s have had their pension benefits eaten up by inflation.

This Minimum Pension benefit will apply to only a very few retirees and surviving spouses who are primarily older retirees. The liability for this Minimum Pension will, therefore, be very modest to the Pension Trust Fund, but the justification is strong and the need is urgent. A similar Minimum Pension benefit was approved at Sandia in October 2000. Such a request was denied when the pension adjustment of April 2001 was granted at Oak Ridge.

3. The BWXT Y-12 and UT-Battelle Pension Benefits Advisory Boards each should include participation of a retiree member. The retiree member would be acceptable to both the management (BWXT Y-12 and UT-Battelle, respectively) and CORRE.

BWXT Y-12 and UT-Battelle have a need to understand the interests of these retirees, both as managers of the Pension Trust Fund and as major DOE contractors in a community where these 13,000 retirees have a significant economic and public opinion influence.

Effective communication leads to better understanding. CORRE seeks the cooperation and support of BWXT Y-12 and UT-Battelle management and, in turn, are very willing to lend our support in a mutually beneficial environment. We sincerely believe retiree representation on these Boards will be mutually beneficial.

LONG-TERM GOALS

In addition to the specific set of proposed actions in 2003, we have drawn on the CORRE Bylaws, the statement of Principles for Administration of the Oak Ridge Pension Fund, and our direct interaction with hundreds of Oak Ridge retirees to develop the following long-term goals:

Annual cost-of-living adjustment for pensions.

An automatic pension adjustment on an annual basis is necessary to compensate for inflation and maintain some semblance of a stable standard of living for retirees. An annual cost-of-living adjustment is the norm for social security, civil service, military, and railroad retirees. An annual cost-of-living adjustment is the norm for Lawrence Berkeley, Los Alamos, and Livermore retirees. Without an annual cost-of-living adjustment, only four ad hoc adjustments have occurred in Oak Ridge in over two decades, resulting in a financial impact far less than the cost-of-living. Equitable economic consideration for retirees should not be solely dependent on ad hoc, retiree-organized campaigns.

Equitable criteria will be applied in making adjustments for all retirees covered by DOE-funded pension plans at contractor-operated DOE facilities.

All of the contractor-operated DOE facilities were established as a part of the Manhattan Project and continued in support of Atomic Energy Commission/ERDA/

DOE missions in energy, science, defense, and environment. Since the entire complex of National Laboratories and Facilities is funded by DOE and its predecessor organizations, and since DOE continues to exercise the authority to approve or disapprove any adjustments in the benefit programs at each site, it seems to CORRE that DOE has a moral obligation to pursue a policy of equity across the DOE complex.

The Pension Trust Fund will be used only to meet current and future actuarial pension benefit liabilities for retirees from DOE Oak Ridge facilities.

CORRE believes that the transfer of money out of this Pension Trust Fund for any other purpose should not be permitted. CORRE will vigorously oppose any attempt to raid the Pension Trust Fund through IRS 420 Transfers.

No exclusion from appropriate benefits.

There should be no exclusion from participating in employee benefit plans after retirement. Retirees should be allowed to continue (or to reactivate) benefits such as dental and vision, plus any others that are provided and appropriate.

When there are enhancements to pension benefits to active employees, equal adjustments should be established for retirees.

No additional financial allocation of resources has been committed to the Pension Trust Fund since 1984. Equitable allocation of these resources should be made to both retiree pension adjustments and employee pension enhancements.

Additional financial allocations should be committed to the Pension Trust Fund for enhanced pension benefits for current employees as needed.

The Pension Trust Fund has an ample surplus (assets minus liabilities). As the overall economy recovers this should again approach $1 billion. Allocation of additional funds should not be necessary to support annual cost-of-living adjustments for retirees. However, in principle, DOE and DOE contractors should be prepared to allocate additional funds if required.

No reduction in other retiree benefits, including insurance.

In addition to the positive adjustments in pension benefits to help offset the cost of living, our goal is to avoid any reduction in other retiree benefits, including insurance.

Approved 05-15-02

Last Revised 01-27-03